PROTECTION V. FREETRADE

Shannon News, 14 June 1927, Page 4

PROTECTION V. FREETRADE

W.E.A. LEOTUBE. The ‘usual weekly meeting of the Levin branch of the W.E.A. was held on Tuesday evening, Mr J. Harvey presiding. The lecturer (Rev. J. D. McArthur) pointed out that although men’s minds had been exercised for centuries over the relative merits of Protection and Freetrade, it could not be said that either policy had an overwhelming following. 'The reason for this is that other factors fcnter into the arena. A country cannot prosper by adopting either policy unless she allows her own people to be efficient and also develops 1. er own natural resources. The period. 1815-1914 saw a complete circle of ideas loncerning fiscal matters In 1315 Protection was the policy followed in practically every land. Then a tendency, towards Freetrade was seen, culminating in 1860-70, but the tide turned once again in favour of high tariff walls This was surely weakening once again in favour of Freetrade when the Great

",Vnr threw Protection back into popular favour FREETRADE. The advocate of Freetrade urges: (1) Industry is carried on for production of wealth, i.e., commodities. Different areas are well supplied with natural resources; therefore let those areas specialise on those industries, so as to produce more cheaply than others. Then by free interchange of these goods the consumer will benefit by cheaper supplits. For instance, Lancashire being rich in coal and having a climate suitable for cotton spinning should specialise in cotton-spinning, and so the West Riding of Yorkshire in woollen goods. Other lands can grow cotton and wool and supply these places with their raw material.

(2) Freetrade enables countries deficient in certain products to enjoy these by obtaining them as cheaply as possible. In return they can export their ovu surplus to the advantage of places not endowed with these things.

(1) Nations trade really by barter and pay for their imports by their exports. If a tariff wall is raised the exports are reduced and there is less- to balance against the imports. No .nation can for long take in imports more than she sends out in exports. She has to find the difference in gold. (4) Freetrade prevents or makes impossible the formation of trusts and consequently the pulling of wires by vested interests in favour of legislation of a protective kind. Producers are compelled to remain on the alert and by efficient methods, up-to-date machinery, etc., to produce as good and as cheap an article as possible. Inefficiency is often cloaked by Protection. (5) Protection may benefit some industries but has to be paid for by the consumer. A tariff on leather may benefit tanners but raises the price to bootmakers, etc.

(6) Protection is a fruitful source o? international friction. Tarff by one country is promptly countered by tariff by another country and friction and suspicion results. THE MERCANTILE SYSTEM. The above arguments, and others were put forward against what was known as the mercantile system which had been the policy in most countries. Under this systetm, which, briefly put, meant that a nation could prosper only when she could ruin her neighbours, England suffered many things. She had to pass the famous Corn Laws, the importation of corn being prohibited until the price of British corn had reached 80s per quarter. The British farmer benefited but the wage-earner had tc pay well for his bread. Then the sys tem resulted in the Navigation Laws which forbade the use of any but British ships or the ships of the country from which the imports came. It also resulted in the idea that colonies were to be content to be pawns in the Motherland’s commercial game. This was not peculiar to England alone; it was universal. When this system, pushed to its logical conclusion, had caused the American War of Independence, many thinkers began seriously to question its value and Adam Smith showed in 1776 that a nation need .not necessarily be ruined because her neighbour became wealthy. Once again Freetrade seemed imminent, but was stopped by the Napoleonic War's. These compelled the Government to raise revenue by taxing everything possible. In 1792, the British national debt was £237,000,000; by 1815 it was £860,0Q0,000. & By this time there were 1500 articles on the Customs list. Iu

1840 a Parliamentary committee investigated the Tariff question and reported that, out of 721 dutiable articles, the returns from at least 600 were not worth collecting. By 1874 the list was reduced to 17 and income tax was 2d in the £l‘. In 1860, Disraeli came to the conclusion that Protection was not merely dead but damned. This, history shows, was at least premature.

THE RETURN TO PROTECTION. About 1871 a trend towards Protec ticn was evident. The causes seem to have been —

(1) Growth of national sentiment. Between 1846 and 1871, three new nation emerged: United States of America, United Germany and United Italy, and there were developments in Japan and Russia. These and other countries found much to wrangle for in Africa and Asia, bitter international spirit was engendered and Piotection was the natiral consequence.

(2) Need for revenue. Governments began to waken up to social needs: Education, Insurance, Old Age Pensions, all needed money. If these things had been all that needed assistance the country could well have met the demandBut wars leaded the Governments withdelit and in the 80’s the great race in armaments began. The politician could not disguise direct taxation, i.e income tax, but he could indirect, sjn he argued: “Let us put duties on imported, goods and then THE FOREIGNER PAYS OUR TAXES.” Of course this deceived only those who were financially interested. THE CONSUMFR PAYS EVERY TIME.

(1) The Protectionist urges that it is necessary to protect “infant” industries’in any country until such time as those industries are able to stand alone. But history has shown iliat once an industry has received assistance of this kind it resents being left to its own lesources. This is evidenced by what has happened in the case of the German and U.S.A. steel trade.

(2) The Protectionist also urges that some nations are favoured with climate, soil, and labour suitable to cheap production, and these can dump their goods into other countries to the ruin, of similar industries in these places.. (3) The standard of living, it is urged, is raised by Protection. If goods: are allowed in free from countries wherethe labourer lives on a handful of rice,, then the labourer in these unprotected places i 3 deprived of a living. Tjie fear is very strong that sweated labour will swamp the home market. Protection and Freetrade as policies swung iu the balance for some years, one side or the other gaining temporary advantage until the 1900’s, when Freetrade began to gain. But in 1914 War again came with the usual historical result —Protection to pay for the war. The lecturer offered two suggestions to the class for discussion:

(1) Protection leading to war and again Protection to pay for that waq and so on (2) Freetrsi.de with the nations having a high standard of living educating backward nations to come up to their standard. The resulting disc-qssion was animated and most enjoyable. Needless to say, no decision was reached.