SAFEGUARDING AND PRICES .sx SIR BASIL PETO'S VIEWS .sx Sir , - Mr. T. Owen Jacobsen in THE FINANCIAL TIMES of 25th June asks me if we pay for our imported manufactures in gold or by goods and services , and , if the latter , who will supply the goods and services in exchange for these imports ?sx The answer , of course , is that we pay for anything we buy in one or more of the three ways he mentions , and the answer to the second part of his question is that if we do not import them we shall not have to pay foreign countries for them .sx In other words , we shall buy them from our own people and pay our own people .sx I do not say that the exclusion of imports means more employment , but that the exclusion of a certain type of imports means more employment .sx It does not throw anybody in this country out of work if we import crude rubber , but it does if we import rubber tyres , for the reason that we cannot produce rubber in this country , but we can produce articles that are manufactured from it .sx With regard to the fall in prices , had the duties the effect that Free Traders prophesy , it would have been perfectly clear either that safeguarded goods would have gone up in price or that at a time of generally falling prices they would have responded less to the fall , or more slowly , than other types of goods .sx This has not been the case , and in some instances the fall in the price of safeguarded goods has been so marked as to preclude any possible argument on the subject .sx With regard to the question of a drop in price immediately on the removal of a duty , Mr. Jacobsen will , no doubt , agree with me when I point out that what happens a few weeks before or after the imposition or removal of a duty does not tell the whole story .sx There is invariably during the transition period a scramble for the retention or the acquisition of markets .sx What matters is the price at which the commodities in question finally settle down .sx If and when foreigners succeed in forcing the British goods off the market the British goods will rise in proportion to the amount of business lost .sx With their costs will rise their prices , and with the rise in the price of British goods will rise the price of foreign goods , keeping , of course , sufficiently low to continue to undersell the British goods , for it is inevitable that the British costs of production must eventually determine the price level of goods sold in this country .sx I am rather surprised that Mr. Jacobsen should say it is futile to say that safeguarding duties have not caused any increase of prices .sx With the exception of the circumstances which I have just outlined no evidence has even been produced of any increase in cost of safeguarded goods , except the case of gas mantles , which are reported to have increased mainly owing to a rise in the price of the raw materials from which they are made .sx It is a curious fact that the users of safeguarded goods , such as paper , were loud in their protest against the removal of the duties , which hardly seems to be reasonable if the duties had the effect that Mr. Jacobsen would suggest they had .sx I am , &c .sx , BASIL PETO .sx House of Commons , S.W.1. .sx Restriction of Imports .sx Sir , - Restriction in one form or another is a primary cause of the present world depression .sx Mr. W. A. Wells appears to realise this .sx In his last letter in THE FINANCIAL TIMES he sets out to prove a remarkable thing - that the policy of Protection , involving the restriction of manufactured imports , would not involve a restriction of our imports as a whole .sx If we shut our manufactures , he writes , more raw materials will have to be imported in their place .sx This is based on the assumption - which I do not admit - that every manufactured article shut out by the tariff will be made at home instead , and that the materials required in its manufacture will be imported , so that imports as a whole will not be diminished .sx The argument is ingenious .sx Unfortunately it does not bear analysis .sx Let us suppose that 100,000,000 of manufactures are shut out by the tariff , and let us stretch a point and assume that the whole of this 100,000,000 is made at home .sx What value of raw materials will be required in its production ?sx Say 50,000,000 .sx This , obviously , will not be enough to atone for the reduction brought about by the tariff in the first place .sx At best there will be a restriction of imports equal to half the amount of the manufactures shut out .sx And when we bear in mind that it is extremely unlikely that anything like the whole of the manufactures shut out will be made here instead , it becomes clear that there is little to be said in favour of this new Protectionist argument .sx Mr. Wells's miscalculation - if I may call it that without offence - is due , I think , to his continued inability to distinguish between manufactures and raw materials .sx To Mr. Wells a ton is simply a ton , no matter whether it is a ton of expensive watch springs or a tone of pig-iron .sx - I am , &c .sx , R. M. FINDLAY .sx London , S.W.1. .sx Case of Silk and Tyres .sx Sir , - Mr. W. A. Wells , in a recent letter in THE FINANCIAL TIMES , states that the net result of safeguarding silk goods and tyres has been to increase employment .sx In reaching this incorrect conclusion , Mr. Wells omits to notice the diminution of employment in those industries which formerly produced goods for export in payment for the silk goods and tyres previously imported .sx As the raw materials now imported in their stead cost less , the countervailing exports must be equally diminished , with consequent loss of employment .sx I am , &c .sx , R. F. WHITEHEAD .sx London , N.16. .sx UNDERGROUND TERMS .sx Sir , - The conversion terms for Underground Six per Cent .sx Cumulative Income debenture stock , to be voted on at the Central Hall next Wednesday , appear to me to be most inequitable .sx The present position is that 1,273,000 Six per Cent .sx First Income debentures have priority for interest payment over 10 millions Ordinary stock .sx Under the new scheme this priority will be reduced by approximately one-half - that is , 60 " B " stock and 55 " C " stock , the latter being the new stock offered to the Ordinary shareholders in exchange for their present holding .sx It will be observed , therefore , that , beyond the problematical per cent .sx increase in their interest , the security for the debenture-holders is gravely reduced to the obvious advantage of the Ordinary stockholders .sx We came before them in the past ; and now as to half their holding we are on an equality .sx This , I submit , is most inequitable , and I trust that debenture holders who have given in their proxies in favour of this scheme will either withdraw the same or attend the meeting in order to give a more considered decision .sx - I am , &c .sx , FRANK MORRIS .sx Northumberland-avenue , W.C.2. .sx ALL-IN COST OF RUBBER PRODUCTION .sx PROPHECY FULFILLED .sx Sir , - In 1928 , in the last paragraph of a letter , written by me , in THE FINANCIAL TIMES , it was stated that well-managed rubbers estates could show all-in costs at 6d or under at full production .sx This statement was challenged , but I was able to quote chapter and verse in support .sx To-day we know that many estates ( Dunlop Plantations and numerous others ) are producing all-in at very considerably below that figure .sx Native holders fall into two categories , those who employ labour and those who do not ; the latter are still producing without loss around the current price of 3d per pound , and it is certain that , should the price of the commodity ever again be forced above 6d per pound , the industry would at no distant date fall entirely into native hands .sx In these circumstances , the one sheet anchor consists in further reduction of costs , a desideratum fully expected from bud-grafting , now extensively resorted to by the more progressive companies .sx On such properties it is confidently expected that all-in costs will in the near future be generally in the neighbourhood of 3d per pound .sx From the above it will be seen that only on the moderately capitalised estates must we expect a profit of a few pence per pound , which will enable them to pay from 2 per cent .sx to 10 per cent .sx to the shareholders .sx Many estates will perforce have to close down or reorganise .sx With rubber marketed in the neighbourhood of 3d per pound , we shall hear little in the future of the reclaimed article .sx That bogy will , happily , have been laid by the heels for ever .sx - I am , &c .sx , W. BRYCE ORME .sx Hove , Sussex .sx Burma Insists .sx Sir , - I am a shareholder in a rubber estate situated in Burma , and have received a notice that the company has to go into liquidation .sx I understand this situation has been forced by the unsympathetic attitude of the Burmese Government , which insists on its rent , and refuses to make advances to the company or to assist it in any shape or form .sx Surely this is a shortsighted policy .sx Rubber will one day come into its own again , and estates once abandoned cannot be reclaimed .sx When times are better and money is again wanted for development in Burma there should be difficulty in raising it .sx I am , &c .sx , R. N. CARVALHO .sx London , E.C.2. .sx The Dutch Extremity .sx Sir , - The Dutch rubber extremity , as I see it , lies in their having goaded their natives from age-proved profitable products into vast planting .sx The rubber collapse will scarcely allay the seething revolutionary spirit in their colonies and may easily lead to infinitely worse Acheens , in which case severest restriction will ensue - this time on their part .sx It is more in their interest than ours to reach some satisfactory solution , and the sooner they cease jockeying for position the better for them .sx The position is or is not as I diagnose it .sx If it is and the Dutch find we are aware of it things will start to hum .sx Our best policy , as I see it , is to break off all negotiations , leave them severely alone to destroy the monster they have created in the best way they can , and enjoy the poetic justice in our turn of benefiting from restriction on their part .sx - I am , &c .sx , J. H. STRACHAN .sx Eastbourne .sx IRON AND STEEL TRADES .sx Sir , - With regard to Mr. Findlay's letter in THE FINANCIAL TIMES of 15th June , he is quite wrong in describing my letter as a defence of Sir Henry Page Croft .sx Sir Henry Page Croft's letter needed no defence - my letter was a correction of misleading statements made by Mr. Findlay .sx This gentleman implied that Sir Henry Page Croft suggested that the Iron and Steel Trades Confederation ( not the Iron and Steel Federation ) advocated protection and nothing else as a remedy for the troubles of the industry .sx What Sir Henry Page Croft pointed out was that the Confederation had satisfied itself that our present system of Free Trade exposed the industry to " those unfair and aggressive forms of competition made possible only by the exploitation of labour and a degradation of healthy commerce and efficient industry , " and that this fiscal policy of free imports must be discarded .sx It is perfectly true that the Confederation along with this declaration advocated some form of public ownership , but the point is that , in so far as free imports , erroneously called Free Trade , are concerned , this association and the Iron and Steel Trades Confederation are in entire agreement that the sooner the policy is eliminated the better .sx Perhaps Mr. Findlay will state whether or no he is under the impression that the Confederation advocates a continuance of Free Trade , or , alternatively , whether the Free Trade Union is in agreement with the policy advocated by the Confederation .sx - I am , &c .sx W. A. WELLS .sx ( Empire Industries Association) .sx London , S.W.1. .sx