PREFERENCE TO BRITISH TENDERERS.

Otago Daily Times, Issue 18510, 22 March 1922, Page 3

PREFERENCE TO BRITISH TENDERERS.

TO THE EDITOB. Sir, — Some time ago you granted me the privilege of pointing out through your columns the extraordinary way in which the tenders for the Mangahao electrical plant were allocated by our Government. At the present time we have before our City Council the consideration of tenders of a like nature — the Waipori electrical plant, — and coincident with these considerations we are favoured by a visit from the British Trade Commissioner, Mr Dalton. The significance of Mr Dalton’s visit at the present Umo can only be inferred from previous policies in the letting of large contracts, and 1 would bog to draw your attention to some aspects of this policy which will appeal' to be unfair. My grounds for bringing up this subject at this rather critical moment are, I believe, sufficient. They may bo stated briefly: (1) That the late decisions in letting electrical tenders from New Zealand prove the undue use, or abuse, of iho patriotic lever, and consequently tend towards the subjection of commercial morality to a sentiment which has not yot been proved worthy; (2) that this matter is of vital importance to New Zealand commerce, to our country generally, and at the present, moment to our Dunedin citizens in particular. I do not in any way impugn the right which British manufacturers have to be represented by a commissioner, provided that certain limits of {airplay are observed. A great deal is hoard of patriotism, and much depends upon the individual conception of what commercial patriotism really is, so that in setting out the case let us first consider the demands of patriotism and form a conclusion on a subject which is 100 often accepted without much thinking. Let us agree that the majority of New Zealanders are Britishers, and would earnestly desire to see the British flag maintain its supremacy. In order to do this, the British Empire must fight a commercial war on a scale which may be compared to that of the martial war which she recently concluded. Especially in the case of England must commerce be successful. Dependent as she is to a large extent upon the outside world for her food supplies, to in return she must maintain- a sufficient stream of exports to ensure the gathering of these supplies. This is essential and is recognised by every British country. To maintain this trade she must either compete on the world’s market with her manufactured exports, just as she undoubtedly does with her invisible exports—finance, shipping facilities, etc.—or offer her goods at higher than market values to those countries that may bo charitably disposed to purchase. Since, however, it is not to bo expected that foreign countries will buy at a higher price from England than may be obtained elsewhere, the field for English exports—unless competitive manufacturing be secured—would accordingly bo narrowed down to the borders of her own filial dominions. Now, at a first glance it may appear quite practicable that England could so restrict her exports to within the British Empire, the dominions under this arrangement agreeing to buy their supplies from England at a greater price than would bo required elsewhere. For many reasons, on the contrary, it will be seen to be highly improbable, if not impossible, A few reasons are: (1) It is not probable that the dominions would agree to this proposal indefinitely without something in return. Unless we consented simply to give so much per annum to England we would require in return to balance our imports from England against our exports —i.e., we would require to b© paid in like coin for our goods, sold to England at values pronortionately higher than market values. That this reciprocity could not be accomplished is evident from the fact that England herself does not subscribe to the arrangement, being willing enough that the dominions, by the institution of preferential tariffs, should buy her own goods at higher than market value, but maintaining, on her part, an open competitive market for the goods which the dominions offer in return. That it would avail us or England very little, even if she did subscribe to her share of the reciprocity, is evident from the fact that under this proposal England would simply pay back to us on purchases of New Zealand produce what we paid to her over and above market values on purchases of British goods. This would even up both sides of the account, and trade within the Empire would hold no special emoluments for England. (2) Other weighty arguments against the possibility of‘England’s restrnting her trade, as stated, to within the British Empire exist in her geographical political, and financial relationships with foreign countries. Her financial interests extend to every foreign country, and these invested interests bring indirectly a return of goods. Politically, her widespread .influence draws her into circumstances which promote and often necessitate adjustn&nts through the channels of commerce; and geographically her situation is central, insular, with good ports, so that a large foreign snipping and hanking organisation has been built up, which it is not in England’s interests to injure. It being apparent, then, that England’s trado must inevitably be extended beyond the British Empire, it becomes a question as to how, if she cannot manufacture on a competitive basis she is to hold that portion of tier trade which is foreign. Take the case of England’s cotton trado with America. The quantity of raw cotton imported to feed the English mills has a heaw effect upon the exchange, and must be balanced by a correspondingly heavy export of manufactured cotton goods. Of these ocertain quantity will be marketed within the British Empire. The remainder will De offered on foreign markets against growing competition and a lessening field. A large quantity of manufactured cotton articles has always been returned to America whence the bulk of the raw material comes, thus evening up the exchange by direct return. Kecently, however, competition has been felt from manufacturers within America itself, and bo, if England is to. retain this particular outlet for her industries, the goods offered must in the first place be at competitive prices. And so it is with all her other foreign exports in many different jj nes — s he must compete on the world’s market. Now the question arises, “How can. this be done on foreign markets if it cannot be dona in the markets of ner own dominions'.'’’ There are but two solutions offering: (1) She must get down to a real competitive basis of manufacturing or (2) either continue the present state of apparently inefficient production and carry on the foreign exports by balancing a relative loss on these by a correspondingly relative excessive profit on the charitable buyers—i.e, make the dominions pay the difference. This latter method of making the .dominions pay her own uncompetitive. margin with foreigners is much the easier way out, and lienee has arisen the cry from England, “ Trade within the Empire.” Trado within the Empire would be a natural sequence if England offered the goods at competitive values, and there would be no need for any hue and cry. As it is, it England will sell to fereigners at a lower price than she will to her own dominions, and that, on the other hand, she will buy from foreigners against the dominions at the slightest saving in sight—that she will even buy and sell that which, through her own stubborn adherence to her self, is burred on this market—German goods—handing ' them on to ns also as British, with a British price and a preferential claim. We have evidence in connection with the recent pipe-line tenders to show that her representatives, the British Agents’ Association, headed, no doubt, by Mr Dalton, will within our own country use every endeavour' to seize from local business houses the just reward of their own enterprise, passing a resolution against the granting of a local sunply contract to one of our own industries, and claiming to over-ride the appeal of this industry even at an advance in price of some £2OOO. And to make all the arrangements possible the people of the dominion are being pointed to “patriotism.” Where does this form of patriotism fake ns? Is it beneficial either to England or to the dominions? Within the realm of England we find that of all the organisations of today which require to ho recast, for the future the huge industrial organisation is the most conspicuous. Exactly how this recasting is to come about is a matter of some lengthy consideration and a little speculation—but. probably in the end it will only he accomplished when the full realisation of the vital necessity to work and suffer some hardship is impressed upon the national mind. Can we, however, m any way hasten the introduction of com-

petitive manufacturing by boosting up the present uncompetitive system? Can wo hope to build England’s future upon this kind of charitable commerce, or is it not more essential that the stability of competition be engendered at the outset? If, in the end, competition will force reorganisation and industrial stability, are we alleviating the position in (he slightest by following the present methods? On the contrary, are we not providing the very means whereby the fabrication of faulty organisation may become so widespread us to sap the fibre of the whole nation? What Bagshot wrote of banking systems is also true of commerce —that to natronise a present bad system is the surest way of preventing the establishment of a future good one, and it may reasonably be argued that the further we extend the present had system the more (he effects of, such system will become engrafted, upon the national character and the moi'e difficult will lie the change therefrom. Some of tho most immediate effects of the present uncompetitive system are: (1) The incentive to higher efficiency is lost; (2) the situation lends itself to many abuses, as (a) being assured of a patriotic reception for their goods at almost any price, the British manufacturers will avail themselves to the uttermost of these unnatural circumstances. Rings .and combines will be formed within the country of England to regulate the price and commissioners will be sent out as representatives of these concerns to stir along the fueling of “ patriotism.” This actually obtains in the electric lamp industry, tho cable industry, the general electrical manufacturing industry, and, as far as I am aware, in the glass industry, (b) Again, the position is open to be exploited by any foreign manufacturer running an office or a small portion of his works in England, and claiming the same charitable rights for his goods on the market of the British dominions as the genuine goods actually made in England, (c) Or, the position may be used, and no doubt is used, for the disposal of German goods. Our tariff law, while it bar? any New Zealand importer from importing German goods, and places such a high duty on others that the importation of them becomes prohibitive, sanctions and agrees to accept as British any goods from England as long as 25 per cent, of the manufactured cost of such goods is incurred in England—the remaining 75 per cent, may be of any. nationality whatsoever. So much for the immediate effects in England. Looking for any benefits within Now Zealand, wo find that in the first place this sentimental policy, or, rather, lack of defined policy, has a vital and basic influence on a large section of our business houses. It makes or mars by hazard, leaving the reward of commercial enterprise, a most fundamental mavter which is normally regulated by a well recognised and inexorable law, to tho whimsical realms of chance. It undermines by its illogical conclusions the very foundation upon which every business transaction rests. It demoralises commercial ethics replacing healthy competition by intrigue and corruption. When all these things are taken into consideration —the effects in England, and the effects in New Zealand, the fact that our Customs Department already prescribes a definite preference for British goods, the state of the present finances, and the number of unemployed in our midst—can it bo said to bo patriotic to pursue this rather illogical policy?—l am, etc., Jas. M. Abebnetht.