POLITICAL LETTERS.

Clutha Leader, Volume XII, Issue 596, 18 December 1885, Page 3

POLITICAL LETTERS.

No. V.

TO THE ELECTORS OP CLUTHA.

Dear Sirs, — It would be impossible in the space occupied by one or two of these letters to discuss satisfactorily the question of whether the country should put on high' import duties with the view oi encouraging industries. But as the question naturally arises out of the tariff proposals, and has been rather prominently before the country for some time past, it is necessary that I should say something about it. Most persons seem to look on protection and freetrade from an interested point of view, and are protectionists or freetraders according as they think the one system or the other will best suit their interests. It is in the large towns where protectionist ideas are most prevalent. Many persons in these places who are engaged in the manufacture of those classes of articles which are imported entertain the opinion that it would be to their advantage if the industries in ■which they are engaged were protected by high import duties. In the country districts, where the people are chiefly engaged in the production of articles for which; in a great measure at least, a market can only be found in other countries, freetrade views prevail. It is said that people are the best judges of what ia to their own advantage. I presume, therefore, it would be very difficult to change the opinion of either the one party or the other. There is one thing that has a special bearing on this subject, and that is the progress which we have already made in manufacturing and other industries. I propose in this letter to limit myself to this view of the case, with the view of showing you that high import duties are not necessary to the progress of the Colony in industries. If there is one thing more than another that we are proud of— perhaps justly proud of — and to which we hear reference made almost every day of our lives, it is the progress which New Zealand has made and U making in various kinds of industries. This is particularly the case in regard to the woollen manufacture. Two years ago the woollen factories used wool to the value of from L 70,000 to LSO,OOO per annum. The value of the manufactured goods and of a portion of them still further manufactured into clothing was then estimated at L 450,000. The imports from Homo of woollen goods are, therefore, in consequence of the establishment of woollen factories in the Colony, less by the Bum named than they otherwise would be. The value of the goods now made is no doubt considerably in excess of this sum. It is extremely gratifying to know that this industry not only affords employment to a large number of persons, but also that it is extremely profitable to those who have invested their money in it. At the last annual meeting of the Kaiapoi Woollen Factory Company, the Chairman of Directors said : ' The several new woollen mills springing up had tended to start a keen contest for the markets, and brought the discounts down as low as possible. With all this, however, to contend against, it must prove a source of genuine satisfaction to the shareholders to find that the returns were equal to the paying of a substantial dividend, such as possibly very few companies could now boast of, and which perhaps only holders of such property as Bank of New Zealand shares, for instance, obtained.' The Mosgiel factory also, it is said, pays handsome dividends to the shareholders. All this goes to show that so far at least as regards the woollen manufacture 15 per cent, is high enough even as an encouragement to the industry. If this is high enough as regards the woollen manufacture, the probability is that it is also high enough as regards other manufactures, or at least some of them, especially ■when we consider the natural advantages of the country for carrying on manufactures. Indeed, so great are these advantages that some industries have sprung up without any protection afc all, and others would be sure to do so though left entirely unprotected. I have already referred to the manufacture of agricultural implements, and the production of hams and bacon, meats, and butter and cheese, as examples of this. But the woollen manufacture itself may almost be said to be another example of the same thing. At all events it was started and took its place as an established industry long before the protection which it now enjoys was extended to it The woollen industry took it^ rise in Nelson. The factory there, biowever, was on a very small scale, and for some years the manufacture of woollen goods there has been discontinued. The Mosgiel factory was the first of its kind on a large scale.

This factory was started two or three years before the duties were changed from measurement to 10 per confc. ad valorem. It was in 1873 that this change was made. The customs' revenue was owing to this change very largely increased. This shews that at the time the Mosgiel factory was started the duty on woollens was very much less than 10 per cent. It is true that this factory received a bonus of, I think, LI SOO from the Provincial Government, because it was the first

factory of the kind, at least, in Otago. No doubt this was an assistance to the promoters of the industry, but if they had not seen their way to hold their own with the small protection of con-

siderably less than 10 per cent., the

bonus would not have been a sufficient inducement to them to start the industry. Any one who has visited any of the Exhibitions held in the Colony of late years cannot fail to admit that, considering the age of the

Colony, it has made more progress in

manufacturing industries than could reasonably be expected. The recent Exhibition at Wellington especially bore ample testimony to the satisfactory growth of colonial industries. The manufacture of woollen goods, of various kinds of metal goods, of furniture, and of agricultural implements, the making of clothing, boots and shoes, candles, soap, rope, bricks and tiles, beer, and wheeled conveyances of all kinds, also tanning and currying, and ship and boat building, have all taken root in the Colony. Speaking of tanning, I may just say in passing that we even export leather. This is almost the only article that we export in a manufactured state. . Last year we exported leather to the value |of nearly L 50,000. It is true, however, that we also imported leather to the value of nearly L 84,000. It is very satisfactory that after supplying largely our own wants in leather we have so much to export. In addition to the industries to which I have been referring there are others which, though they cannot be spoken of as established industries, yet have been sufficiently carried, on to shew that they are adapted to the country, and will become established when circumstances are more favorable than they are at present, such as the making of earthenware, paper, powder, cement, glass, glue, starch, and other things. All these industries are over and above the industries that bear directly on the development of the natural resources of the country, and which, as this is a young country with its natural resources undeveloped, may be said to be the most important of all, viz., the timber industry, mining for gold, coal, and other minerals, and. the agricultural and . pastoral industries. The last census was taken in, April 1881. We have not therefore any official information of a more recent date regarding the occupations of the people. It appears, however, that at that time there were in the Colony no fewer than

1,643 manufacturing establishments or works of various kinds, employing nearly 18,000 persons. The capital invested in land, buildings and machinery, was approximately estimated at L 3,600,000., 600,000. I have no doubt there were very many more persons engaged in the industries enumerated than 18,000, for this number refers Only to those who were working in establishments. In the woollen mills 417 persons were employed. Doubtless the number is considerably larger now, for there is an additional mill and at least two have been enlarged. It is satisfactory to know that the number of these mills is likely soon to be increased. We sometimes hear it said that the Colony has not made adequate progressin iron manufactures, and this may be so, but at the date referred to there were no fewer than 35 iron and brass foundries in the Colony, employing 950 hands. Here I may refer to the timber industry, which is the largest in the southern hemisphere. At the date referred to there were no fewer than 225 saw-mills and sash and door factories, employing 4,200 men. Dr Hector in his last handbook, published in 1883, in speaking of the manufactures in operation in 1881 says : * Unstimulated by the questionable aid to be derived from so-called protective duties, the manufactories and industrial works of New Zealand yet exhibit unmistakable progress ; their total number in 1881 being 1,643 against 1,271 in 1878. This increase is almost entirely due to an extension in the number of industries dependent on the natural resources of the country, or incidental to a rapidly increasing popluation, and would seem to indicate a hardy and natural growth.' I have no doubt that the next census, which will soon be taken, will shew that we have made very considerable

progress in industrial pursuits since the last census, thongh not perhaps so great in proportion as during the years between 1878 and 1881. Indeed so extensively is manufacturing carried on in this Colony, that it is said that a larger proportion of our population is engaged in manufactures than in Victoria, which is professedly a protectionist colony. All these things lead to the conclusion that the Colony has made as much progress in industrial pursuits as could reasonably be expected. If it has done this in the past with a low customs tariff, and in the case of some industries without any or very little protection afforded by customs duties, we may fairly also conclude that it will make satisfactory progress in the future. I would not say that the country has advanced in this respect as it might have done, or as it is desirable it should have done. No one can say this. But though the country may not have advanced, and may not be advancing in industrial pursuits as some people — particularly protectionists — would wish it, still there can be no doubt that it is advancing steadily, and perhaps in the long run a steady advancement may be

better than a rapid advancement. It should not be forgotten that the country has for some time past been in a depressed state. All branches of industry have suffered more or less. It would have been a strange thing if the manufacturing industries had been an exception to the rule. They could not possibly have been an, exception. When ' ,the tideof prosperity begins again toflow the manufacturingindustries may expect to reap their full share of such prosperity. Here I may remark that the 15 per cent., which is the extent to which any industry may be said to be protected at present, does not represent the actual amount of protection which the industry enjoys. The importer has to pay, first of all, freight, insurance, and other charges on the goods which he imports. Then he pays 15 per cent, duty. Interest on the duty, and even profit on it, have to be added before the goods reach the consumer. The protection which the manufacturer in the Colony enjoys is therefore probably as a rule not less than 20 per cent., which is surely high enough. One considerable protection which the woollen industry enjoys is the saving of the freight on the wool Home and on the manufactured article back to the Colony. This I have heard estimated at 3d per lb. Everybody admits that it is desirable that manufactures and industries of all kinds should spring up and make progress in the Colony. The Provincial Governments and the General Government have always recognised this by offering bonuses and in various other ways, and the result is — especially as New Zealand is well adapted for manufacturing industries — that the- progress which the Colony has made in these industries has been at least fairly satisfactory. It is now, however, proposed to go a step further, Viz., to increase the duties for the purpose of encouraging the industries, a step which, as I have endeavoured to shew, it is not necessary to take. I am inclined to think that as practical men we cannot carry either freetrade or protection to their extreme limits, especially as in the past the principles of neither freetrade nor protection have been applied to the Colony. We must do the best we can with things as we find them at the present time. But if the question of freetrade versus pro tec* tion which has been raised- is, as some people say, to have the effect of raising up two contending parties in the House — freetraders and protectionists —an effect which I trust it will not have, and of which I -do not see the necessity, I should have no hesitation in throwing in my lot with the freetraders, because I believe that on the whole freetrade is better adapted to our circumstances than protection. At the same time I should not be inclined to go the length to which some may go. It is probable that from time to time the tariff will be revised. In doing this I should not be opposed to consider favorably any reasonable concession to a struggling industry. 1 think also we should be very careful as to reducing duties, when under the fostering wing of such duties certain industries have sprung up. A thorough-going freetrader would be disposed to reduce them almost regardless of consequences. We may, as I have said, expect changes in the tariff from time to time. Complaints have been made that the tariff is full of anomalies and contradictions, and want of method, and on this ground alone requires revision. But whilst we may expect changes in the tariff, I think that as a rule the duties are high enough already. It appears to me, however, that the protectionist has very much the advantage of the freetrader, The freetrader has two courses open to him — either to oppose increases, thus letting the duties remain as they are, or to reduce the duties. As to the latter course, it is almost hopeless in the present circumstances of the Colony to expect to reduce the duties in almost any one instance. It may be, therefore, that all he can hope to do is to prevent increases. With the protectionist it is otherwise. Time works in his favor. The tariff will come up now and again for revision, as it has always done. The changes hitherto have been in the direction of increases, and the same may be the case in the future. The necessities of the Colony are also in favor of the protectionist. Money will be required. Emergencies even may arise when money must be obtained somehow, and one way of obtaining it is by increasing the duties. If time and space permitted I might bring under your notice many other matters that point to the same conclusion as the progress which the Colony has already made in manufacturing and other industries points to.

I purpose in my next letter to consider the local government proposals of last session. — I am, &c, •James W. Thomson.