LOCAL INDUSTRIES.—No 4.

New Zealand Herald, Volume XVIII, Issue 6063, 23 April 1881, Page 6

LOCAL INDUSTRIES.—No 4.

. INDUSTRIES BENEFITTED BY ! PROTECTION. It will be well to distinguish precisely, what I dp aud what I do not propose to demohstrate by the examples that I intend to bring forward in this article. Freetraders l(aye asked, rather paradoxically—"Does protection protect?" They mean : "If a trade is in a languishing condition, does.the imposition of a tax on the imports that compete with it, divert such demand to. it as will, cause it to \ flourish?" and they further ask—"lf it" does ' so, j is not such a benefit secured to the local trader by causing the public to pay dearer for the class of goods thus protected '!" I intend my examples to show that certain existing industries have been thus benefitted | by protective taxation, and that' the public have not to pay dearer for the commodities thus.affected. . .■•■■ , : ■ ' I do not.intend to mislead either myself or my readers by. insinuating,' that those exatr.plea of successful protection indicate that indiscriminate and absurd imposts should be resorted to in order to "keep local trade active at any price." A single successful example would be quite sufficient to establish my position ; but it so happens that I can produce.several cases in which the public have not only not suffered, but have (in several directions) been the gainers by State interference,; while the losers have only been the few importers and their friends who formerly monopolised the trades. \ ... , . ... The making of soap was a trade that appeared to offer special facilities for successful establishment, iu the existence of raw materials at first cost on the spot, and from the fact that the plant required .was, as com-, pared with that required, for some other trades, comparatively: inexpensive and simple. Yes,, although a good article was made, the.industry was almost crushed out of existence, when the imposition of an extra 2s 6d per cwt. completely turned the, tables, and the trade has become an established one. In one factory alone 15 ' tons a-week are made; aud, to, the surprise even of the owners of the works, the demand is so steady that they cannot keep a box of soap .in stock after each week's lot ,is ready for sale. The' rosults are, that the farmers have a ready local market for a large (and increasing) amount of tallow ; the public have soap at least as cheap as it win formerly imported, and employment is secured fora good number of hands. , . . '

Candles " other : than tallow" are now .taxed Hd a pound. The Id was a revenue tax, and so not grumbled, at, but great was the outcry when the last id was put on (because Jd a pound had been charged on imported steariue, from which candles were to be made) ; but what is the result ? Imported caudles were formerly sold at lOld to lid a pound, and the tax uow prevents their being sold much under that price ; whereas, such a.stimulus has the extra tax of Jd given to the local demand, that candles that cannot be distinguished in size, shape, or weight, and scarcely, in colour, from those imported at IOJd, can now be made from stearine obtained from New Zealand tallow, and can be sold at BJd, with acceptable profit to the makers. In comparing candles j imported at lOid with those made in New Zealand, and sold at BJd, it is found thai the imported ones give an excess of light just discernible by most careful observation, but this is more than compensated by jjhe greater lasting power and consequent additional cheapness of the New Zealand made candles. It may be asked, " Why do not the local makers ask IOJd or lid a pound, and so take full advantage of the protection they enjoy?" I answer, "for two reasons; first, that to the manifest advantage of the public, the competition between the local makers causes them to keep tho price as low as will cover the actual cost of manufacture, and leave them 3uch profit as they consider sufficient inducement to continue the manufacture ; and second, that to' induce the stream of demand to run their way, and to overcome prejudice, they have to offer their goods at a lower price than the imported ones." "Then, why do they not secure the whole market, and completely shut out the imported goods ?" " Because there is always a number of people who are willing to pay the tax, for the. sake of a fancied superiority in the imported goods, or, perhaps, a little real superiority, as for instance the extra whiteness of tho candles in this case." There are other reasons, but it would lead me into too groat discursiveness to recount them here. Chicory is taxed 3d a pound, probably not originally with the intention of creating ah industry, bnt yet with the effect that' a factory lias been established for preparingthat article from the root grown in New Zealand ; with such success that it is believed that even if the import tax were removed, the demand for the local article would keep up sufficiently to yield a fair profit to the promoters. • • ' . .

Tinware receives such assistance from the increased protection which the fifteen per cent, duty adds to the heavy freights on such bulky ware, that local makers are now able to sell many kinds of goods, equal in quality to the imported, fifty per cent, cheaper than they were formerly imported for. So that the public get a tinpot for one shilling which they used to pay two shillings for, through this industry becoming established, partly' by the assistance of a protective tax. The manufacture of wrapping paper, the commencement of which was encouraged (unfortunately for the promoters) by the bonus ottered, has had the effect, through tho competition of the two mills, of causing wrapping paper, which formerly cost the public about five pence a pound, to be sold now by the importers in some cases, and for some qualities, as low as three pence farthing, because the mills can produce and sell a good quality at three pence threefarthings. The timber trade affords a good source from which to draw an inference as to whether or no a " protective" tax assists an industry, as we can see on comparing the gratifying revival that took place in that trade (on the re-iustatemenfc of the Is duty that had been taken off) with the distressing paralysis that had affected it when the local demand became drawn away from it through the removal of the tax under whose fostering power it had flourished. Even Adam Smith —that author so often mis-quoted in support of free-trade—gives valuable testimony in favour of the efficacy of protection, where he says that, when an industry has come "to employ a great multitude of hands" through having been for some time relieved from the competition of foreign goods, it is "a matter of deliberation how far" free importation should bo restored. Hero, at any rate (and elsewhere oven more forcibly), lie admits that "Protection does protect!" and that it secures employment to the inhabitants of the protected country. But, to digress for a moment, this timber matter has another side to it. Its evidence on the general question of the efficacy of protective taxation is invaluable. But'if the principle held by free-traders bo sound, might not the Government have been saved much trouble in future legislation for the "Conservation of Forests," if, by leaving the tax at its reduced rate, they had allowed

foreign nations to continue to cut their trees down cheaply for our benefit, while they left our own forests standing for tho use of our posterity? If "a penny saved is a penny gained, "then one would think a hundred-year-old tree not cut down would be a better gift to our children than a sapling just planted. But this is beside the mark at present. ' .* j It might surprise South Island free-traders to be told that their, success as exporters of wheat is due to protection ; but about ten yoars ago wheat used to be poured in from Adelaide, California, and Chili, and it was an anxious question whether New Zealand could over grow wheat to shut it out; when the import tax of Iβ per cental settled the i matter, by so converting the existing local | demand to our own farmers that they gained courage, supplied their own country, then ventured on exporting, and ended up by being able to Bell wheat in Curistchuroh at 3s 9d the bushel, while in Adelaido the latest telegrams quote it at from 4s 4d to 4s sd. The price of flour before the protective tax had worked such a change was from £18 to £25 a ton ; it is now from £10 to £12 10s, which shows that the Government, by "taxing the poor /nan's loaf " to the extent of 5 per cent., has put it within his reach at a reduction of about 50 per cent. Or, to put it in plainer language, by making 20s worth of foreign flour cost him 21s, they have caused the same quantity of home-grown flour to cost him only 103. . So much for its effect on the consumer. Now, how about the producer, and the country's wealth generally ? Avoiding detail, and putting the matter roughly :—ln 18C9 -we imported wheat and flour to tho value of £155,000,' and we exported wheat and flour to the value of £25,000, making the excess oE imports in. 18G9 £130,000; m 1879 we wheat and flonr .to tfao valuo^of

of £534,000, making the excess of exports in 1879, £482,000. That is, in 1869 we had to" send aicay £130)000 in money, or something else, to buy breaii ; but in 1579 we sold bread to others to the extent of £482,000, for which we received money, or something else ; the result being tbat'in the tenth year we had acquired a gross increase of purchasing power to the extent of £612,000 to enable us to pay for imports of other ljinds. Free-traders 'will say that it is absurd to claim this as the result of protection. That it is due to the natural development of trade, to the advance of settlement, to the opening of railways; &e., &e. : I do not deny the power of these ; but 1 say that thoy might as reasonably declare that the blow struck by a steani-hammer is not caused by the boy who opens the valve, because forsooth the whole power of the steam does not reside in the muscle of his arm ! Ce n'e*l que It premier pas qui coute ; it is only the first step that costs, the other effects follow naturally— from the pent-up steam in the one case, and from the undeveloped but available "natural resources" in the other—and it only requires the same effective "first step" to be taken in behalf of other industries for which the necessary elements exist, for us to witness new developments, perhaps equally astonishing, in the course oi another ten years I There are artificial as well as natural barriers to be broken down, and it is only by a protective tax, acting as an embodiment of public opinion against the monopoly of importers, ■ that time will be saved in developing industries that otherwise may lie indefinitely dormant, or even strangled in their birth. Ecoxomist.