“A FISCAL STUDY”

Sun (Auckland), Volume III, Issue 661, 13 May 1929, Page 10

“A FISCAL STUDY”

FARMERS AND PROTECTION CAPTAIN COLBECK REPLIES In The Sun of May 4 there appeared an article under the heading, “A Fiscal Study.” It has prompted Captain Frank Colbeck, of Morrinsville, to reply. His letter reads: After a lengthy opening, in which he shows how absurd were The conclusions of Adam Smith, J. S. Mill and Cobden. your contributor gets down to “tin tacks” and shows us how Germany, taking an exactly opposite view to Cobden, rose to be a wealthy manufacturing nation. He writes: “Put briefly, the taxation of imports was an expedient which in the opinion of German statesmen suited the needs of their own country, and they were not deluded by any specious plea for producing a millennium based on Free Trade.” I should like to remind our friend that the Corn Laws were abolished in 1846. Germany until 1871 consisted of 26 independent States and as a manufacturing country was negligible. It was not until the barriers between these States were broken down that Germany became a factor in industrial production. It was. in fact, a limited application of Cobden’s principles that made Germany a manufacturing country. By federation she got the right to trade freely between 26 States, with a population of 70 million people. Much is made of the fact that America (U.S.A.) has been so successful and prosperous under a “protective” system. Few people realise, however, that ! tho population of the U.S.A. is greater j than the combined population of Great j Britain, Australia. Canada. United [ States of South Africa and New Zea- ■ land. Just imagine what the position : would be if we had the United States i of Great Britain; if we only had the ! sense and courage to remove the bar- ! riers as Germany and the U.S.A. did. J Under the heading, “Protection for Everybody,” your correspondent goes ; ;on to show how world-wide “protec- ' tion” in various forms is and continues: ! , "We in New Zealand have gone further. Legislation protects the worker in the matter of wages, hours and | working conditions and secures par- ! tial indemnity from loss arising out of j accident. A legal tribunal regulates j wages according to standards of living ! which are deemed reasonable and without much regard to the productive value of the services rendered.” Exactly so! Protection is the “truck system” applied to a nation. You double a man’s wage and then take half of it back by selling him commodities at twice their value and. incidentally, making twice the profit. Legislation protects the worker only to the extent that other legislation has defrauded him. The standard of living remains at the 1914 level, less an extra profit. Your correspondent charges the farmer, “who only amounts to 11 per cent, ©f the population,” with a desire to reduce the standard of living of the rest of the S 9 per cent, of population. Let me assure this gentleman that the farmer wants to do nothing of the kind. We don’t wish to lower wages until we have lowered the cost of living by at least a like amount. We do not blame

high wages for the present unhappy state of affairs. We blame the high cost of living and we fully agree with our friend when he says: “Admittedly the conditions are artificial.” He writes: “Along with the abolition of import duties on monufacturod goods would go the duties on agricultural products, and the practical effect of this would be to present the Australians, who give us notihng in return, a wheat industry worth three millions a year,” and says that this would ruin the South Island wheatgrower. The fact is that the South Island wheatgrower has been ruined by the existing “protective” system, and if he had not to prop up other uneconomic industries he would not require to be propped himself. Only last week the wheatgrowers of Canterbury made an offer to forego their duty if other duties were reduced in proportion. Your correspondent says there is no , real hardship inflicted on the farmer j by’ Protection. He says: “The farmer ! has been told by men who ought to i know better that Protection increases j the price of the locally-made goods by the amount of the duty collected on j the imported goods.” I am one of those “men who ought to know better,” and I repeat the statement. There may be an exceptional case, but it stands to reason that if the quality of the locally-made article is equal to the imported and the price is lower then importation would cease, and the* duty would be ineffective and useless. An instance of this kind is the duties on butter, meat and hams. We farmers have requested the Government to remove them as they are use- j less, -but are often quoted against us by protectionist writers. Your correspondent then shows how little the farmer is affected because after he has paid interest rates, etc., “the farmer will not have more than three or four pounds a week to spend on goods which might be effected by protective duties.” I quite agree that this is so, the reason being that his j overhead charges have been so raised that he is lucky if he has as much as mv friend suggests. It is not only the commodities he buys that affect the farmer, but his freights, his rates, his taxes, his interest, the cost of manufacturing his butter or cheese, the shearing of his sheep, the killing and freezing of his sheep, lambs and cattle, his postal and telephonic facilities and, in fact, every service and commodity used. He not only pays the increased cost of the services and commodities he uses himself, but he has to pay for more used by the classes who are able to pass them on. The only person who does not and cannot pass them on is the exporter, and as the farmer finds about 95 per cent, of the exports, I honestly believe that he has to pay 95 per cent, of the increased cost caused by this iniquitous system. This is the reason people won’t go on the land. It is the cause of the present unemployment. Adam Smith said that the taxation of foodstuffs “was a curse equal to the barrenness of the earth on the inclemency of the weather.” This saying may be applied with equal truth to the taxation of any of the necessaries of life. I wish to touch lightly on your correspondent’s analysis of the Customs revenue. He says that roughly tho duties collected on what amount to the necesaries of life is £3,000,000. His figures are not correct, but I will accept them. As about one-third of the articles he enumerates are imported and two-thirds are made locally the increased cost we pay amounts to a t least £9,000,000 a year, so that to his £5 a breadwinner it is necessary to add another £lO, making the extra cost on the necessaries of life, £ls a breadwinner a year. As I have pointed out previously, if each of the breadwinners really paid his share things would not be so serious, but as nearly everybody except the exporter can pass the extra cost on, and since the extra cost is undoubtedly paid, it stands to reason that the bulk of it is paid by the exporting farmer, “who only amounts to 11 per cent, of the j population.” Even my light-hearted friend must recognise that this is some burden.