PROTECTION VERSUS FREE TRADE.

Te Aroha News, Volume II, Issue 60, 26 July 1884, Page 5

PROTECTION VERSUS FREE TRADE.

Whatever may be the differences of opinion between persons of judgment as to the advantages to be gained by a nation in adopting either a Protective or Free Trade policy, no doubt can exist in any thinking mind as to the desirability of assisting, by judicious protection, the infant industries of an infant country. Here in New Zealand themechanics and originators of manufacturing industries have been extremely apathetic, and have made very little effort to obtain protection for their nursling trades. Being for the most part men with more courage than wealth or influence, they have felt that to obtain anything for themselves, adverse to the interests of the great importing class, would be almost impossible. This may have been true enough in the years that have gone, but the population interested in the prosperity of manufacturing trades is now very lare^e, and their influence, in proper combination, would, we feel convinced, be fully equal, if not more powerful, than the combined influence of the importing class, that is, for any just and unoppressive measure ; and it is our earnest hope that some such combination of manufacturersandartizans^/wcmr/Aout the colony may be brought about for the purpose of establishing a moderate protective tariff upon manufactured goods such as it is possible to manufacture in this country with a reasonable prospect of profit to the maker, if not crushed out of existence by an importer or importers selling such articles at a loss, for fear the poor struggling industry may firmly establish itself on the market. We shall gladly lend our aid to any scheme for combination to protect our infant industries, and invite suggestions on | the subject. We would not think of recommending ! the introduction of a high tariff upon any goods, nor are we by any means sure that a ! permanent protective policy is good for any community, but we think it proper to place before our readers the results of both policies applied to the same country and people. Previous to the advent of Bismarck as a power in European politics, the industrial , progress of Gerfliany had been retarded by confused conditions and a lack of unity. The Franco-German war welded the diverse elements into a compact nation, and placed it in a good way for an era of industrial development. Bismarck introduced free trade, the main reductions being made in 1872 and 1873. The system was given a fair trial. Being disappointed with the economic results of free trade, he reverted to a high tariff in 1878, the schedules going into effect in 1879. This enables us to compare the operation of the two systems in Germany within the space of a dozen years. German manufactures during the free trade period exhibited a rapid decline, and it was not until the protective system was proposed that the recovery became perceptible. This statement is confirmed in the statistics of the production of iron ore, pig iron, and finished iron and steel. While Germany abounds in iron ore, some of which are of superior quality, unfortunately but few mines are found in proximity to coal pits, and important ore deposits of great extent are far from coal. This industry was on the wane before the stiznulating effect of the protective policy of 1879, as will be seen from the following table :—: — PRODUCTION OF IRON ORE IN" GERMANY. 1872 5,895,673 tons 1873 6,177,526 „ 1871 5,137,168 „ 1875 4,730,352 „ 1876 4,711.982 „ 1577 4,980,018 „ 1878 5,162,059 „ 1879 5,859,439 „ 1880 7,238,680 „ 1881 7,593,771 „ The significance of the above table is better appreciated when it is remembered that the duty on iron was reduced in 1873. "From this time," said one of the directors of Krupp's great works, " wages began to decline, and with this decline the production of iron ore decreased, and it was not until the prospect of a new tariff, and its subsequent enactment again stimulated the iron industry, that the production of iron ore increased, and is to-day greater than ever before." When the duties were reduced in 1873, the production of pig iron began to decline from 2,250,000 tons in 1873 until it reached only 1,615,000 tons in 1876, while the number of hands employed in this industry decreased more than 10,000. The total number of furnaces in Germany in 1876 was 435, of which number 210 were blown out. The increase in the production of pig iron during the last four years has been very great; in 1880 nearly reaching 2,800,000 tons ; in 1881, 2,900,000 tons ; and in 18S2 exceeding 3,000,000 tons. In finished iron there lias also been a great increase in the last few years, as the following table shows :—: — PRODUCTION OF FINISHED IRON AND STEEIi IN GERMANY. 1874 2,174,639 tons 1875 2,145,337 „ 1876 1,989,163 , 1877 1,953,243 „ 1878 2,125,320 „ 1579 2,190,350 „ 1880 2,570,783 , 1881 2,914,080 „ 1882 3,170,957 „ In 1876 the industries of the country were suffering from stagnation, none more than the iron trade. The great works of Herr Krupp had been reduced by 3,000 hands, and other large works showed proportionate diminution. This will give some idea of the condition of German industry when the tariff agitation began which ended in the increase of all duties. The following figures will show the effects of the new tariff upon iron and steel Ac.

1879, 325 establishments in Germany employed 152,979 workmen ; in 1883, the same establishments employed 206,150 workmen, an increase of 52, 171 workmen. In 1879 these establishments paid in wages 112,600,752 marks ; and for the year ending in 1883, 177,052,200 marks. The average yearly earnings of a workman under free trade were 731 marks, and under protection 859 marks, an increase of 128 marks in the earnings of every man. In still more condensed form here is what four years of protection have done for the iron industry of Germany from 1879 to 1883 :— Per cent, of increMe. Workmen employed .. .. 33.9 Wages paid .. .. .. 57.2 Average wages paid each workmen 17.4 Not only has the ironworker been benefited by higher wages, but the manufacturer has enjoyed an increase in his dividend, for the financial statements of 107 companies show that while the average free trade dividends under protection reached 1.99 per cent., the dividends under protection reached 5.16 per cent., an increase of 3.17 per cent. This is a trial of Wo opposing systems in one of the Eui'opean Great Powers, and the result must powerfully impress the minds of all interested in this most complex question. We desire to turn the attention of the industrial classes in New Zealand to this subject. It is one that will force itself upon their attention, and having given it due thought they will express|,the results of their deliberations with that moderation which ever insures the respect and co-operation of all desiring right. — Australasian Machinery Market.