THE DEPERSSION OF TRADE.

Nelson Evening Mail, Volume XX, Issue 59, 11 March 1886, Page 4

THE DEPERSSION OF TRADE.

' m. (J. C Firth iv the Auckland Herald. J In the further consideration of this subject there only remains for notice Question 6 of the London Chamber of Commerce circular : •' The effect of communication with other markets." The very greab changes effected in recent years in the modes of communication, as a? already indicated, have exerted a most important influence upon the general level of prices. The transmission of intelligence by slow postal services necessarily kept supply markets much longer iv ignorance of the requirements of demand marJtets ; whilst the conveyance of merchandise in sailing vessels tnefc such requirements in a very tardy manner : whereas now, by the use of the tele-, graph, both theße markets are brought inco diily communication, the powers and requirements of each are accurately and momptly known, anl by steam trantit supply 'markets are able to deliver their produce at aoy given time with celerity and certainty. By these means two important changes Lave resulted. Speculation has been greatly minimised, and under the English so-calle i free trade policy, all supply maritets have been induced to greatly increase their productions, and to concentrate them on the English markets. Under these influences, a general and steady fall iv prices during late years , has followed, until, I venture to assert, that every one of the greab raw materials, such as grain, wool, meats, metal?, oils, tallow, &c, and of the articles manufactured from them have, at each successive operation, descended to values which involve a loss more or less severe to their producers as well as to their manipulators. Is that a condition of things likely to continue ? I think not. For it follows that though, producers may, by the necessities of their position, continue for a time to lose money on what they produce, their power to do so must sooner or later come to an end. Toe results tausb necessarily be — 1, A great impoverishment of producers. 2. A di miu is; ied volume of productions more or less prolonged, with the population iiiid consumption constantly increasing. After an interval, an advance in prices will certainly follow, more or le3s rapid and serious. In, this way, economic laws make their infraction felt. First, to the disadvantage of producers ; then with equal certainty, by an exaggerated ei)hancemenb of values, to the disadvantage of consumers. _ This view of she case has, I think, been overlooked hy Mr Mulhall in his otherwise able article. He has considered low prices, like most English writers on the subject, solely from one point; of view — that of the eonsuviers. Whereas, th,e interests of producers and consumers are really and eventually identical. ..When .Mr Mulhall says, "That the obstacks to commerce, higher tariffs, &% which have been of late years increasing in many countries, have tended to diminish the markets of consumption, " he nob only states a self-evident fact, but he hes forcibly, though perhaps inaclver:eatly, indicated one of the chief causes which led to the present universal depression of trade. And when he further says, "If we . could, to-morrow, sweep away custom houses, and throw open all ports to free trade, the factories of England, the United States, France, Belgium, &c , would ba unable to supply the demands for their products," he knows that in all those countries customs duties must continue to be levied for revenue purposes. What I contend against is high protective protective duties, nob against duties levied ~for purery-j"3 venue purposes. Therefore, his contention is untenable and impracticable. Clearly there can be no such absolute free trade as he here indicates. Between that and the present one-sided English free trade policy, and between both, an-i the present protective and prohibitive policy of foreign nations, there is not only a very wide margin, but a sound, practical, and safe policy. That policy is the fair tkade policy. Let England say to.foreign nations, " We have for the last forty years admitted your productions free, snbjecb only in some few articles to duties for revenue, purpo3«s, in the hopa that you .would meet us by ' adopting a similar policy. Instead of which,' you have eteadily and enormously increased your. protective duties, in the vain hope of stimulating your people to produce articles for which,, in many instances, neither your countries, your people, nor your circumstances were adapted. We intend now to turn your weapons against yourself, in the hope that you may eventually be led to adopt a wiser, a fairer, and a better policy, namely, -that ■of • Doing to others as you desire them to dp to you.' In the meantime we shall levy countervailing duties on such of your imports into Great Britain, her colonies, and her dependencies as we may see fit.' By the bold adoption of such a policy — through a Customs Union 'of the Empire— we should' avoid the humiliation of euch negotiations as those recently conducted by Lord Granville with France, for the continuation of Mr Cobden's Commercial . Treaty with that country. We need, then, no longer continue to use such deceptive formulas as " the most favored nation clause." We could say to foreign nations, " In proportion as you relax your duties we shall reduce ours." The stimulus to the over production of foreign nations offered by our present one-sided free trade policy would be withdrawn. And, more than all, by levying countervailing duties on foreign products and admitting into British ports the wheat, cheese, butter, meat, sugar, wine, &c, of our colonies and. dependencies free, we should restore them, together with our English farmers, to a condition of prosperity to which they have long been strangers. The importance of the colonial and Indian v trade to the United Kingdom will be apparent from their population in 1883 of 213 millions ; and from their total import and export trade with the United Kingdom for 1883 of £186,358,000, or one-fourth of the total import and export trade of the United Kingdom. With an Imperial Customs Union this trade would increase by " leaps and bounds." Nor need the imposition of duties on foreign products be excessive to secure these results. A duty of, say, twelve shillings per quarter on foreign wheat ; of one penny per pound on foreign meat (alive or dead), on cheese, butter, sugar, etc ; and of three shillings on French and other foreign wines would be sufficient. Such duties would not unreasonahly advance the price of these commodities to British con sumers. Take wheat, for instance, at its present price of thirty^four shillings per quarter in Mark Lane, which a duty of twelve shillings would raise to forty-six shillings per quarter. At such a price producers within the Empire could afford :to sell and the British consumer to buy. Whereas, at thirty-four shillings, the British consumer is not only consuming the product, but he is devouring the producer. That is the position at present, both in wheat and in all the chief raw materials, and it is one which I may venture to hope I have shown to be a position pregnant with danger and injury to all parties, and which I think I am justified in assuming can only end in such a great and perhaps rapid enhancement of values, as cannot fail to be full of peril to the real prosperity of consumers. My pro.posal would,, of course, increase, but not more than reasonably increase, the cost of agricultural- products to the consumer ; but that increase would be a trifle to the famine prices certain to result^ sooner or later, from a blind persistence in our present policy. ;. As an instance- of the operation of the I present English one-sided free trade policy, and of its unfairness to the Australasian • colonies, I may siate that whilst French wines imported into the United Kingdom pay a duty of one shilling per gallon, Australian wines pay half a- crown a gallon. Why does England treat her children worse ban she treats strangers ? Ob -'.the further question of high or low wages incidentally referred to by the London Chamber ef Commerce, I may say, as a colonist employing a large amount" of labor in manufacturing, goldmining, and agricultural pursuits, that wages must inevitably tail much below their present level, Bhould the low values of products— in a great measure created, by the present English policy of one sided free tradp— continue. I am not an advocate of low wages. I thoroughly believe in high wages so long as employers can afford to pay them, but no longer, Inpasßing, let me Bay that, so far as the Colonies are concerned, high wages, together with the chance of obtaining freehold lands, are the two most petent magnets to attract the working-classes from Europe to

the Colonies. Without these inducements all other attractions are of little value. As to England, after the present depression has passed away, wages, now being rapidly reduced, must, I think, steadily advance to a higher leval than heretofore. Increa«;d education — technical and otherwise must inevitably develop intellectual power in workmen of all kinds. This improved training will certainly make better workmen, who will be worthy of higher wages. In any ease, the enormous increase of electoral power placed in the hands of English workmen by Mi^Gladstone's recent legislation, will probably be'used to obtain a greater share of the normalj profits of industry, and rightly so. Nor could it safely be otherwise ; for an underpaid workman is little better than a discon ented slave, with the essential difference, that in his greatly increased electoral 1 rights, he has the power of a free man, which he will not fail to use, either to secure a better share of the profits of industry, or failing that, by the not unknown democratic experiment of a resort — as, • I believe, in the last extremity,, so far as English workmen are concerned— to confiscatory legislation, to attempt to destroy the inviolability of contracts, and to attacks on the rights of property. Therefore, I regard a steadily increasing rate of wages in England as not only inevitable but as a necessary safeguard against discontented lawlessness. In finally considering the present depression of trade. I venture to draw two deductions : 1. Seeing that values of all materials, whether raw or manufactured, have probably touched their lowest point, I think we may shortly expect a partial revival of trade. 2. That, by a reversal of the present English one-sided free trade policy, and the substitution of the pair trade policy, that revival will be more certain, more rapid., more complete, and more permanent. And, though the coming period of good trade will, as before, certainly be followed in a few years by another depression of trade, its severity and continuance may be expected to be greatly diminished by the adoption of the " fair trade " policy. In regard to the probability, or otherwise, of a change in English policy in the direction of fair trade, may I be permitted to observe ; that whoever seizes tie floating atoms of opinion and concentrates and crjstaiises them into a formula, not unfrequently does more good or harm to mankind than he who builds or sacks a city. In this way, when Mr Cobden invented or appropriated the term " free trade," he laid down a line of action as rigid as iron rails, upon which English policy has continued to travel for forty years. Englishmen love precedent, 'and .when once the " lines " are laid down, they run on them without much thought or consideration as) to possible consequences. Englishmen seem to have no " switches " on their " line of action." They run straight on, until a great calamity, rathsr than the silent progress of events, the unobserved operation of natural or economic laws, compels a reconsideration of conditions. Just as the application of a screw jack or hydraulic ram removes a locomotive from one line to another — so Engli3h opinion under pressure of a great calamity, shifts bodily to a new line of policy, as likely as not to be in a contrary direction ' to that on which Englishmen had been content to travel for a generation or more. In this way the violent reduction in prices after the termination of the great war in 1815 drove England to enact the Corn Laws, laying down a " Protection line," along which for thirty years the nation continued to run, till the great calamity of the Irish famine of 1846-7 forcibly transferred English opinion to Cobden's "free trade line," along which, one sided though it has been, with true English persistence, it has run for forty years. Once more England finds herself confronted by a crisis caused by the most severe depression of trade experienced in modern times. Will history repeat itself as on previous occasions ? Under the pressure of great calamity is English opinion about to abandon free trade, so called, and run on the " fair trade " line ? Sooner or later it is not improbable. We shall see. J. C. Firth. Auckland, January, 1886.