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The Pamphlet Collection of Sir Robert Stout: Volume 30

Protection and Free Trade

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Protection and Free Trade.

Wellington: Lyon and Blair, Printers, Lambton Quay.

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Protection and Free Trade.

Wellington: Lyon and Blair, Printers, Lambton Quay.

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With your permission, I dedicate this little work to you. The kindly and large-hearted sympathy which you ever evince with the people of this Colony, and the courage you have shown in striking out new paths of advancement for the masses, embolden me to hope that the views I have endeavoured to express will meet with a candid consideration from you, and, if approved of, the most powerful and weighty advocacy that can be exerted on their behalf.

With great respect

, I subscribe myself, Your most obedient servant,

The Author.

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Protection and Free Trade.

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My endeavour in these few pages will be to show that Protection to those industries which can be profitably pursued in this Colony, is essential to its progress and existence. Having no political constituency to be afraid of, I am not hampered by the fear of failure to convince a majority of the electors that my views are sound. I do not propose to weary the reader or myself with an endless array of statistics, which can be made to prove anything, but rather to state admitted facts, (or at least what I believe to be admitted facts,) and then to draw such deductions as will, I trust, seem sound to thinking men.

Free Trade in the Old Country has become an idolatry, and it is denounced as reversion, to advocate Protection there; although, even now, statesmen are frankly admitting that Cobden's prophecy of the consequences of England's example in adopting Free Trade has not been fulfilled, and that some results are occurring in countries with a protective tariff, which are at variance with Free Trade theories. The development of American manufactures is rudely displacing the hope that Free Trade would survive and surpass Protection; and the display of colonial manufactures at the recent Indian and Colonial Exhibition, was not altogether so agreeable to British manufacturers, as the praise bestowed would entitle the exhibitors to expect.

England adopted Free Trade because she believed that it was her best interest to do so; and I believe that owing to her peculiar situation it was really a wise policy. Had all other nations followed suit, the advantage to her would have been still greater. Other nations, and notably America, declared for Protection, because they saw the difference between England's position and their own.

New Zealand has only lately had the question brought at all incisively before it, and there are two considerations, both of them grave, which urge her against the policy, although her own interests are calling loudly for it. The first of these considerations is a sentimental one, but none the less weighty on that account. It is felt to be unfriendly and anti-English to page 6 thwart the wishes of the Mother Country in this respect. Begirt as she is by foes abroad, and weakened by dissensions within, the majority of colonists are determined to stick closer than ever to the country to which they owe allegiance, and will be slow to offend her in any way. This is a powerful consideration with many, and long may it continue so. Whether there is sufficient in it to refuse to support Protection, remains to be seen. The next consideration is not sentimental, but apprehensive: it is the fear of such large vested interests being created that, when Protection has done its work, by creating an industry that can fairly compete with the whole world, the vested interests will be powerful enough to continue a high tariff, in order to artificially inflate their profits. Troubles will come in various forms upon every people, but I do not fear this one in particular. Popular voting may make great mistakes, but it is more ready to remedy mistakes, than aristocratic legislators have proved themselves to be.

The last objection brings into prominence the fact that, at the present time, the chief opponents of a protective tariff are the importing merchants and squatters, and also that class of persons whose incomes are fixed and certain, such as Government officers, bank managers, and the like. Mr. George Fisher, M.H.B., says that the newspapers of the Colony oppose a protective tariff, because they are hired to do so by importers. No doubt, if the newspapers generally did advocate Protection, those interested in opposing it would establish a Press to write it down, and it rests with the Protectionists to do likewise; the only difficulty being that the power of wealth is on the side of the importing interest. The very danger that is apprehended from our protected manufacturers is being experienced now from Free Trade importers: they can afford to spend money in defence of their present interests, and are not backward in doing so. But the danger apprehended from protected colonial manufacturers uniting to keep up a high tariff, in order to unduly inflate prices, is wholly imaginary and impossible, and vanishes before the thought that competition amongst themselves, will soon reduce profits to a fair margin above the cost of production. The woollen fabrics, boots and shoes, manufactured within the Colony, are priced according to the lowest cost of production in the most economically worked mill or factory, and competition is already getting keen between them. Protection in these articles would not raise the price at all; it would only increase the local demand, and create more and more factories, employing our surplus labour. No doubt our importers would feel the change a little, but they must be far more stupid persons than their success hitherto in life warrants us in believing them to be, if they are not able to adapt themselves page 7 to the change, and find it more profitable than the present system. They are very conservative in their principles, only they call it liberalism: their fathers fought the battle of Free Trade and Protection at Home, and they do not want to argue it all over again here. "Protection is dead," say they, "dead as King Arthur, and as great a fraud." It suits their present interests to say this, but if they would look ahead it would suit them better to recognise at once that we are at the Antipodes, and that in policy as well as geographical position, the opposite is sometimes correct.

The Colony cannot live without manufactures. It cannot maintain an ordinary prosperity by farming; it has practically at present no other resources; it cannot establish manufactures without powerful aid. Bonuses are insufficient to establish manufactures, because they do not provide any inducement to people to buy colonial manufactures in preference to foreign. No bonus can be offered which would enable the colonial manufacturer to undersell the foreign; but a tariff can do this, it can estimate the fair value of an article, and then tax the indifferent purchaser, who insists upon having imported goods. I have just said that beyond farming the Colony has practically at present no resources; and it may well be asked whether this is true, after the display made at the New Zealand Industrial Exhibition of 1885, and the pæan of praise that then was sung. Unfortunately it is only too true: we demonstrated beyond doubt that we had the ability to manufacture almost every requisite of our life, if we had the chance, but we have not the chance, so long as those, whose selfish interests lie in an opposite direction, prevent our industries from competing on equal terms with the low wages of older countries.

We have timber, and gold, and coal; but with the exception of the latter, these will not have a permanent or widespread effect. Our coal will supply our factories, but without factories our coal is of comparatively little worth. Wool and grain are grown in a certain portion of the Colony, and the wool and grain growers are Free Traders, because they want the cheapest labour, clothes, furniture, necessaries, and luxuries that they can obtain in exchange for their wool and grain. These interests are represented by wealth and intelligence, and this it is, which makes the introduction of a protective policy so difficult and slow. Come it must, when the shoe pinches so tightly that it can no longer be worn, and the foot is lamed and crippled. Can it not come now, before the weakening of starvation and dishonest credit, has unnerved the body and brain for healthy work?

Free Trade is an easy doctrine to argue if you will assume the major premiss—if you take for granted, that nations and page 8 individuals will act fairly, and that their conditions are similar; in other words, if you treat human affairs as if they were arithmetical factors, and can be proved accordingly. It never has been so from the creation; one touch of nature mars the whole problem, and the Q.E.D. falls ignominously to the ground. According to the unanswerable logic of Bright, Cobden and Villiers, America, Germany, and all other nations must necessarily follow England's example, and espouse Free Trade; compelled to do so by the glory of the success that was to follow its introduction. Had America done so, would she now be England's rival in manufactures? I do not think that it will be seriously contended that she could have survived the early years of competition with her rival.

The more simple the form in which the question is put before the people, the more clearly it will be understood. I place these postulates before my readers:—
1.It is to the interest of a few wool and grain growers, and some importers, to have Free Trade.
2.These classes are insufficient to maintain the Colony and its burdens, and provide for natural increase in population.
3.That without large population the agricultural community must languish and fail.
4.That by the establishment of manufactures, a large population can be supported, which will, in turn, support the agriculturist and other classes.
5.That the difficulties in the way of establishing manufactures are chiefly the difference in wages here, and in older countries, and the opposition met with from Home manufactures and importers.
6.That it is undesirable to reduce the price of labour here to that of England, or other old world countries.
7.That the requirements of a country teeming with population, and unable to raise its own food-supply within itself, are different from those of a new country with a sparse population, able not only to produce its own food-supply, but to export to others.
8.That the burden of debt which New Zealand has incurred, chiefly in rendering valuable the properties of wool and grain growers, demands an increase in population, and the production of the highest possible equivalent for money in order to pay the interest on such debt.page 9
9.That the colonists, and especially colonists of the above classes, are not patriotic enough to buy colonially manufactured goods from a desire to benefit the country, but would probably do so, if they had to pay a tax to the State for importing foreign goods.
10.That the success of a protective policy depends upon the wisdom with which it is applied.

The wool and grain growers, the importers, and the recipients of a fixed income, oppose Protection because they believe that the effect of it would be to raise the price of commodities they are compelled to buy, without raising the price of those they sell. The wool and grain growers export their wool and grain, and the cheaper they grow it, the larger their profits. The price they receive is fixed by the market of the world, but the wages they pay is fixed by the rate in the Colony. The lower wages sink, and the easier land is obtained, so much the better for them. It matters not to them if people starve at home, for lack of money to buy bread: they have their railways, their land, and ships, and away goes their wool and corn to supply the world at large. Some of them are honest enough to admit this, but not many; the majority prefer to prate of the final victory of Free Trade over Protection, to invoke the shadows of Bright, Cobden and Villiers, to point to the conversion of Sir Robert Peel, to shrug their shoulders in contempt at those who would re-open the controversy; and all the time employ their power, pecuniary, political, and personal, in defeating Protectionist ideas. Admit here, for the sake of argument, that from their own point of view they are right, and the question at once arises: Are the people going to allow the interests of a privileged class to override all others, and turn this Colony into a sheep run, or machine-tilled corn field? "The earth is the Lord's," say they, "and the fulness thereof;" meaning themselves as the lords. The earth is the People's, say I, and if they do not all eat of the fulness thereof, it is their own folly which prevents them. Theirs is the political power; let them wield it to their own advantage.

But these people are wrong, even from their own point of view. They are not so independent as they seem; they, too, know the iron hand of debt and heavy interest. They will not be able to exist with an impoverished people around them, and a bankrupt Government; they must bear the expense of maintaining those parts of the Colony in which wool and grain cannot be grown; and they will find that a home demand is better in the long run than a foreign one. Will they not see the advantage in being able to sell within the Colony, to a thriving page 10 and industrious population, rather than having to wholly depend upon the fluctuations of the world's market; and that even if for a time they have to pay a little more for commodities under a Protective tariff than they would under Free Trade, the seeming loss would be more than recouped to them?

As to the other part of the class we are considering—the importers, and that large army the Civil servants, bank managers, et hoc genus omne—is their case different? We will see. The importers would find the change so gradual, and that as imports lessened, if they did lessen—and I doubt if they would—other profits in the shape of brokerage and trade with manufacturers would take their place; capital would flow into the country for machinery and plant; indenting would long continue, and not during the present generation would English trade be less. Instead of manufactured articles, we should long have to import the wherewithal to make those articles; and not till a full century of our existence has passed, shall we be able to supply ourselves with machinery and plant in the endless variety required. Patentees would still be protected, and patented machines would have to be imported as at present. For the salaried portion of the community, to whom Protection is a bugbear worse than a 10 per cent, reduction, I would point out that there is a worse evil than high-priced goods—namely, dismissal, "in consequence of reductions in the service." They cannot be maintained unless the country continues to be prosperous and populous; and as the demand for labour such as their's increases, so will their incomes be commensurate to the cost of living. Be wise in time, I would say to these: you are not called upon to actively advocate one side or the other; consult your true interests, and place no obstacle in the way of the development of this people and Colony, and do not turn away from this counsel, as too presumptuous from an unknown man in politics. I would not trouble to write these pages but for the unfortunate fact that those who govern us, who are looked up to as men of light and leading, cannot too suddenly press a protective policy upon the country; they cannot either frighten or offend a powerful section of the community, but must go cautiously, waiting until the truth is brought home to the people generally, and they are ready to give their verdict. You to whom I now speak have weight and influence among the people, especially in matters of opinion; removed from the daily struggle for existence, accustomed to exercise judgment on doubtful matters, possessing practised pens, and often practised tongues: your influence, quietly exerted, will have a large effect in hastening or delaying the inevitable result.

It surely requires no argument to show that all the classes page 11 above referred to are insufficient to maintain the Colony and its burdens, and provide for natural increase in population. Had a different start been made, had no public debt been incurred, had no foundations been already laid, a certain number of these, backed by a comparatively few of the working class, might have continued to so maintain a holding of the Colony that its name would still be in geographies, and included in a list of English possessions. But we have been too enterprising for this: we have discounted the future; and to retire from active business now would mean bankruptcy and disgrace. Those who are living in a fool's paradise, taking for granted that because it is well with them at present it will ever continue so, and not seeking for the causes of their present prosperity, and for the guarantees of a permanence for things as they are, may scout the proposed remedies and laugh at apprehensions for misfortunes; but, be they never so positive in their security, matters will work to their natural consequence. Taking the Civil Service as an example, and admitting that it is neither overgrown or over-paid, what is to become of the children of the present Civil servants? Can they all be received into Government offices, and be servants of the public? They may, if the public is increasing in proportion to their own numbers, but not otherwise. Then are there other openings offering? I think not in due proportion to the increase of candidates. Had we countless acres of pasture, or arable land, no doubt great cities might arise; but we have no such qualification, our Colony cannot be one merely of city and plain. I believe firmly in the wisdom of the policy which has been almost undesignedly shaped, and which has produced the beginning of so many, and so varied industrial arts amongst us. I do not know if this is the critical time at which a right or wrong decision will make or mar us; but, were it not for our genius in extricating ourselves from the consequence of mistaken counsels, I should say it was. In any event, the departure which is now sought to be made must have an immense importance upon our career for many years to come.

A purely agricultural population, without accessible and lively markets, exist in a fashion which hardly any civilised being can desire. The field, garden, and dairy will no longer supply the wants of civilized man. Without cash to purchase clothes, implements, machinery, comforts, and imported necessaries, life on a farm is intolerable. Farming is now no longer the primitive means of living it used to be: it is a business, demanding knowledge and capital; and the farmer, without a market, is as helpless as a merchant in a desert island. The prosperity of our farmers depends upon the goodness of the markets afforded them; and how are we to provide a market here, except by page 12 having large numbers of mouths to fill, belonging to people who are producing wealth in other forms? Years ago, I remember a certain goldfields warden who was much chaffed concerning a speech he made. This gentleman said: "The merchant lives upon the storekeeper, the storekeeper lives upon the miner, and the miner wrests the auriferous ore from the bowels of Mother Earth." He said "Muvver Earf," but that does not matter: what he said was perfectly true; and what is the result of such one-sided "reciprocity"? When the miner has exhausted Mother Earth's supply of ore, he and the storekeeper, and the merchant, all depart for fresh woods and pastures new. If we can, in exchange for the farmer's stores, supply him from the hands of those who eat those stores with clothes, implements, and other indispensable requisites, a reciprocity is created which is not "all on one side." But if the farmer has to send his produce away across the sea, turn it into money in a foreign mart, and from thence bring back the things he must buy—friction, loss of power, loss of money, loss to the country is the result. Take an illustration from banking business. How much actual cash does it take to settle the exchanges of all the banks doing business in a city? Hardly hundreds; yet the debit against each bank alone amounts to tens and hundreds of thousands. A clerk goes round, and the cheques drawn on one bank are set against those it holds drawn on other banks. I speak of cities where clearing-houses have not yet been established, but the same thing occurs in both instances. Now, supposing, instead of this easy way of settling differences, each bank had to remit to a distant city, bullion or drafts, representing the value of the cheques drawn upon it, and in the course of time received from the same or another city, bullion or drafts representing the value of the cheques received by it upon other banks—what loss would occur! what increase of capital would be required! how the danger of ruin would be increased by delay in receipt! how difficult it would be for a new institution to commence business! Yet this is very analogous to the system of exporting our farming produce, and importing our farmers' implements, &c. I hope to show, further on, how utterly inapplicable the cogent arguments which forced Free Trade, or rather a free-food supply, upon the English people, are here.

Now, if we can succeed in well-establishing a number of manufactories suitable to the conditions of the Colony and people, there is no class which will more benefit by it than the farming and agricultural population, although the whole Colony will also feel the advantage. The essays which were written for the New Zealand Exhibition, 1885, show clearly enough the different manufactures which can be successfully pursued in the page 13 Colony; but they do not, unfortunately, succeed in proving that those manufactures are encouraged to the extent patriotism would desire. Even if farmers had to pay more for their clothes, implements, &c., by purchasing them in the Colony, they would more than recoup themselves by the enhanced price they would obtain for their produce, and by the saving of freight and charges to convey and sell their produce. But they would not have to pay more; competition amongst the manufacturers would bring prices to their proper level, and would speedily guarantee an equal, if not superior, excellence to the articles. Protection is not of so much value in raising the prices of colonially manufactured articles, as in inducing people to forego their prejudices in favour of imported wares. Every one is in favour of our manufacturing our own wares—at least no one openly opposes it, but they oppose the only means by which it can be accomplished. They profess a horror of a corrupt or permanently high tariff, continued for the advantage of one set of interests; yet they themselves set the worst possible example by opposing it from interested motives. They will be overcome by common sense; and should those who are now at present striving to establish industries by means of a protective tariff, hereafter endeavour to unfairly prolong a high tariff, the same common sense will know how to deal with them, in whatever way they may seek their own interests at the expense of the common weal. The welfare of the whole community is now sought, and is opposed by one or two classes whose present interests are adverse to the change.

It is chiefly in the difference of wages, that the difference in price between foreign and colonially made wares is made up. There is also the difference in the value of capital, and the extent of market. Could we have skilled artisans at from 15s. to 30s. a week, or even far less, as in England and some foreign countries, we should soon have manufactures as cheap as there; and the only remaining difficulty would be to convince our people that our goods were as excellent as foreign. Who wants wages reduced to such a price? The richer the man, the more likely he is to desire it: but the more benevolent, the more certainly will he strive to prevent it. Who wants our labour dependent upon the rich man's smile—the labourer and artisan's wife and family thankfully receiving the crust of charity—the workhouse, the natural asylum for the old age of honest, sober toil? High wages do lead to riotous and improvident living in many cases; but the evil thus wrought is nothing compared to the wide-spread misery of having recompense for labour scarce sufficient to keep body and soul together. The drunkard and his family will see poverty and distress, whether wages are high or low; but thousands of happy working men's homes exist in the page 14 land of good wages, and they are impossible where wages hardly suffice for food for the family. With Free Trade, we are affected by the fluctuations of the labour market all over the world; our struggling industries can be extinguished by the market being flooded with the bankrupt stock of other countries. We buy cheaper for a few months, and then find that a thousand willing hands, in our own colony, are starving because their employment is taken from them.

Lord Penzance, in an article in "Nineteenth Century," says: "The true mainspring of prosperity and wealth is employment. Wealth is born of exertion and skill, of both of which there is plenty in this country; but, to reap any advantage from them a third thing is needed—a means of bartering or selling their produce—in one word, a market."

In Canada, the protective system has been largely tried of late years, and with great success. Here is the account given of it by Sir John McDonald:—

"I am largely responsible for the national policy of Canada, a policy which has been, and perhaps is now, severely criticised on this side of the sea—a policy of revenue secured by tariff. There is nothing to show that this policy has, in any respect, failed in its intention. The balance of advantage has been largely in its favour; indeed, high as party feeling runs in Canada, even the Opposition have ceased to attack the protective policy, or as both parties have agreed to style it the "national policy" of our Government. Our policy is to protect such staple industries as are capable of a practically unlimited expansion, and to admit raw material free which cannot be produced at Home. When we commenced to tax cotton and woollen goods, we were assured that the consumer would be ruined, and driven out of the country by high prices. What has been the result? Our manufacturers of cotton and cloth are in a position of increasing prosperity, and to-day the consumer is able to buy his goods more cheaply than when Canada was upon a Free-trade basis. Formerly our industries were at the mercy of the manufacturers of the United States, who recognised that our mills, once closed, were never likely to re-open, and it was therefore prudent and profitable to sell goods in Canada for a short time even at a loss, for the sake of controlling Canadian markets later at their own prices. This was actually done! We found that the cotton operators of the United States were sending us goods at less than the cost of production, and were collecting the amount of that loss by levying an assessment on their Manufacturers' Association."

And this is what we shall have to contend against, until we have the means of preventing undue advantage being taken by those who have obtained a start in the race. I do not think page 15 that the mass of the people of New Zealand, having the remedy in their own hands, will allow themselves to be frightened into starving themselves by the "shibboleth" used by Home manufacturers, and their colonial agents, in favour of Free Trade. But the people must have the question pressed home to them, and, if necessary, it must be made a leading question at the next elections: they must understand that it is their interests they are fighting for, and not the interests of a few manufacturers; they must understand the question, and be able to comprehend the arguments on both sides, and, as a help in the controversy, and to give it some prominence, these pages are written.

It is undesirable to reduce wages here to the starvation rates of the old world. What advantage is it to a man that bread is cheap, if he has not sufficient to buy it? How do the Free-traders at Home propose to keep their place in the world of commerce and overcome foreign competition? Why, chiefly by "the workpeople exercising more than they do the virtues of temperance and providence." I do not deny that they should exercise those virtues more than they do, but what an encouragement is held out to them to do so! Train themselves to live on radishes and garlic, like Egyptian slaves! for what purpose? that the labour of their hands may be sold for less and less money. Free Trade means cheapness, and nothing but cheapness; but has cheapness ever made a nation wealthy, or is it capable of doing so? Want of work causes distress in this Colony sometimes, but not dear food or clothing. It makes very little difference in the price charged to the consumer here, whether the article is bought in a cheap or dear market, it is the intermediary profits that make up the price: when drapers are continually selling at "fifty per cent, less than usual price,"—and very generally an enormous reduction is really made—the manufacturers' price has not so much to do with the selling price of a single article as is generally imagined.

But do not let it be for a moment assumed that I would advocate a duty on bread. Not for one moment. In the first place it is not wanted here, because practically we grow our own corn, and export a vast quantity as well. It was the price of bread in England that led to the Corn Law agitation, and the repeal of those laws; and the difference between their state and ours I will now speak of. England cannot grow her own food supply: New Zealand can, and does so, as far as the staples of life are concerned. England's Free Trade policy has only been a success so far as it extended to her food supply; it is becoming a lamentable failure so far as articles which she can produce is concerned. The success of English manufacturers in the years succeeding the repeal of the Corn Laws was due to other causes than the repeal of those laws, although it is generally put down page 16 entirely to that repeal. Nemesis is now pursuing the English Free-trader, his markets are being swamped by the wares of Germany and America, both protected countries.

In 1882 there were 110 iron furnaces in Staffordshire, and now there are no more than 41, and as fast as the furnaces are extinguished in England others are lighted abroad to replace them. Free Trade is a beautiful theory for the Millennium, but that time has not come yet, and until it is quite safe to beat our swords into ploughshares, a Free Trade colony means a poor stagnant people, a declining exchequer, and a hopeless future for all but a few. The Public Works policy, which was vigorously initiated in 1876, gave employment to our people, raised wages, and provided a market for our producers: but what is to take its place, and pay interest on the borrowed money, unless we maintain a large population, and produce wealth by skilled labour? I know of nothing—it is admitted that there is nothing, yet the cry is persisted in, that manufactures will grow gradually of their own accord, without forcing, and be all the healthier in consequence. It cannot be done. The example of what was done in Canada, as quoted by Sir John Macdonald, is sufficient to show what happens. A similar policy is being pursued towards us, and a closed factory here is not easily opened again. Reverse the dogma of Free Trade—namely, "That all imports of articles the like of which we produce at home ought to be free of duty," and say "That the imports of articles the like of which we produce at home must be taxed, and that the imports of articles the like of which we cannot produce at home shall be free,"—and we shall then import sufficient to keep exchanges from losing their balance, and will also be supporting amongst us thousands of people engaged in making here, at good wages, the articles that starving wretches in other countries would otherwise be making. We may be sorry for those whose cheap blood-money-goods we decline to buy, (and were all the world Free-traders we would follow suit,) but sympathy for foreigners will not cause us to vitally injure ourselves; and if we look at figures showing the progress of the commercial world, we find that Free-trade England is under the average in the march of progress, and that she is now seriously examining the question afresh in order to protect her own interests.

Nations and peoples may do generous acts, individuals may be philanthropic and large hearted, expeditions may be furnished to the Soudan, but to expect the British and Continental merchant to calmly acquiesce in New Zealand establishing her own manufactures, and deprive them of a good market, is more than the records of the past would justify us in believing possible. It cannot be done without a make-weight. Unless we are content with mere pastoral and agricultural existence, we page 17 must put a penalty on those who have the start; when we catch up in the race, we will trade on equal terms.

The consolidated debt of New Zealand may be reckoned at £37,000,000, but there is a good estate to show for much of this, provided it is worked to the highest profit, but not otherwise. A merchant may have large and costly warehouses, a fleet of ships, and agencies abroad: but if he does not keep pace with the times, if he allows his business to languish and fail for want of enterprise, of what value are his costly premises and varied plants. The profits of his business will not afford him interest on the money sunk in such investments. This is how it is with us: it somehow was always intended that we should be more than a pastoral or agricultural people; our island home has something to do with this, and we have gone on preparing for it; until now the crux comes, in the shape of the question: Can we, or can we not, proceed further, without boldly declaring for Protection as against Free Trade? If we cannot, and will not accept the remedy of Protection, then loss from wasted preparation must be the result, and that loss will be no temporary one from which we can recover, but crushing, disheartening, deadening and permanent. There is not only the consolidated debt, but the many millions of private obligations due by the people of New Zealand; failure now will be felt further than the shores of the Colony, and the capitalist has an equal interest in the question with the artisan, who now looks at his sons, asking what will they do to make a living.

Theorists would, I think, naturally assume that people would buy of their own producers rather than from foreigners. They would argue this way: "The irresistible tendency of the human race is to seek its own advantage; it must be to a people's advantage to purchase of their neighbours, so long as they have anything to sell to their neighbours, in order that their neighbours may have the means of buying and paying for their goods—ergo, people will buy from their neighbours rather than from strangers"—neighbourhood being understood to be limited to a country. That is the way Free-traders argued; but the bottom fell out of the argument, and will always be out when tested. The Colonial military man sends Home for his uniform, because he likes the style and cut of a London tailor; and ladies would, if they could, send to Paris for their bonnets and dresses. These are actuated by a desire to excel their neighbours in fashion. The merchant finds it easier and cheaper at present to send away for his stock; he deals in large parcels, finance is accommodated more smoothly by such dealing, and a gentle screw is required to check the tendency. Now, leaving out of the question those articles which cannot be produced here—and the duty upon which should be only imposed from a revenue page 18 point of view—if a sufficing protective duty were imposed on articles which the Colony can produce, one of two things would result: either the goods would be made here, and in making them labourers would be supported, or the wealthy person who persisted in importing, would pay such a tax to the State as his extravagance would indicate lie was able to afford. There are people who would import clothes and other things if the duty was a thousand per cent, ad valorem, and be rather glad of doing so, and outshining the vulgar herd—for by no means would I have a prohibitive duty; prohibitive it might be to economical persons, but not to those who will have a thing at any price. This tendency in some people would obviate the revenue difficulty, which would arise if Customs receipts materially fell off, although it has been proved in the United States, Canada, and Victoria, that the Customs revenue does not suffer from Protection, but rather profits by it. One of the chief advantages of a Protective tariff would be its guarantee to the Colonial manufacturer against unfair outside competition, and this would be more gain to him than a mere increase in price. It may be possible that the New Zealand manufacturer can profitably produce an article here at an equally low price as the foreign manufacturer can profitably land it on our shores, especially when ordinary Customs duty, freight, and charges are set against increased wages; but then comes in the question of fair and unfair competition. Can our man be guaranteed from attempts to "run him off the road"? His purse is not as long as his foreign competitor's; and once he is shut up, not only is he out of the race, but his failure deters others from entering. It is a charming thing, no doubt, for people here to belong to Co-operative Stores in England, and import everything, without a soul in the Colony getting a crust out of the transaction; but it will not be so charming if the economists find that they have saved money in the Colony so generally and completely, that they are the only people who can pay taxes and their own salaries.

Of course, I shall be told that I have not learned the alphabet of the science of political economy, and that the law of exchanges overrides my objection; and my reply in advance is that, having read a very great deal upon the subject, my own view is—from which, of course, every one is at liberty to differ—that the questions have been so obscured by learning, and overlaid by fine-sounding theories and elaborately-wrought-out calculations, that common sense has been lost sight of, and that the quality of common sense is the safest to be guided by in the argument. Common sense tells me that the man who can get skilled labour in Germany at 2s. a day can land goods here cheaper than I can make them; it tells me, also, that those who have money here will buy those goods in preference to mine, but that those page 19 who have not the money to buy mine or his must go without; it tells me that, if we cannot produce something to sell, in order to obtain cash wherewith to purchase goods, it does not matter to us whether goods are dear or cheap; it tells me that in this Colony we cannot produce sufficient quantities of wool and grain to purchase foreign goods for all of us; it tells me that, whether we tax English goods or not, they will not retaliate by taxing our wool and grain, because they cannot produce those commodities themselves, and that they must import the same quantity whether taxed or free; it tells me that we can manufacture our own goods, but that we cannot do so against unfair competition; it tells me that, not being angels, our people will not buy in the Colony for the sake of helping the Colony; it tells me that, as self-interest is inducing certain sections of our people to support Free Trade, so the motive of self-interest must be employed on behalf of the people at large, and that there is no more immorality or unfriendiless in our handicapping foreign produce, than for the foreign producer to land goods at less than cost price in order to close our mills and factories and be able to retain the trade.

Now, as to the application of a Protective policy. I do not think any one would advocate piling up a tariff indiscriminately, for the purpose of promoting exotic industries. Nor do I think any will expect, in a paper such as this, that a perfected scheme should be laid down, showing what is to be protected and what free. Let it be shown to the satisfaction of Parliament that a certain industry can be pursued with success in the Colony, provided that it be for a time protected against unfair competition; and then let such measure of protection be given it, as—whilst withdrawing it from foreign competition—leaves it exposed to the free and open competition of the home grower and manufacturer. What we are now contending for is the admission of the principle of protected industries; the matter of allocation of duties, no doubt, will be disputable, but it can be settled if a basis is once agreed upon.

We have been to a certain extent "cutting our own throats," in instituting direct lines of huge steamers, capable of carrying more than all our imports, if fully filled up. We have now to reckon with the lead other countries have obtained, and especially the lead the British manufacturer has—with all his machinery in working order, with vessels awaiting his commands, and with almost unlimited capital wherewith to wage a contest for supremacy—unless he is quietly and firmly told that he will only be allowed to sell to those amongst us who are willing to pay a tax to our revenue for the privilege of withholding from willing labourers within the colony the value of the wares he buys abroad. I shall probably be told that exports page 20 and imports must balance somehow; and that unless we buy from England she will not buy from us. Were there only two countries in the world, the argument might apply; but there are many, and it might as well be said that unless one shopkeeper employed the actual physician who dealt with him, their business relations could not continue, because the physician could not pay the storekeeper. The great factor in keeping a reasonable balance between exports and imports in this colony has been gold; but this is a decreasing supply. We have imported stores, and paid for them in gold, but we cannot hope to do so permanently. We must export in some form to pay interest on our debt, and pay for imports; and wool, grain, and meat are the chief articles so far. We shall send coal, not to England, but to other countries, who will pay us, not with goods, but with money derived from the sale of their exports to still other countries, and so the circle will be kept up. Direct interchange of exports and imports to suit the convenience of one party, who has established himself in a particular line of business, is very well for that one party, but not for both. If New Zealand declares for Protection, there will be a howl at Home amongst an interested class, and perhaps ugly words will be used about breaking the silken chain that binds us to the Throne, but that will not matter much. If what Free-traders here assert be true, and we are able to establish industries here, and drive the foreign goods out, the feeling will be just as strong against us, and probably the unfair means I have mentioned will be taken to defeat our endeavours, causing perhaps still bitterer feelings; but the tie will really be as strong, and the loyalty as true, as if we implicitly obeyed the behests of the Cobden Club, and sank ourselves in the effort to keep English trade alive for a while.

I notice by our New Zealand papers that the question is every day coming more and more definitely before the electorates. Before these pages can be in print, probably great strides will be made, and many opinions formed. I hope what I have written will meet with fair and candid criticism. I am well aware how much more remains to be said on both sides, and how the ramifications of the question can be pursued until the inquirer becomes lost in speculative mazes, and having lost sight of the radix, stares in wonderment at the branches and foliage, vainly endeavouring to predict how each twig and leaf will grow.

Lyon & Blair, Printers, Wellington.