PROTECTION AND FREETRADE.

New Zealand Tablet, Volume XVIII, Issue 31, 26 November 1886, Page 13

PROTECTION AND FREETRADE.

(A Paper lead before the Dunedin Catholic Literary Society by ] Mb. P. Cabolin.) ,

( Contimied.') ALA.B 1 that an editor or newspaper dabbler (as I understand him to be), should be so preternaturally ignorant. Now, it will be remembered that this Colony has oorrowed something like the amount stated since she started on her career; but anyone understanding n, little ot the , principles of commerce, and particularly jou who have followed ray argument, will see that this borrowed capital comes into the country | in the shape of imports, and must of necessity come in that form, for it would be impossible to find specie to transmit to any country who ' had contracted for a large loan. For instance, England, as I mentioned i previously, lent to foieign nations from 1870 to 1874, over 4UO ! millions. Well, if she sent this in specie or bullion, it would completely clear her of these indispensable mediums of exchange, and figures show 'hat she received more gold during these years than she , sent out. Her only way of transmitting the loans, then, was in the form of export ; and her exports show during these yeais, by being ahead of tLe impor s, that such was the case. This proves, then, that ' this so-called lamentable excess of our imports over our exports since our trade began, is nothing else but the money that we borrowed, , come to us in the form of imports. Then, you will see at a glanoe, < that this money wbich we borrowed, and of which our up-country ] correspondent says only two millions remain, is still in the country. It is in the couDtry in the shape of opened-up land, railways, docks, and other fixed capital which need not be mentioned ; so that not a farttung ot it has gone to pay for the excess of our importations ; for this excess simply constituted tbe borrowed capital itself. There are two classes of people, or nations, who import more than they export. The rich, as in the case of England, who receive interest for invested capital in the foim of imports ; and they who are borrowing, who receive the borrowed mouey under the same guise. So soon as a nation, America being a case in point, begins to pay her debts, her exports must, as a matter of necessity increase largely and be ahead uf her imports. There is another phase cf this question which will faatisfactorily account for excess of imports over exports, and it is to a ceriain extent applicable to New Zealand. Suppose we send a cargo of frozen mutton to tngland, the vaiue of the cargo on board the ship at Port Chalmers being, say, sooo pounds; it is entered iv our export records at that figure, by the time that she reacnts Eugland, and when the meat is sold the cargo realizes, say 7,000, this large profit being considered necessary to defray the expenses of sending so long a journey. This money is laid out in England in buymg a mixed cargo of goods for the colony ; and by the time that ship, or some other, it matters not, reaches Port Chalmers, her cargo will be wonh about £9,000, and will be entered at that figure oq our import records. But for tbie £9,000 we only paid £5,000, the difference being the profit on the transaction. So that our imports, exceeding our expons in that respect, is a ga.u instead of a loss, as S.me people would wish to make out. The difL-renee between the 5 and 9 thousand is the remuneration for the capital and labour invested and expended in the transaction. Each country is the gainer and the world the richer. It may happen that a country may import more from another country than she exports to that country, but if that be so it will be balanced by exporting more to some other country than will be imported to that at the end of the year there will be a balance. England imports more from America by 100 per cent than she export b to that nation ; but, yet, the figures I have already quoted show that at the end of the year ncr imports and exports about balance. Keeping this in view you will De better able to solve a question asked by a correspondent in the Star a few evenings' ago : "We imported he stated, from America goods to the amount of £139,000 last year and

exported to America £39." I am not able to say if these figures are correct, but it matters little as far as my argument goes whether they are or not. The great part of th'i American carrying trade, is. as you know, done on tCn^lißh bottoms. It will happen in many instanc =< that &□ English ship will so to an Americtti P'»rt, unload, load again with a c*r»o for New Zealand, unload here, and again load with a cargo for England ; so that she may have come here with an American cargo, hnt goes away with a cargo of our commodities for England. — Ie is impossible to d > more than touch upon the numerous correspondence and arguments with which Protectionists have inundate! the newspapers lately ; but what I have dwelt upon will show what sort of food has been dished up for the uninitiated to feed upon ; but they are not very particular. As a hungry man will almost eat anything, so will those who are suffering from a ware of adversiy, griap at any straw wnich they fondly fancy will tide them on to the haven of prosp-rity. " Well, well," the Protections will answer, " there is no great harm in giving it a trial, and if we find it does not answer our purpjse we can easily do away with it ; or if it succeeid' we will only continue it for a while until our industries get a proper start." This is another pet argument of the moderate Protectionist. Well what do we find, that scarcely any country that has adopted Protection has been found capable or willing to dj away with it afterwards. What says Mr. Walla, an American Economist of some note ?? — •' Although the main argument advanced in the United States in support of Protection is, that ita enactment is intended to serve only a temporary purpose, in order to allow infant industries to gain a foothold and a development against foreign competition, there has never been an instance in the history of the country when the representatives of such industries, or those who had a hand in promoting that policy, who have worked under Protection for a long series of years, have been willing to submit to a reduction of the tariff But, on the contrary, their demands for higher duties are insatiable." So much then for the arguments of those who say they only require it for a abort time. Even England did not throw off the yoke until she was on the borderland of starvation, and the verge of a revolution. If it be efficacious to go in for Protection, by all means let the system be prepetuated ; but if it is detrimental to the well-being of a nation, it should not be tolerated for one day. " What matters it, if we do pay a little more for our locally produced articles if by Protection we keep the money in the country, get higher wages, and constant employment." This is another argument which is being continually served up at political meetings by men who ou^ht to know more about the principles of political economy. I have already shown you the fallacy of 6ending money out of the country for imported goods, that no such thing takes place, and that all imported goods are, and must be pud for by exporting goods to the same amount. And now I will just show you that it is impossible for any great length of time, to get more remunerative wages in one country than another. When I say remunerative wages, I mean wages that a man can save more out of in one country than another. A man may get 30s per week in England, and it may be higher wages than 40s would be to him in America, for if wages go up the price of goods rises in proportion. So that the value of wages must always be measured by the co9t of living ; and I migrht mention here that it is the country wh^re low wages are given, and the cost of living proportionally low, that has the best means for competing in foreign markets and advancing her foreign trade. It is impossible, as I raid before, to keep the rate of wages at a relatively higher standard in one country than in another, while the ports are free, for labour to come in and compete with that which is in the field. I mentioned ttiis argument to a Protectionist the other day, and he replied (and his reply was brimful of wisdom, as that of a Protectionist usually is): "Oh, we have got societies, they will see that the wages are not pulled down." Well, 12 years ago, the working men of England were getting from 25 to 30 per cent, more wages than they are getting to-day. There is no country in the world where labour uaions are so strong and plentiful as in that country, but thougn they fought the capitalists inch by 1 inch, they had to give way, and year by year wages were gradually lowered until they reached their present level. I have known of several i trades being out on strike in Lanca.hire for 9 months, a r id the i they > had to resume work for less than they were first offered by the I employers; and that after they bad wasted, for wasted I call it, the , resources of the society, and sheei starvation compelled them to resume , work ; after, too, their employers had suffered in capital, having lost a great deal of their trade, through it naturally flowing in other channels. So much, then, for keeping up w iges by trade unions. As rt'gar is getting high prices for local goods, it sometimes happens, that through force of circumstances, even they are reduced below their , natural value. Let an industry be protected from outside competition, i it may for a little time pay, but local competiti >n soon begins to tell ' on it ; capital is drtwu from other channels and directed into this, so that competition gets so keen that, there being » limited market, over1 production soon ensues ; prices are cut down, in order to buy and ' woik it off ; but to no purpose ; men must be reduced in wages or else go on half-time until the surplus stock is worked off. It is impossible to export it ; a protected article can never be profitably i exported. This state of matter* U really ukiag place herein Dunedin. {To be continued.)