CORRESPONDENCE.

New Zealand Herald, Volume XXII, Issue 7260, 24 February 1885, Page 6

CORRESPONDENCE.

—~, # ~.■■■ , COMMERCIAL FEDERATION. ; tO MB EDITOR. Sib.— letter of Mr. Firth, on commercial federation, is evidently intended to lead public opinion on the subject, and may .be considered a sort of manifesto of the 1 party known as fair traders^ ; I ask for a little space to offer a fair criticism. Everyone must sympathise with the desire to draw closer the commercial bonds between England and her numerous colonies, but how this is to be accomplished by legislative means, without interfering with colonial self-government, is. I confess, a problem which will call forth the resources of the ''greatest statesmen." * Mr. Firth's fundamental principle is that commercial federation must be based on free trade, by which I understand him to mean free exchange throughout the entire Empire; and * yet I may be wrong, as he speaks of the indebtedness of the colonies requiring special Customs duties. Now that is not federation or free trade. The greatest Federal Union in the world is the United States of Amerioa, consisting of thirty-seven States, each with a separate government, and an aggregate population of 50,000,000. This union is based on free (trade; there is a free interchange of the productions of these thirty-seven States, for instance, New York exchanges . with California and Pennsylvania with Louisiana, all free ot Customs duties. This is a very important fact often lost sight of in the diversion of these questions. Now, if Mr. Firth means that England shall continue- to do asshe now does, viz., receive 'productions of .the.colonies, free from import .dues, but • that the colonies, in view of their indebtedness, shall still go on charging Customs dues, ' then I say this is not federalism ob the basis of free trade*; Mid/,moreover, Mir a proi posal which will never be acceptable in free ttrade England.''V«y 4 ,- : -•.':• ' ■ ■i^ZiJ'-L' ''■•'■ '• 1 This brings me to note his next condition !of Federalism, which is, that England shall abandon free trade, and shall adopt "countervailing duties" for the outside world. 1 con- , fess this proposal takes me by surprise, espe- ' cially as coming from a gentleman who has all bis life been an ardent freetrader. It is like saying, " Now, 1 after forty years' trial, I consider free trade has broken down, and Igo in for protection," The reasons he gives I will presently examine. However, observe he speaks of free trade as a policy to be adoped or not at pleasure, just as Despotisms, Empires, or .Republics are., I can see no analogy in this sort- of argument. Free trade (in the sense in whioh he "wishes to apply it) can scarcely be called a question of politics. It is more like a question of, arithmetic. You can test the truth of the principle without any balancing of probabilities. The test is simply this : Here are two countries, New Zealand and England for instance, engaged in industrial pursuits. Can the people of England bring us products of their industry more cheaply than we can produce them ourselves ? If they can, then we have one condition essential to trading transactions between the two countries only one. Before there can be any commerce another condition is essential. We must have some commodity which England wants, and which we can produce more cheaply. If we have not, then there is an end to business between the two \ countries. There is nothing here whioh England can afford to take of us in exchange for cheap commodities, and so the people of England will keep their cheap commodities rather than send them here and get nothing in return. Of course international commerce in its operation is infinitely more complex than this for - a variety of reasons unnecessary to go into here, but always the problem is capable of being reduced to these simple elements. This law is as immutable as the rule in arithmetic which fixes that two and two added together make four. Now for the reasons, Mr. Firth has been studying the Board of Trade returns, and, as I think, makes unfair use of them. It is notorious that by the way figures are massed together they may be made to say almost anything. My objections to the way he has used bis figures are two. First, in the exports to the various countries he names he gives the exports of British produce only, whereas the whole of the exports from whatever source derived should be given as against the total imports. Take the United States, for instance : the total exports in 1881 were £36,783,047, the amount of £6,986,749 being of colonial and foreign produce. It is obvious that these must be included, as they beoame available for. the purpose of an English export by having been purchased from the colonies or other countries by Manchester or Bradford goods, Sheffield cutlery or Birmingham hardware. And here comes in the advantage to England of being a free trade country ; she beoomes the mart of the world, all nations send their productions to her as they do to no other country, and they all go to her for the execution of their orders, which is * source of no small profit to her. If we had an analysis of that £6,986,749, I have no doubt but that New Zealand wool, or some other of our productions, would figure for _ a considerable sum, and thus we are indirectly benefited by England finding a market for us we should not otherhave. My second objection to. the way Mr. Firth uses his figures is this. It is unfair to select any one year and compare with any other single year, the conditions in the two oases may not be the same. He compares 1873 with 1881 in this instance of the United States. Now, 1873 is a very unsafe year to use in any comparisons of this nature ; it was one of the years of inflated values of English exports owing to the Franco-German war. To show the full effect of my meaning, I will give him two years of trading to the United States, whioh is a complete answer to his reasoning ;—

Imports from. Export* to. 1878 -*89,146,170 £17.531,904 1882- 88.352,613 38,708.643 Decrease, o*B9 per ot. Increase, 121 per ot. I only observe regarding these figures that being of more recent date than those used by Mr. Firth, and the latest returns I have at hand, they might by some be considered more reliable as indicating the present course of trade between the two countries ; but for the purposes of my argument I don't want them and J leave them for the reader to draw what inference he likes from them.

Mr. Firth next devotes three paragraphs in his endeavour to prove that the larger imports from and the smaller exports to the United States and other countries are the result of the free trade policy of Englund as opposed to the protectionist policy of Amerioa; that this hat placed special hardships on English agriculturists *ahd manufaotuiers, and that their united losses amount to £1,280,000; that the condition of diatreie of .English agriculturists and manu* faoturers is more profound and hopeless than within the memory of living man. Having thus stated the oase, he proceeds to deal with his remedy. I feel I should trespass too much on your space to attempt to deal with matters of such vital importance in this letter, but if you will kindly give me room I will do so in another.—l am, &c, John Milne. February 20,1885.