Wairarapa Daily Times [Established Quarter or a Century.] FRIDAY, SEPTEMBER 4, 1903. PREFERENTIAL TRADE.

Wairarapa Daily Times, Volume XXVII, Issue 7556, 4 September 1903, Page 2

Wairarapa Daily Times [Established Quarter or a Century.] FRIDAY, SEPTEMBER 4, 1903. PREFERENTIAL TRADE.

The July number o£ the Nineteenth Century contains several interesting articles on Preferential Trade. That by Sir E. Giffdn is of most importance, both on account of the great reputation of the write*, who is probably tho foremost statistician of the Empire, and the clearness with which his views are expressed. He begins by distinguishing two questions for discussion—l. The economic question; will a system of mutual trade preferences benefit both the Colonies and the Mother Country. 2. The political question; how far may the union of the Empire bo promoted by the acceptance of a trade policy distasteful to England, and injurious as far as it goes ? The first of these questions is answered aa follows: —It is admitted that raw materials cannot be taxed so that England can only give preference to the Colonies, by taxing the food she imports from them. The total imports of wheat and flour amount' to 100,000,000 cwts., of which 19,500,000 come from British ' possessions — New Zealand sends 1,388,000 cwts. —that is, less than 20 per fient. of the imported supply. Suppose a duty of 5s per quarter, or js 3d a cwt., is placed on wheat and wheat flour from foreign countries—and it would take such a duty at least to produce sensible effects —the consumer would be burdened to the extent of the charge on foreign wheat) that is £5,094,000, together with 41,219,000, by which the price of colonial wheat would be raised; and a further •sum of about £2,000,000 as enhanced price of wheat produced at Home, making a total of £8,313,000. This seems a large price for consumers at Home to pay in orde'rto give the Colonies a bonus of £1,219,000. Of course, the sum raised on foreign corn would remain in the country, and might go to the reduction of taxation, or to old age pensions, while the enhanced price of wheat grown at Home would be a help to the British landowner. There, thus, would certainly be a tax on the consumer of the amount stated, which he might, or might not, get back indirectly, for it does not follow that the person who is indirectly benefitled is the same as the one who is taxed, all to give the Colonies a fractional bonus, of which New Zealand would get £86,600. It is urged that, owing to this bonus, the colonial production would be stimulatedj and the Empire become selfsupporting. But this is sure speculation. The reason is that even a slight increase of production, owing to special stimulus will depress the market price, just as it did • when we gave our West Indian sugar planters a preferential duty against slave-grown sugar. The price of wheat may easily sink so that foreign wheat, .plus the duty, is as cheap as it was before the duty. Foreign countries will suffer; but neither the Colonies nor the English iarmer will be benefited. To fcurp to other food supples, of which the Colonies provide about ££0,000,000 out of a total of £210,500,000, a ten percent, ad valorem duty would give the Colonies a bonus of £4,000,000 at an expense to England of £21,000,000. This does not seem very good business. The bonus to the Colonies is not large considering their resources, and might disappear,' as was explained with regard to the bonus on wheat. When we consider that the annual income of the British possessions is estimated at 1200 millions, it is clear that an addition of four millions would not materially affect ,their purchasing power. Again, it is |£ thaVßritain will obtain the t

trade which at present goes to foreign countries. It is not necessary to give the statistics for all the colonies, those for New Zealand are a fair samplo and are of most interest to us. New Zealand imports from the United Kingdom and other British possessions goods worth nearly ten millions, and from foreign countries about two millions. A further examination shows that this two millions is divided into about one and ahalf millions from America, and £300,000 from European countries. How much of this trade can be diverted ? Mr Giffen estimates the amount at less than one tenth, for the reason that many of the articles concerned are bought from foreign countries, because they cannot bo obtained elsewhere. England is never likely to provide us with kerosene, or currants or tinned salmon. The situation is then as follows: — Preferential Trade will give the colonies, at the best, a bonus so small aa hardly to affect their purchasing power; and even if the whole of their foreign trade were diverted to England, its amount is so small as not to be a serious gain. But it is urged foreign oountries are encroaching on the British markets in the colonies, and Preferential Trade would prevent this. In face of the fact that exports from England to the colonies have increased from 75 millions in 1887 to 109 millions in 1902, it is difficult to take this argument very seriously. Hence Mr Giffen conoludes that there is no economic advantage in Preferential Trade, and it seems difficult not to agree with his conclusions. In our next issue we purpose to discuss the political effects of Preferential Trade.