TWO-WAY TRADE

Wanganui Chronicle, Volume 77, Issue 155, 3 July 1934, Page 12

TWO-WAY TRADE

NEW ZEALAND AND BRITAIN THE WAY TO PROSPERITY OTTAWA AGREEMENT SUPPORTED A MEETING IN WANGANUI. Free trade with Britain within five years, and as an immediate step towards that ideal the full observance of the terms of the Ottawa Agreement, found favour at a public meeting in Wanganui yesterday. Addresses were delivered by Messrs. William Goodfellow and Albert Russell, representing the New Zealand Producers and United Kingdom Manufacturers’ Reciprocal Trade Federation. In advocating a two-way trade with Britain as a pathway to prosperity, both instanced the danger of antagonising the British market, and indicated how the Dominion’s import trade was being diverted to such countries as Australia. The meeting further resolved that the Government be asked to make the report of the Traffic Commission a national, and not a party Issue.

Mr. W. A. Veitch, M.P.. presided, and briefly introduced the speakers. Mr. Goodfellow, in a brief introduction, explained the objects of the federation and outlined its structure. Its ideal, he said, was the establishment of free trade with the United Kingdom within live years and the immediate chief aim was to have the Ottawa Agreement carried, out, not only literally but liberally, and not only in letter but in spirit also. There were 35 branches and sub-branches of the federation, extending from the North Cape to the Bluff. It did not follow the usual course and finance itself by members’ subscriptions, but had obtained something like £l2OO in cash by voluntary subscription from organisations in sympathy with its objective. Most ol: that

amount had been obtained in the North Island. In addition to conducting a publicity campaign tire federation bad affiliated with the federation of British Industries, the largest organisation of its kind in the world and the most powerful political organisation in the United Kingdom. “We deemed it wiser to link up with rhe manufacturers and those associated with them, than with the farmers of Great Britain.” Mr. Goodfellow proceeded. ■'Manufacturers, businessmen, bankers, traders, shippers represent 94 per cent, of the population of Great Britain. Onlv t> per cent, are connected directly, or indirectly, with farming.” Mr. Goodfellow agreed that the Government of New Zealand had carried out the Ottawa Agreement in part, but at the same time it bad done other things to neutralise such action. Raising the rate of exchange was one, and nothing has been done to neutralise the bad effect of such act by reducing the duty on certain lines of British goods coining to this country and which did not conflict with local industries. The underlying principle of the Ottawa Agreement was to reduce the trade barriers between the United Kingdom and the countries of the Empire. Britain had made certain concessions under the agreement. She waived the 10 per cent, tax on food and agreed to take a larger share of New Zea land’s primary exports. On the other hand New Zealand had undertaken to take a larger share of British manufactures. Figures showed that Britain had kept her share of the bargain, but New Zealand bad not. In 1931, the year before the Ottawa Agreement, New Zealand imported from Great Britain £11,196,000. In 1932 the imports amounted to £10,350,000. and last year (1933) they bad fallen to £9.500,000. ‘ ‘ So far as 1 am aware, and I believe it is correct, no other Empire country has reduced its purchase from the United Kingdom,” Mr. Goodfellow added. ‘‘On the other hand. New Zealand's exports to Britain have remained practically stationary, at 3/ millions a year. The volume increased as the price declined, but the value remained practically the same. Britain’s Trade with Denmark. The speaker then compared the position between Britain and other countries which were competing with New Zealand for the British market. In 1931. the year before the Ottawa Agreement. Denmark had exported to Britain 46 millions. In 1932 those, exports fell to 40 millions and in .1933 to 35 innlions. In the same period Britain exported to Denmark eight and a-hfiL

millions in 1931, £9,800,000 m 1932 and £11,750,000 in 1933. •'Not only have our imports from Great Britain fallen, we are allowing our trade to slip away in other direction.” Mr. Goodfellow went on. New Zealand bought from Australia £2,760.000 and sold to that country just ovex a million, but in the two years since the Ottawa Agreement a trade balance, favourable to ourselves, had amounted to three millions. If that 1 rading was not checked the imports in excess of our sales, in tra-de with Australia, would range round about four million. That trade was being diverted from the United Kingdom. Because of depreciated currency the Australian manufacturer had been able to undercut the manufacturer in Great Britain, with the result that New Zealand’s trade with Australia was increasing. All the Government buildings in Wellington now being erected were using Australian steel. Seventysix per cent, of the wire netting trade which had been done with Great Britain had been diverted to Australia. The seriousness of the position was that New Zealand was weakening her only market. There was no alternative market for this Dominion to that offered by Britain. The speaker’s company had sent representatives to the East and had explored the possibility of trade with those countries, but there was nothing substantial to be gained there. Vast numbers of the population had no buying power. Australia, too. was nearer the East and could eater for that market much more cheaply than New Zealand. Three Vital Matters. “We have heard a lot about the Empire keeping in step,” the speaker proceeded, “but New Zealand is getting badly out of step with Britain by letting trade slip away to Australia and Canada. A number of us do not realise that New Zealand is in a unique position. She is unsatisfactorily situated geographically and not suited to mass production and unable to compete, because of huge transport costs, with industries in other countries like Great

Britain. My federation believes that a higher standard of living will result if a country exports those things which it can manufacture cheaply and exchange them for goods which can be manufactured more cheaply in other countries. A number of us fail to realise that we are absolutely dependent upon the British market for three things:— (1) Trade. (2) Finance. (3) Defence. ‘‘Ninety per cent of our butter Is absorbed by the United Kingdom and 99 per cent, of our cheese. Apart from our wool, practically the whole of our produce goes to Great Britain. So far as finance is concerned, it is not generally known that there are special facilities for countries of the Empire to raise money in Britain. Our securities are rated as trust securities and we obtain a lower rate of interest than the foreigner. In regard to defence it is not generally realised that we are solely and definitely dependent upon Great Britain. If we had had to foot the bill England has had to pay for defence we would have had to raise four millions. We would have had to find four millions in addition to what we are already paying. ‘‘We feel that New Zealand is at the cross-roads. We have either to allow the drift towards Australia to go on or we must reunite with the United Kingdom. If we drift to Australia we will have to join with Australia and look after our own defences, for it would be unreasonable to expect the United Kingdom to do that if she was

not getting our trade. If we remain united with the United Kingdom we will continue to look to her for our defences.” The speaker briefly introduced Mr. ■Russell who had come to the federation which Mr. Goodfellow represented with a proposition, and the federation had accepted. It'had sent Mr. Russell to address meetings in various parts of the Dominion. The Empire Mr Russell prefaced his address with a forceful aid appropriate description of the magnitude, of the British Empire and the mighty force for good it represented. “I stand tor the people, he said, “for New Zealand as a whole. I was born in Napier and, as a New Zealander, I am a Britisher and behind the British Commonwealth of Nations and the Throne. I want you to keep that Imperialistic idea in your minds this afternoon. “I went to the Federation, it did not come to me.” Mr Russell proceeded, ft was mv idea that the people of New Zealand, if properly appealed to. could be led along the narrow pathway to prosperity. If there is something wrong with a country we must look to the community itself for leadership, for development, for safeguards. When the fails then the country rotters. It all comes back to the community itself. If our problems are to be worked out for the good of all we must have a straightforward and righteous Government. That is why we are here to-day. for we feel that there is so much that is not understood about the running of the country. Wo do .not know what the Government is doing and the people should know all there is to know about the moves of Parliament. That is why we say ‘put the cards on the table, face up.’ What a. trite saying that is. You all know, when you play bridge, that when the cards are on the table face up you know just where you stand and what cards are left to nlay. You have played poker too, probably, and have lost money sometimes on the cards lying fa*ce up on the table.” (Laughter). The speaker said that a lot had been heard about quotas recently, but that had not emanated from Britain. He quoted Mr Walter Elliott, in refutation of the suggestion that the talk had emanated from that quarter. The Ottawa Agreement Mr Russell directed attention to the Ottawa Agreement. That conference had been a. success. The agreement was signed a year and ten months ago and represented a. remarkable step forward so far as New Zealand was concerned. It was the first thing of its kind ever signed between New Zealand and the Mother country. It meant a great deal to the Dominion, but there was a grave danger of the good it could do being wiped out because Ncw_ Zealand was not playing the game. ‘‘How?” Mr Russel] asked. “Because, after the agreement was ratified by all the Governments and Great Britain has carried out her share of the bargain we, to. use the words of the man in the street, have been backing and filling in the hope that something of a miracle will happen Co satisfy every businessman, trade or calling. But a bargain is a bargain and there arc always two sides. That is why wo are here, tn see New Zealand honour the Ottawa Agreement to the full.”

Some Things Done “It >s true that two or three things have been carried, but. the major issues have been laid on the shelf,” Mr. Russell proceeded, “The : Government has carried out, clause six, but we have fallen, down on I ; clause seven: “His Majesty’s Government in New Zealand undertakes that protection by tariffs shall be afforded against United Kingdom products only to those industries which are reasonably assured of sound opportunities of success.’' “We have not carried out that clause. Do not. think that we are against secondary industries. We are <>n the side of secondary industries that come under clause seven of the agreement, those which are assured of a reasonable chance of success. We have also fallen down on article eight of the agreement: — “His Majesty’s Government in New Zealand undertakes to institute an inquiry into the existing protective duties, and, where necessary, to reduce them as speedily as possible to such a level as will place the United Kingdom producer in the position of a domestic competitor. . . that is, that the protection afforded the New Zealand producers shall be on a level which will give the United Kingdom producer full opportunity of reasonable competition on the basis of relative cost of economical and efficient production. ” ('The word ‘producer’ used in Claust- 8 meant manufacturers in Britain and secondary industries in New Zealand.) “It is true that a Tariff Commission has been set up, but here is the rub—the report, of that commission comes before Parliament this session and nearly a year has gone t>y. I ask you. is that, playing the game? We are losing one of the best opportunities this country has ever hud and losing prestige with Great Britain. We need the closest contact with the |Eiitxsh market for two reasons —(1) It is our main market, and (2) it is

practically our only market, as 88 per cent, of our surplus goes there.” Proceeding, the speaker said that the balance of trade between New Zealand and Great Britain was growing more and more in the Dominion’s favour, not because imports were growing less, but because New Zealand was importing goods from other countries, Australia being one. “How long is the British manufacturer going to stand that?” Mr. Russel] asked, adding that the Ottawa Agreement was made for a term cf five years, to be reviewed at the end of three. “At the end of three years it will probably be renewed,” he said, “but if >t is not, look out for restrictions. The only long-distance policy this .country can adopt is a two-way trade with Britain. To-day we have a great opportunity to establish free trade with Britain, but will we have that opportunity in three years' time? How tolerant Great Britain has been with us, but it is only human nature that she will insist, on us buying our imports from those countries which buy our products. We stand for free trade with Britain within five years.” The speaker added that the Federation of British Industries stood foursquare behind, the Ottawa Agreement. Free trade in which goods would be exchanged for goods, was the only practical way to prosperity. There would be world stagnation if countries attempted to live within themselves. The reasonable policy was for a. country to export those things H could produce cheaply find exchange them for things other countries could produce cheaply. Mr. Russell, at this stage, drew attention to a coloured chart which was designed to indicate how New Zealand would be affected by free trade. The Dominion had 5-)0,000 workers, with a. million dependents. Twentyfive per cent, were engaged on farms, five per cent, in occupations which would benefit from reduced costs, arising out of fiee imports of products of Great. Britain; six per ecu I. m occupations which did not require piotection and would probably gain as much as thev would lose by free imports from Britain; four per cent, m occupations which probably would ieorganise or rationalise their industries to meet the competition of free imports. The other 60 per cent would all benefit by free imports. Mithout free trade 90 per cent, of the workers were injured, six per cent, wore not benefited and the remaining foui ”■ ceived a benefit. If freg trade was brought, about 90 per cent, of the workers would benefit, six per cent, would remain uninjured and four pei c. .. would be compelled. to altd their methods Mr Russell said that be bad been m different parts of the world and he was proud of the fact that New Zealand had been referred to as a •country which did things. It was the first to "rant women’s franchise, the first with penny postage and old-age pension,. “There is a great opportunity for New Zealand to-day to prove whether she is still one of the Commonwealth of Nations or merely giving lip service to Britain.” he said. Party System Condemned The speaker stressed how important it- was that the Tariff Commission's report should be made a national and not a. party measure in the House. “There is no personality in my remarks, but it appears to me. that the reason why the Government of this country is not functioning to-day is due to the vicious system of party politics. Members of the House are often compelled to vote against something which is for the national good, to vote with a party. That is what is called ‘era’cking the whip.’ You have often seen a mob of bullocks coming up to a corner and turning a certain way. Along comes the drover and cracks bis whip, and they become docile again. That is whv we urge that members should be able to vote as their conscience dictates. (Applause). Let the cards be put on the table face up. AVe want you to take that up with your member and make him aware of his responsibility. ’ ’ Mr Coates at Dunedin, Mr Russell quoted a report of the Kt. Hon. J. G. Coates’ appearance be-

fore manufacturers at Dunedin: Mr Coates said he found it difficult to talk 10 manufacturers at present. They all knew that as a result of the Ottawa Conference the Tariff Commission had been set up in terms of the undertaking given to the United Kingdom at that gather ing. Actually it was time something of the sort was done in any case, as it, was some years since any move in this direction had been made. But while ho admitted that- a definite undertaking to investigate tariff matters generally had been given New Zealand was in no way committed by that undertaking. The New Zealand Herald (Auckland) had commented on Mr Coates’ utterance in the following leader. It is somewhat difficult to reconcile Mr Coates’ remarks to the Duuedin manufacturers in regard to the Ottawa agreement ■with the document itself. He stated that there had been a definite undertaking by New Zealand (to investigate tariff matters generally, but that New Zealand was in no way committed by that undertaking. In view of the fact that customs resolutions, which will be framed in the light of the findings of the Tariff Revision Commission, are to be submitted to Parliament at the earliest possible moment —prior to the. presentation of the Budget is the intention—it. is important that there should be a clear understanding of the exact position. Certainly the agreement did not bind New Zealand in the matter of time, though no time was lost in passing the necessary resolutions covering the small group of items specifically mentioned and in abolishing the surtax. But there is a most definite undertaking. Article 7 is as follows: “His Majesty’s Government in New Zealand undertake that protection by tariffs shall be afforded against United Kingdom products only to those industries which are reasonably assured of sound opportunities for success.”

While this allows groat latitude of judgment the intention_ is clear.

-Much more precise, however, is Article 8, which reads: “His Majesty's Government- in New Zealand undertake lo institute an inquiry into existing protective duties, and, where necessary, to reduce them as speedily as possible to such level as will pla'ce the United Kingdom producer in the position of a domestic competitor, that is, that the protection afforded to the New Zealand producer shall be on a level which will give the United Kingdom producer full opportunity of reasonable competition on the basis of relative cost of economical and efficient production. ” Thus the Dominion is definitely committed to action that is not merely a guesswork process. The only escape from it would be through the quibble that in each and every case th© “reasonable competition” is now provided under the preferential schedule. It would be an evil day for New Zealand’s reputation if this article were to be treated as other than a sacred undertaking. The revision might have been neces sary “in any case,” but it is to be hoped that, when the resolutions come before Parliament, the spokesman for the Government will not allow them to he treated as a matter of routine or commercial discretion. Whatever may be thought of Ottawa, New Zealand is in honour bound to implement the agreement to the letter. Mr. Rus-ell said that the only way lo lower prices was to reduce tariffs. ‘We cannot, get anywhere without Britain,” he proceeded. “The fifteen aer cent, raised exchange, while we recognise that it was needed at the dine because the farmers were in a parlous stat, really mean an extra 15 per cent, duty against the British , manufacturer. Don’t you think tha* :he Government, at the same time, by a nice friendly gesture, should have reduced duties on British goods by 15 per cent.?” Lower Purchasing Power. The speaker indicated how the purchasing power of the community had been lessened through depreciation of currency. If a man worked all day for 15s, that was subject to a 10 per cent, cut. it left him with 13s (id to spend. If he went into a crockery -hop, for instance. to buy goods not manufactured in New Zealand, he would expeei to get _l.3s 6d worth of goods. But the twas a 20 per cent, duty, 25 per cent exchange, and 10 per cent, further be accounted for. That left him w 7s 6d worth of goods. That was where ihe purchasing power of the commnn ity had gone toA Voice: You’re right, sir. Mr. Russell gave further illustrations comparing prices of articles nnt manufactured in New Zealand but imported from Britain. He compared those prices on the basis of trade under tariffs, as in operation to-day, and under free trade which his federation was advocating. A suit of clothes costing £2 to manufacture in Britain would sell at £6 6s lOd in New Zealand under the tariff. If there was free trade the £2 articles would sell for £3 19s 6d, or 60 per eent. less. Linoleum which cost £1 4s in Britain, under rhe tariff system sold at £3 8s 9d in New Zealand. Under free trade it would sell at £2 7s 7d. A dinner set (crockery) costing 15s at Home, sold to-day at 56s 6d in New Zealand. Under free trade it would sell at 39s 9d. Four aluminium saucepans costing 5s 6d in Britain sold at 21s 3d in New Zealand under the duty system. Under free trade they would be 15s. “What do the hindrances to free trade mean?” Mr. Russell asked, and followed his question with this illustration: A box of butter produced in New Zealand would bring 56s on the Home market, equal to the price of four pairs of boots at 14s each pair. But to-day, with all the restrictions, it would only buy two pairs of boots. There followed unemployment on the ships coming out. on the wharves and in the workshop. It was the beginning of an anti-clock-jrise movement. That box of butter

had to be made to buy four pairs of boots, not two, ami by that, it would start, again the clock-wise motion, which would lead to prosperity. Britain a Sheet Anchor. He paid a tribute to British leadership. reminding his audience that Britain, when Continental interests had sought to trap her, had balanced her Budget simply by asking for more income tax. which the Britisher seemed pleased to pay to safeguard his own country. The two million war loan was converted from 5A to 3| per cent. Britain to-day was absorbing her unemployed and 300,000 more men bn > been put into occupations this year since January than had ben absorbed over the same period last year. Britain was a sheet anchor, and the speaker quoted Mr. J. H. Thomas, who, speaking as a Minister, said that the “clouds had passed and the country was on the road to certain prosperity.” The depression had made people more tolerant. “Let us have faith in our ideals,” the speaker concluded. It is a time to build, a time for faith, a time to unite. Some people think there is a great upheaval coming, ami we will have a Government, which is for the people, and puts principle before price. Maybe it is coming, just as definitely as I feel that you are going to get behind rec this afternoon and see the objects of ihe Ottawa Agreement, carried out ami the report of the Tariff Commission made a national, and not a party issueGod Defend New Zealand,” . . . . and the speaker recited the first verse of the New Zealand hymn to a. silently attentive audience, thus bringing a fitting climax to an address which impressed all who were present. Asked by Mr. Ernest Wright how it was proposed to make up for the loss in revenue if customs duty on British goods wa.s removed as advocated, Mr. Russell replied that it was. expected that the purchasing power of rhe coniniunity would be increased by some 50 per cent, as a result, of free trade. It would therefore be no hardship to widen the scope of the sales tax to all articles produced within New Zealand. Mr. A. R. Rankin proposed:— That this Large and representative meeting of citizens of Wanganui and surrounding districts urge the Government to fully implement the Ottawa Agreement, and drastically to lower tariffs on British imports into New Zealand. This meeting expresses the hope that action and consideration on the Tariff Commission’s report will be made a national, and not a party issue. Mr- H. C. Jenkins seconded, and in a brief outline of world economic problems from the Napoleonic wars up tc the present, indicated the wisdom ol the course being proposed l-y the speak ers of the afternoon. The motion was carried unanimously