The Causes of the Existing Depression.

I do not intend to occupy your time by discussing the disputed merits of protection versus free trade, and have merely quoted the foregoing figures, to show that the most protectionist country in the world experiences the effects of a general industrial depression at least as severely as other countries.

It may, however, be instructive to discuss some of the assumed causes of the world's depression. It is often said that the general decrease in the production of gold, has caused a corresponding reduction in the value of all other commodities, and consequently of the world's wealth. We, however, must bear in mind that money has very little relation to wealth in the strictest meaning of the term. For instance, if ail the specie or paper money of every sort were destroyed, the wealth of the world would remain undiminished. The actual loss would amount to so many tons of metallic substances, and a certain quantity of paper. The real wealth would remain intact, as there would still be left just as much of house accommodation, food, clothing, land, machinery, ships, railways, labor, &c., &c., as before. It is the distribution thereof that alone would be affected. Of course the previous holders of the money, would lose what represented the conventional and legal claim to a certain share of those objects which constitute wealth, and such a catastrophe would be severely felt by them. The destruction also, which we are supposing, would, until some other standard of value was adopted, disorganise trade, and for a time obstruct many of the processes of wealth production. The fact however remains that it would not to any material extent, diminish the aggregate of the world's wealth. The distinction therefore, between a fall in prices and a fall in values must be apparent, and consequently it will be evident, that even if the lessened production of gold, has had the effect of lowering the price of all descriptions of commodities, the relative values are not thereby disturbed. But as the terms under which those who borrow money from other countries, and the annual interest thereon, necessitates payment on the basis of metallic money, it is obvious that as a lessened supply of precious metals, has a tendency to reduce prices, it increases the burden of any such indebtedness. It is, therefore, evident [unclear: tha] page 18 when a lessened supply of gold causes a general fall in prices, a larger quantity of commodities, than heretofore sufficed, is required to be exported by borrowing countries in order to meet the interest on their indebtedness. Here, the before, we may have one of the causes which aggravates the depression this colony is at present laboring under, in common with the rest of the world. But we must bear in mind, that this cause can only affect us to the extent of the amount payable for interest, as if the prices of all the articles we export have been lessened, by the decreased production of gold, so likewise have the prices been relatively reduced of all the commodities we import in exchange, and consequently our purchasing power of such commodities is not affected.

There are many other causes, such as bad harvests, commercial panics, excessive speculation in past years (causing an undue inflation in values) succeeded by the sub sequent obstinate depresssion, which all combine to darken and perplex the present state of things. During periods of exceptional activity, people strive eagerly to share in the profits that are King made. A large increase of capital is pressed into every description of trade and industry, and, as always happens, this exceptional activity does not permanently continue, the invariable consequence being a rapid fall in prices and a diminution of profits.

The inevitable reaction will, however, set in some day, and we shall then doubtless find prices restored to the old level, and the balance of trade readjust itself.

Another factor that of late years has tended to retard the colony's progress, is the ever-changing laws that are from time to time passed affecting the rights of capital and the tenure of land. Insecurity and uncertainty respecting both capital and land, are formidable obstacles to the creation of wealth, as few care to remain in a country after accumulating capital, if their possession of it is indirectly assailed by exceptional or excessive taxation. There are several instances of capital having been withdrawn from New Zealand, during the past few years, by the owners of property realising their estates and retiring to other countries, in consequence of recent alterations in the incidence of taxation. If more capital were available, more land could be utilised, and fresh industries established, and therefore we should encourage the creation and accumulation of capital, instead of frightening it away by threats of confiscation.

We constantly hear of the unemployed, and that undue competition is depressing wages. It is, however, the paucity of capital that reduces wages, and the true remedy for a redundancy of labor (when such exists) is to accelerate the growth of capital, and therefore it must be evident, that legislation tending to restrict the accumulation or creation of capital, is in reality legislation directly prejudicial to the interests of labor, and consequently prejudicial to the industrial classes.

In addition to the above causes, the depression in Canterbury has been aggravated by three successive bad harvests, but as I shall refer to the effects of this later on, I will now pass on to a consideration of