THE BUTTER PROBLEM

New Zealand Herald, Volume LXX, Issue 21457, 3 April 1933, Page 13

THE BUTTER PROBLEM

Sir, —Writing to the above caption, g Mr. F. Morrill dissents from the view fexpressed by Mr. William Goodfellow, g that the only sound policy for this Do- f minion is free trade with Great Britain, y and in doing so Mr. Morrill manages, | or rather mismanages, to make his f letter an omnibus of protectionist fal- ? lacies, exposed numberless times. His \ assertion that such a policy would ban- i ish employment in manufacturing in L secondary industries in New Zealand j is not borne out by experience else- j§ where. For example, Denmark, which has always in modern times given | British goods practically free entry, is || only about a seventh of the size of | Now Zealand, and has over double our | population, and can export manufactures to New Zealand, and, after pay- | ing artificial and natural protection charges, amounting up to 150 per cent, r can -still sell here against our Now Zea- I land-made machinery, etc., of similar j kinds and equal quality. This result is [ not due to low wages, for Denmark, I of which the Government is described as being semi-socialistic, pays the highest wages in Europe, according to tho returns published by the Labour Committeo of tho League of Nations. The Ford Motor Company of Great Britain, which has factories in 12 foreign countries, finds that although the highest wages arc paid in Denmark tho unit production costs are lowest, so there does not seem to be much wrong with the free trade of what our well-in r formed Governor-General calls "the wily Dane." Make no mistake, the workers would gain most by free trade. As to capital invested, it is one of tho vices of protection that it tends to induce capital into uneconomic industries, and thus keep it out of economic ones, and the quicker that position is rectified the better. Regarding customs revenue, had wo depended less on that in tho past and paid our way by more direct and less-wasteful means of collection we would not now bo burdened by the great overgrowth of debt and governmental expenditure. It were cheaper and better to collect directly, as in the caso of unemployment taxation. Customs taxation is income tax graduated tho wrong way round, hitting tho working man with a family relatively tho hardest. There would be vastly moro employment in New Zealand under freer trade conditions, for "sadly-diminished spending power" requires low and competitive costs, and prices to compensate, leaving effective wages, or purchasing power, unaffected by a dfop in nominal wages. Going beyond tho scope of Mr. Morrill's letter, I would add that a prerequisite to tho settling of the issue between free trade and protection is currency reform to give internal stability of general (not individual) prices, but . along sound linos, similar to those advocated by Sir Basil Blackett in "Planned Money." In tho mcautimo, tho freer trade sido has, in my opinion, much the better of tho argument. T. E. McMillan. Matamata.