The Pamphlet Collection of Sir Robert Stout: Volume 30
Freetrade and Protection
Freetrade and Protection.
When times are bad there is always a cry for a change in legislation. If the country has hitherto had a Freetrade policy, there is a cry for Protection. It has been tied up with Protection, there is a cry for Free-trade. Anything for a change, by way of experiment. We see an excellent example of this in the case of South Australia. That colony is, upon the whole, essentially pastoral and agricultural, and has suffered from severe droughts for some years past by the effects of which many thousands of cattle and sheep have died, and many hitherto wealthy settlers have been ruined. The wheat crops have also either failed or have been wofully deficient in yield, One would have thought that the remedy for this state of affairs would have been to do something for the farmers if possible, such as making dams to couserve water, and sinking artificial or other wells, experimenting with crops suited to stand the consequences of dry weather, and so on, but instead of this, what do we find? A proposal to introduce Protection to manufac-factures! The ruined farmers ask for bread, and they are given a stone. The country is in a state of distress. Handicap it still more, and place it at the mercy of the town? Let us apply this lesson to ourselves. New Zealand has not suffered from drought like Australia, but it is suffering heavily from low prices of its produce. The farmers are distressed, and the remedies suggested are to distress them still more. I should wish the farmers of New Zealand to bear in mind that they cannot themselves be protected. They export wool, wheat, oats, potatoes, and other agricultural produce. What they import in that line is a trifle. Such products as maize are probably imported for the farmer's own use, and any duty upon these would still further handicap them. Parliament might place duties upon agricultural produce, but as little or none would be imported, the result would be nil. Therefore Protection to native industries means favoring the town at the expense of the country.
It is asserted by Protectionists that the adoption of their principles results in getting goods cheaper. They would make one disbelieve in the evidence of his senses. One has only to visit any Protectionist country to find that he is paying enhanced prices for everything. True, that prices have fallen since Protection was established in America and other countries, but Protection has had nothing to do with it. Iron, for instance, is now produced far cheaper than it was a few years ago, but that is caused by improved processes, and there is a general fall in prices all over the world, and the same result has occurred with other goods.
I am as much as any one in favor of establishing all manufactures which we can work to advantage. Agricultural implements, for instance, are made in New Zealand of a more suitable character than those imported, and I imagine require no protection to succeed. I would readily give more for a colonial double furrow plough than for an imported one, because the former will do the work much better than the latter. What woollen factories require is not protection to secure the Home market, but openings for their goods in Australia and elsewhere. Give more protection to these factories, and shut out the Australian market, and in the course of a year or two they will be ruining each other. Our population is altogether too small for the successful running of many factories. People talk of the success of protection in America, forgetting that the United States have a population of some 60,000,000, and a climate ranging from nearly arctic to tropical, with absolute freetrade within its borders, that it produces cotton, wool, and other raw materials, that it has perhaps the largest coal field in the world, and immense supplies of iron and other minerals, including the richest mines of gold, silver and copper. Therefore, the ill effects of protection are comparatively little felt. The expected results, however, which were to keep up the price of labor, do not appear to have had that page 5 result. I am informed that the average wage of mill hands in America does not exceed 2s 6d a day, and that 330,000 souls were lately unemployed, but fortunes have been made by manufacturers or by "rings," as might naturally be expected when the whole community is called upon to contribute to their enrichment.
Compare the surroundings of the manufacturers of the United States with that of the New Zealand Islands, with their united area, and population of 600,000 only. What we now require, and shall require still more in the immediate future, is an outlet for our manufactures, and this is not to be attained by a restrictive policy.
The fiscal policy of the Australasian colonies is of the most antiquated and what may be called old Tory description, and reminds me of the system in vogue on the Continent of Europe some 40 or 50 years ago, where one was pestered by an examination of baggage perhaps several times during a day's journey. "Protection" was then in full force, even in Great Britain, and the results were certainly not agreeable. Commerce was hampered, enterprise was checked, people were starving, bread riots were common. There may be hard times now, but in no measure so hard as they were then. The sooner that all barriers to trade between the Australasian colonies are thrown down the better. New Zealand then could freely send wheat, oats, barley, potatoes, fat cattle and sheep, and manufactures, and receive in return maize, fruit, wine, &c. Trade would doubtless soon extend to other articles. New Zealand ought to supply Australia with beer if the brewers would make a marketable article, but made safe in their profits by a protective duty they inflict an inferior liquid upon their long suffering customers. Instead of helping the farmers by using malt and hops, I suppose they patronize the foreigner by brewing from sugar, mixed with other compounds. Of course I except those brewers who make good beer. I observed lately some one called for a protective duty upon wine! This shows what we might come to, viz., to be expected to drink New Zealand wine! The fact is that the wine duties are far too high already, Wine should be treated as a necessity for the general public as in France and other countries, and not as a luxury for the rich, and then there might be hope for temperance, and the natural exchange would be New Zealand beer for Australian wine.
If we are to do a large trade with Australia we must be prepared to receive Australian commodities in exchange for our products, and not erect artificial barriers. No large trade can exist without an exchange of commodities. Look at the state of trade between Australasia and the kindred race in the United States. With the 60,000,000 inhabitants of the latter conutry, the trade of the former is of the most limited character, and this of course arises from the exclusion of Australasian staples by the high protective duties of America. If "protection" were true in theory then Great Britain ought to levy corresponding duties upon our produce, and then our amount of trade with Europe would dwindle to a similar amount. Where should we be then, with our surplus wool, tallow, wheat, &c? We might revel in a superabundance of produce, but we should have no money. We could then neither pay our public nor our own private debts. We should be an insolvent community with no hopes of getting out of the mud. I should wish everyone to bear in mind the great axiom of Free Trade, viz., that there is no import without a corresponding export, directly or indirectly. Thus commerce balances itself automatically if left alone. Those countries in which the imports apparently exceed the exports, happen always to be the most prosperous. Your protectionist is always watching the imports with fear and trembling, fearing that they may exceed the exports. If he ceased to bother his head about it he would save himself a great deal of trouble. He may, however, do his best to increase the exports, and that will of necessity increase the imports also. In fact that is what the country wants at present—more variety and greater quantity of exports.
There is one aspect of protection on which I give my opinion with diffidence. The causes of the depression which has page 6 now lasted so long over all the world are considered to be very obscure, and no doubt may be various, but I venture to suggest that one cause of the depreciation of our staples, viz., wool, tallow, wheat, &c., may be the adoption of "Protection" by' numerous populous States in Europe, by the United States, Canada, and Victoria. These countries all go in, more or less, to exclude English goods, consequently England has not the means of paying for the raw staples at the old figure. How can she do so if her means of payment are excluded? In consequence down falls the price to a figure which she can afford to pay by the exchange of commodities.
If my theory is correct, then Victoria loses upon the fall in price of her staples far more than the profits derived by a small minority of her population from the protection of her manufactures. The loss to her general population is great and absolute, the profit is limited to a handful of her people.
New Zealand is essentially made by nature for a commercial country, and to progress in a natural way she only requires to be left alone and excluded from the experiments of political and economical heresy. My remarks are called for because both these baneful influences are in the air, and a policy of an antiquated and old Tory principle is strongly advocated. I am an old sailor, and I want to see the ship go ahead instead of astern, which is sure to follow if a retrogressive policy should carry the day.
Lest it should be said that I propound nothing for the good of the farmer, I request attention to the following remarks. Anyone who reads the Australasian must be struck with the gigantic efforts which are being made to promote irrigation in Victoria, and within the next few years I think we shall see an enormous accession of wealth to that colony from the operations now contemplated or in progress. I must say it "riles" me to see the intelligent application of skill in that colony and its total absence in this.
I have at various times advocated the introduction of irrigation on a large scale in New Zealand, and have usually been met with the remark that we have plenty of rain. There is plenty of rain in England, but no farming there pays better than an irrigated meadow. We might double and treble our produce by means of irrigation, and some districts, such as the Waikato and the sands of the Manawatu, we could make fertile by its use. I hope my Auckland friends will be grateful for the suggestion. Not that irrigation can provide the phosphates if these are deficient, but by growing clovers and other leafy plants a supply of nitrogen can be given to the soil. Our supply of water is enormous, whereas the Victorian supply is not so.
What I propose need not involve any Government outlay whatever. Victoria has contracted with Messrs Chaffey Bros, to provide large tracts of land, which the latter are to irrigate and settle with population, and it has legislated to allow other districts to form Boards for irrigation purposes. If our Parliament and Government were to devote their energies to the irrigation question for some years to come, they might get the colony out of its difficulties, and keep themselves out of mischief.
At the present moment the ship of State is in a perilous position, and the question seems to be on which tack she shall go. If she goes on the lines of a restrictive policy we shall be close hauled for years to come, in the faint hope of weathering the breakers. The right tack and the true policy is to contend for a Customs Union of Australasia. Then we should place ourselves in a similar position to the people of the United States. If we have not 60,000,000 people for a market we shall have 3,000,000 or 4,000,000, with a rapidly increasing population, and, as this increases, our trade and manufactures would increase also.
In the immediate future it is not the competition of the "down trodden serfs" of Europe which we have to fear, but it is that of the down-trodden serfs" of New Zealand. I trust it will be observed that the above is a quotation. Most of us have heard it or read it before With the mills at present running, and those in prospect, and in default of an outlet beyond the colony, the "down trodden serfs" of Mosgiel, of Kaiapoi, of Ashburton, of Welling- page 7 ton, and I suppose we may now say of Auckland, will soon figuratively be at each other's throats.
When I consider the large internal trade which might be done in Australasia it puts me altogether out of patience to sec steps taken to make a Customs Union impracticable.
Wellington, of all places, should look to its trade.
I am at a loss to understand the sudden howl for Protection. Our manufactures have been protected from foreign import all along. The present import of 15, or as some say 16½ per cent, is ample. Where is the cause for increasing it even from the Protectionist point of view. If that game is once commenced there is no knowing where it may end. The manufacture of steel began in the United States with a Protective duty of 15 per cent, and gradually rose to 150 per cent! Think of that, oh ye people! Think of being put under the thumb of "rings" and syndicates who will squeeze 150 per cent out of you! Unfortunately we must look on our 15 per cent impost as hanging round our necks for many years to come. Our finances demand the sacrifice—let our manufacturers rest and be thankful.