FREE TRADE VERSUS PROTECTION

Nelson Evening Mail, Volume LXIV, 7 August 1931, Page 6

FREE TRADE VERSUS PROTECTION

(To the Editor) Sir, —“Ivanhoe” wisely makes no attempt, to assail the fundamental principles of free trade baaed upon the division of labour and elementary mathematics. He can only sneer at them as “fine spun theories.” Mere sneers are no argument and call for no reply. Ho asks me to explain the discrepanev of three million pounds between New Zealand’s direct exports to the United States of America and her direel. imports from that country. 1 dealt pretty fully with the question of exports and imports in “The Mail” of Tuesday, 28tli duly, page 0, column ;t mul surely .1 need not traverse all that ground again. But to put the question in perhaps a more convincing form 1 will present to “Ivanhoe” these two horns of a dilemma and ask him to tell us on which he prefers to impale himself. The balance of three millions is not sent to tho U.S.A. as direct ex ports from New Zealand. Therefore it must be sent either as indirect exports or not at all. There is no other alternative. Now if the balance is sent indirectly, then the. total imports, direct arid indirect, equal the total exports, direct and indirect, as I affirm. But if t!u' balance is not sent at all, then we have to believe that the cute Yankees are dolts enough to supply us with three million pounds worth of goods every year without our paying for them. Which does “Ivanhoe” prefer to believe, that exports equal imports or Unit the Yankees are such simple fools us to give us three million pounds worth of goods for nothing? If Ivanhoe had really studied the subject lie would not waste time in questioning such universally accepted principles. Of course the indirect exports from New Zealand to the U.S.A. go mainly via Britain. For instance we may send wool to Britain and Britain send hoots to U.S.A. Some portions may take a still more circuitous route. New Zealand may send wool to Germany, Germany send machinery to France and finally France send silk to U.S.A.

My statement with regard to the navigation laws was not incorrect. These laws did prohibit all foreign nations from participating in Britain’s coastal trade. See Encyc. Brit. Vol. 10, page 175. “Ivanhoe” does not approve of tariff walls between the population of the North and South Islands, but his reason is remarkable. It is that “they have both the same standard of living.” So we have here “Ivanlioc’s” delightful admission that we should not erect tariff walls against any peoples that have the same standard of living us ourselves. But surely the peoples of Australia, Great Britain, U.S.A. and most of the civilised countries of the world can claim to have much the same standard of living as ourselves? So “Ivanhoe” must disapprove of .erecting fiscal walls against any of these. This is a long, long stride towards free trade and I am almost prepared to welcome “Ivanhoe” with open arms as a brother free trader.

“Ivanhoe” thinks Britain should have maintained high duties on agricultural products to foster her fanning industry. Had slie done so, the increased cost of living would have prevented her from developing her manufactures to the same extent.' She would not have been nearlv so wealthy and-pow-erful. She would not have been able to support such a large population. Above all she would not have provided the magnificent market for New Zealand and the other dominions upon which we have all built up our prosperity.

'So far as New Zealand farmers are concerned, the paltry duties on jams, apples, oranges, etc., do not provide any adequate compensation for the greatly increased cost of almost everything the farmer has to buy. I am etc., F. G. GIBBS. Nelson, Gth August.

(To the Editor! Kir, —I have read all Mr Gibbs’s lectures on free trade to date and like niost others find nothing of the slightest interest for the practical man. Any man with brains knows that if all t.he world had free trade it is the ideal trading condition and equally lie knows and very obviously that if all (he world has protection against one nation that that nation is at a decided disadvantage. Even Mr Gibbs said that nations could put up such a harrier that no trade could be transacted by the nation against whom this tariff existed. Hasn’t it nearly got to that Stage now? When the great Adam Smith propounded his theory what position was England in then —has been up unlil ‘2O years ago? Owing to many inventions in relation to weaving, spinning, the treating of iron, steel and application of steam she hud a tremendous start on the world and could compete even if she had a tariff of 25 per cent, against her because she produced 25 per cent, more cheaply than other nations could. What is the position regarding the cost of production to-day in comparison with other nations? it is probably dearer owing to two tilings: disorganisation touring the war and lack of turnover owing to her having lost her trade connections. Turnover as any business man knows is the essence of cheap production (few Free Traders know anything about actual business), therefore other nations have kept out as much manufactured stuff as possible, built up their turnover by supplying their own local demand first and then exported their surplus into Free Trade England with probably a 25 per cent, tariff margin on their side.

Take this example. A, B, C, D ole., nations all start on free trade. Directly all the nations shut themselves olf from A (or England) by a 50 per eenf. duty. What would any sane man do under the circumstances? Join in with a 50 per cent, duty also wouldn’t he? Then what is the position? Are not all the nations again trading on an equal footing the same as they were in the firsL place? If is no good England saying “I know I am right, free trade’is correct you’ve all got to change.” They laugh and pile in their goods, England’s factories lose their turnover, up goes their eosf of production and she cannot compete at. all.

Take one or two little examples. Fifty years ago England produced over half the iron and steel for (lie world. To-day she imports more than she exports. Free traders like to see imports. And it would he very much worse if il were not for one industry, the motor industry. This is the one'bright spot and il helps to keep the iron industry going. A few years ago motor manufacturing was getting almost extinct , Nourishing Breakfasts! Red Diamond Klakios give all day energy. Necessary for children. All Grocers.

until what happened? The McKenna duties were put on the imports of motor ears. Lip went the turnover and down has been coming the price and wo have been getting an infinitely better article. Huge sums of money have been attracted into England for building plants and one alone that 3 years ago turned out 1900 motor ears per annum now produces 7.5,000 motor ears and trucks, and employs (‘2,000 hands. The British Empire alone absorbs (>()(),- 000 ears and as yet England only produces’2so,ooo, and you will find if only Mr Snowden will leave these duties on, England will be exporting ears to foreign countries in large numbers. This is a definite concrete example of what can be, lias been and is being done in one industry. Any complaints? Free trade within the Empire, yes, by all means. “United we stand divided we fall” is truer to-day than ever. We can produce amongst ourselves, \ believe, any article as cheaply relatively as any country in the world. Lot us supply England with our raw material as cheaply as we can. She, owing to her manufacturing facilities, will return it made up to us much more cheaply than we can do it here in most cases. As her trade expands she will be able to give us better prices for our wool, meat, butter, etc. Some articles, of course, owing to freight we could probably be able to hold our own with by manufacturing but in 90 per cent of eases we are relatively not in a position to do it. 'Pile big cry of free traders is “Up will go the cost of bread and food.” That is very questionable. Anyway, perhaps it goes up by three pence (wbieii it wouldn’t). Does the man in a job getting a decent wage care a rap? No; at the present, probably he cannot buy a loaf if the total cost is only three pence because lie is out of work.

May I suggest that the old text books he thrown in the fire. They will at least burn and give warmth these cold nights. Free traders may console themselves with tin* thought that “AVe know we are light,” and so is tile Brotherhood of Man, Universal' Peace etc., etc., but the world is not at the right stage of evolution to put them into use effectively. Air Gibbs says, that for national safety (which comes first) free trade can he put on one side. I :ifk you which is the most dangerous war. economic or high explosives? We are in the middle of the greatest war now and the Empire's safety is at stake so in future let us have protection first in every sense of the word. 1 am etc., EMPIRE AND PROTECTION. Nelson, (>th August.