Goal in Sight?

In its race to grab a bigger chunk of the world trade market than it ever had before, Britain passed the first lap last week. And it was running well ahead of its schedule to pay off its import debts by exporting 75% more goods than it did in 1938. Only six months ago, the goal seemed impossibly distant. Exports were barely 50% of the 1938 monthly rate.

But in May, for the first time since war's end, export volume was greater than the May 1938 volume by a good 15%. The British were even talking of reaching their export goal by the end of 1947.

But U.S. traders, who feared that Britain would gobble up some of their markets, could relax. Despite the increase, Britain still had an unfavorable balance of trade in May of -L-27,062,000, and -L-136,887,000 for the first five months this year. And the "export or die" program had already started to hold itself down by its bootstraps.

In tightening their belts to export, the British had boosted machinery exports to 123% of the May 1938 volume. The cotton yarn and textile industry, traditionally a big exporter, was well below the May 1938 volume. One reason: lack of machinery, some of it of the same type being exported. In coal, another mainstay of British exports, the picture was no better. Exports were only 369,757 tons v. 3,000,000 in an average month of 1938. Again the trouble was lack of machinery, antiquated methods, shortage of manpower. Moreover, unless slipping coal production could be boosted, the entire export program might have to be curtailed. There were estimates that coal may fall as much as 20,000,000 tons short of needs next year. The threat of a manpower shortage hung over all production.

Nor could Britain count on keeping those gains she had made. In the world seller's market, she has been able to sell everything she could produce. But some of her greatest strides have been made in markets which the U.S. had long dominated, notably autos. Even the British expect present exports of 5,600 cars a month (only a dribble of 40 cars came to the U.S. in April) to drop to under 3,500 when Detroit gets into high.

In the long run, the success of the British export program will depend on how much of its present market Britain will lose to increasing competition later. The British hope that they can sell everything they can export for at least two years. This may be overoptimistic. Furthermore, the easy market now may make it harder to compete later. British manufacturers, who have always resisted innovation, may get so complacent that they will postpone modernization until it is too late. Those who do try to increase their efficiency may find that the machinery they need has been exported. When the time comes, they may find they cannot compete with the more efficient U.S. manufacturers.

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