The Butterfly Effect: A British AAR

Chapter XCV: Affairs of Steak​

The historic international beef trade, doubtless a thrilling roller-coaster of a subject to the specialist, would not merit our attention in and of itself, however it does have merit as an excellent example of the problems that Imperial Preference encountered in the late 1930s. While there are countless other products who's trade could also server as an example of these issues, the beef trade has the added advantage that it was tied up in both Dominion politics and the wider foreign policy situation. As such it is worthy of our attention, if not perhaps are undying interest. The basic situation was simple and had not changed for many years; Britain was a net importer of beef and the Dominion governments, especially the Antipodeans, wanted their farmers to supply that market. How those desires would mesh with Imperial Preference and the wider economic and diplomatic situation is where we will find the meat of this subject.


As the above graph clearly shows that Argentina had retained her historic commanding position in the British beef market despite Imperial Preference, a direct result of the Anglo-Argentinian Roca-Runciman Treaty which had put a floor under the Argentine beef trade in exchange for concession to British interests in Argentina. While this did annoy the Dominion, especially the Antipodeans who coveted the Argentinians market share, the entire issue was soon drowned out by the escalating Anglo-Irish trade war which neatly (if inadvertently) solved the problem. With Irish cattle subject to penal tariffs the trade naturally collapsed leaving a void into which the Dominion trade could expand without squeezing the protected Argentine trade. The most pressing problem solved it was convenient for all sides to avoid looking at the fundamental issues involved; as Imperial Preference was perceived to be successful (not least by the various electorates) there was little to be gained and much to be lost by looking for problems. While work continued in the background of government, the political establishment as a whole moved onto new matters, leaving them almost entirely unprepared when the problem re-emerged in a most unexpected location; Canada.

The problem was slow to emerge as Canada was, for the most part, self-sufficient in meat, only after the rapid economic growth on the back of the British war effort and subsequent Canadian re-armament did the nation need to import. Imperial Preference should have ensured that it was Australian or New Zealand farmers who benefited, yet despite the high Canadian import tariffs it was Argentinian beef, especially the much prized Argentine steak, that began flowing into the country. The mechanism was as old as it was cunning, Argentine beef was imported tariff free to Britain, processed so it became a 'British' product for tax and tariff purposes and then shipped equally tariff free to Canada where it was sold as prime Argentinian beef. The extra sea miles increased costs but the large premium on Argentinian steak ensured a healthy profit overall, an outcome that delighted the men behind the venture but annoyed almost everyone else. It was in fact a perfect storm, despite the low volume of material and the relatively tiny sums involved, it managed to hit almost every button simultaneously and exposed the tensions inherent in Imperial Preference.

Quite simply it was not and is not possible to run a coherent free trade block when the member states are free to arrange their own bi-lateral trade agreements. The opportunities for arbitrage are too great and will distort the system as goods 'leak' into the system, a problem made all the worse for the Empire by the vast distances involved; it is 10,000 miles from Canberra to Ottawa as the crow flies, shipping costs over such vast distances are significant even today, in the 1930s they were dominant. For Imperial Preference to survive there would need to be a common trade policy in the Empire which, given the importance of trade to international affairs required co-ordination on foreign and economic policy. As the general drift of Dominion affairs had been towards greater and greater independence on these matters a sudden reversal towards a more co-operative (and inevitably British dominated) state of affairs would require a significant change in policy direction. To add to the problem there many, including important figures such as the Canadian Prime Minster Mackenzie King, who were only lukewarm about "Empire" free trade to begin with and wished instead for full free trade.


With the political establishment grasping for answers the civil service stepped in with their default solution; a Head's of Government meeting to stall for time and then a Royal Commission to kick the matter into the long grass while the problem was sorted out. Had the problems with Imperial Preference been confined to beef, or even to the meat trade in general, this doubtless would have been acceptable, but the complaints and fears where far more widespread. In Australia for instance there were worries about South American wool exports leaking into Britain through bi-lateral trade deals, this was a serious concern as almost 2/3rds of Australian exports were wool or woollen products, making the country's colossal national herd of 110 million sheep one of the pillars of the Australian economy. These fears were shared by New Zealand and South Africa, both large wool exporters, though not quite so dependent as Australia. For all three nations the continued competition from South America, particularly from nations such as Argentina and Uruguay, was a long standing annoyance and seemed to them to fly in the face of the aims of Imperial Preference.

Conversely in Canada it was the free trade lobby that took the chance to make their case. The main worry for such men was the nations lost US partners, from a pre-Depression high of over £400million cross-border trade had slumped to less than £100million and despite the presence of yet another pro-tariff president in the White House they continued to nurture their free trade dreams. Arching above all of this was the growing problem of industrialisation, if Britain's industries sold to the Dominions where would the nascent local industries find their markets? Equally if the Dominion industries began to dominate their local markets where would Britain's industrialists find replacement customers? As we have seen with defence spending these were live issues which could not be long delayed and, as with defence, the solution would require the co-operation and acceptance of all the parties involved.

Therefore the Royal Commission was vetoed and instead agreement was reached to stage a second Imperial Economic Conference, this time in London, to resolve matters. Where the Ottawa conference had established the foundations of Empire Free Trade it would be up to the London conference to make the grand idea work.

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Notes:
Next time I suggest anything similar to a beef update tell me I'm an idiot. That was not easy to write and at times not even enjoyable. Thank the lord it's over.

Right so as always the numbers are indeed correct, Australia did have 110million sheep in the mid-1930s or 16 each to put it another way. The jokes really make themselves don't they? Equally true is the terrifying importance of wool to Australia, I've seen a few estimates that exports were half the Australian economy at the time, meaning wool exports were a 1/3rd of the total Australian economy and that's without even allowing for domestic demand and the lamb/mutton trade.

The Canadian trade figure are roughly OTL, the peak number was from 1929 and the lower was an low ball estimate from 1933. In TTL it's probably even worse than that but I didn't want to over do it.

Britain was the only country to import beef in large quantities and I can't really say why, there's not that much good beef country in Britain I guess. OTL it was 85% of the pre-WW2 market with Germany and Italy making up most of the rest, with Italy utterly bankrupt I figure the Italians are probably eating less steak so I've bumped up Britain's share.

The London Conference has to find a way to make Imperial Preference work in a way that doesn't bugger up British investments in South America (well over £1 billion at the time, and British GDP was only £4.5 billion in 1935) or utterly screw over the Dominions exports or industries (even if Britain wanted to, they are now assertive enough to resist). A hell of a circle to square but there are plus points; Alf Landon is very pro-tariff so that'll will deprive Canada (and PM King) of somewhere to run and everyone thinks Imperial Preference saved them from the Depression so there is good will to make it work. Still a tough job.