The Pamphlet Collection of Sir Robert Stout: Volume 50
Future Prospects. — Freetrade and Protection
Freetrade and Protection.
Having shewn what we have already done, and the materials we have to work upon, I shall now consider our future prospects—What it is possible for us to do.page 41
At this stage I ought to give you a dissertation on the much debated question of Freetrade versus Protection; but I will not do so for several reasons, the principal one being, that it is a subject on which I can only give a "layman's opinion." I shall therefore pass it over with a few remarks, intended to shew the bearing it has on the commerce of New Zealand.
In the first place, it seems to me clear that we must not accept the statements, conclusions, or predictions of either side as gospel, for we see one country flourishing with freetrade and another equally prosperous with protection; and the one appears to be as much subject to periods of depression as the other. Carried to extremes the abstract principle in either case ends in absurdity. Mathematical freetrade, as I understand it, is an effectual barrier to all progress, "a folding of the hands to sleep." The essence of its philosophy seems to be, "thou shalt not produce nor make anything that can be produced or made cheaper by anybody else." As applied to our case this is equivalent to saying, America can grow wheat cheaper than New Zealand, why should we attempt to till our lands?—Galashields can weave cloth cheaper than Mosgiel, why think of wearing Colonial tweeds? And the other side of the picture is equally absurd:—protection, pure and simple, means that we are to roof in the Taieri Plain with glass to grow grapes, rather than let any of our money find its way to the vine growers on the banks of the Douro.
New Zealand is theoretically a freetrade country, and the Customs' duties are in no case so high as to be considered "protective duties"; but there have always been exemptions in favour of particular industries, which is simply protection in another form. In the early days, woolpacks and sheepwash tobacco were admitted free, as a small perquisite to the squatter. Agricultural appliances of all kinds have always been page 42 duty free as a privilege to the farmer, and now his produce is carried on the railways at a low rate with the same object. Coal-mining is encouraged by the construction of harbours, and gold-digging by the making of water races. Protection is only supposed to be extended to industries that cannot go alone or require a start. In New Zealand we protect some of the industries which, above all others, are best adapted to the country. If corn cannot now be grown without protection, the look-out for manufactures is not very bright.
Taking it even in its narrowest and most selfish aspect, protection is undoubtedly a very uncertain weapon to fight with. Like some of the new torpedoes, apt to turn and lay waste its own home. The whole it is trade of a country may be compared to the water in a hydraulic press—the slightest pressure applied at any point is transmitted throughout the entire mass, and the weakest place suffers most. The pressure is often more effective and difficult to resist when it comes in the form of exemptions. In admitting machinery duty free as an encouragement to manufactures we discourage the local manufacture of machinery. Carpet weaving is encouraged by admitting certain yarns; but this militates against the use of Colonial wools, which would make a better fabric. Considering the extent of our resources in raw materials and coal, which is the main-spring of most industries, together with the other advantages we possess, I believe local manufactures will ultimately thrive better with no exemptions whatever; and in the meantime the exemptions should be confined to raw materials we have not got or which are not developed.
The evils of isolated protection and the anomalies arising therefrom are well exemplified in the evidence taken by the Colonial Industries Commission in 1880.page 43
One set of manufacturers wanted the duties taken off certain articles, and another set wanted more put on. It would be to the advantage of sauce and candle-makers to get bottles and wrapping paper admitted free, but the bottle and paper-makers see the question from a different aspect. And this difference of opinion is not restricted to different trades; it frequently exists in the same business. One Dunedin firm, in the furniture trade, advocated protection on a large scale; the representative of another waxed eloquent over the beauties of freetrade. The explanation in this case is not far to seek:—one manufactures the whole of the furniture from Colonial woods; the other imports it ready to put together, the fitting, polishing, and stuffing being all that is done by him. Auckland manufacturers wanted a protective duty of 35 per cent, put on agricultural implements and brass-work—beyond the abolishing of some exemptions, the representatives of these trades in Dunedin wanted nothing; and I have already shewn that they are two of the most successful manufactures in the Colony. These cases indicate the difficulties that beset any system of isolated protection, which in the end resolves itself into something approaching private monopolies.
Although it is so difficult to encourage Colonial industries in a proper manner, there is not the slightest doubt they should be encouraged, for the benefits to be derived from the establishment of manufactures of various kinds are incalculable, and our position as a commercial country will not be secure without them. It would be unwise to foster any industry that wants continual propping up—money kept in the country at this price is too dear. But when the beam is so near the balance that a slight touch will turn it, that touch should certainly be applied. The whole community will benefit by the establishment of new industries, page 44 consequently it is only reasonable that the country should bear the expense of finding out what industries are likely to succeed, and of the experiments necessary to shew whether they can really go alone. What form such assistance should take, and whether it should be decided on the basis of a general Colonial policy on the merits of the individual industries, are questions for legislators to determine.
After considering the various branches of industry as relates to the future, in the order already fixed, I shall again revert to the general question of establishing manufactures, apart from its connection with the problems of Freetrade and Protection.