THE DEPRESSION OF TRADE.

New Zealand Herald, Volume XXIII, Issue 7552, 3 February 1886, Page 6

THE DEPRESSION OF TRADE.

Mb. Firth haa pnblished three letters on the above subjeot. laek for a like space to pass theia In review. Hβ opens with the statement that the present depression i" more general in the number of industries affected, and more usJveraal In the range of countries, than any depression for the last 100 years. For a bold statement of this nature I think he should adduce some evidence. One hundred year* ago the foreign trade of England did not amount to £28,000,000, and yet in the years 1792-3, business was so depressed that both banket* and merchants were failing all over the country to suoh an alarming extent that the Government passed a Bill through Parliament to loan to merchants, on the security of their goods, no lets a sum than £5,000.000. In 1797 the pressure was so great that the Bank of England failed, and the Government had to pus another Act of relief. At this period war wae raging on the Continent, and the distress there was as great as in England. Com was regularly as high as 100s a quarter, and in ISOI the average rose to 129* 6d. Other periods of depression might be named equally severe, but I will mention only one which must be in the recollection of Mr. Firth. I refer to the year 1842 : 1 remember the time well. To call it by depression is to call it by a wrong name ; It was distress of the direst kind ; the scenes I then beheld were burnt into my memory ; and I would rather not write a description, but the histories of the period very fully »nd faithfully describe it. I mention 1542, for the Corn Laws were then in full force, and tfair trade tariff which laid an import duty on everything which came into the country, the average price of wheat ruling between 50a and 70s the quarter. Those ought to have been halcyon days according to the reasoning of Mr. Firth, but they were not. ... . ■ Mr. Firth's letters abound in fallacies, showing that he cannot hove studied out the points ne raises. I will proceed now to examine some of them. Hβ says in hia first letter:—"But inasmuch as bad harvests were never general, our foreign export trade, not then as trammelled as now by heavy protective tariffs, to some extent compensated Baalish manufacturers for the reduced 'home trade." Whereas now, whilst England under the ngime of free trade admits the productions of foreign nations practically free, the English farmer has no longer the compensation for reduced yields by an increase in price; and the repression of our foreign export trade, by the prohibitive tariff* of almost every foreign nation, deprives our manufacturers of any compensative advantage in that direction." It is not correct to say the English farmer get* an uniform price for his wheat, no matter the sort of harvest —good or bad. The state of the English harvest governs the price of wheat in England. ISSO. ISSI, and 1882 wer* notoriously bad harvests, and the price of wheat scarcely moved from 45a tbe quarter. 1884 wm a very good harvest, and the price ruled about 365. IN'or is it true the manufaoturer gets no compensation in a foreign market when the "home" is bad owing to deficient harvest. It would be enough for me to ask. How is the imported foreign corn paid for if not in English manufactures ? I tried in my letter to Mr. Firth which you published eleven months ago to show him that international trade is nothing bat barter, and a* the foreign nations do not make England a present of the wheat they send, they must take directly or indirectly English manufactures, and thus the compensative advantage does come. If Mr. Firth would jut ponder for one moment, be would see how wall and wisely even what he calls onesided free trade works. England can only make her own laws; she does not presume to nuke laws even for her own colonies; she candot either by any laws she makes compel her own colonies, not to mention foreign nations, to alter their laws to suit her ideas. She says:—" My ports are open to all the world to send their produce free from any import duty." The result is, the produce oomes j and it really does not matter what sort of tariff the sending country has, that country must directly or indirectly take English goods in payment, and the consumers in that country are the persons who pay the tax.

The aext fallacy I notice is contained in the paragraph commencing :—" These low value* have been accompanied by a lower ▼aloe for money than has before been known," Ac. Hβ speaks of the woollen manufacturer speculating in baying largely in wool wbea he thought prices were at the bottom, and being bitten. If it was not considered a rude remark to make, I should reply, Serve him right. Buying for speculation is one thing, and interferes with legitimate business most seriously ; buying for immediate use to manufacture is another, and if conducted in a regular and systematic manner, does not in the long run lead to loss. Then he says money is taken out of trading and concentrated in consols and other stocks, and thus becomes congested, 4c. I reply that it is a law in currency and trade that, when gold is cheap, goods are dear, and when goods are cheap, gold is dear. This is very easily illustrated : Suppose a sheep is worth 20s on the Ist of January, and I purchase 100, they will cost me £100 ; but if sheep of (he same weight and quality on the Ist of February are only worth 15s each, I purchase my 100 for £75, the natural remark is that aheep are cheaper in February than in January, which is the same thing as sayiog in the sheep market gold is cheaper in January than in February, at which date a trader could get more sheep tor his gold, Whilst in January he could get more gold for his sheep. This, I hope, is quite clear. With regard to changing investments from trade to consols and other stocks, I would only remark that consols are a defined security, and you can only buy in by someone selling out; the person selling out is like the one buying in, simply changing his investment; and the likelihood is that whilst one is leaving trade for consols, the other is leaving consols for trade. Another fallacy is to suppose that England Is to convert all the world to free traHe by the imposing of countervailing duties Similia tiniilibus curanlur may do in medicine, but certainly not in political economy ; besides, it has been tried. England brought herself to the verge of ruin by a thirty years' experiment. No. England in tbis respect mast not accept the lead of other nations on this question. There is no principle whatever in saying, "Well, if you will not do as I wish, which I know to be right, I must step down from my pedestal and do as you do, which I know to be wrong." If England were to adppt protective duties to-morrow, »he would have the entire Press of the Continent jeering at her, and exclaiming that her free trade policy had utterly broken down. Only lately, when Lord Salisbury proposed this Committee of Enquiry into Fai Trade, the "Independance Beige," a paper circulating largely in France and Belgium, announced that the new Government were about to alter the commercial policy of the country, and by that one article did a great deal to increase the existing depression. The last fallacy I shall notice is the one in which Mr. Firth asserts that a 12s duty on corn and other duties on food would make no unreasonable advance in price, and, of course, coat little more to live. I estimate that dalles of such an extent would enhance the coat of living in England by 25 per cent; and adopting the reasoning of Mr. Firth, that low prices mean high wages, most certainly would high pricee so contract employment that wages would quickly descend, and thus it would be like a candle burning at both ends. Pertinent to this point, I would refer him to the great debate which took place in the House of Commons in 1842 on Sir Robert Peel's new Corn Law Bill. The object of that measure, as advooated by the supporters of the Government, waa to keep the price of wheat at 56s the quarter, and also on other articles of agricultural produce, such as cheese, batter, &c. Mr. Cobden, in the course of hie speech, said.—" I ask the right honourable Baronet, and I pause for a reply, is he prepared to carry out that principle in the articles of cotton and wool as well M in corn?" Bir Robert Peel said it was impossible to fix the price of food by legislation. Mr. Cobden resumed :—" Then, on what are we legislating ? Will he try to keep up the price of cotton, silk, and wool ?" No reply. "Then we come to this oonclualoßg that we are not legislating for the universal people. I auk the right honourable Baronet whether, while he fixed his eoale of pricee to secure landowners 56s per quarter for wheat, has he any sliding scale for wages f Will he give the people a law to keep Op the rate of wazes ? He will say that you have passed resolutions to the effect that you cannot keep up the rate of wages; but that ia no reason why you should pass a law to mulot the workingaan of one-third of the loaf he earns,"

In another letter I will endeavour in a detailed form to deal with the present depression— at all event* as far as England is Concerned—and notice the latter half of Mr. Firth's last letter. John Milne.