THE NEW ERA.

Hokitika Guardian, 10 August 1918, Page 4

THE NEW ERA.

THE STATE AND INDUSTRIES.

(By X.)

‘State Socialism —one feature of which would be the running of all industries by the State—may be coming, though when it comes it will be in” a form that many so-called Socialists will not recognise. If it is to the interests of the people'as a whole, it will surely come sooner or later. But we are not considering socialism just now, but the actual and practical relationship of the State to industries. At present the State runs most of the public services, including the railways, fn the near future it will probably take over further transport services, and assume direct control of any essential industry which must by its nature be a monopoly. It will pos-sibly also enter further into competition with individual enterprise in supply of fuel, foodstuffs and the actual necessaries of life, with a view to beeping down what is known as ;; t he cost of living. The State will probably net enter the industrial field further than this —for the present at least.

The primary industries—the exporting industries do not need special State assistance, and will probably not be interfered with further than may be necessary to ensure that the needs of the people are met and local markets, supplied at reasonable cost before our products are exported. The policy to be followed will be that the State will r.ot interfere with private enterprise, unless such enterprise conflicts with the interests of the people as a whole. With the secondary, or local manufacturing industries, the position is different. The State will be asked to assist their industries, and in return may ask for more or less measure of control. Tf the people are asked to subsidize industries, directly or indirectly, they have a right to know what they are to get in return. The usual method by winch the State, in a half-hearted way, has attempted to encourage iudnshies in the past, has been by a so-called Protective tariff. In many cases this has been really a revenue tariff, and has added to' the revenue without keeping out imports. The local manufacturer has not benefltted, as the large outside manufacturers can afford in “dumping” their surplus goods to meet the duty and still cut below the locally produced article. Let U 3 see why ? A manufacturer starts say in New Zealand in a small way building an article of which the New Zealand market could absorb say 2,000 a year, and the landed cost imported is £25. He turns nut‘2o of these articles in the first year and finds his manufacturing costs £4' > per unit, lie cannot: compete with the imported article. But lie finds if he could sell at £4O he would get a share of the market. By enlarging his works, gel ting better machinery and belt r mganisntiou he increases his output to 20*• a year and finds his costing i educed to 130. Nmv he knows if he could put his output up to 2,000 a year his costing would come down again and lie could compete with the imported aiticle. But. here competition which is said to he the life of trade bnl it often the death of a promising industry, blocks him. Let us assume tlmt. eight linns in Now Zealand are each supplying 200 units, and 400 units arc imported, thus meeting the market demand fov 2,000. Now what will he the fate of this industry ? Sootin' or later the representative of the big outside manufacturing firm comes along to see how it is tlm market for its goods is so limited. He is told there art! a number of “ wretched little manufacturing concerns ’’ which are "cutting in”

110 confers with t lif agents, r parts to liis prinr.ipn Is and I,ln- result, is next season a ml. in piiec-s which puts half the little If urn I histories out of notion perhaps the whole of thorn. Sometime.s the same result, can ho attained by cutting off the supplies of raw material. 1 know one nail factory which was working tip a good little business. As soon as the firm fiom v/hicli this factory importing its steel wire found out, what was being done, as they, or a lirm amalgamated with them, sent wire nails to New Zealand they dumped up the price of the wire to a figure which left nothing for manufacture. Tn one way or -another the big manufacturer in the outside world will crush out his small competitor as ruthlessly as a man would put his foot upon a spider.

What could he done in the case in point ? If the eight manufacturers had combined, started one large up-to-date works capable of turning out 2,000 units a year they would have been able to give the outside manufacturer a “ run for his money,” as possibly the manufacturing costs might have been brought down to £2O per unit. But such imagination would be utterly impi’acticalile if the initiative were left to the manufacturers themselves. Combination is more effective than competition but the only effective combination that of the trust —is often used against the public interest. One trust is, in any case, always liable to be absorbed by a larger trust to which matters of local industry or public policy would he of no consequence whatever. For the ramifications of the Trust System I would refer your readers to Lawson’s “Frenzied Finance.’’ Let ns see rather how the Slate could .help in the case of our illustration.

Admittedly if the manufacturer who started turning out 20 units a. year and found the cost £4O per unit went to the Government and asked for a duty so that the lauded cost of the imported article would be £4O instead of £25 he would have no good case. Tt would he ridiculous to pnt a tax of £ls on 1,980 users so that a factory turning out the remaining 20 units required for the market could be kept going. The position would be improved when the manufacturer could show he was turning out 200, or one-tenth of the market requirements and asked for only 20 per cent, duty on. Still this would mean a tax of £5 on 1,800 consumers and the public would not be getting an adequate return If, however, the eight

manufacturers combined and repre- - sented to the Government that they were in a position to supply, and adequately supply,-all the requirements of the market then the matter becomes oue worthy of consideration. The Government might then satisfy itself: (l) as to whether the manufactured article was of good quality and suitable in every way to local requirements ; (2) whether its supply in quantity sufficient to meet the local market could be guaranteed by the manufacturers; (•!) what number of men- were employed ; what number of apprentices could be trained ; what wages were paid ; and what the prospects of development, and the general importance to the country of the industry. If this information was satisfactory the Government might be expected to ascertain in what way it could best arsis!-, whether by a bonus, a protective tariff, a rebate of duty on the raw material required, supply of cheap power from hydro-eleottic sour es, or special facilities for transit. Jn return for such assistance as might be granted j the State should have the right to see that the faotoiies were well and efficiently conducted, the apprent ees property trained, and the selling prices of the manufactured articles kept at a reasonable figure. If, however, at the time the application was made to the Government it was found the factories were too small, obsolete, or inefficiently conducted assistance could be refused until such time as the industry was put on a better looting, but with a definite promise of assistance in such event. It would th -n be for the manufacturers themselves to decide what steps were to be taken—which steps would probably be in the direction of closing some of the least efficient factories and enlarging those most conveniently situated and capable of dealing with expansion of trade.

The machinery for dealing with industries in this manner might conceivably take the form of “.Industrial Courts ” in which riii manufacturer, the employees, the importers, and the consumers or users of manufactured goods should each lie able to stato their case. Such courts presided over by level-headed business men would be able to deal with such questions on their merits, and Parliament could act on their recommendation. This would be certainly better than the present crude method by which industrial matters are brought before our legislators.

But the machinery, or course of ; procedure is only a detail. The main j issue is that the State should provide ' facilities for carrying on industries; should see that, natural resources are developed either by private enterprise or by the State itself; and see that industries when established are carried on efficiently and in the interests of the people, an I if so carried on are adequately assisted or protected. Once the pricniple is affirmed th it the industries of a country both primary and secondary - are part of its national life, and no! merely the private ventures of the capitalist., then the relationship b tween I lie State and the producer an 1 manufacturer will adjust itself. The neglect of industiies in the past has been due to lack of interest and to hick of knowledge as to their vit.l uec s-tity to the welfare of a. truly demo ratio community. There has also hem reluctance on the part of employers t > tolerate anything in the sh p.t of State interference. Well, the Stafc* is interfering anyhow ! It has into - fered in the past, is interfering v< ry drastically in the present, and will almost certainly interfere more in the i nture. It is useless showing hostility toward such inter feience. Let us rather, recognising we are all units in the body politic, endeavor to show how such interference may, if wist ly directed, assist iri wiping out. iu- ■ (liciency and in building up the prosperity not only of our industries but of our country.