FREE TRADE AND PROTECTION.

New Zealand Times, Volume XXXIV, Issue 5551, 13 January 1879, Page 3

FREE TRADE AND PROTECTION.

(From “ Fraser’s Magazine.’” From an article entitled “ Colonial Custom Houses,” by Edward Langton, contributed to the above-named periodical, on the effects of protection in Victoria, we make the following extract : But Mr. Michie further undertakes to show that the protective system in Victoria has been a success. “ That these duties,” he says, also gave an impulse to manufactures in the colony cannot be doubted.” For evidence of this he goes to Mr. Hayter’s “ Victorian Year Book,” for 1876-7, and cites some figures, of which only the following are material ; SUMMARY OF VICTORIAN' MANUFACTURES, WORKS, ETC.

Is anyone expected to believe that the 982 manufactories in 1867 ware all brought into existence by the tariff passed only in the previous year ? If not, how does Mr. Michie reconcile the fact that so many existed, under free trade, with his previous representation that digging, bullock-driving, and kindred occupations were the only ones available during the pre-protection period ? And if we ask for proof that the increase shown in Mr. Hayter’s tables is due to protection, where is it to be found ? It is a fact that a large number of industries were acclimatised prior to 1866. It is reasonable to suppose that, without State meddling, the same causes which led to their introduction would, as the colony became settled and the population grew, lead to their increase. What would have happened in Victoria may be inferred from what has happened in New South Wales. In the following table some of the principal trades are selected which protection was designed to encourage in Victoria, and a comparison is made between the number of factories belonging to those trades in Victoria and in New South Wales during 1876 ;

It will be observed that in only two trades out of this list has Victoria outstripped her neighbour, and, mirahile dictu, those two are protected in New South Wales as well as in Victoria ! In regard to all the others there is perfect free trade in New Sonth Wales. It is necessary to add that the population of Victoria was, in 1876, 840,390, and that of New South Wales in the same year 629,776. If it was, as Mr. Michie alleges, the protective system which gave an impulse to manufactures in Victoria, to what are we to attribute the greater development of similar manufactures exposed to unlimited competition iu New South Wales ? To show how customs duties have affected the demand for British manufactures in Victoria, Mr. Michie gives a table, from Mr. Hayter’s “Year Book,” of the value of imports and exports, both in gross and per head of the population, of the several colonies of the Australian group. On this table Mr. Michie rermarks ;

“ It will thus be seen that the value per head <if the consumption of imports in Victoria in fche year 1876 was £lB 18s. Hd., as against aS22 13s. IJd. per head in the colony of New Siouth Wales As the habits and

ntiodes of life of the people of the two colonies are much the same, ‘Victoria would appear to The supplying herself with her own manufactures to the extent of £3 15s. a head, spent jin the colony, instead of its being sent to To both the facts and infei'ences of this passage exception must be taken. Mr. Michie 3bas compared the imports of Victoria in 1876 ■with those of New South Wales in 1875. By this means he has managed to compare the Jiowest year of "Victoria for the last five years •with the highest of New South Wales for the same period. Again, he has rested his case oni •one year, instead of on an average ; a proceeding which is always more or less deceptive, and is therefore eschewed by statists. If we take tthe five years from 1872 to 1876, both inclusive, we have this result;— IMPORTS PER HEAD.

By this wider and more trustworthy induction, Mr Miohie’s “ three pounds fifteen shilHings ” is at once reduced to £1 3s. 3d. -So much for the facts : now for the inferences. Are the imports alone a reliable means ■of measuring the domestic manufactures of a country 2 Must not the imports iu a large decree depend upon the exports ? And can a country which produces a large quantity of exportable articles conduct a profitable business unless it imports largely also ? The average exports per head for the five years ending with 1876 were as follows : Victoria. New South Wales. £lB 6 6 £2l 7 3

Instead of coming to Mr. Miohie’s conclusi'on, that the smaller imports of Victoria indicate larger domestic manufactures, would it not be .somewhat more rational to conclude that, as N ew South Wales has more to export, she natut ally receives larger imports in return ? For, i t must be borne in mind, there is no questk in here of payment in coin. Both the colonies are exporters of coin and bullion ; and the imports and exports of the precious metals are incl iuded in the per capita calculation upon which Mr. Michie proceeds. Again, may not the con sumptioi) of commodities be greater in a count Ty where their importation is free, than in one t vhere their importation is clogged with heavy i luties 2 It would appear from the statistics to which the writer has access, that in Great- Britain the poorer classes manage to consume -about three times as much corn as they did Before the Repeal of the Corn Laws. Why sbiould not the people -of New South Wales c onsume more manufactured goods than those of Victoria ; at least, of such goods as are free of dtxty in the former, and subject to 20 per cent, duties in the latter ? The duties levied fm Victoria on articles which are free in New South Wales amount to upwards of £500,000 per annum. Tie sum is probably increased by the profits of each person through ■whose hands the goods pass to £750,000 by the time it is paid by the consumer. Here we have a burden on the people of nearly £1 per head. Would it be very astonishing if, in a neighboring country, where the people are altogether free from such a burden, they expend the sum thus saved on manufactured goods ? All experience goes to show that cheapening a commodity or a service increases Its use ; and what has happened in regard to bread and postage in Great Britain might not -unreasonably be expected to happen in regard to boots, woollens, and agricultural implements in New Sonth Wales. The larger imports of New South Wales, therefore, may not afford ■the slightest support to Mr. Mfchie’s theory that protection has given an impulse to manufactures in Victoria ; but may only be an indication that, other things being equal, the people of one country, where an .article is cheap, will consume more of it than the people , of another country where it is dear. Rut let us apply Mr. Michie’s argument to some o' the other colonies—to Tasmania for example. The average imports of that colony for the three years cited by Mr. Michie were £ll Bs. per head ; that is £8 11s. 2d. per head less than Victoria. Are we to conclude, with Mr. Michie, that Tasmania ‘ would appear to he supplying herself with her own manufactures to the extent of ’ £8 11s. 2d. ‘a head spent in the colony, instead of being sent to England V Yet, if Mr. Michie’s conclusion in regard to Victoria be sound, Tasmania must he supplying herself with seven times as great a proportion of her consumption of manufactured goods as Victoria, and this with a tariff but slightly protective, and adopted only for revenue purposes. This case of Tasmania, in fact, points to the conclusion already suggested, that the imports are influenced chiefly by the exports. Tasmaniahas but £9 6s. sd. perheadto export, and she gets back £ll Bs. Victoria sends out £lB ss. 6d, and receives in return £l9 19s. 2d. per head. N, S. Wales parts with £2l 7b. 3d. per head of exports, and imports in return £2l 2s. sd. There seems here a natural proportion between the outgoings and the in-

comings of each colony—a proportion which we may safely conclude would be pretty well preserved even if the exports of Victoria were doubled. In the latter case not even Mr. Michie would be satisfied if the imports did not increase in a somewhat similar ratio ; unless, indeed, he is a believer in the old bugbear called '‘Balance of Trade,” and thinks that the surest indication of a country’s pirosperity is that its exports exceed its imports. Mr. Michie thinks fit to taunt Sir Henry Bailees, of New South Wales, with having advocated protection in 1860. This was eighteen years ago, and the very year of Mr. Michie’s lecturebeforereferred to. Time, which should make all men wiser, has enabled Sir Henry to grasp the truth which Mr.Michiethen insisted on ; while Mr. Michie turns his back upon the light, and reverts to the economic system of the dark ages—to the system which be himself so forcibly and skilfully exposed, and belief in which Mr. Grant Duff recently described as having become, in England, “the creed only of incapables.” Truly, when one recalls the clear view and vigorous description of the truths of free trade which Mr. Michie exhibited in 1860 ; when one considers that it is quite impossible for any man to divest himself of knowledge once obtained, one is enabled to appreciate to the full Mr. Miobie’s declaration : “It is certain that free trade has no more dangerous or formidable enemies than are to be found much too plentifully among Free Traders !” Edward Langton', Member of the Executive Council of Victoria, Honorary Member of the Cobden Club.

Year. Total Number of Number of hands Establishments. employed. 1807 082 11,330 1872 ' 1,740 19,463 1877 2,302 31,478

Factories. Victoria. New South Wales. Agricultural Implements 43 48 Boots .. .. 07 87 Clothing 53 53 Conch and waggon .. 110 144 Jam 8 7 Soap and candle 42 32 Leather.. 03 118 ■Woollen cloth.. 8 8

Year. Victoria. N.S. Wales. £ s, d. £ s. d. 1872 17 19 10 17 0 3 1873 21 3 9 21 9 10 1874 21 4 7 21 11 6 1876 2< !) 6 22 19 2 187B 18 18 1 22 2 4 Average £19 19 2 £21 2 5