The Great Controversy.

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 various cogent reasons, the principal one being that I can only give a "layman's opinion" on the subject, my acquaintance with the "Dismal Science" being very slight. I shall, however, give what I consider the salient points of the controversy—"how it strikes a stranger "—and will endeavour to show the bearing of the question on the industries of New Zealand.

In the first place it is perfectly 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 page 62 protection, and the one appears to be as much subject to periods of depression as the other. We are told that there are certain economic laws as immutable as those of the Medes and Persians, and that these laws govern and regulate every movement in the commercial world. I believe that nine-tenths of these laws are a myth, and that political economy has no real existence as a science. Comte, the great French philosopher, defines science as "the power of prediction." The captain of any of our Home steamers, though he has not seen land for a month, can tell the hour and minute when a certain lighthouse will appear in sight, and we know beforehand that spirits of salt poured on limestone will cause an effervesence, but the Dismal Science gives no such certainty in predicting effect from cause. According to all rule the industries of America should have come to grief long ago, but they are to-day more vigorous than ever. America manufactures more steel rails and weaves more woollen cloth than England. We have American locomotives running on our railways, because they are cheaper and better suited to our requirements, and can be got in less time than from England. Belgium, a country where native industries are protected, should not be able to compete with freetrade England, yet we are using Belgian iron in the Waiau Bridge because it is cheaper, and we hear of Belgian ironwork being used in Glasgow itself for the same reason. Furthermore, German cottons have in a few instances been sold in Manchester.

The value of iron and ironwork imported into Great Britain from Belgium and Holland during the last five years has averaged £1,847,780 a year.

Richard Cobden predicted "that in less than ten years from the time that freetrade was inaugurated in England every civilized country would be freetraders to the backbone" It is now 40 years since freetrade was established in England, and for all practical purposes she has gone alone. Either the prophecy of the great apostle is unfulfilled, or there is only one civilised page 63 country on the face of the earth. I am afraid we must accept the former of these alternatives, for Gladstone says "that the commercial supremacy of the world must ultimately pass from the United Kingdom to the United States.

Referring to this subject Mulhall says "American industry and population increase much faster than in Europe, and so does the wealth of the nation. Everyday that the sun rises upon the American people it sees an addition of £500,000 sterling to the accumulated wealth of the republic, which is equal to one-third of the daily accumulation of mankind." The manufacturing industries of the United States are already 35 per cent, greater than those of the United Kingdom.

The protectionists point triumphantly to the progress of the industrial arts in America, as proof positive that their views are correct, but freetraders say that the prosperity of America is attributable to other causes that she has prospered "in spite of protection." Theoretical freetraders tell us that England has most to fear from competition when foreign countries throw off the trammels of protection; but the practical Chairman of the Manchester Royal Exchange says that "foreign tariffs are the bane of our existence."

We thus see that political economy is anything but an exact science, and that it cannot even be classed with the practical rule of thumb science of our every day life. The reason is simply that in the one case we have inert matter with no will of its own, to work upon—the clay in the hands of the potter. In the other we deal with the sentiments, passions and aspirations of humanity which obey no natural laws.

Another fallacy is the idea that a hard and fast line can be drawn between freetrade and protection. This can only be done when we deal with abstract principles, and carried to extremes the abstract principle in either case ends in absurdity. Mathematical freetrade, as understand it, is an effectual barrier to all progress," page 64 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?—Galashiels 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.

This shows the impossibility of defining the issues between freetrade and protection, in fact there is no boundary to fight for—each party is constantly encroaching on the other's territory. Freetraders are rank protectionists as regards their social and educational institutions, and protectionists are ultra-freetraders when it involves the question of cheapening raw materials and labour. The manufacturers of England would like to restrict the export of machinery, and the agriculturist the import of wheat. And quite recently the English newspapers wanted the Queen to entertain to encourage trade.

Another untenable position is to apply the same principle to all countries, and at all times. What suits old countries, who have manufactures firmly established by precedent and practise, may be quite unsuitable in a new country, where manufactures are struggling into existence. John Stuart Mill advocated temporary protection in his earlier works, and in his old age affirmed the principle, saying, further, "I do not even say that if I were an American I would not be a protectionist."

The motto of the Cobden Club is, "Peace on earth, good-will among nations," and many of its teachings are on these lines, philanthropy being a favourite text to preach from. In this matter-of-fact age it is difficult to page 65 accept the theory of pure disinterestedness. It is far easier to assume that with freetraders and protectionists alike the main-spring of action is self-interest. Until the millenium comes this is the only feasible hypothesis. During the civil war in America, when the trade of Manchester was at its last gasp for want of cotton, the freetraders, one and all, with Cobden at their head, pressed the English Government to "stimulate" the cultivation of cotton in India When charged with inconsistency, Cobden admitted that on this question he flung the principles of free-trade to the winds.

As I was writing this part of my lecture, I came across a case in point. An article in a leading colonial newspaper, one that is severely orthodox on the doctrines of freetrade; it said—"The impenetrable stupidity of our legislators has in the past prevented the colony from reaping her full share of the advantages to be derived from the stores of coals on the West Coast. A liberal expenditure on harbours ten years ago would have repaid us again and again." This paper would probably go into convulsions at the idea of putting a shilling duty on coals, but here it proposes to give what, with the cost of the railways already made for the same purpose, is equivalent to a bounty of five shillings a ton on the total consumption of the colony for the last ten years. The interest on the expenditure is equal to a duty of ten shillings a ton on all the coal we import. As a strict matter of principle there is as much protection in making harbours to develop our own coalfields as there would be in prohibiting the import of coal from Newcastle.

The whole Public Works policy of New Zealand is a gigantic system of protection to develop the resources of the colony, and stimulate her various industries. So also is the education system; the State educates our children simply that we may hold our own with other countries. Although theoretically a free trade country, New Zealand is violating the laws of freetrade at every turn, and it has been the same all through. In the page 66 early days woolpacks and sheepwash were admitted free as a protection to the squatter. Agricultural appliances of all kinds have always been duty free as a bounty to the farmer, and now his produce is carried on the railways at a low rate with the same object. Coalmining 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.

Assuming that there is a seed of disinterestedness in the world of commerce, I think that it finds a more congenial soil in protection than in free trade. Protection teaches the old fashioned doctrines "love thy neighbour as thyself," and the "labourer hire," in modern phraseology "give a good day's pay for a good day's work." Free trade says "buy in the cheapest market, and sell in the dearest." It is the practical exponent of the Darwinian theory, "the survival of the fittest. "Kill or be killed." Carlyle, Ruskin, and Max O'Rell are each in his way severely sarcastic on the great free trade principle of cheap production. The sage of Chelsea says:—"Sad news that the English nation's existence depends on selling manufactured cotton at a farthing an ell cheaper than any other people. A most narrow platform for a great nation to base itself on."

It is this unchristian doctrine of extorting the uttermost farthing that has given us the Song of the Shirt.

"With fingers weary and worn,
With eyelids heavy and red;
A woman sat in unwomanly rags
Plying her needle and thread.
Stitch! stitch! stich!
In poverty, hunger, and dirt,
And with a voice of dolorous pitch
She sang the Song of the Shirt."

page 67

"Work, work, work,
Till the brain begins to swim;
Work, work, work,
Till the eyes are heavy and dim;
Seam and gusset, and band,
Band and gusset and seam,
Till over the buttons I fall asleep
And sew them on in a dream."

"Work, work, work,
My labour never flags.
And what are its wages? a bed of straw,
A crust of bread and rags.
That shatter'd roof—and this naked floor;
A table—a broken chair
And a wall so blank my shadow I thank
For sometimes falling there."

All this is in favour of the protectionists, but we must not run away with the idea that there is nothing to be said on the other side.

The duty on cloth in Victoria has been raised lately simply because the New Zealand manufactures were competing successfully with those of Victoria on their own ground. The discussion on the question revealed the fact that the Victorian factories are not so well appointed nor so well conducted as the New Zealand ones. Excessive or premature protection undoubtedly emasculate an industry of this kind. In the one case it lessens competition, without which there cannot be life and vigour, and in the other the young plant is forced into full bloom before it has time to gather strength for itself. Although undue competition has given us the Song of the Shirt, it does not follow that a moderate amount is injurious, many a deadly poison is a good medicine when taken in proper doses, and we know that the plant that is unduly forced in its youth will not stand alone in its old age, it wants support all its life.

To start industries before their time is a still greater evil: a cloth-mill on the diggings, or a cement factory in the pastoral age, would have little chance of succeeding, no matter how much protected or stimulated.

page 68

It may also be set down as an axiom that assistance not required is injurious. The pace is always steadiest when there is a heavy load to pull. There is always a danger of a capsize when the power is in excess of the work to be done.

Again, we may take it for granted that the cost of production in a highly protected country is greater than in a free-trade one, everything else being equal; consequently, all the industries in that country which depend on a foreign market, are placed at a disadvantage. The western farmer of America, or the wine-grower of France receives no benefit from the protected manufactures with which he is surrounded. On the contrary, they do him harm. In like manner the gold-digger of New Zealand is not a protectionist in the matter of trade. Open ports mean cheap powder and cheap picks to him, consequently he goes in for protection in the shape of roads, water-races, and sludge channels.

One of the greatest objections to protection is the un-certainty of its actions. Like some of the new torpedos, it does not always discriminate between friend and foe. The whole trade of a country may be compared to the water in a hydraulic press. The slighest pressure applied at any point is transmitted through the whole mass, and the weakest place suffers most. An all-round system of protection would have much the same effect as absolute free trade and isolated protection, whether in the form of differential duties or exemptions, is a harp very hard to tune. Nearly every manufacturer in New Zealand would be benefitted by getting in raw materials duty free, but this would leave undeveloped the natural resources of the country, and all industries connected therewith.

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.

page 69

The evils of isolated protection and the anomalies arising therefrom are well exemplified in the evidence taken by the Colonial Industries Commission in 1880. 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 shown that they are two of the most successful manufactures in the Colony. These cases indicate the difficulties that beset any system of isolated protection, To deal out even-handed justice in the matter is an intricate problem that can only be solved by a system of trial and error.

I shall have occasion further on to revert incidentally to the question of freetrade versus protection, but in the meantime I will sum up the whole case in the words of the naturalist who undertook to write a treatise on the snakes of Ireland—"there are no snakes in Ireland." There is no such thing in practise as freetrade or protection, and to the theorists on both sides I might quote the ancient Latin proverb, In medio tutissimus ibis, the golden mean is the only safe position; or, putting it into the vernacular, keep the middle track.