W.E.A. LECTURE.

Hawera Star, Volume XLVIII, 30 July 1924, Page 8

W.E.A. LECTURE.

' ‘INTERNATIONAL TRADE.' : At the' last meeting of the Hawera Economics Class, held on Thursday, last, the tutor, Mr TV. A, Sheat, lectured upon ‘‘lnternational Trade.” International trade, said the lecturer, conformed to the general principle of exchange, namely, that it was mutually advantageous. The development of international trade enabled the special advantages of different parts of the world to be shared in- by ’people's less favourably situated. The- underlying principles and advantages of international trade could be illustrated by an example of the early history of America. Two centuries ago a band of immigrants landed in America, made their way into the extreme south of Ontario and settled down in a fertile valley traversed by a river. A populous and prosperous village grew up. The north side of the river had most of the best land for grazing and for timber-milling; the south had land more fertile for wheat and other crops. For long this village formed a virtually self-supporting community. A bridge across the river enabled persons to pass freely to and fro, and thei market arrangements were such as to enable every special advantage of soil or position to be used to the fullest extent, both for the personal gain of the individual who owned it, and for that of the whole village. Here was a simple case of the economy of division of labour on a basis of free exchange. It was evidently to the advantage of villages on both sides that there should be the. closest contact and the fullest commercial intercourse over the bridge. It happened that after the War of Independence the stream mentioned was made part of the boundary between Canada and U.'S.A. Politically, the village was cut in two. In time this political severance would affect the feelings, of the two groups of villagers towards one another and lead to a decrease of social intercourse. Rut eoiild it be argued . that it would make that division of labour and that freedom of exchange which were Advantageous formerly less advantageous.. It would feasible to accompany tile political severance by a , severance of the economic ties which bound the two sides together, hut 'such a step would evidently mean .that every person who had anything, to sell would then have! only half the market he had before, while for everything he had to buy, he would be similarly restricted in tliei supply available to • hup." It plight be possible for ail the villagers to. supply their heeds by dealing entirely oil their own side of the stream, hut it would not necessarily be to their .advantage to do so. so doing they would lose their shire of the natural advantages of special skill belonging to .some villagers on the other side and the restriction of the market fair the things ■in' which they had superior advantages would rob them of part of the fruits of. their labour. The political" division, did not affect the true economy of industry. . It was advantageous before that there should be the fullest liberty for each' individual to move to any part of the settlement where the .industry would reap the greatest reward, and this advantage must . be! in part lost by an attempt to restrict the liberty of movement. Such liberty led to a better development not only of a part, but the whole district, '.an advantage) in which all could share. ' So long as the community were well, within the 'san<e ' iiatijonalL 'boundary, it was quite obvious that the fullest cooperation between a}l its members by division of labour, freedom of markets and" The full liberty' of movement for capital and labour was conducive to the common welfare of the village as a wholes and of each section of it. This evident economy could .not be reversed by a purely political event which split the little industrial community into two political communities. This illustration served to set forth the fundamental principles underlying all international trade. TVbat was true of two parts of the frontier village was broadly true of the two countries with no common frontier. By trading together each gained, for each was enabled by this means to develop more fully the biranches of industry for which it was specially adapted, and likewise to' share in the special advantages possessed by the other. The inhabitants of every country benefited by thd fullest possible intercourse with all other nations, for in this way they could get most wealth, utilising most completely and effectively any special qualities of natural resources or acquired skill they might possess, and sharing by exchange in the special advantages which the other nations possessed: The main currents of mocleirn industrial life involved the increasing recognition of this truth. The broad tendencies that were working towards an international division of labour did not, however, work unimpeded. Political or social interests, real or imaginary, caused restrictions to be imposed in many cases where from the purely economic point of view they could scarcely be justified. Economic solutions of practical problems were, however, seldom found to be final, and often in the practical world of affairs other interests of a political character, such as ; the desire for security and national self-efficiency, were strong enough to outweigh the purely economic factor. It was well, however, to bear in mind that any advantages of this kind could in general only be gained at the expense of some economic loss. It was generally only by looking at one trade at a time, or trade with one country at a time, or trade for a brief selected period, or from some other separatist point of view that any branch of international trade might appear disadvantageous.