FREE TRADE AND PROTECTION.

Taranaki Daily News, 23 July 1931, Page 15

FREE TRADE AND PROTECTION.

(To the Editor.)

Sir,—l notice a letter in your issue of July 18 signed “Carbon,” in which he condemns protection and advocates free trade. In the first place 1 should like to ask “Carbon” where is he going to get the money to pay for his imports of manufactured goods, the value of which and our interest bill has caused New Zealand for a number of years to be

going to the wrong side of the ledger to the extent of, I suppose, the tidy sum of at least £7,000,060 a year over and

above the value of our exports. According to the New Zealand Year Book of 1931 our funded debts then amounted to in London £146,000,000, in Australia over four millions. Add to this a recent loan -floated at about 6 per cent, in London of £5,000,000 when money is going begging there for from 2 per cent to 3 per cent. It also shows there must be a big amount of unfunded debt when our exchange is -against us to the extent that £llO of New Zealand money only buys £lOO of English money, so probably the total amount owing outside New Zealand would at least be £160,000,000. This is outside of money invested here by, we will say, foreigners. In using the word foreign I imply all investments from other than persons resident here.

’ I suppose I would not be far out in saying that we have to find interest on £180,000,000 which at present cost us 4J per cent, l)ut is gojng to be more as each loan falls due and has to be redeemed, but which at the present is £8,100,000. This amount has to be taken out of the value of our depreciated values of our primary exports before we can get any goods in return unless we go further into debt. Now what have we got to show for this £lBO millions ? First, about 3000 miles of worn out steel rails which cost I suppose about £15,000,000 (the labour costs of construction was local), and probably £5,000,000 worth of rolling stock,. mostly worn out. Second, several millions of pounfls worth of manufactured clothing and boots the bulk of which should have been manufactured here if we had had wise statesmen in the past, and which 1 might also add is mostly worn out. Third, several millions of pounds worth of machinery and motor-cars, which also is mostly worn out. I am not going to reply directly to “Carbon,” but to the arguments of free traders as a whole. This is one of their stock arguments, that if we closed up every foot factory in New Zealand, paid the. operatives their regular wages and took the duty oft boots we would be money in pocket by buying the foreigners’ goods. That is, we will say we will sell our cow hide to the foreigner for 6s and then pay him £6 to make it into leather and £26 to make it into boots. I am afraid it will take us a long time to pay off otir national debt. As an illustration of what I am driving at, say, Brown wants a hundred cords of wood, which Jones, whose farm is across the road, offers to stack in his yard for£loo. Brown has two sons out of a job, also a big monkey and an overdraft as high as he can go. Brown has timber on his place, but it. is not easy of access, so much so that when he has the firewood in his yard it has cost him £l5O-—that is, by allowing himself and sons’ 14s a day. The question is, does Brown lose £5O by not giving Jones the contract or does he make £lOO, which he hadn’t got, if he had let the contract or otherwise? That is our position in a nutshell. If Brown could have employed himself and sous at something that he could have made equal ■ wages to Jones and then bartered it, it would have, been all right. But it surely does not pay us to sell our wool for 2s 6d a fleece and then barter with a man who wants £4 for the same fleece converted, into cloth. That man will be on the winning side. I api placing New Zealand in the place of the man who has the raw material and the foreign manufacturer as tho other fellow, as all money spent in the country circulates and everybody gets the benefit of it.' As to whether protection of secondary industries benefits primary producers, I might say that the value of secondary industries is about £90,000,000, and of this over 50 millions c ' raw or primary products are used and the remainder circulates through the community, so much so that I suppose over half the value of the products of the land is consumed locally. All the barley, oats, wheat and potatoes and over half the mutton that is slaughtered is consumed locally, and what would the farmer get for his cull cows if we did not have the local market? So much so that

in 1930 we consumed 1,884,533 cwt and exported 411,292 cwt. Wo also consume 85 per cent, of our pork, which" is a big help to the man on the land, all our eggs, most of our hoiley, all our stone fruits, most of our apples excepting about a million cases of our choicest, that we have to subsidise the foreigner to eat, while we eat the seconds and thirds to the extent that one year we had to pay out £90,090 so as the foreigner could get cheap apples and the, shipping companies big dividends. “Carbon” quotes Mr. Bright, Mr. Gladstone and Mr. Joseph Chamberlain. Now before I allude to the matter of these gentlemen I wish to state that England was the leading manufacturing nation in the world from the beginning of the 19th century to the end of it. This was due to several reasons. Chief were the invention of the steam engine, the spinning and weaving machines, and also protection, which John Bright assisted in abolishing. Mr. Bright, being a big manufacturer and not being afraid of foreign competition, as little of that then existed, wanted cheap food for his wage slaves so that they could work all the cheaper and produce bigger profits for him, and the world was his market. Hence the cry of the ‘‘repeal of the corn laws.” So much for Mr. Bright’s sympathy for slaves. The repeal of the corn laws was the greatest disaster that befel Ireland. With all the repressive laws that Ireland had to suffer under England for six centuries her population grew until it was 8,900,000 up to the , time of the repeal of the corn law but since it has fallen to less than half that. Mr. Gladstone was a politician. He entered Parliament as a Conservative, later became a Liberal, fathered . Home Rule for Ireland and just dropped I it in time to prevent its becoming law, for according to the Constitution he had the power of creating enough new peers to have his measure carried, but he was just another in a long list of Englishmen who betrayed Ireland for ■seven centuries. “Carbon” should know, as I presume he docs, that Mr. Joseph Chamberlain espoused the cause of protection before he retired from public i life. t

The three greatest nations in the world before the war were Great Britain, Germany and the U.S.A. Great Britain built her manufacturing industries up under protection, and they have declined under free trade. She became the world’s greatest creditor na-

tlon by giving what she liked for raw material, for the rest of the world was doing nothing else but producing it, and charging what she liked for the finished article and giving credit to the different nations for what they could not pay her in raw materials. Germany rose rapidly within the last 50 years by protecting her secondary industries; so much so that up till the war she was England’s greatest commercial competitor. The United States is the most marvellous nation in the world’s history. Her foreign investment outside of war debts equals that of England, and it is all due to protecting her industries against foreign competition. The value of her secondary industries, according to latest figures, is 27,000,000,000 dollars of added value over and above the cost of raw materials, at which 8,000,000 workers were engaged, who received 10,000,000,000 dollars, or about £5 a week each. On the other hand, 6 1-3 million farmers with a farming population of 27,000,000 produced only 16,000,000,000 dollars, 11,000,000,000 dollars less than the eight million workers in factories. Personally I believe in the federation of the world. ' I believe in no trade barriers. I believe in no nationality, but until that ideal is reached I bedeve we should Ido as the other fellow ie doing. Our butter and cheese is barred from almost every country in the world except England, and as she will not do anything to help herself the day may come when she may not be in a position to be our best customer, so it behoves oqrselves to establish our own manufacturing industries and thus create a local market for our primary products and compete in- the world’s markets with our manufactured goods. No primary producing nation solely is a great creditor nation: they are mostly debtor natiops. The whole of the South American Republics are in that position, all great primary producers. The whole of Asia is in the same boat. Free trade England is paying the German indemnity. In 1929 she imported from her own possessions 360 millions worth of goods and sold them 324 millions worth. At the same time she imported from other countries SG6 millions worth of goods' and sold them 405 millions worth of her own goods, leaving an adverse trade balance of 456 millions, and the bulk of this did not come from debtor- nations, but from creditor nations. The United States alone supplied her with 195 millions worth and only took 45 millions worth, leaving an adverse balance of 150 millions. Of course, England’s foreign investments and her shipping industry will balance her ledger, but it will leave her very little for future investments, whereas the U.S.A, has in ■all 223 millions of a favourable trade balance to invest in foreign countries as well as her income from investments already made. Through England being free trade every nation in the world that wants ready cash can dump its surplus goods there, even if sold at a loss, because they can make their profit out of goods sold on the home market. I am told Often that America is prosperous because of the war. Nevertheless it was because America had secondary industries established under protection, that she was able to supply the Allies with goods. If China or Brazil, both countries larger - than the U.S.A., had the goods we wanted’ we would’ have bought from them, with equal avidity and paid

for them in 1.0.U.’5. During the Civil War in America, when the Northern States were trying to free the slaves, England supplied goods to the South and allowed boats to be built there, one of them, the Alabama, afterwards costing England £3,000,900 on account of the havoc it played with the North-, erners’ shipping. So people who live in glass houses should not throw “stoney.” Finally neither free trade nor protection is going to solve our economic ills, as nothing short of the co-operative commonwealth is going to do that. Take the instance of the 27,096,009,060 dollars produce* by 8,000,009 workers, of which they only receive 10,000,090,000 dollars. The halfmillion of employers, say, cannot consume their portion as quick as the workers, so that there must be a big heap of surplus -goods that prevents employment, and so stagnation of trade and distress is the result. Money plays no part in our economic system. It is all a matter of exchange of goods. Our Banks are only book-keeping establishments for our villages, towns, cities, nations and the world, as very little gold changes hands. Referring again to New Zealand, I might state on top of the £180,090,909 we owe there is a matter of another £80,009,000 of gold that we have produced and exported, for which -we.- got mostly manufactured goods.—l am, etc., W. B. McMANUS, Stratford, July 21, 1931. (We must ask correspondents to keep down their letters to reasonable proper- | tions, otherwise we cannot guarantee insertion.—Ed. News).