322 ENGLISH SAGA

to generalise tariff reductions and so make for greater freedom
of trade.

Before mass production and cheap transport made it as easy
to export to the far side of the world as to the next province,
the universal use of the "most favoured" nation clause did not
have the effect of subjecting a country, which wished to reduce
tariffs to a favoured foreign customer, to dumping from the
rest of the world. It merely lowered tariffs all round without
interfering with that natural preferential and stable trade which
existed between neighbouring countries. But once the world
became for transport purposes a single unit and every nation,
emulating Britain's example, started manufacturing for export,
the operation of the clause made it dangerous and even impossible
for any government to reduce tariffs at all. Though every nation
needed stable trade and the reduction of fiscal barriers between
itself and those with whom it normally traded, any agreement
between two nations to this effect was impossible so long as this
ubiquitous dause enabled others with lower wage and pro-
duction costs1 to claim equal rights and so flood the markets
which they were trying to regulate and extend. Paradoxically
the "most favoured" nation system meant that no nation could,
under normal trading conditions, be favoured at all. It pre-
vented by any but arbitrary and violent methods the formation
of those larger and natural fiscal areas which alone could have
rendered the capitalist system workable.

This unintended ossification of tariffs by the very measure
which had been designed to reduce them had disastrous effects
in the changed world of the 'twenties and 'thirties. By making
the creation of planned and orderly international trade impos-
sible, it subjected the peoples of every country to violent fluctua-
tions which perpetually dislocated their employment and
standards of living. Obstructing profits from stable trade, it
drove investment into speculative channels and created a vast
vested interest in fluctuating prices. Because capital could not
earn assured returns from long-term investments, it sought
them from forestalling rises and falls in stock exchange, currency
and commodity prices. The ends of those who controlled capital
became increasingly served, not by the steady development of
the earth's resources, but by successive booms and slumps which
brought recurrent uncertainty and unemployment to the workers

*Such, for instance, as Japan.