The Temuka Leader SATURDAY, FEBRUARY 7, 1885. PROTECTION.

Temuka Leader, Issue 1300, 7 February 1885, Page 2

The Temuka Leader SATURDAY, FEBRUARY 7, 1885. PROTECTION.

STATE BANK,

A New York correspondent writes : "In one week, New Zealand, which so recently was considered the abode of pavages, takes our goods to the amount ol 78,080 dols., and the exports include 11 organs, 10 cases of shoe-blacking, 9 of stationery, 30 of sewing machines, 26 cases of clocks, 524 of furniture, 3 pianos, 12 barrels of ink, 6 cases of slates, and a score of carriages. This certainly does not look like savage life." Now, here is a subject for reflection, We allow all these goods to come into New Zealand almost free of charge, but the Americans will not allow a pound of our wool, or any produce which we may send to them to enter their ports without paying a heavy duty. We import about five million pounds worth of goods into this colony every year, which could be manufactured by our own workmen if we had the common senso to protect them. We have not, aud the consequence is that our workmen are standing still, and our colony going backwards, while other people are fattening on what we produce. A discussion on the question of Protection v. Freetrade was carried on recently in Christchurch. Some of the merchants there took up the freetrade side, while the artisan class favored protection, and for months both sides argued the subject in the columns of the newspapers. The great argument the merchants had on their side was that protection meant to tax farmers and working men for the benefit of a few tradesmen ; protection would create monopolies, and the result would be disastrous according to Mr Chrystsl and a few of his friends. Now let us see how this would ruin the farmers. American reaping machines now cost farmers about ±6O each, but of that sum about £lO goes to the importing merchant. Thus the farmer is paying £lO to the merchant for importing the machinp. Now, if this £lO were put on the imported machine in the shape of duty, the result would be that ma-chine-making factories would bo started in New Zealand, the money would bo kept in the colony, our own workmen would be employed, and the farmer could get the machine as cheap as he gets it now, or very nearly so. It is no wonder that importing merchants favor Freetrade for they make a good thing out of it, but that it is a bad thing for the colony cannot be doubted, We have so frequently discussed this subject before that we do not feel disposed to go very fully into it at present. At the same time we may point out that Protection has been the secret of America's prosperity, that it has given an extraordinary impetus to trade aud commerce in Canada since it was adopted there, and that it is through its adoption Victoria is getting to be the moßt prosperous colony in the southern hemisphere. Why should Victoria be prosperous and New Zealand depresspd ? We can grow iu Nev Zealand twice as many bushels of grain to the acre as can be grown in Victoria: yet the latter colony is far more prosperous and it is because numerous industries have been established under her Protective laws. And though Protection is carried to great extremes in Victoria the cost of living is cheaper there than in any of the other colonies, workmen can find better nii'l more constant employment, the farmers can get better prices for their prodoce, and thus the classes most benefited are those which the Christchurch merchants say would be ruined. Until wo establish industries we cannot be prosperous, and it is impossible to carry them on successfully without giving them sufficient protection to enable them to live. At any rate American goods should be heavily taxed, for they have shut our wool out of their markets and we ought to shut their " Yankee notions " out of ours. They deserve no consideration, and we hope the day is not far distant when they will have to pay for sending their goods to this colony.

A correspondent of t/ie Otago Doily Times has analysed the report of the Colonial Bank in a manner thai ought to convince anyone that the proposal to establish a State Bank in New Zealand is practical. He says : " 1. The shareholders subscribed £400,000 capital, which appears to be carefully (to use a nautical phrase) stowed away in bullion, coin, and Government debentures at 3 per cent. So much for capital. 2. The Company take £123,000 from the public, and give their notes in exchange, and with this money (borrowed from the public) they build banking-houses, etc. You may now probably feel curious to discover how they live and thrive. We shall see. 3. The Company receives £1,500,000 of deposits from a confiding public at from nought to 5 per interest, and the bank, after

eo borrowing, lends exactly that amount out to borrowers at 8 to 12\ per cent, making a gross profit of 5 per cent, or thereby, equal to, say, £75,000, the larger portion of which musl be absorbed in expenses of management, as a net profit of some £16,000 only appears for dividend purposes. Surely a bank which would confine its operations to the exercise of the borrowing and lending functions only should be a magnificent dividend-paying concern, and shorn of all the mystery and intricacies of London and other exchanges (which I imagine mint be a source of loss rather than profit), would open a splendid field for a State Bank. I have come now to the conclusion that the occupation of moneylending, bo deprecated as unrespectable in an individual, becomes quite a gentlemanly and socially correct thing if only a large company under the name of a bank runs it. And where the joke comes in is that no capital appears to have been launched out by the bank, they contenting themselves by borrowing from Peter to lend to Paul." If this does not convince people that a State Bank would be a practicable and profitable institution nothing will. Here we hove a company who started with a capital of £400,000, which they hare invested in bullion, coin, sud Government debentures at 3 per cent. Practically the Company had no money at all, fcr tho amount subscribed was invested in the purchase of land, buildings, etc., and in Government debentures, and the way they have been able to get on is by working on the money of their customers and by issuing notes. Now, the question is : Why should the Government give these people the privilege of making money out of paper and then charging the people 10 per cent, on this paper moue\ ? Why could not the Government make this paper money? It woulil be safer in the hands of the Government ; it need not be so dear, and the profits from it would go towards defraying the expenses ot the Government. Mr P.alt, the great London authority, soys " paper money is the money of civilisation;" and Mr Gladstone says that the power to issue paper money belongs to the State, and that the State ought not allow its issue by any private enterprise. With both we agree, Paper money is very convenient: far more, so than coin, but to allow private companies to issue it without restriction as this colony'is doing is certainly very risky. The State alone should have the power to issue paper money, and if that power were reserved by tho State we should never have panics, depressions, and financial crises such as we so frequently experience.