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The Pamphlet Collection of Sir Robert Stout: Volume 67

The direct result of the Policy of Freetrade in a new Country is, that its inhabitants can do nothing but grow human food and raw material for export to old countries

The direct result of the Policy of Freetrade in a new Country is, that its inhabitants can do nothing but grow human food and raw material for export to old countries.

The cost of every article depends not entirely but chiefly on the cost of the labour necessary for its production; consequently, the cheaper labour and capital of old countries enables them to compete successfully against New Zealand in the manufacture of any article where much labour is required for its production. The item of labour in the cost of most manufactured goods is three-fourths of the whole value of the article—that of the raw material, one-fourth; of course, in some cases, it is much more, in others less. Labour in most new countries is fifty per cent, dearer than in England. We pay here to a labourer say, five or six shillings a day, whereas in England the same amount of labour would be obtained for three or four shillings. A carpenter's wages here are, say seven or eight shillings per day, in England about five shillings or five shillings and sixpence. Taking, therefore, labour and capital at three-fourths and raw material at one-fourth, in twenty shillings worth of goods in England, fifteen shillings is labour and capital, and five shillings raw material. Labour and capital being fifty per cent, dearer, raises the price in new countries from fifteen shillings English cost of labour, to twenty-two shillings and sixpence Colonial cost of labour, or twenty-seven shillings and sixpence, as against twenty shillings, supposing the cost of the raw material equal. Against England, however, page 6 we must put the cost of the freight and expenses to carry the raw material to England, say two shillings and sixpence, and the cost of the freight and expenses of the manufactured article back to New Zealand, say one shilling—total to and fro, three shillings and sixpence in the pound; while England has seven shillings and sixpence the advantage in labour and capital, thus giving four shillings in the pound in favour of England as against New Zealand, in the output of manufactured goods. These figures are of course assumed, but they show at once the principle, that no colonial industry can flourish against the competition of the English manufacturer, unless protected to an extent equal to the advantage gained by the English manufacturer through the cheapness of the labour and capital he employs, less the extra cost he is put to for freight and expenses.