WWm 
 
 n 
 

 THE GIFT OF 
 
 H-m4-. . or .Jb - \Sj\ uXh 
 
 ft. I-JI14L £ /( „| |<j4>3. 
 
Date Due 
 
 ^ RT~7 1 
 
 is§Ku 
 
 
 
 ■ 
 
 nPtfrVrf 
 
 
 
 ^yyU^-sHf 
 
 Hp,T 1.' IT 
 
 
 
 IP 1 ■ iitl 
 
 , W 
 
 
 
 " l >*Md 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ca 
 
 2 32 33 
 
 
 Cornell University Library 
 HF1755 .R64 
 
 Government revenue especially the Arneri 
 
 olin 
 
 3 1924 030 185 379 
 
Cornell University 
 Library 
 
 The original of this book is in 
 the Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924030185379 
 
\ 
 
 Copyright, 1881, 
 By ELLIS H. ROBERTS. 
 
 All rights reserved. 
 
 The Riverside Press, Cambridge: 
 Electrotyped and Printed by H. 0. Houghton & Co. 
 
PREFACE. 
 
 At the Commencement of Cornell University, in 
 June, 1883, Hon. Samuel Campbell, of New York 
 Mills, proposed to provide for the delivery of a course 
 of lectures on Political Economy, from the point of 
 view of American legislation. Because in many in- 
 stitutions the instruction runs in free trade lines, 
 but less in Cornell University than in many others, 
 he recommended the statement of the protective 
 policy, and of the logical grounds upon which it rests. 
 Upon his nomination a lecturer was appointed, and 
 in February of 1884, a course of ten lectures was 
 delivered to the two upper classes, with members of 
 the Board of Trustees and of the Faculty, and towns- 
 people, for whose convenience Library Hall in the 
 village was occupied. 
 
 The Trustees of Hamilton College, at the Com- 
 mencement in 1883, extended an invitation for the 
 delivery of the same lectures at that institution. The 
 author consented to give a part of the course there 
 in April and May following. 
 
 The substance of these lectures constitutes the pres- 
 ent volume. It is the embodiment of studies which 
 run back to the early boyhood of the author, when 
 Henry Clay was in his sunset splendor. These 
 
iv PREFACE. 
 
 studies were extended at Yale College when Pres- 
 ident Woolsey drew out from undergraduates crit- 
 icisms upon the text-books then in use there in Po- 
 litical Economy. Labors on the Ways and Means 
 Committee of the House of Representatives directed 
 further attention to the subject. Subsequent exam- 
 ination and reflection and the perusal of various 
 authors have contributed to deepen the convictions 
 which are here urged, as the teachings of history and 
 of logic, of the application of scientific principles to 
 the experience of nations. 
 
 Office of the Utica Morning Herald, 
 Utica, N. Y., March, 18S4. 
 
CONTENTS. 
 
 CHAPTER I. 
 
 INTRODUCTION. 
 
 Our Inquiry relates to getting Money for the Public Treasury. 
 
 — The American System of Revenue. — Political Economy 
 and its Divisions. — Origin of Government. — Society a Neces- 
 sity. — Grotius. — Locke. — Rousseau. — Hobbes. — Herbert 
 Spencer. — Theocracy. — Divine-Right. — All Men have Equal 
 Rights. — Freedom Fundamental. — Order comes from Con- 
 flict. — Constitutions. — Civitate Dei. — Restraints of Govern- 
 ment. — Plato's Republic. — Utopia of Sir Thomas More. — 
 Solomon's House of Lord Bacon. — Law in its Final Analysis. 
 
 — Evolution of Nations. — Their Divisions. — A Nation has a 
 Distinct Character and Special Tasks. — Nations must con- 
 tinue to Exist. — Is Political Economy a Science 1 — The Ex- 
 perience of States with reference to Revenue. — The Best "Wit- 
 nesses. — Laws as uniform as any outside of Pure Mathemat- 
 ics 15 
 
 CHAPTER II. 
 
 OLD WORLD METHODS. 
 
 Egypt. — Joseph and his Brethren. — Pharaoh's Levy on Grain. 
 
 — Royal Domain. — The Kings seek Profit out of Commerce. 
 
 — Own the Mines. — Duties on Manufactures. — Personal Ser- 
 vice. — Vast Revenues. — First Export Duty. — Kings and 
 Priests forbidden to use Articles not produced in the Country. 
 
 The Hebrews. — Royal Domain. — Three Tenths. — Presents. 
 
 — Tax on Merchants. — Solomon's Importations and Trade. — 
 No Sign of Tax on Industry. — Personal Service. — Spoils of 
 Conquered Enemies. 
 
 Assyria. — Imports, Exports, and Revenue in Darkness. — Re- 
 
Vl CONTENTS. 
 
 ceipts from the Satrapies. — Institutes of Manou. — Bates on 
 Cattle, Mines, Grain, Sales. — A Capitation Tax. — Discrimi- 
 nation between Raw Material and Finished Silk. — Kings of 
 Persia forbidden to eat or drink anything produced out of the 
 Country. 
 
 Phoenicians. — Tyre and Sidon original Ocean Carriers. — 
 Phoenician Commerce based on Domestic Industry. — Hiram's 
 Exports and Enterprise. — Ezekiel's Description of the Com- 
 merce of Tyre. — Carthage ; its Trade with Cornwall ; its Col- 
 onies, — Collects Import Duties. — Taxes on the Provinces. — 
 Manufactures under Royal Direction. — The State the Chief 
 Merchant. — Spanish Mines. — Commercial Treaties with 
 Rome. 
 
 Greece. — Tribute of Allied Cities to Attica. — Public Domain. 
 
 — Silver Mines. — Revenue from Customs. — Tax on Aliens. 
 
 — Court Pees. — Peculiar Form of Personal Service. — First 
 Direct Tax in Athens. — Assessment on Slaves. — Surplus Rev- 
 enue of Athens. — Farmers of the Revenue. — Solon's Classifi- 
 cation. — Income Tax. — The Peloponnesian War caused by 
 Commercial Rivalries. — Pericles' Boast of Fostering Indus- 
 try. — Aristotle favors Encouragement and Restriction of Com- 
 merce. 
 
 Rome. — Revenue from Land. — Taxes by Classes. — Duties on 
 Imports. — The Register of Augustus. — Tributes from the 
 Colonies. — Augustus adds to the Customs Duties ; Tax on 
 Salt ; Imposes an Excise ; Invents the Tax on Legacies and 
 Successions. — Farmers of the Revenue. — Constantine. — 
 Capitation. — Tax on Occupations. — Gifts to the Emperors. 
 
 — Justinian's Estimates of Peculation. 
 
 China. — Its Revenue Methods parallel with those of Western 
 Nations. — Tax on Land. — Charges on Occupations. — Transit 
 Duties. — Salt Tax. — Imposts on Manufactures. — Import 
 and Export Duties. — Sale of Offices and Degrees. — Adjust- 
 ment of the Tariff after the Wars with Britain. 
 
 Italian Republics. — Prominence given to Manufactures. — 
 The Basis of their Commerce. — The State spared in Taxation 
 the Earnings of Labor. — Great Revenues of Florence. — Cus- 
 toms Duties in Venice. 
 
 Germany. — Charles the Fifth continues Old Methods. — Aus- 
 tria. — Prussia. — Tax on Land, Occupations, Income. — Mod- 
 ern Enforcement of Protective Policy. — Bismarck's Avowed 
 Purpose. — Hamburg enters the Zollverein. 
 
 France. — Land Tax. — Royal Domain. — Tithes. — Domains 
 of Cities. — Early Reliance on Customs Duties. — Sully and 
 Colbert. — Income Charges. — Turgot. — Patentes. — Farm- 
 
CONTENTS. vii 
 
 ing the Revenue. — Octroi Duties. — The Cobden-Chevalier 
 Treaty. — President Thiers restores Protection. — Conven- 
 tional and General Schedules in the Tariff. 
 
 England. — Land Tax. — Tithes for the Crusades. — The Great 
 Charter and Merchants. — Direct Tax on London and the 
 Jews. — First Import Duties in England. — First Fruits of the 
 Church. — Benevolences of Henry the Eighth. — Queen Eliza- 
 beth and Commerce ; Increases Customs Duties. — The Stuarts 
 and the Revenue. — Farming the Revenue. — Monopolies. — 
 Prohibition of Manufactures in the Colonies. — The Navigation 
 Laws. — Lord Brougham. — Loans. — Prohibition of the Grow- 
 ing of Tobacco. — Stewart's Political Economy. — British 
 Budget for 1882. — Movement in England for Fair Trade. — 
 Demand for Direct Taxation in Lieu of all Duties. — Professor 
 Fawcett. 
 
 Spain and the Netherlands. — Evils of Bad Systems. — John 
 De Witt. — Destructive Charges on Land. — Dependence of 
 the Netherlands on its Colonies. — Movement against Free 
 Trade in Holland. 
 
 Farmers op the Revenue. — Cost of Collecting Government 
 Charges 26 
 
 CHAPTER III. 
 
 MODERN PRACTICES ABROAD AND AT HOME. 
 
 Duties on Exports. — On Imports. — Tax on Land. — Public 
 Domain. — Mines. — Monopolies. — Taxes on Liquors and To- 
 bacco. — Railroads and Telegraphs. — Corporations. — Salt, 
 Sugar, Tea, Coffee. — Incomes. — Patentes. — Stamps. — Suc- 
 cession. — Lotteries. — Peculiar Sources of Revenue. 
 
 Table of Revenue of Different Nations. — Effort univer- 
 sal to collect some Revenue from Commerce. — All Countries 
 except Two adopt a Protective Policy. — Contrast by Numbers. 
 — The Latest Legislation is Protective. 
 
 Origin of Protection. — Not with Cromwell and Colbert. — 
 Goes back to Egypt and Phoenicia. — Acharnians of Aris- 
 tophanes. — The Strife between Athena and Poseidon. — 
 Caasar. — France. — England. — Ruskin : "No Nation dares 
 to abolish its Custom Houses." — Fawcett. — Sidgwick. — 
 Appeal to Authority. — Protection sustained semper ab omni- 
 bus ubique 66 
 
viii CONTENTS. 
 
 CHAPTER IV. 
 
 AMERICAN METHODS AND RESULTS. 
 
 The British Stamp Tax for the Colonies. — Pitt's Distinction 
 between Internal and External Taxes. — Commissioners to col- 
 lect Import Duties. — The Revolution began our Revenue. — 
 The Power to levy Taxes and regulate Commerce conceded to 
 the National Government. — The Architects of the Union Ex- 
 perts in Matters of Revenue — The Second Statute » Tariff. 
 
 — The Precedent for our Fiscal Legislation. — Madison in ad- 
 vance of Hamilton. — Hamilton's First Report as Secretary of 
 the Treasury. — Tariffs of 1790 and 1 791. — Hamilton's Report 
 on Manufactures. — Legislation before 1812. — Report of Gal- 
 latin, Secretary of the Treasury. — Internal Taxes of 1791. — 
 Resistance to Law. — Internal Taxes repealed under Jefferson. 
 
 — Hostile to the Genius of a Free People. — The Public 
 Lands. — The War of 1812. — Fluctuations in Imports. — 
 Secretary Dallas and the Tariff of 1816. — The Debate.— 
 Clay, Webster, Calhoun. — Tariff of 1824. — Convention of 
 1827. — Debate and Legislation in 1 828. — Nullification. — The 
 Clay Compromise. — Fiscal Acts of Thirty Tears. — Internal 
 Taxes again. — Effect of the Reductions of Duties under the 
 Compromise. — Election of 1 84-0. — Tariff of 1842. —Report of 
 Robert J. Walker. — Free Trade Acts of 1846 and of 1857. — 
 From Nullification to Secession. — Gold driven from the Coun- 
 try. — The Morrill Tariff. — Increments and Reductions. — 
 Repeal of the Moiety Laws. — Act of the Tariff Commission. 
 
 — Internal Taxes a Third Time. — Vast Revenues collected 
 in 1866. — Four Periods in our Revenue Legislation. — The 
 Influence of Slavery. — The Southern Confederacy makes the 
 only Attempt to embody in Fundamental Law a Prohibition 
 of Duties to foster Industry. — Limits of the Four Periods by 
 Events and by Time. — Rates of Duties. — The Free List. — 
 National, State, and Local Imposts 82 
 
 CHAPTER V. 
 
 THE INCIDENCE OF IMPOSTS. 
 
 Why are Charges paid to Governments ? — Upon whom do they 
 finaUy fall ? — Droits. — Duties. — National Life. — Charges 
 adjusted to Services ; to Sacrifices. — Voluntary Offerings. — 
 
CONTENTS. ix 
 
 Direct and Indirect Taxes. — Incidence of the Land Tax. — 
 Taxes on Personal Property. — Imposts on Trades and Occu- 
 pations. — Stamps. — The Poll Tax. — Articles of First Ne- 
 cessity. — Whisky and Tobacco. — Imposts become a Business 
 Risk. — The Stamp upon Matches. — Cigars. — Effects of 
 Imposts on Consumption. — Sugar. — Tea. — Coffee. — Salt 
 in Prance and England. — Incidence of Customs Duties like 
 that of Internal Taxes. — Duties become an Element of Cost. 
 — Effect of Supply and Demand. — After the Treaty of Ghent 
 British Manufacturers sold in this Country below Cost. — 
 They sought to control our Markets. — British Surplus of 
 Books and Merchandise. — Silks. — Railroad Supplies. — Bes- 
 semer Bails. — Undervaluations prove that Foreign Producers 
 pay heavily to enter our Markets. — Growth of American Silk 
 Manufacture. — Fall in Prices. — The Law of Incidence. — 
 Imposts relative to Earnings and Capital. — The Friction of 
 Imposts. — Cost of Collection. — Imposts should not be a Ter- 
 ror. — Should be adjusted to accord Largest Measure of Free- 
 dom in Property, Labor, and Home 132 
 
 CHAPTER VI. 
 
 FREEDOM OP PBOMJCTION. 
 
 Imposts obstruct Commerce. — They obstruct Production. — The 
 Statesman must aim First at Freedom for Production, not for 
 Trade. — Quesnay: Agriculture the Only Source of Wealth. 
 
 — The Mercantile Theory. — Locke. — Adam Smith. — Agri- 
 culture, Manufactures, Commerce. — Production different from 
 Transportation and Exchange. — How to build a State. — 
 Distribution and Consumption. — Freedom renders Labor 
 Fruitful. — Burke: " The Revenue is the State." — Labor be- 
 fore Exchange. — Domestic Industry Stable. — Commerce 
 Fitful. — Homes. — Henry C. Carey : Diversity of Industry. — 
 Increase of Production. — New Industries offer Fresh Prizes. 
 
 — Alleged Overproduction. — Sidgwick : "Society is always 
 in a Condition of Underproduction." — Agriculture and Man- 
 ufactures. — Statistics of J. R. Dodge, of the Agricultural 
 Department. — The Tariff and Production. — Pig Iron. — 
 Manufactures in 1850 and Subsequent Decades. — Mining 
 Industries. — Wealth per capita. — Gladstone : the American 
 Republic " the Wealthiest of all the Nations." — Testimony 
 of Bismarck. — Carlyle. — The Tax-gatherers should touch 
 
CONTENTS. 
 
 Production at the fewest Points. — Duties on Imposts limited 
 to the Frontier. — Leave all the Pest of the Country un- 
 touched. — No Inquisition 165 
 
 CHAPTER VII. 
 
 COMMERCE BROADER THAN BARTER. 
 
 Shall a, Revenue System protect Production or Commerce in 
 Largest Measure % — The Balance of Trade no Mystery. — 
 The Individual who buys more than he sells tends to Bank- 
 ruptcy. — Commerce confers Value. — A Nation's Trade only 
 the Sum of that of its Individuals. — Capital, Earnings, Debt. 
 
 — The American War Loans. — Say. — Mill. — Blanqui. — 
 Coin and Bullion. — The School of Eree Trade. — The Atti- 
 tude of the Nations. — Buckle. — Broad Humanity. — Profits 
 of Commerce. — Balance against Britain. — Margin of Gains. 
 
 — The Carrying Trade. — British Capital Abroad. — The 
 World's Banker. — France. — American Commerce. — Immi- 
 gration. — British Exports and Imports. — Exports and Im- 
 ports of the United States. — Comparative Growth since 1865. 
 
 — Admission of Sir Thomas Brassey. — "MacMillan's Maga- 
 zine." — Mr. Gladstone's Prediction of the Commercial Su- 
 premacy of the United States. — No Reason to change our 
 Policy. — British System does not even promote Commerce . 203 
 
 CHAPTER VIII. 
 
 FALLACIES ABOUT MARKETS. 
 
 The Place to sell and the Place to buy. — Commerce Complex 
 and Continuous. — Creating Foreign Markets. — The Trade 
 with Brazil. — The Trade with China. —Great Britain and 
 the United States. — The Home and the Foreign Market. — 
 McCulloch's Fallacy. — Two Deposits. — The Whole Apple, 
 or only a Part. — Markets and Government Charges. — Reve- 
 nue collected at Home.— Aggregate of Taxation. — Shall 
 Labor or Trade support Markets ? — Britain and its Revenue 
 
 System. — Mr. Gladstone's Statement about Manufactures. 
 
 SirEardley Wilmot. — "Nineteenth Century." — Raw Materi- 
 als. — Wool. — Germany. — Protected Industries. — Boots and 
 Shoes. — Our own Markets the Best for us 235 
 
CONl'ENTS. xi 
 
 CHAPTER IX. 
 
 DUTIES, WAGES, AND PRICES. 
 
 Many Causes of the Material Development of the United States. 
 
 — Condition of American Labor. — Benefits of High Wages. 
 
 — Happiness in the United States. — Industrial Activity and 
 Progress. — Robert P. Porter on Wages. — John Bright on 
 English Wages. — A Cotton Mill in Bolton, England, com- 
 pared with a Cotton Mill in the State of New York. — A 
 Woolen Mill in Scotland and one in New York. — The Consu- 
 lar Reports. — Report of the Peabody Trust in London. — 
 "Chambers' Journal." — Ratio of Capital, Labor, and Im- 
 posts. — Testimony before the Tariff Commission. — Logic of 
 Immigration. — Savings Banks. — Railroad Charges. — Ex- 
 penses of Government. — Prices of Commodities. — New York 
 and Liverpool Markets. — Details. — Summary. — Cost of 
 Living. — Figures from Consul-General Merritt. — The Char- 
 ity Organization in England. — Classes of Expenses. — Living 
 in the State of New York. — How Wages are expended. — 
 Retail Prices in the Country. — Clothing from One Tenth to 
 One Fifth of Expenses of a Family. — Purchasing Power of 
 Money tends to Equilibrium. — Efficiency of Labor. — Exam- 
 ple in Cotton. — Wages in Britain and on the Continent. — 
 British Production. — American Results. — A Revenue Policy 
 which will strike down Wages cannot be tolerated .... 264 
 
 CHAPTER X. 
 
 ALTERNATIVES OP PROTECTION. 
 
 Sciences of Administration. — Political Economy an Applied Sci- 
 ence. — Cairnes' Classification. — A Professor before the Tariff 
 Commission. — Senior. — The Teachings of Experience. — 
 Political Economy Everybody's Business. — If not by Protec- 
 tive Duties, how shall Government be supported 1 — The Brit- 
 ish System and the American System. — Appeal for Fair 
 Trade in England. — The Cobden Club. — Demand to abolish 
 all Customs and Excise. — Financial Reform Association. — 
 Direct Taxation asked for. — Opposition here to any Tariff at 
 all. — British Taxes burden Labor. — American Imposts fall 
 on Wealth and Waste. — Duties should be adjusted to protect 
 American Industry at Fair Prices. — The Equation of Wages. 
 
:u CONTENTS. 
 
 — Cotton. — Iron. — Stability the First Need. — German Ac- 
 tion. — Exaggeration. — The Chancellor and the Army. — 
 Lasker. — Three Schools of Political Economy. — Incidental 
 Protection : repudiated by John C. Calhoun. — Legislation 
 must affect Production. — Should be Deliberate and Intelli- 
 gent. — Duties should be Adequate. — Free Trade and Labor. 
 
 — Free Trade compels Specializing. — We must provide for 
 Growth of Population. — Free Production enlists Idle Capital 
 and Labor. — Enlarges Competition. — Patents give Monopo- 
 lies. — Complaints of British Workmen. — Complaint in Lon- 
 don " Quarterly " on behalf of Property and Land. — London 
 " Spectator" on Free Trade. — The Choice between the Amer- 
 ican and the British System 308 
 
 CHAPTER XI. 
 
 THE KIVALEIES OF COMMERCE. 
 
 The Protective System interferes with Commerce, but asserts In- 
 dustrial Freedom. — The War of 1812 and the Rebellion hurt 
 our Carrying Trade. — The Price of British Commerce. — 
 John Bright on Wars waged by Britain. — Professor Seeley's 
 Expansion of England. — The Spanish War and English For- 
 eign Trade. — Three Centuries of Conflict. — Pitt. — Carlyle. 
 — £100,000,000 spent in Thirty Years in Avoidable Wars. — 
 Turkey and Egypt. — Greater Britain. — Trade of the Colo- 
 nies. —Protection of Colonies against the Home Country. — 
 The Home Country collects Duties on the Tea of India.— 
 Imports and Exports of Britain, Germany, France, the United 
 States. — Turkey and Egypt a Part of the British Possessions 
 in Fact. — The Colonial Trade not Foreign Commerce. — Du- 
 ration of Nations. — War and Commerce. — State Interference 
 in Britain. — George J. Goschen. — Herbert Spencer. — Free- 
 dom at Home 341 
 
 CHAPTER XII. 
 
 CONCLUSION. 
 
 Fallacy of Free Trade. — Fact of Freedom of Industry. — State 
 Interference most Beneficent when exerted in Behalf of Indus- 
 try. — Freedom most Fruitful in Production. — Free Will most 
 Active in the United States. — Low Wages the Bequest of An- 
 
CONTENTS. xiii 
 
 cient Serfdom. — They increase with Population. — They ad- 
 vance with Liberty. — Extent of Territory does not compel 
 High Wages. — Destruction of Caste. — Soldiers. — Clergy- 
 men. — Lawyers. — Doctors. — Salaries and Earnings. — Sci- 
 ence and Industry. — Pay of Skilled Mechanics. — Rewards of 
 Production. — Advantages of such Rewards. — Professor See- 
 ley's Declaration. — Our Continental Position. — Our Diversi- 
 fied Production will develop Commerce. — Our Plag will return 
 to the Ocean to stay. — Mr. Gladstone's Prediction of our 
 Commercial Supremacy the Echo of our Home Industries . . 365 
 
GOVERNMENT REVENUE. 
 
 CHAPTER I. 
 
 INTRODUCTION. 
 
 Our Inquiry relates to getting Money for the Public Treasury. — The 
 American System of Revenue. — Political Economy and its Divis- 
 ions. — Origin of Government. — Society a Necessity. — Grotius. 
 
 — Locke. — Rousseau. — Hobbes. — Herbert Spencer. — Theoc- 
 racy. — Divine Right. — All Men have Equal Rights. — Freedom 
 Fundamental. — Order comes from Conflict. — Constitutions. — 
 Civitate Dei. — Restraints of Government. — Plato's Republic. — 
 Utopia of Sir Thomas More. — Solomon's House of Lord Bacon. 
 
 — Law in its Final Analysis. — Evolution of Nations. — Their 
 Divisions. — A Nation has a Distinct Character and Special Tasks. 
 
 — Nations must continue to Exist. — Is Political Economy a Sci- 
 ence f — The Experience of States with reference to Revenue. — 
 The Best Witnesses. — Laws as uniform as any outside of Pure 
 Mathematics. 
 
 Our theme carries us into the field of political 
 economy, that "science of wealth," so wide in its 
 scope, so varied in its branches. I shall ask you to 
 study broadly and deeply the subject of revenue, es- 
 pecially the getting of money for the public treasury. 
 The cognate topic of spending the public moneys 
 will well repay consideration ; but just now our in- 
 quiry relates to filling the treasury, and not to emp- 
 
16 AMERICAN SYSTEM OF REVENUE. 
 
 tying it. We are to find out about the income of 
 states. Our studies are for a practical purpose : we 
 are not simply to seek what is curious and attractive, 
 but we are to learn what men have done in order to 
 judge what we ought to do. So we are to enter the 
 domain of history, and to apply to its records the 
 light of analysis and of criticism. The theme is very 
 broad, and we shall render it more definite, and on 
 many accounts more instructive, if we try to limit it 
 by directing our investigations to whatever illustrates 
 and establishes the American system of revenue, as 
 it has been and as it ought to be. 
 
 Political economy treats of the principles of pro- 
 duction, of exchange, and of revenue. The details of 
 production belong to several departments, — to the 
 trades and special industries, to the arts of agricul- 
 ture and mechanism. The details of exchange divide 
 themselves into the various branches of traffic, — into 
 banking and currency, into transportation and the 
 wide reach of mercantile enterprise, and the multi- 
 form mysteries of commerce. The problems of rev- 
 enue will bring us immediately upon the relations of 
 government to the people. We shall need to speak 
 of production and exchange only as they relate to 
 the income of states. 
 
 The origin of government, and of the ideas funda- 
 mental to it, have been the theme of much curious 
 theory. If we assume the existence of man, no 
 great mystery attends the beginning of states. For 
 we find order existing everywhere in nature. With 
 
INTRODUCTION. 17 
 
 the lowest forms of life, system appears. The 
 grasses grow with the regularity of an army with 
 banners. The forests stand arrayed like a multitude 
 of warriors, or scattered like scouts on duty. The 
 flight of birds may have suggested the Greek pha- 
 lanx and the battle lines of other peoples. Even 
 amid birds of prey a system is apparent in their ex- 
 cursions and their life together. The excellence of 
 the organization of the beavers and the bees is the 
 text of constant study for the naturalist. When 
 mankind gathered in families, and later in tribes, 
 organization sprang out of the exigencies of the sit- 
 uation. Government in its last analysis is little 
 more than the family or the tribe organized. Add to 
 the swarm of bees, to the flock of sheep, to the herd 
 of cattle, to the den of lions, intelligence and a moral 
 sense, and the result is government. 
 
 Society is as absolutely a mathematical necessity 
 as the presence of numbers can create, when men 
 find themselves together. That society may be bar- 
 barous or civil, and many grades may be discovered 
 in the history of the race, but in its crude form it is 
 as natural a development as the association of the 
 lower orders of existence. 
 
 Grotius is the father of the theory that a social 
 compact is the basis of the state. But when man 
 is possessed of sufficient intelligence to frame such a 
 compact, government must already be in existence. 
 The organization essential to agree upon terms of 
 living in a state, is already an inchoate state. Locke 
 
18 AMERICAN SYSTEM OF REVENUE. 
 
 did little more than vary the expression of Grotius. 
 Rousseau's social contract is at bottom identical. 
 Hobbes' suggestion, that government is a refuge from 
 a condition of war natural to man, has been ex- 
 plained to rest upon a like basis. His thought was 
 probably the radical and imperative necessity for 
 government, in the nature of man, and thus did not 
 accept the idea of compact. Herbert Spencer con- 
 ceives a stock company for protection. But that 
 again presupposes the organization which can frame 
 the company. 1 
 
 Historically no social contract has ever been cited, 
 and investigation does not justify any such assump- 
 tion. On the contrary the early peoples all start 
 from a theocracy in some form. To the Hebrews 
 God spake directly, and bore rule over their common- 
 wealth. Gods were the original rulers of the Eastern 
 as well as the Western states. The monarchical 
 derivation is from on high. Sovereigns never weary 
 of resting their title upon divine right. 
 
 The radical principle is that society is the normal 
 condition of man ; and that the state, rude it may 
 be, but real, must coexist with it. Where two or 
 three are gathered together, society already has been 
 established, and some form of rule has grown out of 
 necessity. In such society and such a state, all men 
 must have equal rights. They must be as free within 
 that political element as the fish is in the water, as 
 
 1 See on this point of social contract Hearn's Aryan Household, 
 p. 10. 
 
INTRODUCTION. 19 
 
 the bird in the air, as the wild beast in his lair. 
 Thus freedom is no outgrowth of convention ; it is 
 the absolute source of all rule, and it springs from 
 divine right in as complete a sense as any human 
 condition can claim to rely upon divine title. 1 
 
 Since thus government is a necessity for mankind, 
 each individual becomes an integral part of it, in the 
 analysis of history, and a vital part. His claim to a 
 place in it is as complete as his right to breathe the 
 air or walk the earth. He owes nothing to any mon- 
 arch, and derives no share of his rights from the 
 state. For convenience, privileges and obligations, 
 rights and duties, are defined by laws and constitu- 
 tions ; but these all rest on the original manhood of 
 the individual, and on the reason and moral sense 
 which are its chief constituents. Personal liberty is 
 
 1 This is the doctrine of the Declaration of Independence. It 
 was most rigorously maintained by James Otis in a. paper published 
 in July, 1764. One of its paragraphs is in these words : — 
 
 " Government is founded not on force, as was the theory of Hobbes; 
 nor on compact, as was the theory of Locke and of the revolution of 
 1688; nor on property, as was asserted by Harrington. It springs 
 from the necessities of our nature, and has an everlasting founda- 
 tion in the unchangeable will of God. Man came into the world 
 and into society at the same instant. There must exist in every 
 earthly society a supreme sovereign, from whose final decision there 
 can be no appeal but directly to Heaven. This supreme power is 
 originally and ultimately in the people ; and the people never did in 
 fact freely, nor can rightfully, make an unlimited renunciation of 
 this divine right. Kingcraft and priestcraft are a trick to gull the 
 vulgar. The happiness of mankind demands that this grand and 
 ancient alliance should be broken off forever." — Quoted by Bancroft, 
 History of U. S., vol. iii. p. 80. 
 
20 AMERICAN SYSTEM OF REVENUE. 
 
 not the creature of any political organization ; but 
 every government owes its entire claim to life to the 
 necessity which is fundamental to our humanity. 
 Every member of the state holds precisely the same 
 relations to it as his fellow. Age, sex, health, 
 strength, intellect, confer no additional rights under 
 the government. The rights attach to the individual, 
 and not to his conditions. If the state steps in to 
 define its members, it may restrict its privileges, may 
 establish classes, hy force ; but no power exists in 
 reason other than that of the mass of persons who 
 act together for political convenience. They may 
 say that for certain purposes, mature age or the dis- 
 tinction of sex shall be the standard of participa- 
 tion in council and action ; and the sword-bearer thus 
 becomes the citizen and the legislator. But absolute 
 equality of rights and of responsibilities, limited only 
 by natural abilities, is none the less the logical de- 
 mand of the very foundations of all government. 
 
 Order does not come without conflict in any field 
 of nature. Among men as among beasts the sway 
 of the strongest is the beginning of authority. In- 
 telligence and morality have a constant struggle with 
 force. Their effort for mastery is the great tragedy 
 of the ages. By it are determined forms of govern- 
 ment. After the sway of brute violence comes that 
 of intelligent strength. Then follow gropings for 
 systems and constitutions, and for the full embodi- 
 ment in statutes of the original right of every mem- 
 ber of the state to a voice in its councils and a share 
 in all its blessings. 
 
INTRODUCTION. 21 
 
 The culmination of such a progress inspired the 
 dream of the great theologian, who portrays the 
 saints in heaven in no loose disorder, but in Civitate 
 Dei, the " Commonwealth of God." To him the citi- 
 zen was the consummation of the highest ideal. 
 
 While social relations must continue, it is not 
 quite certain that the restraints of government must 
 not grow more and more mild and less and less tan- 
 gible and visible as the human race attains higher 
 degrees of elevation in moral and intellectual char- 
 acter. 
 
 The practical statesman is compelled to acknowl- 
 edge that the greatest minds of the race have agreed 
 in attributing to the state the most intimate and di- 
 rect control over the individual and his family, over 
 his education, his industry, and his life. The Re- 
 public of Plato, the Utopia of Sir Thomas More, the 
 Solomon's House of Lord Bacon are the utterances of 
 the most pronounced communism. But experience 
 has not adopted the theories of these brilliant and 
 consistent dreamers. Common sense has not ac- 
 cepted their philosophy. 
 
 On the contrary the tendency of modern states- 
 manship has been away from the paternal theory, 
 from the demand that the government shall do 
 everything for the subject, and to the broader 
 ground that the individual attains the best devel- 
 opment for himself as a unit and as a part of the 
 aggregate through the largest measure of freedom. 
 Government involves restraint. Law may be consis- 
 
22 AMERICAN SYSTEM OF REVENUE. 
 
 tent with the highest liberty, for law is not necessa- 
 rily compulsion ; it is only the expression of the 
 conditions essential to peace and order in the state. 
 The law of the stars and the universe is the record 
 of their courses. In the final analysis law may be- 
 come the expression of the conduct of the true man. 
 If ever all men become true, penalties will disappear, 
 and the restraints of government will fade away. 
 
 While government is a natural development, the 
 sphere within which it acts cannot extend over the 
 globe. There must be divisions. On the family, 
 tribes grew up, then races. Nations were evolved 
 by leaders, or natural lines, rivers and mountains 
 and oceans. The differentiation of language helped 
 to intensify the separations. Nations attained to in- 
 dividuality. They learned the need of self-defense, 
 of independent care, of separate lines of action, of 
 special developments. The man is most useful to 
 the family who is well balanced and self-reliant and 
 industrious ; the family is most an ornament to the 
 state when it develops all that is best within itself, 
 and seeks to raise itself and all its members to the 
 highest usefulness and culture. That state again is 
 nearest to the ideal standard which employs all of its 
 energies, which builds up every one of its own re- 
 sources, which adds everything possible for it to add 
 to the sum of human wealth and power and progress. 
 
 The town or parish, the county, the state, are ele- 
 ments of the nation. The specific sphere of each 
 may vary for local convenience. To the outside 
 
INTRODUCTION. 23 
 
 world the nation is the representative of sovereignty, 
 whether in the republic of the United States, the 
 empire of Britain or Germany, the kingdom of Italy, 
 or the Asiatic governments of China and Japan. 
 
 Nations are the great facts of history. They are 
 distinct and they must be recognized. They must 
 continue to stand, so long as various interests and 
 diverse tongues divide men. They have sprung out 
 of the necessities and the conveniences of peoples, as 
 well as out of the strifes and ambitions of rulers. 
 "Who can expose the influences which have created 
 nationalities and overthrown them ; which have sep- 
 arated and again united races and segments of peo- 
 ples ? Such organizations have had their tasks ; 
 they have been and are factors in the movements of 
 humanity. They have been the agents in the tri- 
 umphs of civilization, and sometimes in its decay. 
 The nation is a vital energy as distinct and separate 
 as an individual. It has its sphere of action, its 
 work to do, its trials, and its difficulties. It has its 
 lines of thought and influence, at particular inter- 
 vals ; as Athens had under Pericles, as Rome had 
 under Julius Csesar, as England had under Eliza- 
 beth ; as Germany has now under William and Bis- 
 marck ; as Britain has to-day under Victoria and 
 Gladstone. Especially has the United States in 
 these days its own position to maintain, its task to 
 perform, its high purpose to subserve. You will find 
 that the man who is most true to his own manhood 
 is the most devoted champion of humanity in its 
 
24 AMERICAN SYSTEM OF REVENUE. 
 
 broadest reach. That nation which does its own 
 work most thoroughly, which trains its own citizens 
 to the most complete usefulness and ripest develop- 
 ment, serves the whole world most effectually, and 
 i adds the most to the achievements and the happi- 
 ness of mankind. 
 
 Philosophy has had its master-minds, who have 
 worked out a glowing period for humanity. They 
 have conceived of various forms of government. 
 They have dealt with problems too profound to be 
 worked out in daily life. They have attained to 
 calmer heights than it can be hoped that men can 
 climb on earth. Not one of them has ever believed 
 that nations will cease to be. Poet and thinker are 
 content to draw fields of perfection, where conflict 
 shall never be heard. They portray a day after 
 
 " The nations' airy navies grappling in the central blue,'' 
 
 when disputes shall be settled — 
 
 " In the Parliament of man, the Federation of the world." 1 
 
 Nations must stand to work out the vast aims of 
 civilization. We must accept them as hardly less 
 essential than individual men. 
 
 The question whether political economy is a sci- 
 ence at all, or whether it is simply an art or even a 
 simple device, or a certain cunning, has long been 
 discussed. The same question has arisen over the 
 whole matter of state-craft, of politics in its broad- 
 est sense. At this time we will not enter into that 
 
 1 Locksley Hall. 
 
INTRODUCTION. 25 
 
 particular discussion. We will inquire into the ex- 
 perience of states with reference to revenue, and try- 
 to discover what the long centuries have found by- 
 actual tests, and what has been the sum of theory 
 in its effect upon action. Incidentally we will learn 
 what some of the leading teachers have had to say 
 upon this matter ; but the first and probably the best 
 witnesses whom we can summon will be the nations 
 that have led mankind along the path of progress. 
 They may inform us that government revenue can 
 be adjusted according to laws as well determined as 
 those of any science outside of pure mathematics. 
 That must be our conclusion, if it shall appear that 
 the experience of mankind points with marvelous uni- 
 formity in the same lines of theory and of practice. 
 
CHAPTER II. 
 
 OLD WOULD METHODS. 
 
 Egypt.— Joseph and his Brethren. — Pharaoh's Levy on Grain.— 
 Royal Domain. — The Kings seek Profit out of Commerce. — Own 
 the Mines. — Duties on Manufactures. — Personal Service. — Vast 
 Revenues. — First Export Duty. — Kings and Priests forbidden to 
 use Articles not produced in the Country. 
 
 The Hebrews. — Royal Domain. — Three Tenths. — Presents. — 
 Tax on Merchants. — Solomon's Importations and Trade. — No 
 Sign of Tax on Industry. — Personal Service. — Spoils of Con- 
 quered Enemies. 
 
 Assyria. — Imports, Exports, and Revenue in Darkness. — Receipts 
 from the Satrapies. — Institutes of Manou, — Rates on Cattle, 
 Mines, Grain, Sales. — A Capitation Tax. — Discrimination be- 
 tween Raw Material and Finished Silk. — Kings of Persia forbid- 
 den to eat or drink anything produced out of the Country. 
 
 Phoenicians Tyre and Sidon original Ocean Carriers. — Phoeni- 
 cian Commerce based on Domestic Industry. — Hiram's Exports 
 and Enterprise. — Ezekiel's Description of the Commerce of Tyre. 
 — Carthage ; its Trade with Cornwall ; its Colonies. — Collects 
 Import Duties. — Taxes on the Provinces. — Manufactures under 
 Royal Direction. — The State the Chief Merchant. — Spanish 
 Mines. — Commercial Treaties with Rome. 
 
 Greece. — Tribute of Allied Cities to Attica. — Public Domain. — 
 Silver Mines. — Revenue from Customs. — Tax on Aliens. — 
 Court Fees. — Peculiar Form of Personal Service. — First Direct 
 Tax in Athens. — Assessment on Slaves. — Surplus Revenue of 
 Athens. — Farmers of the Revenue. — Solon's Classification. — 
 Income Tax. — The Peloponnesian War caused by Commercial Ri- 
 valries. — Pericles' Boast of Fostering Industry. — Aristotle favors 
 Encouragement and Restriction of Commerce. 
 
OLD WORLD METHODS. 27 
 
 Rome. — Revenue from Land. — Taxes by Classes. — Duties on Im- 
 ports. — The Register of Augustus. — Tributes from the Colonies. 
 
 — Augustus adds to the Customs Duties; Tax on Salt; Imposes 
 an Excise ; Invents the Tax on Legacies and Successions. — Farm- 
 ers of the Revenue. — Constantine. — Capitation. — Tax on Occu- 
 pations. — Gifts to the Emperors. — Justinian's Estimates of Pecu- 
 lation. 
 
 China. — Its Revenue Methods parallel with those of Western Na- 
 tions. — Tax on Land. — Charges on Occupations. — Transit 
 Duties. — Salt Tax. — Imposts on Manufactures. — Import and 
 Export Duties. — Sale of Offices and Degrees. — Adjustment of 
 the Tariff after the Wars with Britain. 
 
 Italian Republics. — Prominence given to Manufactures. — The 
 Basis of their Commerce. — The State spared in Taxation the 
 Earnings of Labor. — Great Revenues of Florence. — Customs Du- 
 ties in Venice. 
 
 Gebmany. — Charles the Fifth continues Old Methods. — Austria. 
 
 — Prussia. — Tax on Land, Occupations, Income. — Modern En- 
 forcement of Protective Policy. — Bismarck's Avowed Purpose. — 
 Hamburg enters the Zollverein. 
 
 France. — Land Tax. — Royal Domain. — Tithes. — Domains of 
 Cities. — Early Reliance on Customs Duties. — Sully and Colbert. 
 
 — Income Charges. — Turgot. — Patentes. — Farming the Reve- 
 nue. — Octroi Duties. — The Cobden-Chevalier Treaty. — Presi- 
 dent Thiers restores Protection. — Conventional and General 
 Schedules in the Tariff. 
 
 England. — Land Tax. — Tithes for the Crusades. — The Great 
 Charter and Merchants. — Direct Tax on London and the Jews. — 
 First Import Duties in England. — First Fruits of the Church. — 
 Benevolences of Henry the Eighth. — Queen Elizabeth and Com- 
 merce ; Increases Customs Duties. — The Stuarts and the Rev- 
 enue. — Farming the Revenue. — Monopolies. — Prohibition of 
 Manufactures in the Colonies. — The Navigation Laws. — Lord 
 Brougham. — Loans. — Prohibition of the Growing of Tobacco. 
 
 — Stewart's Political Economy. — British Budget for 1882. — 
 Movement in England for Fair Trade. — Demand for Direct Tax- 
 ation in Lieu of all Duties. — Professor Fawcett. 
 
 Spain and the Netherlands. — Evils of Bad Systems. — John 
 
28 AMERICAN SYSTEM OF REVENUE. 
 
 De Witt. — Destructive Charges on Land. — Dependence of the 
 Netherlands on its Colonies. — Movement against Free Trade in 
 Holland. 
 Farmers of the Revenue. — Cost of Collecting Government 
 Charges. 
 
 EGYPT. 
 
 The story of Joseph and his brethren presents, 
 with the exception of the spoils of war, the first in- 
 stance of the collection of public revenue. In the 
 years of plenty, Pharaoh gathered one fifth of the 
 grain in kind ; in modern phrase, he levied a tax on 
 land of twenty per cent, of the gross product. Other 
 records prove that much of the soil of Egypt was 
 royal domain, and the only other owners were the 
 priests and warrior classes. From these assessments 
 were made. 1 Joseph's brethren went down to Egypt, 
 as Abraham had gone before them, because that 
 country had long been the granary of the Mediter- 
 ranean nations. From the royal granaries the He- 
 brews were supplied. The king was in this way 
 seeking profit out of commerce. He took his tribute 
 also from all merchants who entered his land. The 
 Pharaohs held the mines in their own possession; 
 it appears that they worked them on commission. 
 Proof exists that they levied dues on linen, and 
 doubtless also on other kinds of manufactures. Not 
 only in the case of slaves, but of Egyptians as well, 
 the monarch claimed mastery over the persons and 
 labor of all but the priests and warriors. The com- 
 plaints of the Hebrews before the exodus exhibit the 
 hardships of the demands. Even with the modern 
 1 Wilkinson's Ancient Egypt. 
 
OLD WORLD METHODS. 29 
 
 additions to our knowledge, it is difficult to under- 
 stand how, with a population never so great as that 
 of the State of New York to-day, Egypt built its 
 pyramids and temples and tombs which overwhelm 
 our estimates of wealth and material forces. When 
 the pyramids were built, that land waged no foreign 
 wars. Afterwards vast treasure was won by con- 
 quest from subject nations, but the military array 
 which overran other lands must have been in the 
 first instance established by Egypt itself. The do- 
 mestic revenue must have been in all ages very 
 great. It came in the largest measure from the soil, 
 especially in the valley of the Nile, from royal do- 
 mains, and from a share of the products of other 
 cultivators. Commerce contributed its full share, 
 by traffic in the name of the ruler, by charges on 
 traders, and the first example of an export duty is 
 traced to that ancient land. 1 In addition, every in- 
 dustry and all kinds of property were held subject to 
 the royal demands, and the personal labor of all the 
 inhabitants outside of the temples and the army was 
 liable to the calls of the government for cultivation 
 of the royal domain, and for the construction of the 
 vast works which yet testify of the wealth and power 
 of all the dynasties. 
 
 Egypt was greater than its kings or priests; for 
 both were forbidden to use any article not produced 
 in the country. The development of all classes of 
 production was thus persistently fostered. 2 
 
 1 Sinclair. 
 
 2 History of Political Economy by Mesnil-Marigny, vol. i. p. 263. 
 
30 AMERICAN SYSTEM OF REVENUE. 
 
 THE HEBBEWS. 
 
 The Hebrew methods rested upon the soil as the 
 beginning of the revenue. Under the kings the 
 royal domains, the cornfields, vineyards, and pastures 
 were extensive, and received frequent increase by 
 confiscations on slight pretexts of rebellion or other 
 offenses. Large flocks were the property of the rul- 
 ers. In addition the government collected a tenth 
 of the grain and fruits of the vine and of the flocks, 
 besides the two tenths devoted to the priests and the 
 sacrifices. In the earlier days, as often now in the 
 East, all visitors were expected to make a present of 
 value to the king, and the proceeds from this source 
 were considerable and regular. The tax on mer- 
 chants passing through the country, as well as on 
 those entering for purposes of trade, was enforced 
 often with rigor. Solomon illustrates the practice of 
 other kings by his ventures in importing gold and 
 silver, ivory, and oriental birds and animals. His 
 ships sailed to Ophir and probably to China, and 
 his caravans must have penetrated far eastern lands. 
 The spices of Arabia poured their perfume into the 
 palaces from every merchant's chest, Tyrian purple 
 and blue decked Hebrew princesses, and the glass 
 of Sidon served for ornament and reflected their 
 beauty ; Babylon and Nineveh must have paid their 
 tribute before Assyria achieved its conquest. Ex- 
 cept in the nature of the gifts which the kings re- 
 ceived, no testimony is afforded that the mechanical 
 
OLD WORLD METHODS. 31 
 
 industries of the country were taxed. But the kings 
 possessed broad power of extorting personal labor 
 from Hebrews as well as foreigners sojourning in the 
 land. As the ' Hebrews spoiled the Canaanites on 
 their return from Egypt, so they continued at all 
 times to derive large resources from their conquered 
 enemies, until in their decline they were compelled 
 to pay spoils to their conquerors. 
 
 ASSYRIA. 
 
 Assyria, like Egypt, must have extorted heavy 
 taxes from its people, for its monuments bear wit- 
 ness of its greatness. But Rawlinson can after all of 
 his investigations only tell us that its imports, ex- 
 ports, and revenue are involved in almost total dark- 
 ness. The central authority derived a large revenue 
 in money and produce from all the satrapies. These 
 undoubtedly came first of all from the land and its 
 products, and next from trade in all of its forms. 
 By the institutes of Manou in India a tax of one 
 fifteenth was levied on the net revenue of cattle, and 
 mines of gold and silver ; one sixth, one eighth, or 
 one twelfth, according to circumstances, on the quan- 
 tity of grain ; one sixth on sales generally, and to 
 adjust this charge a minute statement was required 
 of the cost, the transportation, and the buyer ; on 
 the sales of immovables, the tax was one twentieth. 1 
 Traces of a capitation tax are found. 2 Heavier 
 duties were levied on silk fabrics than on the raw 
 1 Marigny. 2 De Parieu. 
 
32 AMERICAN SYSTEM OF REVENUE. 
 
 material, for the encouragement of the weaver and 
 dyer. With all his power, the king of Persia was 
 forbidden to eat or drink anything produced out of 
 the country. In emergency in India one fourth of 
 the property of the subjects could be taken by law. 
 It was by the strong hand of despotism that treasure 
 was collected to equip the armies of Darius and 
 Cyrus, and to send the fleet of Xerxes to Salamis. 
 
 THE PHOENICIANS. 
 
 Out of the mystery surrounding the people who 
 gave letters to the Western nations, the splendors of 
 Phoenician commerce illumine all seas and all lands 
 to far eastern Asia and the British Isles. Tyre and 
 Sidon, and their greater daughter Carthage, were 
 the original ocean carriers, and the leaders in the 
 mastery of commerce. Hiram was the pioneer of Sol- 
 omon in both the Eastern and the Western trade. 
 Carthage risked voyages on the Atlantic, and created 
 traffic more varied than any other nation of its own 
 day. Phoenician commerce had for a basis domestic 
 products and diversified industry. Cedars from Leb- 
 anon and wheat for food and pure oil were sent to 
 the king of Jerusalem, and cunning work in brass 
 and fabrics beautiful in purple and fine in blue, dem- 
 onstrated the skill of Hiram and his workmen. 
 Modern enterprise can justify no more gorgeous de- 
 scription than Ezekiel portrays of the commerce of 
 Tyre, with its sails of broidered work. Much of this 
 traffic was transacted for the profit of the ruler ; it 
 
OLD WORLD METHODS. 33 
 
 was Hiram himself who furnished Solomon with the 
 cedar of Lebanon and with implements of brass, and 
 who joined him in ventures to Tarshish and to 
 Ophir. So Carthage in its extensive commerce 
 maintained monopolies from which the state drew 
 large profits. It was on account of the state that 
 the mines of Spain were worked, and that tin was 
 brought from far-off Cornwall. By no government, 
 ancient or modern, has a greater share of the world's 
 trade ever been concentrated. It was for the sake 
 of commerce that Phoenician and afterwards Cartha- 
 genian colonies were established really as trading 
 factories. Upon commerce conducted by private 
 persons heavy import duties were collected. In ad- 
 dition, taxes were levied on the provinces and cities 
 subject to Carthage, from the provinces in kind, and 
 from the cities in money. These were the sources 
 of revenue for the Phoenician cities ; the domestic 
 manufactures were under royal direction ; to foreign 
 commerce Phoenician energy devoted itself, and the 
 state was the chief merchant. Except as personal 
 service is implied no other taxes upon the citizens 
 of the capital are indicated. In the provinces it is 
 plain that some assessments were made upon the 
 products of the soil. 
 
 From its commerce, " very glorious in the midst 
 of the seas," Tyre derived vast resources ; and Car- 
 thage obtained from its Spanish mines alone the 
 moneys necessary for carrying on its second great 
 war with Rome. During the intense rivalries with 
 
 3 
 
34 AMERICAN SYSTEM OF REVENUE. 
 
 its enemy and final conqueror, Carthage framed with 
 it two commercial treaties, forerunners of methods 
 boastfully claimed for our own times. 
 
 GREECE. 
 
 At the culmination of Greek power, when Attica 
 held the hegemony and Pericles was rendering 
 Athens the glory of the confederation, the revenue 
 of the state came in chief measure from the tribute 
 of the allied cities. Grote estimates three fifths from 
 that source. Attica held for itself landed property 
 in city and country, pastures and woods and olive- 
 groves, and the silver mines at Laurium contributed 
 steadily to its treasures. 1 The other states owned 
 public domain, and some of them transferred the 
 title, and not simply the income, to the head of the 
 confederation. Athens, with its wide commerce, de- 
 rived revenue from customs, as in less degree did 
 other states of the peninsula. Export duties were 
 regularly collected. Resident aliens paid a tax on 
 persons as well as for license to trade. The court 
 fees were large, and more than sufficient to cover the 
 
 1 Aristophanes, in his Wasps, gives this summary : — 
 " Count lightly, not with calculi, 
 But on the fingers, what a sum of tribute 
 Comes to us from the cities, and besides, 
 The many hundredths, Prytanean pledges, 
 The metals, markets, harbors, salaries, 
 And sale of public confiscations. 
 From these we draw nearly two thousand talents." 
 
 (Wheelwright's Translation, lines 709-715.) 
 
OLD WORLD METHODS. 35 
 
 costs of the suits. Personal service took a peculiar 
 form, owing to the intensity of Athenian patriotism. 
 The chief citizens fitted out ships and manned them 
 at their own cost ; they undertook the support and 
 direction of the choruses in the theatre, and of the 
 public games, the entertainment of foreign guests, 
 and the celebrations of a religious and official nature. 
 These were the only charges paid by the Athenians 
 for a long time ; and it is cited as a notable excep- 
 tion that in the disasters of the fourth year of the 
 Peloponnesian War they were for the first time forced 
 to pay a direct tax. 1 Owners of slaves were assessed 
 according to their number, and harbor and market 
 dues were collected. Athens stands out as the only 
 ancient state which was accustomed to gather a sur- 
 plus of revenue in times of peace in preparation for 
 war ; and especially under Pericles this practice was 
 maintained. To attack Syracuse Athens had three 
 thousand talents, or three million four hundred and 
 fifty thousand dollars, in its treasury ; and when Chios 
 revolted, a third as much had been saved to defend 
 Piraeus from a hostile fleet. The mines, the lands, 
 and the customs were intrusted to farmers of the 
 revenue, and not to officers of the government. 2 
 
 The classification of citizens by Solon according 
 to their annual income does not appear to have been 
 for purposes of taxation ;. it was the basis of political 
 power. Yet it has historical significance in finan- 
 cial legislation, as a prophecy of levying government 
 1 Grote. a Curtius. 
 
36 AMERICAN SYSTEM OF REVENUE. 
 
 charges by classes, and especially of the income tax, 
 ■which has been attributed as a discovery to other 
 law-makers. 
 
 Commercial rivalries were the cause of some of the 
 greatest of Greek wars. The Athenians excluded the 
 Megarians from their markets ; and Sparta by trying 
 to force an unwelcome trade upon them brought on 
 the Peloponnesian War. After the defeat of iEgos- 
 Potamos, Corinth demanded that its commercial 
 rival, Athens, should be destroyed; but Sparta re- 
 fused its assent to the cruel proposition. No people 
 ever made greater efforts to provide for production 
 at home. Pericles in his famous speech boasts of 
 giving employment to all at Athens, and his succes- 
 sors in the government were themselves tradesmen 
 and mechanics, as Aristophanes shows in his com- 
 edies. Xenophon complains that in order to con- 
 trol their trade craftsmen kept their processes secret. 
 Aristotle, in his "Rhetoric," insists that commerce 
 must, according to circumstances, submit to many 
 restrictions and receive encouragements. Obviously 
 his plan is a protective system. 
 
 HOME. 
 
 The land was the original dependence of Rome 
 for its revenues. The state claimed at the outset 
 much of the soil, and as colonies were planted the 
 territory became public property. As early as Ser- 
 vius Tullius the citizens were divided into six classes 
 and these into centuries, first for military purposes, 
 
OLD WORLD METHODS. 37 
 
 and yet according to wealth. Taxes came to be ap- 
 portioned to these classes, and thus they partook of 
 the nature both of capitation and income charges. 
 Duties were levied upon imports from a remote pe- 
 riod. Gibbon pathetically remarks : " History has 
 never, perhaps, suffered a greater or more irreparable 
 injury than in the loss of the curious register be- 
 queathed by Augustus to the Senate, in which that 
 experienced prince so accurately balanced the rev- 
 enues and expenses of the Roman empire." 1 That 
 register would show the monstrous tributes collected 
 from the provinces through the oppressions of the 
 proconsuls, when Asia paid as much as twenty-one 
 million dollars a year, Egypt more than eleven mil- 
 lion dollars, and Carthage a war indemnity of twenty 
 million dollars to be paid within fifty years out of its 
 ruins. Guizot and Wenck estimate the annual trib- 
 utes in the time of Augustus at not less than two 
 hundred million dollars. 2 That sum, when money 
 was worth perhaps eight times what it is now, ought 
 to have sufficed for all the expenditures of the em- 
 pire. But it was one of the first tasks of that em- 
 peror to add to the customs duties, which Julius 
 Csesar had restored from ancient practice, 3 and to ex- 
 tend the system ; the duties ranged from an eighth 
 to a fortieth of the value of the commodity. The 
 excise dates from the time of Augustus ; it was 
 always a low rate, but it covered all sales of real or 
 
 1 GibboD's Decline and Fall, vol. i. p. 187. 
 
 2 Vol. i. p. 189. 8 Merivale, vol. iii. p. 545. 
 
38 AMERICAN SYSTEM OF REVENUE. 
 
 personal property, even to the small items of the 
 retailer for daily use. Augustus seems to have been 
 the inventor of the tax on legacies and successions ; 
 it was to be five per cent, on all inheritances exceed- 
 ing a certain value to any others than the nearest of 
 kin on the father's side. The farmers of the rev- 
 enue were the objects of frequent complaints, and of 
 occasional efforts by statutes to restrict their exac- 
 tions. 
 
 Constantine attempted to apply a more arbitrary 
 and direct method of taxation. His commissioners 
 extorted a share in the produce of the land in kind, 
 and the historian testifies that the agriculture of the 
 provinces was insensibly ruined. 1 The assessment 
 partook of the substance of a land tax with the 
 forms of a capitation. Thus a sum was apportioned 
 to a particular province and divided by its popula- 
 tion, so that each head was reckoned at such a price. 
 The common standard of the impositions in Gaul 
 was about forty -five dollars a head, which Gibbon 
 calculates at four times the average of French taxes 
 in his day. To avoid the utter ruin of the poorer 
 classes which such a rate would produce, several such 
 persons were included in the assessable head. On 
 the very poor a poll tax was levied. The device of a 
 tax upon occupations comes to us from Rome, and it 
 included all vocations, down to the petty retailer, 
 and even to those whose trade is not mentioned to po- 
 lite ears. Mines and quarries, salt, fisheries, and for- 
 
 1 Gibbon, vol. ii. p. 144. 
 
OLD WORLD METHODS. 39 
 
 ests were subject to special charges, and tolls were col- 
 lected on post-roads and bridges. 1 Gifts to the mon- 
 arch, which began as honors at a triumph, soon became 
 a recognized charge from cities and provinces on any- 
 festive or notable occasion. Rome itself was expected 
 to make a present to the emperor at such periods of 
 the sum of three hundred and twenty thousand dollars. 
 Justinian testifies that in Egypt the taxes payable in 
 money, which ought to equal those payable in grain, 
 were frequently reduced to nothing, through the 
 weakness or crime of the prefect. As the total 
 amount derived from Egypt was about six million 
 dollars a year, the peculations or losses appear to have 
 reached about one half of that sum. Perhaps we 
 see more plainly in Roman history than in other 
 chapters of the life of nations the extortions and 
 wrongs committed by rulers and farmers of the rev- 
 enue. Yet under similar systems like experiences 
 were probable elsewhere ; and the complaints of the 
 Roman provinces and the crimes of the Roman offi- 
 cers are, it may be, the type of those which other 
 subject countries suffered from, and from which our 
 own times are practically free in all lands. 
 
 CHINA. 
 
 One of the curious phases of the history of rev- 
 enue systems is that the Chinese methods have been 
 in so many respects parallel with those of the West- 
 ern nations. Like needs have developed like devices, 
 1 Merivale, vol. iii. p. 543. 
 
40 AMERICAN SYSTEM OF REVENUE. 
 
 and similar evils have followed from similar causes. 
 China has from a period beyond the beginnings of 
 history maintained a tax on land, payable even yet 
 about one half in kind ; the rate for soil under culti- 
 vation varies from one fifth to one third of the gross 
 product. 1 All buildings pay a ground-rent to the 
 government. 2 Taxes answering to the French pa- 
 tentes are collected on stores, markets, and corpora- 
 tions, but keepers of small shops and persons who 
 practice the liberal arts are exempt. 3 Transit duties 
 on all trade produce, next to the land tax, the largest 
 share of the revenue. 4 In the rural districts the 
 land bears by far the most of the burdens. Salt pays 
 a separate tax ; there have been imposts on certain 
 manufactures, as porcelain, silk, and varnish. For- 
 eign commerce is charged with both export and im- 
 port duties. The sale of offices and degrees is a 
 regular source of income to the government. 
 
 Official returns show that foreign commerce paid 
 in recent years from five to six times more than do- 
 mestic trade in the way of revenue to China. 6 At 
 all times difficulty has arisen in the collection, par- 
 ticularly of the internal taxes, and violence has been 
 used to enforce the government charges. 6 
 
 After both wars with Britain and its allies, the 
 
 1 De Parieu, from the Moniteur, vol. i. p. 221. 
 
 2 Williams' Middle Kingdom, vol. i. p. 739. 
 
 3 De Parieu, vol. i. p. 290. 
 
 4 Williams' Middle Kingdom, vol. i. p. 444. 
 6 Williams' Middle Kingdom, vol. ii. p. 404. 
 8 Williams' Middle Kingdom, vol. i. p. 498. 
 
OLD WORLD METHODS. 41 
 
 adjustment of the tariff was the first demand of the 
 conquerors. They recognized the protective policy 
 of the Chinese while seeking to force foreign com- 
 merce upon them. The story of the introduction of 
 opium is pathetically narrated by Professor S. Wells 
 Williams, in his "Middle Kingdom." "The trade 
 in opium was legalized at a lower rate than was paid 
 on tea and silk entering England," and the " moral 
 sense of a people was broken down." The policy 
 by which British commerce, and in fact nearly al- 
 ways the commerce of all peoples, has been ex- 
 tended, can be read in the recent history of China. 
 France is to-day repeating in Tonquin the applica- 
 tion of similar methods. 
 
 ITALIAN REPUBLICS. 
 
 The Italian republics of the Middle Ages afford 
 curious fields for economic study. They gave a 
 prominence to production and to commerce such as 
 has never been surpassed. In some of them it was 
 necessary to work at some trade or pursue some art, 
 to be a citizen and to aspire to a place in the govern- 
 ment. The manufacture of silk and of wool con- 
 ferred a certain nobility. They sought to make 
 that with which they could command foreign com- 
 merce. Venice was chief among them, and Florence 
 alone competed with it for mastery. At Venice 
 it was that cotton was fabricated in fine and attrac- 
 tive forms ; its silk was lustrous in beauty and 
 precious in value ; its linen rivaled the products of 
 
42 AMERICAN SYSTEM OF REVENUE. 
 
 old Tyre, and its dyes equaled the Eastern splendors ; 
 its arms had the fame of those of Damascus and 
 Cordova ; its furniture was the adornment of pal- 
 aces ; its glass and gold devices and its laces have 
 not yet lost their place in mechanical annals ; and 
 its leather approached the delicacy of art. Venetian 
 workmen were forbidden by grave penalties to trans- 
 fer their skill to other lands. 1 Thus Venice was able 
 to gather in the most precious commodities of the 
 East and of all lands. Its commerce was for that 
 age world-wide. The Venetians grew rich, and 
 their prosperity attracted the rivalry of all Europe, 
 until foreign and intestine strifes brought ruin. 2 
 
 1 Blanqui, p. 202. 
 
 2 " I have prepared," says the Doge Moncenigo, " a statement of 
 the products of our [Venetian] commerce : — 
 
 Every week there comes to us from Milan seventeen Ducats. 
 
 or eighteen thousand ducats, which makes per year . 900,000 
 Prom Monza, a thousand per week, and per year . . 52,000 
 From Como, two thousand per week, and per year . . 104,000 
 From Alessandria, one thousand per week, and per 
 
 year 52,000 
 
 From Tortono and Novara, two thousand per week, 
 
 and per year 104,000 
 
 From Pavia, two thousand per week, and per year . . 104,000 
 Prom Cremona, two thousand per week, and per 
 
 year 104,000 
 
 From Bergamo, fifteen hundred per week, and per 
 
 year 7 8) 000 
 
 From Palermo, two thousand per week, and per 
 
 year 104,000 
 
 From Piacenza, one thousand per week, and per 
 
 year 52,000 
 
 1,654,000 
 
OLD WORLD METHODS. 43 
 
 In all the splendor of these Italian republics one 
 rule prevailed : the state rarely touched by tax- 
 ation the earnings or savings of labor. Florence, 
 in 1338, drew more than one half of her revenue 
 
 "What evidently establishes the truth of this result is the ac- 
 knowledgment of all the bankers, who declare that every year the 
 Milanese has to pay us sixteen hundred thousand ducats. Do you 
 find this a pretty fine garden which Venice is eDJoying, without its 
 occasioning her any expense ? 
 
 Tortona and Novara use per year six thousand pieces Ducats, 
 of cloth, which, at fifteen ducats a piece, make . . 90,000 
 
 Pavia, 3,000 pieces 45,000 
 
 Milan, 4,000 pieces of fine cloth at thirty ducats . . . 120,000 
 
 Como, 12,000 pieces at fifteen ducats 180,000 
 
 Monza, 6,000 pieces at fifteen ducats 90,000 
 
 Brescia, 5,000 pieces at fifteen ducats 75,000 
 
 Bergamo, 10,000 pieces at seven ducats 70,000 
 
 Cremona, 140,000 pieces of fustian at four and one 
 
 quarter ducats 70,000 
 
 Parma, 4,000 pieces of cloth at fifteen ducats . . . 60,000 
 
 " In all 94,000 pieces ; and the import and export duties, at simply 
 
 one ducat per piece, bring us 200,000 ducats. 
 " We have a trade with Lombardy estimated at 28,000,000 ducats. 
 "Do you think Venice has there a pretty fine garden'? Ducats. 
 
 Then come the hemps for the sum of 100,000 
 
 The Lombards buy of you every year 5,000 pounds 
 
 of cotton for 250,000 
 
 Twenty thousand quintals of thread (or, perhaps, of 
 spun cotton), at fifteen or twenty ducats per hun- 
 dred 30,000 
 
 Two million pounds of Catalogne wool at sixty 
 
 \ ducats per one thousand .... 1 20,000 
 
 As many from France 1 20,000 
 
 Cloths of silk and gold for 250,000 
 
 Three thousand lots of pepper at one hundred ducats 
 per lot 300,000 
 
44 AMERICAN SYSTEM OF REVENUE. 
 
 directly from commerce, and the internal taxes 
 were little more than nominal. 1 The days of Flor- 
 entine splendor can be traced almost absolutely by 
 
 Four hundred loads of cinnamon at one hundred and Ducats. 
 
 sixty ducats per load 64,000 
 
 Two hundred thousand pounds of ginger at forty 
 
 ducats a thousand 8,000 
 
 Sugars taxed from two or three to fifteen ducats per 
 
 hundred 95,000 
 
 Other commodities for sewing and emhroidery . . . 30,000 
 Pour thousand thousands of dye woods at thirty 
 
 ducats a thousand 120,000 
 
 Grains and plants for tinctures 50,000 
 
 Soaps 250,000 
 
 Slaves 30,000 
 
 Total .... 1,817,000 
 
 " I do not count the product of the sale of salt. Acknowledge 
 that such a commerce is a fine estate. Consider how many vessels 
 the movement of all this merchandise keeps employed, either in car- 
 rying it to Lomhardy or in going for it to Syria, Romania, Catalogne, 
 Flanders, Cyprus, Sicily, and all parts of the world. Venice makes 
 two and a half or three per cent, on the freight. See how many peo- 
 ple live from this movement : brokers, workmen, sailors, thousands of 
 families, and finally the merchants, whose profit does not amount to 
 less than 600,000 ducats. 
 
 " That is what your garden produces. Have you a mind to de- 
 stroy if? No, indeed. Well, you must defend it against whoever 
 may come to attack it." — Daru's History of Venice, vol. ii. p. 293- 
 314. 
 
 1 Revenues of the city and republic of Florence, from 1336 to 
 1338, in gold florins of the weight of seventy-two grammes, at twenty- 
 four carats : — 
 
 Port duties, or import and export duties on merchan- norms, 
 dise and provisions, farmed out by the year at . . , 90,200 
 
 Import on the sale of wines at retail, one third of the 
 
 value 59,300 
 
OLD WORLD METHODS. 45 
 
 the productions of cloth, and when that industry 
 was at its height, the revenues of that little state 
 
 Florins. 
 
 Estimo, or land tax on the country places 30,100 
 
 Tax on salt sold at forty sols a bushel to the bourgeois 
 
 and twenty sols to the peasant 14,450 
 
 Eevenue from the property of rebels, exiled and con- 
 demned 7,000 
 
 Tax on lenders and usurers 3,000 
 
 Dues from nobles invested with territorial possessions . 2,000 
 
 Tax from contracts (inscriptions like mortgages) . . . 11,000 
 
 Tax on butcheries of the city 15,000 
 
 Tax on butcheries of the country 4,400 
 
 Tax for rents 4,050 
 
 Tax on flour and mills 4,250 
 
 Imposts on citizens appointed podestas in a foreign 
 
 country 3,500 
 
 Tax on indictments . ... 1 ,400 
 
 Profit on the coinage of gold pieces . 2,300 
 
 Profit on the coinage of copper pieces 1,500 
 
 Bent of lands of the corporation and tolls ...".. 1,600 
 
 Tax on cattle dealers in the city 2,150 
 
 Tax on the verification of weights and measures . . . 600 
 Street sweepings and rents of the deposits of Orto San- 
 
 Michele . 750 
 
 Tax on country rents 550 
 
 Tax on country tradesmen 2,000 
 
 Fines and sentences from which payment is obtained . 20,000 
 
 Defaults of soldiers (for exemption from military duty) . 7,000 
 
 Tax on doors and houses in Florence 5,550 
 
 Tax on fruit women and old clothes women .... 450 
 
 Permission to carry arms, at twenty sols per head . . 1 ,300 
 
 Tax on sergeants 100 
 
 Tax on woods floated on the Arno 100 
 
 Tax on the examiners of guaranties given to the corpo- 
 ration 200 
 
 Share of the state in duties collected by the art-consuls 300 
 
46 AMERICAN SYSTEM OF REVENUE. 
 
 were greater than those of England under Eliza- 
 beth. 
 
 Venice controlled her commerce with practical ab- 
 soluteness. The state claimed the exclusive right to 
 its own ports and to the gulf which surrounds them. 
 The ships and their owners and sailors must be 
 Venetian, and no foreign merchant could be even 
 received on a Venetian vessel. The customs duties 
 fell twice as heavily on foreigners as on natives of 
 Venice. Blanqui tells us 1 that " as national manu- 
 factures acquired importance, the government de- 
 parted from the liberal policy it had hitherto pur- 
 sued, and the manufacturers obtained an absolute 
 prohibition of such foreign merchandise as they pro- 
 duced." The truth is, that as Venetian mechanism 
 was developed, its importance was promptly recog- 
 nized, and commerce grew up around and upon it. 
 The splendors of these Italian republics are the 
 charm of the Middle Ages. They reached out their 
 arms with marvelous grasp, considering their popula- 
 tion and their extent. They became the successors of 
 Macedon and Rome, as well as of Tyre and Sidon ; 
 they overran the East with their arms as well as 
 
 Florins. 
 
 Tax on citizens who reside in the country 1,000 
 
 Tax on possessions in the country 
 
 Tax on battles without weapons 
 
 Tax on Firenzuola 
 
 Tax on mills and fishing 
 
 The total exceeds 300,000 
 
 (Sismondi, History of the Italian Republics, vol. iv. p. 166.) 
 l Page 200. 
 
OLD WORLD METHODS. 47 
 
 their arts and their commerce. They were strong 
 while they pursued the works of peace, and based 
 their power on production and the commerce which 
 was developed by it. They fell by causes outside of 
 their industrial policy. Their systems of revenue 
 favored industry on the soil to a degree never else- 
 where surpassed, and they relied upon commerce for 
 the revenues of the states to an extent equal to that 
 of any policy ever introduced in any land. 
 
 GERMAN STATES. 
 
 Blanqui, a Frenchman opposed to the whole cur- 
 rent of French financial legislation, discovers in the 
 accession of Charles the Fifth a change in the course 
 of political economy in Europe. 1 No other writer 
 has discovered any such radical difference in the 
 spirit of government in any of its branches at that 
 era. Charles the Fifth devoted himself to conquest, 
 but in that respect he followed examples much older 
 than his age. He devoted himself to the aggrandize- 
 ment of his own country, of Spain, and of Germany. 
 In this policy he copied the examples of every ruler 
 of strong character from the beginnings of history. 
 He maintained for Germany and Spain the system 
 of developing internal industry, and of imposing 
 charges upon foreign commerce, as had been done by 
 every ruler known to human annals. Julius Caesar 
 certainly applied customs duties to purposes of pro- 
 tection, and Charles the Fifth only carried out the 
 l Chap. xxi. 
 
48 AMERICAN SYSTEM OF REVENUE. 
 
 lessons of revenue systems which the experience of 
 other lands had impressed upon his country and his 
 time. When the empire fell apart, each separate 
 state held to the traditions and the practices which 
 had prevailed. 
 
 In the chief German states, in early days, the 
 financial systems were very complex. A land tax 
 has existed in some form in all of them from the be- 
 ginning of history. The charges on commerce were 
 collected by the several petty princes with circum- 
 stances of much rigor. Austria had a tariff which 
 often varied, and covered merchandise of every sort. 
 Its internal taxes were manifold and vexatious. 
 Prussia pursued the same policy. Both of these 
 leading governments have collected, from a very re- 
 mote period, taxes on persons, on industries, on 
 movable wealth, on food, and on beverages. The 
 burden of military service has been heavy in Ger- 
 many in all times. It will be hard to find in finan- 
 cial systems any charge which has not been tried on 
 the Rhine and the Danube. The diverse methods 
 for reaching occupations and personal property in 
 Prussia and Austria, before the middle of this 
 century, leave scarcely any room for new devices. 
 The personal tax in Prussia, graduated according to 
 income, has involved all of the annoyances which 
 have been alleged in Britain against the income 
 tax. In that country, a class tax is collected from 
 5,115,555 persons, and even from those whose in- 
 come is as low as $105 and not above f 750 a year ; 
 
OLD WORLD METHODS. 49 
 
 but the technical income tax comes from 163,024 
 persons, who report $750 a year or more. There, as 
 elsewhere, prosecutions are numerous for these taxes, 
 and last year no less than 1,556,507 executions were 
 issued for non-payment of the class imposts. Just 
 now, the sharpest discussion is in progress in Prussia 
 over these taxes. 1 These personal charges, according 
 to a prominent French author and statesman, 2 are 
 endured in countries inhabited by the pure Germanic 
 race or its principal branches, while among the Neo- 
 Latin peoples they have but a small number of iso- 
 lated applications, temporary or from pressing ne- 
 cessity. 
 
 In the present generation, and especially within 
 the past decade, Germany has revived with increas- 
 ing force the protective policy which has been tra- 
 ditional in all of its states. In the adjustment be- 
 tween Austria and Hungary in 1877, the finances 
 presented one of the points of difficulty. 3 Hungary, 
 buying little coffee or petroleum, assented to heavy 
 duties upon them, and the Austrian manufactures 
 were protected by high duties. Again, in 1882, the 
 Austrians increased their customs duties, for pur- 
 poses of protection. In the Northern German states 
 the tariff has occasioned prolonged discussion and va- 
 rious partisan combinations. Bismarck has asserted 
 the policy of protection with all the vigor of Colbert 
 and Cromwell. Since 1878 he has insisted with un- 
 
 1 Saturday Review. 2 De Parieu. 
 
 8 Muller's History., p. 591. 
 4 
 
50 AMERICAN SYSTEM OF REVENUE. 
 
 flinching determination on collecting such duties as 
 will develop German production. He states that the 
 measure which he has carried through and made the 
 law of the empire was prompted by "the necessity 
 not alone of assisting individual branches of industry 
 by special protective duties, but still more to secure 
 to native industry in all branches an advantage over 
 foreign industry in the home market," with a view 
 also to extend the exportation of native goods. 1 The 
 great chancellor has endeavored to win the support 
 of the extreme radicals by measures entirely inde- 
 pendent of his protective policy, and he has not been 
 sustained by the elections in those measures, al- 
 though the emperor has taken his part. But the 
 protective features which he has embodied in such 
 vigor in legislation have won for him the favor of 
 the land-owners, whose burdens he has mitigated, and 
 of the industrial classes, whose earnings he has in- 
 creased. 
 
 Hamburg was long a free city, and sought com- 
 merce by every device. It has been one of the 
 points at which trade has been more nearly exempt 
 from all charges than in any large country. But 
 that city has in 1882 asked to be admitted into the 
 German Zollverein, and to collect the protective du- 
 ties which are a part of the purposes of that union. 
 The city passes into the general German methods ; 
 meanwhile a spot is reserved in which a free port 
 will be maintained. But Hamburg chooses to look 
 
 1 Muller's History, p. 644. 
 
OLD WORLD METHODS. 51 
 
 to the manufactures of Germany for its trade and for 
 the basis of its commerce, and thus becomes a strong 
 example of the progress of protection. 
 
 FRANCE. 
 
 France, in spite of the allegation of De Parieu, is a 
 conspicuous illustration that systems of revenue do 
 not depend at all upon race. For there the whole 
 field can be closely studied from domestic experi- 
 ence. The land tax has prevailed from the estab- 
 lishment of the nation. Charlemagne relied upon 
 the products and rents of the royal domain for his 
 revenue. 1 Tithes were early collected, and Philip 
 Augustus ordered such an impost for the third cru- 
 sade. Since 1376 customs have brought money into 
 the treasury. In various provinces the rates and pol- 
 icy have been different, and cities like Lyons as late 
 as the sixteenth century maintained their own dou- 
 ane. Not until 1790 were the divergent systems of 
 customs merged into a uniform tariff. Export duties 
 have figured in French methods. Whether by sepa- 
 rate provinces or for the nation customs duties have 
 been a chief reliance for revenue in France, since in 
 1576 Jean Bodin, who was at the head of the finan- 
 cial administration, asserted the principle of moder- 
 ate restriction of commerce for protective purposes, 
 in his work " De la Republique." 
 
 Under Louis XIV a capitation tax was collected 
 from twenty-two classes of persons. Sully and Col- 
 
 1 See his Capitularies, Blanqui, p. 114. 
 
52 AMERICAN SYSTEM OF REVENUE. 
 
 bert abolished many oppressive charges, and the 
 latter raised the customs to render them more 
 strongly protective. 1 In 1710 ten per cent, was lev- 
 ied on incomes of every kind, whether from land, or 
 from movable property, or from industrial or pro- 
 fessional occupations. Interrupted at intervals the 
 tenth was collected from land as well as from other 
 sources until 1749, when the twentieth took the place 
 of the tenth. But this rate has been doubled and 
 under stress tripled ; so that the charge upon land 
 has been at times as high as thirty per cent. In 
 1830, Dupin 2 states the tax on land sold was so 
 heavy as to absorb two years' income. Turgot tried 
 to concentrate all taxes into a single impost on the 
 net product of the soil. 3 In 1791 the law of "pa- 
 
 1 Colbert's aim in revising the customs was to make them a means 
 of protection for national manufactures, in the place of a simple 
 financial resource, as they formerly were. Most articles of foreign 
 manufacture had duties imposed upon them, so as to secure to simi- 
 lar French merchandise the home market. At the same time Colbert 
 spared neither sacrifices nor encouragement to give activity to the 
 manufacturing spirit in our country. He caused the most skillful 
 workmen of every kind to come from abroad ; and he subjected man- 
 ufacturers to a severe discipline, that they should not lose their vig- 
 ilance, relying on the tariffs. 
 
 He had himself summed up in a few words his system in the mem- 
 orial he presented to the king : " To reduce export duties on provis- 
 ions and manufactures of the kingdom ; to diminish import duties 
 on everything which is of use in manufactures ; and to repel the prod- 
 ucts of foreign manufactures, by raising the duties." — History of Po- 
 litical Economy, by J. A. Blanqui, pp. 283-4. 
 
 2 Forces Productive, vol. i. p. 130. 
 
 3 Blanqui, p. 373. 
 
OLD WORLD METHODS. 53 
 
 teittes," which is in many respects peculiar, became a 
 fixed part of the financial scheme of France. These 
 patentes are charges upon vocations according to an 
 arbitrary classification, raised nominally on the pre- 
 sumed importance and profit, on location relative to 
 city and country, on rent, and number of persons or 
 machines employed. The list is curious, and the 
 complexity of the system renders it costly and oner- 
 ous. Taxes on food, on consumption in the broadest 
 sense, have been long the rule in France. It was, 
 says De Parieu, in spite of the Roman example, the 
 true fatherland of the tax on salt, which it still in- 
 sists upon collecting. It was the country in which 
 farming the revenue attained the greatest impor- 
 tance. To France alone can we look for the tolera- 
 tion of separate custom houses at the entrance of over 
 fourteen hundred of its communes ; for the octroi 
 duties involve that consequence. These are an in- 
 heritance coming down from 1323, when they were 
 collected for the benefit of the state ; afterwards they 
 were divided between the state and the communes, 
 and have latterly been conceded wholly to local ob- 
 jects. They are collected from beverages, edibles, 
 fuel, forage, and certain raw materials in chief part. 
 The rates are often monstrous, and were (1866) 
 on coal in Paris three dollars and sixty cents a ton, 
 and this was more than the cost of that article at 
 other points. Varying from a few centimes per cap- 
 ita in some localities they amount to five dollars per 
 capita in Marseilles, and to eight dollars per capita 
 
54 AMERICAN SYSTEM OF REVENUE. 
 
 in Paris. The cost of collecting them rises to twelve 
 per cent, in some communes, and for the whole coun- 
 try averaged a few years ago ten per cent. 1 The 
 tobacco monopoly is maintained in France in all its 
 rigor. 
 
 The estimate is made that counting taxation and 
 conscription, the French workingmen, taking the av- 
 erage of them, pay one fifth of all their earnings to 
 the government. 
 
 Among the many evils which the third Napoleon 
 brought upon France was the partial overthrow of 
 the policy of protecting the national industries. He 
 was overreached by Cobden in a commercial treaty 
 when M. Chevalier introduced the fallacies of the 
 free trade school. Not a little of the popular repul- 
 sion which after Sedan rendered the empire impossi- 
 ble grew out of the depression of industry and trade. 
 President Thiers, 2 with marvelous reconstructive 
 power, followed the negotiations for peace and the 
 organization of the republic by a brave return to the 
 policy under which France had prospered, and which 
 all of her strong statesmen, whether royalist or re- 
 publican, and not least the first Napoleon, deemed 
 vital to her prosperity. That protective policy is 
 maintained by the republic, and during the past year 
 President Gre"vy has refused to renew the reciprocity 
 treaty with Britain. 3 Out of this policy France has 
 
 1 De Parieu, vol. iv. 
 
 2 Mutter's Political History of Recent Times, p. 475. 
 8 Annual Register, 1882. 
 
OLD WOULD METHODS. 
 
 55 
 
 surprised Europe by paying $200,000,000 of its debt, 
 and reducing its taxes by $60, 000,000 a year. 
 
 A peculiarity of the French tariff is that two 
 schedules exist, one styled conventional and the other 
 general. The former applies to countries, like Ger- 
 many and Britain, with which commercial treaties 
 are maintained ; and the other is enforced against 
 the rest of the world, and bears with severity on 
 some American products. In some instances the 
 rates under treaties are higher than under the gen- 
 eral schedules, but the rule is the reverse, and nota- 
 bly in the case of important commodities. It is under 
 this system that complaint has arisen over the prac- 
 tical prohibition of American pork. 1 
 
 ENGLAND. 
 
 The Danegeld tells of the origin of the land tax in 
 England. It has existed in all parts of Britain from 
 the beginning of our knowledge of any public in- 
 
 1 Some of these differences are : ■ 
 
 See Schedule of Beverages. 
 
 Wines, per hectoliter 
 
 Alcohol and brandy, per hectoliter .... 
 
 In schedule " Yarns and threads : " 
 Cotton yarn, according to fineness, per 100 kilos. 
 Woolen yarn, per 100 kilos. 
 
 In schedule " Tissues : " 
 Cotton, unbleached (according to weight), per 
 
 100 kilos 
 
 Woolen, per 100 kilos 
 
 In schedule " Animals : " 
 
 Live oxen, each 
 
 Hogs, each ... . . ... 
 
 Conventional 
 Tariff. 
 
 Francs. 
 
 3.50 
 15.00 
 
 15.00 to 300.00 
 10.00 to 100.00 
 
 50.00 to 300.00 
 (a) 
 
 2.60 
 .30 
 
 General Tariff. 
 
 Francs. 
 
 4.50 
 30.00 
 
 18.60 to 372.00 
 31.00 to 124.00 
 
 62.00 to 625.00 
 75.00 to 620.00 
 
 15.00 
 3.00 
 
 a 10 per cent, ad valorem. 
 
56 AMERICAN SYSTEM OF REVENUE. 
 
 come. The Conqueror had a revenue of only two mil- 
 lion dollars, and the kings of the Houses of York and 
 Lancaster only about a half a million dollars a year. 
 To raise these sums levies were made without form 
 of law by royal prescript under the Normans, and 
 special extortions were excused by some exigency of 
 the ruler. Stephen imposed no regular taxes, but 
 seized what he wanted. Before the time of Henry 
 II, the land bore the largest share of the taxes, but 
 tithes were levied for the crusades near the close of 
 his reign, 1 and thereafter personal property was bur- 
 dened from a thirtieth to a seventh, and in the case 
 of the Jews even to a fourth. A clause in the great 
 charter forbids more than the ancient customs on 
 merchants entering or leaving the realm. This pro- 
 hibition points to the practice of the kings of collect- 
 ing money as license, or as continuous tax, at their 
 pleasure, perhaps as a guaranty for personal protec- 
 tion, upon all strangers, and this came soon to be 
 a charge upon traffic, by whomsoever conducted. 
 Henry III required from London, and from the 
 Jews, direct payments into his coffers. Edward I 
 was sovereign when a tenth was collected from grain 
 and from animals for the crown ; and to him also 
 were granted, the first time in England, duties on 
 imports. The poll tax dates from Richard II, and it 
 was levied on all persons, male and female, above the 
 age of fifteen years. Henry VII sent out commis- 
 sioners to collect a sixteenth of every man's sub- 
 
 1 Green's History of the English People, vol. i. p. 322. 
 
OLD WORLD METHODS. 57 
 
 stance, and took it in money, plate, or jewels. Henry 
 VIII, with the help of Cardinal Wolsey, found in 
 the church rich mines to work, and appropriated the 
 first fruits and tenths to himself. Doubtless, when- 
 ever princes wanted funds, they resorted to loans to 
 get them ; but Henry VIII took four shillings in the 
 pound from the clergy, and three shillings from the 
 laity, under this pretext ; and his benevolences, pre- 
 tended voluntary contributions, exasperated his sub- 
 jects. 
 
 Queen Elizabeth took ventures for the crown in 
 the commercial enterprises which marked her reign. 
 With Raleigh, and with Drake, with daring naviga- 
 tors who carried English greed into remote seas, she 
 enlisted capital, and looked for her share of the re- 
 turns. 1 She evidently followed the example of Solo- 
 mon, and serves as a brilliant example of the almost 
 uniform policy of drawing from commerce in some 
 shape the largest practicable addition to the royal 
 revenues. She understood the subject, for she had 
 probably read Sir Walter Raleigh's Essay on Trade, 
 in which he advocates measures for favoring Eng- 
 lish manufactures and controlling foreign commerce. 
 In 1590 she increased the customs charges from 
 £14,000 to ,£50,000 a year, taking from that source 
 by so much larger a share of her revenue. 2 
 
 The Stuarts brought not a little of their trouble 
 upon themselves by their extortions in taxes, and by 
 
 1 Cunningham's Growth of English Industry and Commerce, p. 306. 
 
 2 Hume, vol. iv. p. 218. 
 
58 AMERICAN SYSTEM OF REVENUE. 
 
 the attempt to get them by proclamation, without 
 vote of Parliament. To Charles I his first Parlia- 
 ment conceded #6,000,000 a year, from customs, ex- 
 cise, crown lauds, and hearth money; 1 but he sought 
 more by illegal means, and sold state lands, set up 
 monopolies, drew subsidies, and reduced extortion to 
 a system. Ship money aroused John Hampden. 
 The resistance to the farmers of the revenue was a 
 reversal of ancient practice, for Elizabeth had a 
 struggle over them, and only yielded in part near the 
 close of her reign. As early as 1329 the Bardi of 
 Florence paid twenty pounds a day, Sundays ex- 
 cepted, for the revenue. Under Elizabeth the rent 
 was £14,000 to £50,000 a year upon total receipts 
 never so large as £500, 000. 2 Both James and Charles 
 made the worst of the monopolies, which were ex- 
 tended to cover many articles of prime necessity, 
 such as salt and soap, coal, starch, pepper, alum. In 
 1671 English taxes were taken out of farm, and sub- 
 jected to the control of commissioners, and they have 
 remained so ever since. 
 
 The British system has for three centuries been 
 directed to building up commerce. For commerce, 
 adventurers were sent over every ocean. For com- 
 merce, colonies were planted. For commerce, the 
 eighteenth century was made a century of warfare 
 in the New World, and for the prize of India. In 
 1750 the British Parliament enacted : " From and 
 after the 24th day of June, 1750, no mill or other 
 
 1 Hallam, chap. xv. 2 Hume, vol. iv. p. 216. 
 
OLD WORLD METHODS. 59 
 
 engine for slitting or rolling bar-iron, or any plaiting 
 forge to work with a tilt-hammer, or any furnace for 
 making of steel, shall be erected, or, after erection, 
 continued in any of his Majesty's colonies in Amer- 
 ica." 1 This was the spirit in which even Chatham 
 treated the colonies, when he sought to prevent them 
 from making even a hob-nail. It has been the tra- 
 ditional temper of Britain towards other countries. 
 It is the expression of the strong purpose to hold 
 control of the world's manufactures for the sake of 
 supremacy in commerce. 
 
 This purpose to monopolize the trade of America 
 brought on the Revolution, by unjust taxes and the 
 crushing out of local industries. The same purpose 
 inspired the navigation laws, the manifold grievances 
 which were designed to cripple our commerce and to 
 obstruct our industrial independence. They drove 
 our republic into the War of 1812, in which, while 
 we failed to extort in treaties the recognition of our 
 claims, we nevertheless asserted our nationality, and 
 compelled respect for our power, our courage, and 
 our growing vitality. British statesmen and traders 
 learned that a new competitor had appeared, if not 
 yet to challenge foreign commerce, at least to be mas- 
 ter in its own markets. Then began the war on our 
 industries by indirection, of which Lord Brougham 
 gave the sinister proclamation. He said : " It was 
 well worth while to incur a loss on the first exporta- 
 tion, in order by the glut to stifle in the cradle those 
 1 Act 3 George II, c. 29, sec. 9. 
 
60 AMERICAN SYSTEM OF REVENUE. 
 
 rising manufactures in the United States which the 
 war has forced into existence." The same policy was 
 maintained towards Ireland with deadly effect. 
 
 At the close of the Napoleonic wars the British 
 revenue came from customs, excise, stamps, land, and 
 assessed taxes on property, income, including pensions 
 and salaries, lottery profits, besides heavy loans, 
 which had become a regular dependence in Britain 
 as well as in France, and in all Europe. 
 
 The customs were levied with an immediate view 
 to develop internal industries, and to enable them to 
 compete with the products of other countries. Up 
 to 1846, in considerable part to 1859, the British 
 policy was more rigidly protective than that of any 
 other land. 
 
 A feature of the British statutes which exhibits 
 their stern adaptation to their end is the prohibition 
 of the growing of tobacco. By an act passed Au- 
 gust 23, 1831, no tobacco can be grown anywhere in 
 the United Kingdom, " except in the physic garden 
 of the universities, or of a private physician," and 
 then only in very limited quantities. 
 
 Stewart's " Political Economy," which List well 
 described as an expression of British experience, in- 
 sists that the only way to promote industry is by 
 positive action, and not simply by permission and 
 protection. No government ever did more than Eng- 
 land for three centuries to develop home manufac- 
 tures, and to crush out competition. 
 
OLD WORLD METHODS. 61 
 
 The British Budget for 1882 shows that £19,- 
 300,000 was raised from customs, £27,230,000 from 
 excise, £11,145,000 from stamps, £2,775,000 from 
 land tax, etc., £11,662,000 from income tax, £7,- 
 150,000 from the post-office, £1,650,000 from tele- 
 graphs, £380,000 from crown lands, £1,180,000 from 
 interest on advances, and £4,725,000 from miscella- 
 neous sources. This is a total of £87,197,000. To 
 this must be added the collections for local purposes, 
 as poor rates, school tax, police, roads, and the like, 
 £61,174,480, making a grand total of £148,371,480, 
 or in dollars, $741,857,400, to a total population of 
 35,262,762. 
 
 Customs duties are now collected in Great Britain 
 on cocoa, coffee, chicory, tea, tobacco, wine, beer, 
 and ale ; and duties to countervail the excise charges 
 are collected on spirits and strong waters, chloroform, 
 chloral hydrate, collodion, ether, ethyl, naphtha, soap, 
 and varnish. 
 
 The British system does not now rest without as- 
 sault. A movement for fair trade, with duties to 
 protect home industry, has secured a foothold in Par- 
 liament, and maintains a popular organization. The 
 answer of the government to a proposition for duties 
 of ten per cent, on foreign manufactures was given 
 by Mr. Chamberlain, that the British people would 
 thus be compelled to pay forty million pounds more 
 for their food. The British colonies cannot produce 
 the amount of food required in the home islands, and 
 cannot buy the manufactures necessary to pay for 
 
62 AMERICAN SYSTEM OF REVENUE. 
 
 the needed food. Even more threatening to the 
 British financial system is a sentiment which finds 
 advocates in "the Financial Reform association," 
 which, through elaborate publications, insists upon 
 the substitution of direct taxation "in lieu of the 
 present unequal, complicated, and expensively - col- 
 lected duties upon commodities." * Especially does 
 this association demand that the land tax shall be 
 readjusted. Our discussion in the United States on 
 topics of revenue arouses no more bitterness than 
 these proposals excite in Britain, and certainly does 
 not threaten any such sharp divisions of our people 
 into distinct classes. 
 
 Professor Fawcett's elaborate argument against 
 protective duties for retaliation against the United 
 States, in his work on " Free Trade and Protection," 
 is evidence of the growing tendency in England to 
 question the wisdom of the present policy of revenue. 
 
 SPAIN AND THE NETHERLANDS. 
 
 Ancient Spain and the Netherlands add little to 
 the theories or facts of revenue except bad adminis- 
 tration and excessive rates. Both maintained a colo- 
 nial policy for the extension of their commerce, and 
 they tried to maintain trade by heavy duties. In 
 Spain the internal charges became so onerous that 
 McCulloch attributes to them a greater loss than was 
 caused by the exclusion of the Moors, and he traces 
 
 1 See in Financial Reform Almanack for 1 883, catalogue of thirty- 
 seven tracts. 
 
OLD WORLD METHODS. 63 
 
 to taxes the decay of the country. Spain did not 
 abandon farmers of the revenue until 1849. In Hol- 
 land in 1750 the land tax bore so ruinously upon 
 property that owners sought to be relieved by aban- 
 doning their lands to the state. But this privilege 
 was formally denied to them by edict of 1751. In 
 1790 the tax greatly reduced was yet from eight to 
 nine per cent, of the gross produce. John De Witt, 
 in 1746, had boasted of the wealth of the Nether- 
 lands, and declared it was " because its trade and all 
 exchanges were left unfettered, unimpeded, unlegis- 
 lated upon ; and that by this free trade the Nether- 
 lands became both the most peopled and the richest 
 country on the earth." Five years later some of its 
 land would not meet the taxes upon it. The people 
 who could contest with Britain for the possession of 
 the New World as well as for the mastery of the Ori- 
 ent fell behind their neighbors, and soon ceased to be 
 accounted even a secondary power. Their bankers 
 still compete with other money-lenders ; but trade 
 has fallen to a low ebb, and except as the nation 
 derives a revenue from the remnants of its colonies, 
 as from Java especially, the Netherlands can hardly 
 claim to rank among the producers of the world. 
 The student of finance must be struck with the fact 
 that this nation, so boastful of the freedom of its 
 trade, as a government concerned in agriculture, en- 
 forces a seventh of the labor of the colonists for pub- 
 lic profit, and seeks more than a third of its revenue 
 from colonial products raised by the government and 
 handled by its agents. 
 
64 AMERICAN SYSTEM OF REVENUE. 
 
 No recent manifestation has been more suggestive 
 than the movement in Holland for the return to the 
 protective policy. The Chamber of Commerce of 
 Helmond protests against the system of revenue 
 which prevails, as destructive to commerce as well 
 as to production. Wages have been reduced to the 
 minimum, and yet Belgium competes successfully 
 with the Dutch on their own soil. The American 
 consul at Amsterdam, in a report to our state depart- 
 ment, declares that the mechanics and artisans very 
 generally enlist in this movement, and join in de- 
 manding unrestricted trade with the Dutch colonies, 
 and the adjustment of the tariff to protect home in- 
 dustries against foreign competition. The experi- 
 ence of the Netherlands justifies this protest against 
 its revenue system, and furnishes strong arguments 
 promising the success of the advocates of a protec- 
 tive policy. 
 
 COLLECTING THE REVENUE. 
 
 Farmers of the revenue have always aggravated 
 the burdens of taxation. French authorities declare 
 that under Henry IV individuals paid a hundred 
 and fifty million francs, while the treasury received 
 only thirty million. Under Louis XIV. half the 
 money paid by the nation failed to reach the govern- 
 ment. In the United Provinces, in the last cen- 
 tury, almost half the gross taxes went to pay for ad- 
 ministration and collection. 1 Rau, a German author, 
 1 De Parieu. 
 
OLD WORLD METHODS. 65 
 
 testifies that in Rhenish Bavaria, at one time, 247,- 
 081 florins were paid for getting 101,017 for the 
 treasury. These are illustrations of rates which were 
 the rule in the era of abuses under all governments j 
 but, without robbery, costs have often exceeded the 
 income. For thirty years before 1763, the remit- 
 tances of revenue from the American colonies aver- 
 aged only ,£1,900, and the expenses for officers were 
 £7,000 a year. With improved methods, rates have 
 been very high. France still pays fifteen per cent, 
 and upwards for gathering in its customs, and its oc- 
 troi cost the communes an average of ten per cent. 
 These figures seem very large in Britain and the 
 United States, for the British customs have not for 
 years involved expenses above five per cent. In the 
 United States the internal revenue has been assessed 
 and collected for 3.63 per cent., as in 1880, with the 
 rate increasing by the diminution in the sum col- 
 lected. The cost of customs is now 3.7 per cent. 
 
CHAPTER III. 
 
 MODERN PRACTICES ABROAD AND AT HOME. 
 
 Duties on Exports. — On Imports. — Tax on Land. — Public Do- 
 main. — Mines. — Monopolies. — Taxes on Liquors and Tobacco. 
 — Railroads and Telegraphs. — Corporations. — Salt, Sugar, Tea, 
 Coffee. — Incomes. — Patentes. — Stamps. — Succession. — Lotter- 
 ies. — Peculiar Sources of Revenue. 
 
 Table of Revenue op Different Nations. — Effort universal 
 to collect some Revenue from Commerce. — All Countries except 
 Two adopt a Protective Policy. — Contrast by Numbers. — The 
 Latest Legislation is Protective. 
 
 Origin of Protection. — Not with Cromwell and Colbert. — Goes 
 Back to Egypt and Phoenicia. — Acharnians of Aristophanes. — 
 The Strife between Athena and Poseidon. — Csesar. — France. — 
 England. — Ruskin : " No Nation dares to abolish its Custom 
 Houses.'' — Fawcett. — Sidgwick. — Appeal to Authority. — Pro- 
 tection sustained semper ab omnibus ubique. 
 
 Turning now from individual nations, let us 
 group modern countries by the classes of imposts 
 which they collect. We shall find that no example 
 exists of a failure to derive a considerable share of 
 revenue from commerce. China includes exports in 
 its schedules of duties ; so do Brazil and Guatemala. 
 New Zealand collects an export charge on gold. 
 Every nation which has any system of revenue at 
 all imposes duties on imports. Under the combina- 
 tion of the Zollverein the German states make collec- 
 tions of customs and divide the proceeds on the basis 
 
PRACTICES ABROAD AND AT HOME. 67 
 
 of the population of the several states included in the 
 alliance. Mexico still maintains custom houses on 
 the borders of its several states. 
 
 A tax on land is also one of the uniform depend- 
 ences of modern governments. Russia, before the 
 emancipation of its serfs, levied no tax on the soil, 
 doubtless owing to the tenure under which it was 
 held. In the United States, with three brief excep- 
 tions, all due to war necessities, the national govern- 
 ment has made no charges upon the land, but has 
 allotted that sphere to the states, and all of them, ex- 
 cept Pennsylvania and New Jersey, rely chiefly upon 
 it. In Europe and the Asiatic countries, the yearly 
 revenues come in large part from the land. A public 
 domain still as in ancient times affords returns in 
 many nations either by sale or lease. In this repub- 
 lic our public lands have not yet ceased to pour their 
 millions into the treasury. In Belgium, Colombia, 
 and Japan, a special tax is levied on mines ; and 
 Greece continues, as in the time of the glory of 
 Athens, to receive contributions from the silver 
 mines at Laurium. 
 
 Monopolies on certain articles are yet maintained. 
 France still permits tobacco to be sold only under 
 this restraint. Austria-Hungary draws profit from 
 the concession of monopolies on salt and tobacco. 
 Italy, Spain, Roumania, Costa Rica, Honduras, Nic- 
 aragua, and the Dutch West Indies also employ the 
 same methods for getting money. 
 
 Fermented and distilled liquors and tobacco are 
 
68 AMERICAN SYSTEM OF REVENUE. 
 
 common objects of special taxation, by licenses, by- 
 stamps on the packages, or by tax on the manufac- 
 ture, or by two or all of these plans combined. 
 
 Comparatively new as railroads and telegraphs are, 
 they have been very generally chosen as sources of 
 revenue. In England the telegraph is monopolized 
 by the government. In Belgium and France the rail- 
 roads are commonly, as in Russia, in great part owned 
 by the state. In these countries and in Germany, 
 guaranties are given by the state of a part or all of 
 the capital, and everywhere governments seek by 
 tax or from a share in the profits to get income from 
 railway traffic and from telegraphing. In Pennsyl- 
 vania especially, in New Jersey, and latterly in New 
 York, such corporations are assessed separately. This 
 uniformity of imposition of taxes upon such inter- 
 ests indicates the deliberate aim of securing funds 
 for public use from domestic trade through the in- 
 struments upon which it relies most for active and 
 prompt movement. 
 
 Salt and sugar, with tea and coffee, are subjected 
 to heavy charges in many lands ; the first in France 
 and India, the second in most European and Amer- 
 ican states, tea and coffee notably in Great Britain. 
 The levying of taxes on consumption of articles of 
 prime necessity is a principle in the Old World. 
 
 The tax on incomes with which Americans were 
 familiar during the rebellion, is levied in Great Brit- 
 ain, Prussia, and Sweden, with rate increasing on 
 large incomes, and with exceptions in favor of those 
 
PRACTICES ABROAD AND AT HOME. 69 
 
 falling below a fixed standard. The patentes of 
 France are charges upon occupations ; Belgium, 
 Prussia, Bavaria, Austria-Hungary, also collect im- 
 posts upon trades. Stamps upon certain papers or 
 on various commodities are required in Great Brit- 
 ain, some German states, Sweden, and Portugal. 
 Taxes on the succession of property are maintained 
 in Britain, Prussia, and Denmark, and in some 
 American states. 
 
 Lotteries pay fees to Austria-Hungary, Prussia, 
 Italy, the Netherlands, Spain, and Brazil, and in this 
 country to Louisiana and Kentucky. 
 
 Of peculiar sources of revenue, Germany and 
 Sweden derive money from state banks ; and Ger- 
 many from a state printing-office ; Servia has a capi- 
 tation tax graded according to rank, occupation, and 
 income, with a distinction between married and un- 
 married persons ; India gets profit from opium, and 
 raises quinine on government account ; and Peru be- 
 fore its unfortunate complications with Chili, relied 
 largely on the sale of guano. 
 
 The two free cities have been traders and not pro- 
 ducers, and their systems of revenue have been 
 adapted to their position. Hamburg before entering 
 the Zollverein got $6,500,000 a year from its do- 
 mains, from lotteries, from stamps and like charges, 
 and from official fees. Bremen requires .$2,500,000 
 annually, and picks it up, one third from public prop- 
 erty, one third from direct taxes, and the remainder 
 from indirect imposts. Perhaps Gibraltar deserves 
 
70 
 
 AMERICAN SYSTEM OF REVENUE. 
 
 OOiO CO O CD CO 00 CO -* r-s CO CN rHCNiOCO 
 
 CO 
 
 I "^ I I I t 
 
 cm 2 a 
 
 lOrHoOcocn 
 
 £ — P* 
 12 *» 
 
 iOCOOCQCO-*lO(M CO zDl— 
 
 Sal 
 
 CM O UOHCOfflffl >— < L— qN 
 
 OS CO i OS O Ol Oj CO lO | N CO | | CO (O | 
 
 o i-i t-oico^oi coo coco 
 
 V-f OHCOP 
 
 d ■"-- c-i o «J 55 
 
 ■1 CO r-i CO I-1 
 
 COCO 
 
 ©CD | 
 COCO 
 
 qi-cocooi i incQcsiqmioSoioo 
 ri^HTjicqco thi^co 'aicdt^aiirs 
 
 1* 
 
 10.90 
 3.30 
 6.61 
 
 m 
 
 » 
 
 3.17 
 2.38 
 14.66 
 10.04 
 
 i-i 
 
 CO 
 CO 
 
 -rHOOOl 
 CO 10S 
 
 3.10 
 
 }-cK-*CM 
 3 l~ CO I- 
 
 
 
 
 Ss«:n 
 
PRACTICES ABROAD AND AT HOME. 71 
 
 to be mentioned as a free port, but its trade is very 
 trifling. 
 
 A different classification will still farther enable us 
 to judge of the relations of different revenue systems. 
 Comparisons are difficult from the variations in the 
 statements which are published, and the fact that in 
 many countries local taxes are collected which do 
 not appear in the national budgets. The figm-es an- 
 alyzed on page 70 are those of the British States- 
 man's Year-Book for 1883, corrected and extended 
 from the Almanach De Gotha for the same year, 
 from official publications, and other sources. The 
 table states the percentages of the total revenue re- 
 ceived in the various countries from the different 
 classes of imposts. 
 
 a. The income tax where it is collected, as in Britain and Prussia, 
 is stated with the property and direct taxes. 
 
 b. France includes excise in its report of indirect taxes. 
 
 c. The salt and tobacco monopoly are included in this statement 
 from Austria- Hungary. 
 
 d. The figures for railways in Bavaria include also mines. 
 
 e. In Denmark the returns on customs include the tax on beet 
 sugar- 
 
 f. In Germany the excise includes salt and tobacco with beverages. 
 In the Netherlands the report includes divers articles. 
 
 g. Germany receives contributions from the states, included here 
 with other receipts. 
 
 h. Greece puts receipts from the mint with those from the post- 
 office. 
 
 i. The Netherlands include here the receipts from stamps. 
 
 t. The customs reported for Prussia are its share from the imperial 
 treasury. 
 
 I. Prussia thus reports the produce of its furnaces and forges. 
 
 m. Spain reports excise and stamps and fees together. 
 
72 AMERICAN SYSTEM OF REVENUE. 
 
 Enforced military service must be accounted a 
 form of taxation, and it may become the most bur- 
 densome. In European countries it is now one of 
 the causes of most grievous complaint. One out of 
 twenty-eight of the population of the seven great 
 powers is a soldier, and must be supported by the 
 other bread-winners. One seventh of the people of 
 France, it is estimated, is required for the army, 
 either to fill its ranks, or to support it. In the 
 United States during the rebellion, the draft and the 
 excessive bounties afforded illustrations of this prac- 
 tice. But the subject belongs more strictly to other 
 branches of political science than to that of revenue. 
 
 The imposts of which we have been speaking are 
 those of the state, of the general government. The 
 provinces, the counties, the communes, and the cities 
 have in the Old World, as the commonwealths and 
 the chief local divisions have with us, their distinct 
 treasuries. In the Old World the taxes for these 
 minor organizations are generally assimilated to 
 those of the state. They as a rule fall upon the 
 same objects. The French octroi are a conspicuous 
 exception. But the local systems outside of France 
 introduce no principles which are not applied in the 
 imposts of the general governments. 
 
 Since there are local as well as state taxes, to use 
 our American phrases, in addition to those of the 
 general government, comparisons are difficult. But 
 local and state taxes fall upon land and articles of 
 prime necessity, in other lands as well as in the 
 
PRACTICES ABROAD AND AT HOME. 73 
 
 United States, as the general rule. Our tables show 
 that the effort is universal to throw some consider- 
 able part of the charges of the central government 
 upon foreign commerce. 
 
 TESTIMONY OE THE NATIONS. 
 
 All economists agree that the only countries which 
 levy imposts for the support of government with a 
 view to favor commerce in the first degree are Great 
 Britain and the Netherlands. These are examples 
 of free trade. 
 
 The revenue systems of all the Asiatic countries 
 are protective, and in Europe, France, Austria, North- 
 ern Germany, Russia, Italy, Spain, and Switzerland 
 are systematically and increasingly devoted to the 
 policy of levying charges, with the purpose of favor- 
 ing home production. 
 
 While Great Britain maintains a free trade policy 
 at home, her colonies, except New South Wales, in- 
 sist for themselves on rigid protection. The West 
 Indies, as the " Westminster Review " : complains, 
 violate the rules of free trade by collecting, as in Ja- 
 maica, thirty per cent, of the revenue from imported 
 food. Canada, by her national policy adopted in 
 1880, prefers home production to commerce. In Aus- 
 tralasia the colony of Victoria is a sturdy champion 
 of protection. New South Wales is quoted for free 
 trade, but it presents the striking example of a state 
 in which no direct tax is collected. The chief part 
 
 l October, 1883. 
 
74 AMERICAN SYSTEM OF REVENUE. 
 
 of the revenue is derived from public lands, either 
 by sale or rent, and nearly one fourth of its revenue 
 comes from customs. New Zealand secures its reve- 
 nue chiefly from customs, and from land sales. The 
 same is the case with Queensland and South Aus- 
 tralia. Western Australia adds to these sources cer- 
 tain licenses. Even India until 1882 protected itself 
 by restrictive duties against British cottons. 
 
 While the commercial policy of revenue is main- 
 tained by Great Britain and the Netherlands, with 
 an aggregate population of less than 40,000,000, the 
 industrial system is enforced by all the other West- 
 ern nations, with a population of not less than 340,- 
 000,000. With this majority of eight times the 
 
 numbers of the minority are arrayed, in at least 
 
 * 
 equal degree, the intelligence and progress of man- 
 kind. The eastern nations are quite solid on the 
 side of the industrial system, not excluding until 
 1882 even British India. 
 
 The latest examples of revenue legislation un- 
 biased by vested interests, and in the face of the full- 
 est discussions, are to be found in Germany in its 
 unification, in the several British colonies, and in 
 Japan in introducing Western methods. In all of 
 these instances, without obligations pleading for a 
 particular policy, the system which has been adopted 
 has been strongly and even rigidly protective. 
 
 All of the changes in revenue policy which have 
 been most recently adopted in Europe have been in 
 favor of a protective system. 
 
PRACTICES ABROAD AND AT HOME. 75 
 
 Austria and North Germany have within a few 
 years extended and invigorated their protective pol- 
 icy. The French Republic has with continued dis- 
 cussion stood firmly by the principle of Colbert and 
 of the periods of French glory. Eussia develops its 
 vast resources by close adherence to a protective sys- 
 tem, and in 1882 added ten per cent, to its customs 
 duties. Even Britain. wavers. In India the govern- 
 ment control is absolute, and the purpose to control 
 all industry and all trade for British advantage is at 
 the bottom of the entire administration and posses- 
 sion. The Australasian colonies are following the 
 example of the United States in financial policy as 
 well as in other respects, with practical defiance of 
 English teaching and of English desires. 
 
 ORIGIN OP A PROTECTIVE POLICY. 
 
 The credit of establishing the principle of protec- 
 tion has been assigned to Cromwell and to Colbert. 
 Our investigation has corrected any such misappre- 
 hension. No revenue system existed in the olden 
 times in which one chief purpose was not to build up 
 the country at the cost of foreigners. Hiram and 
 Solomon conducted commerce for the profit of their 
 governments, as Egypt had before them sought to 
 draw wealth from outside peoples. The policy of 
 Carthage was conspicuous for its protective charac- 
 ter. It destroyed the ships of competitors who 
 sought to get metals to build up competing indus- 
 tries. In Persia, as the records show, royalty itself 
 
76 AMERICAN SYSTEM OF REVENUE. 
 
 was confined to the use of home-made articles. The 
 Philistines compelled the Jews to put out the fires 
 of their forges, 1 so that they might not become in- 
 dependent, just as, nearly eighteen hundred years 
 later, England required the American colonies to do. 
 Athens was distinctively protective in its policy. 
 
 The first of the plays of Aristophanes which has 
 come down to us is devoted to a satire of the Achar- 
 nians, who, as the dramatist suggests, because they 
 burned charcoal, were not ready to have free trade 
 forced upon them by war. The anxiety of the Mega- 
 rians to smuggle in their commodities, whether short 
 mantles or little pigs, finds its counterpart in those 
 who to-day try to place the world under tribute to 
 their arms and their diplomacy. Dikaiopolis, who is 
 ready to peddle out peace and to sacrifice everything 
 for free trade for himself, proves at least that when 
 Athens was greatest it was the master of its own 
 markets and the protector of its own industries. 
 
 Aristophanes represents Dikaiopolis buying peace 
 
 for himself against the wishes and policy of Athens, 
 
 and this is the proclamation which he makes : — 
 
 These are the limits of my market-place, — 
 'T is lawful here for all Peloponnesians 
 To traffic, all Megarians and Boeotians, 
 Trading with me, but not for Lamachos. 2 
 
 1 1 Sam. xiii. 19. 
 
 2 This is the burden of the play, lines 719-722 : — 
 
 Spot ftkv Ayopas ela-iv o'iSe tt)5 ep.7js. 
 €VTa{!0' ayopd£eiv iratri Tl£k<movVT](TCot.s 
 e£e<7Tl Kai Meyapevffl Kai BouuTtois 
 e<p' wre 7TwAcu' Trpbs ejw^, \"/j" \oj 8e 0iij. 
 
PRACTICES ABROAD AND AT HOME. 77 
 
 Throughout his plays this comic poet makes fun of 
 his country for putting tanners, lamp - makers, and 
 other artisans into the chief places, for the successors 
 of Pericles were chosen from such trades. Athens 
 exalted the mechanic arts as well as those of paint- 
 ing, sculpture, and literature ; and the satirist proves 
 the policy of the city in the era of its greatness by 
 his elaborate ridicule of it. 
 
 Lamachos and Dikaiopolis stand for the opposite 
 policies of trade. Lamachos is prompt to fight al- 
 ways to protect the home market against the Mega- 
 rians and Peloponnesians. Dikaiopolis insists on a 
 free market, which he proposes to secure by making 
 a separate peace for himself. The rollicking spirit 
 in which their strife is depicted is the essence of the 
 play. The persistence with which free trade is aimed 
 at, but funnily enough, only for the negotiator him- 
 self, illustrates the current of economic history. Here, 
 in lines 623-625, we read : — 
 
 kyk Se ktjpvttg) ye HeXonovvqatois 
 uTvaat teal Meyapniai nal Boiariotc 
 TzoTielv ayopa&iv irpbc k/ie, AafiaxiJ fe /J-V- 
 
 Long before the great satirist, and at the begin- 
 ning of Athens, the struggle between industry and 
 commerce began, and on the rocky height above the 
 city was erected the temple which proclaimed the 
 triumph of production. The legend recites how 
 Athena and Poseidon strove for the mastery of land 
 and people. With her olive-tree and her industrial 
 arts Athena drove Poseidon to the caves of the sea, 
 
78 AMERICAN SYSTEM OF REVENUE. 
 
 and the statue of gold and ivory which shone from 
 the Parthenon across the midland sea testified to the 
 achievements of art and industry. The world has 
 not learned to build a structure of more beauty and 
 grandeur than that white temple on the hill, which 
 even yet looks down on Pnyx and Agora, on Phale- 
 rum and Salamis. At its side the Greeks built their 
 edifice to Wingless Victory. From them comes the 
 wise lesson of the dependence of commerce on domes- 
 tic development, and from them it is for us to learn 
 how to lay even more firmly the foundations of a vic- 
 tory which shall never flee away. 
 
 Julius and Augustus Csesar restored the protective 
 policy which had originally prevailed in Rome, but 
 had been interrupted in the corrupt and weak days. 
 Gibbon testifies that " the rate of the customs under 
 Augustus varied from one eighth to one fortieth part 
 of the value of the commodity ; and we have the 
 right to suppose that the variation was directed by 
 the unalterable maxims of policy ; that a higher duty 
 was fixed on the articles of luxury than on those of 
 necessity, and that the productions raised or manufac- 
 tured by the labor of the subjects of the empire were 
 treated with more indulgence than was shown to the 
 pernicious, or at least the unpopular, commerce of 
 Arabia and India." 1 
 
 The world-wide struggles of the eighteenth cen- 
 tury were for the markets of the nations. First 
 France and England fought for the possession of 
 
 1 Decline and Fall, vol. i. p. 190. 
 
PRACTICES ABROAD AND AT HOME. 79 
 
 America and of India. Then England had to meet 
 Spain and Holland in battle for the same prize of the 
 world's trade. Cromwell and Colbert are only the 
 types of England and France, and of their consistent 
 policy. 
 
 When Holland failed by war to maintain the mas- 
 tery of commerce, the attempt was made to win for- 
 eign trade by relieving it of charges which had pre- 
 viously been collected from it. But Britain held to 
 its stern protective policy, and step by step, through 
 all the influences which its government could exert, 
 it sought to draw commerce to its ports, and even 
 more especially to secure foreign markets for its com- 
 modities. From a very early day various writers ad- 
 vocated free trade, as in 1739, an essay on the 
 "Decline of Foreign Trade " boldly proposed "that 
 all sorts of merchandise be imported and exported at 
 all times without paying any customs or fees." 1 But 
 until 1846 the arguments of the farmers and manu- 
 facturers outweighed the appeal of mere commerce. 
 
 Blanqui, with all his audacity, moans that " the 
 prohibitory system," for so he styles the policy of the 
 civilized world, outside of two countries, " has in- 
 fected all Europe." 2 Mr. Ruskin admits that " no 
 nation dares to abolish its custom houses." The in- 
 fection has been the result of the experience of all 
 the centuries. In the course of revolutions nations 
 have been found to dare anything which promised 
 
 1 Cunningham's English Industry and Commerce, p. 374. 
 
 2 Page 526. 
 
80 AMERICAN SYSTEM OF REVENUE. 
 
 greatness and prosperity, but not one has yet dared 
 in any madness or exaltation to abolish its custom 
 houses. The lesson is as eloquent as all the ages can 
 render it, that every government, with two excep- 
 tions within recent days, has relied in large part upon 
 charges upon commerce for its revenue, and with a 
 direct purpose to encourage its own laborers and to 
 enlarge production upon its own soil. That is the 
 declaration of the common sense of mankind. 
 
 Professor Fawcett, one of the foremost advocates 
 of the British system, declares with something of 
 pathos, that "not only in countries where protection 
 has been long established is there a disinclination to 
 follow the example set by England, but even in 
 new countries, such as Australia, there is constantly 
 displayed an eagerness to introduce protection in one 
 or other of its various forms." Sidgwick 1 declares 
 that " free trade has recently been called in question 
 by an apparently growing party of practical men." 
 This is abundantly true. It is the way in which the 
 prediction of Cobden that England could convert the 
 world to free trade is answered. It is the sturdy 
 adherence of mankind to methods which their sense 
 and their experience approve. 
 
 Under due restrictions, the appeal to authority has 
 just weight. Considering the extent of time covered 
 by our investigations, and the array of nations which 
 by their constant practice bear their testimony, dem- 
 onstrating that the opinion of the world has found 
 1 Page 6. 
 
PRACTICES ABROAD AND AT HOME. 81 
 
 expression in legislation, we insist that upon no point 
 has authority stood so firmly as for a protective sys- 
 tem of revenue, — for a revenue system which charges 
 commerce avowedly and vigorously with some share 
 of the burdens of government. Doubters and critics 
 have arisen as they have assailed Christianity. 
 
 But no axiom of morals, no doctrine of any creed, 
 hardly any fact in science outside of pure mathemat- 
 ics, has ever been so uniformly sustained by the 
 teachings and practice, certainly not by such a con- 
 sent of legislation, of mankind in all ages. Whatever 
 strength can be derived from the approval of man- 
 kind, from general acceptance, semper ab omnibus 
 ubique, belongs to a revenue system which protects 
 home industry by levying imposts upon commerce. 
 
CHAPTER IV. 
 
 AMERICAN METHODS AND RESULTS. 
 
 The British Stamp Tax for the Colonies. — Pitt's Distinction be- 
 tween Internal and External Taxes. — Commissioners to collect 
 Import Duties. — The Revolution began our Revenue. — The 
 Power to levy Taxes and regulate Commerce conceded to the Na- 
 tional Government. — The Architects of the Union Experts in Mat- 
 ters of Revenue. — The Second Statute a Tariff. — The Precedent 
 for our Fiscal Legislation. — Madison in advance of Hamilton. — 
 Hamilton's First Report as Secretary of the Treasury. — Tariffs of 
 1790 and 1791. — Hamilton's Report on Manufactures. — Legisla- 
 tion before 1812. — Report of Gallatin, Secretary of the Treasury. 
 
 — Internal Taxes of 1791. — Resistance to Law. — Internal Taxes 
 repealed under Jefferson. — Hostile to the Genius of a Free Peo- 
 ple. —The Public Lands. —The War of 1812. —Fluctuations in 
 Imports. — Secretary Dallas and the Tariff of 1816. — The Debate. 
 
 — Clay, Webster, Calhoun. — Tariff of 1824. — Convention of 
 1827. — Debate and Legislation in 1828. — Nullification. — The 
 Clay Compromise. — Fiscal Acts of Thirty Years. — Internal 
 Taxes again. — Effect of the Reductions of Duties under the Com- 
 promise. — Election of 1840. — Tariff of 1842. — Report of Robert 
 J. Walker. — Free Trade Acts of 1846 and of 1 857. — From Nulli- 
 fication to Secession. — Gold driven from the Country. — The Mor- 
 rill Tariff. — Increments and Reductions. — Repeal of the Moiety 
 Laws. — Act of the Tariff Commission. — Internal Taxes a Third 
 Time. — Vast Revenues collected in 1866. — Four Periods in our 
 Revenue Legislation. — The Influence of Slavery. — The Southern 
 Confederacy makes the only Attempt to embody in Fundamental 
 Law a Prohibition of Duties to foster Industry. — Limits of the 
 Four Periods by Events and by Time. — Rates of Duties. — The 
 Free List. — National, State, and Local Imposts. 
 
AMERICAN METHODS AND RESULTS. 83 
 The chronicles of American revenue begin with 
 the attempt of the British Parliament to collect a 
 stamp tax in the colonies. It was natural for the 
 home authorities to seek to get back some of the 
 money which the settlements on this side of the At- 
 lantic were costing. Pitt, in his remarkable response 
 to Grenville, drew a sharp line between internal and 
 external taxes, and clearly intimated that customs 
 duties might be collected in the colonies without of- 
 fense. Franklin, as agent for Pennsylvania, gave 
 expression to like suggestions. At all events, in the 
 beginning the colonists based their opposition wholly 
 on the nature of the tax which was imposed. But 
 the repeal of the stamp tax was followed by the bil- 
 leting of troops on Boston and New York, and fric- 
 tion was continued and grew more intense. The ap- 
 pointment of commissioners to collect import duties 
 found the spirit of liberty aroused, and the protest, 
 " No taxation without representation," was the foun- 
 dation of union. In fact, owing to distance and to 
 slowness of communication representation for the col- 
 onies in the British Parliament was impracticable. 
 The demands of the colonists were, therefore, that 
 Britain should not impose any taxes upon them, but 
 that any contribution to the general government 
 should be conceded by the colonial legislatures upon 
 request from the ministers in London. Radical prin- 
 ciples were declared in high places in those days. 
 Pitt insisted in Parliament that taxation was no part 
 of the governing power, but that moneys must be 
 
84 AMERICAN SYSTEM OF REVENUE. 
 
 conceded by the people. The colonists perhaps made 
 no distinction between kinds of taxes ; they felt the 
 movements of independence, and the grievance of the 
 stamp tax brought their spirit of freedom into action. 
 Another kind of burden at that time might have 
 served as well for organizing the tendency to separa- 
 tion. As a matter of fact the corner-stone of Amer- 
 ican Union was laid in revenue. 
 
 Trouble enough there was during the days of the 
 confederation to raise moneys for carrying on the 
 struggle. The impracticability of relying upon sep- 
 arate states for a national fund was demonstrated. 
 When the constitution was framed this was one of 
 the radical difficulties, and, with the methods of su- 
 pervising commerce, presented grave obstacles to the 
 formation of a republic. The concessions were made, 
 and the power to levy taxes and to regulate com- 
 merce became fundamental with the national govern- 
 ment. 
 
 The architects of the Union had been trained in 
 a hard school of revenue. To them it was true, as 
 Frederick List said later : " The best book on po- 
 litical economy in this new country is the volume of 
 life." They were familiar with all the discussions 
 with the mother country. They had experienced the 
 trials of the confederation. They had known all the 
 opposition to national systems of taxation and of com- 
 merce. They were no novices in the principles and 
 the practical application of methods for raising rev- 
 enue, and developing trade and industry. Whether 
 
AMERICAN METHODS AND RESULTS. 85 
 
 as students of history or as subjects of the rough dis- 
 cipline of establishing a new government, they were 
 as well equipped for pronouncing upon the questions 
 involved as any like number of statesmen whom the 
 world has ever seen gathered in one place. 
 
 THE FIRST AMERICAN TARIFF. 
 
 They began prudently, and with a clear under- 
 standing of the purposes which they had in view and 
 of the measures which were necessary for attaining 
 them. The second statute which Congress enacted, 
 and which Washington signed, declared in a pream- 
 ble, that it was " necessary for the support of the 
 government, for the discharge of the debt of the 
 United States, and the encouragement and protection 
 of manufactures, that duties be laid." This was the 
 beginning of American legislation on the revenue. 
 It expresses the principles which have grown into the 
 American system. No one among the leaders of our 
 politics during the first three quarters of a century 
 failed to accept the doctrine, 1 although several have 
 given utterance also to the belief that a tariff ought 
 not to seek to protect domestic industry. We may 
 find such contradictions in the career of many of our 
 statesmen. Our legislation does not show such vari- 
 ations. Until we reach the tariff of 1846 the statutes 
 are a succession of imposts prompted by the spirit 
 which enacted the original American tariff. 
 
 1 In Greeley's Essays on Political Economy, he gives an abstract 
 of the opinions of early American statesmen on the tariff. 
 
86 AMERICAN SYSTEM OF REVENUE. 
 
 The charge has been put forth that American rev- 
 enue legislation is complex and confusing. No other 
 branch of our statutes shows less of blundering, less 
 of tendency to change, less of crude and ill-meant 
 work. There is no mystery about our tariffs, save 
 that which comes from the variety of our commerce, 
 the diversity of our industries, and the vast sums of 
 money which our continental growth and our foreign 
 wars and the great civil strife have entailed. 
 
 When the national government began its career 
 the treasury was empty, and borrowing had been 
 carried quite as far as was prudent. Congress had 
 no more pressing obligation than to provide means 
 for supporting the new institutions. The plain duty 
 was to lay the foundations of a system of revenue 
 which could grow with the nation. Experience and 
 reason had taught the necessity of adequate receipts 
 from sure resources. The Continental Congress had 
 proposed customs duties, and all of the states except 
 New York had assented to their collection. On the 
 basis of that scheme, Mr. Madison, who as one of 
 the framers and chief champions of the constitution 
 understood the tasks which confronted Congress in 
 the very early days of the session, set to work to pro- 
 vide a revenue. He was ready for broader action 
 than was even his associate in the " Federalist." 1 
 
 l In his special message of February 20, 1815, "laying before Con- 
 gress copies of the treaty of peace and amity between the United 
 States and his Britannic majesty," Mr. Madison urges : — 
 
 " But there is no subject that can enter with greater force and merit 
 into the deliberations of Congress than a consideration of the means 
 
AMERICAN METHODS AND RESULTS. 87 
 
 Hamilton was not prepared for fixing specific du- 
 ties and enumerating articles, but Madison deemed 
 
 to preserve and promote the manufactures which have sprung into 
 existence and attained an unparalleled maturity throughout the 
 United States during the period of the European wars. This source 
 of national independence and wealth I anxiously recommend, therefore, 
 to the prompt and constant guardianship of Congress." 
 
 In a letter dated "Montpelier, October 10, 1827," and addressed to 
 the Lynchburg Virginian, Mr. Madison declares that the doctrine of 
 protection " had been entertained and acted on from the commence- 
 ment of the Constitution of the United States by the several branches 
 of every administration under it," and that " the power of Congress, 
 in its enlarged sense," was " a primary and known object in forming 
 the constitution." 
 
 Writing September 18, 1828, to Joseph C. Cabell, Mr. Madison, 
 who had been claimed as sympathizing with the South Carolina 
 hostility to the new tariff, said : — 
 
 " That the encouragement of manufactures was an object of the 
 power to regulate trade is proved by the use made of the power for 
 that object in the first session of the first Congress under the consti- 
 tution, when, among the members present, there were so many who 
 had been members of the federal convention which framed the con- 
 stitution, and of the state conventions which ratified it ; each of these 
 classes consisting also of members who had opposed and who had 
 espoused the constitution in its actual form. It does not appear from 
 the printed proceedings of Congress on that occasion that the power 
 was denied by any of them. And it may be remarked that members 
 from Virginia, in particular, as well of the anti-federal as the federal 
 party, the names then distinguishing those who had opposed and 
 those who had approved the constitution, did not hesitate to propose 
 duties, and to suggest even prohibitions in favor of several articles of 
 her production. By one a duty was proposed on mineral coal in favor 
 of the Virginia coal pits ; by another a duty on hemp was proposed 
 to encourage the growth of that article ; and by a third a prohibition 
 even of foreign beef was suggested as a measure of sound policy. 
 
 " A further evidence in support of the constitutional power to pro- 
 tect and foster manufactures by regulations of trade, an evidence that 
 
88 AMERICAN SYSTEM OF REVENUE. 
 
 it wise to begin in that way, and Congress agreed 
 with him. The original law prescribed certain spe- 
 cific duties, with enumeration of merchandise, in ad- 
 dition to ad valorem charges, with drawbacks on 
 articles exported within a year. At the same time a 
 discrimination of ten per cent, was allowed on goods 
 brought in by American vessels. This act of July 
 4, 1789, — for it was passed on the thirteenth anni- 
 versary of our national independence, — ■ consists of 
 less than three pages of the law books. The highest 
 ad valorem rate was fifteen per cent, on carriages ; 
 the specific rates are adjusted at ten cents a gallon on 
 Jamaica spirits, eighteen cents on wine, six to fifteen 
 cents a pound on tea, and at like standards ; while 
 the rate on all unenumerated articles was five per 
 cent, with a short free list. 
 
 The duties charged on American ships entering the 
 ports of the country were established at six cents 
 per ton, while foreign owners were required to pay 
 fifty cents a ton. When the vessels were owned 
 partly in the United States and partly abroad, the 
 rates were thirty cents a ton. This first tariff went 
 into effect on the first of August, 1789. 
 
 ought of itself to settle the question, is the uniform and practical sanc- 
 tion given to the power by the general government for nearly forty 
 years, with a concurrence or acquiescence of every state government 
 throughout the same period ; and, it may be added, through all the 
 vicissitudes of party which marked the period. No novel construc- 
 tion, however ingeniously devised, or however respectable and patri- 
 otic its patrons, can withstand the weight of such authorities, or the 
 unbroken current of so prolonged and universal a practice." 
 
 In a second letter to Mr. Cabell, October 30, 1828, Mr. Madison 
 advocated the exercise of this power. 
 
AMERICAN METHODS AND RESULTS. 89 
 
 The treasury was formally organized as a depart- 
 ment September 2, 1789, and Alexander Hamilton 
 was the first secretary. His first report dealt with 
 the debt which was pressing, and the means to pay 
 the annual interest as well as the current demands of 
 the government. He wanted in all $2,839,163. He 
 argued that this sum might be derived from the ex- 
 isting duties on imports and tonnage, increased, as 
 could well be done. He classed the articles which 
 were enumerated as all of them in reality luxuries. 
 Under this inspiration the tariff of 1790 was enacted, 
 which made an average increase in duties of two and 
 one half per cent. The imports for the year ending 
 September 30, 1790, were, at duties of five per cent., 
 $13,778,510 ; at seven and a half per cent., $960,- 
 138 ; at ten per cent., $644,326 ; and at fifteen per 
 cent., $5,429. But it must be remembered that es- 
 pecially in the United States money was worth a 
 great deal in those days of poverty, and the imports 
 and the rates of duties are to be measured in that 
 light. The duties on distilled spirits were modified 
 according to proof, by act of March 3, 1791, and 
 carried up to forty cents a gallon. 
 
 HAMILTON'S REPORT ON MANUFACTURES. 
 
 These acts were prophecies of the famous report of 
 Alexander Hamilton on manufactures, communicated 
 to Congress December 5, 1791, and still a classic 
 on topics connected with the production and the 
 finances of our country. He dwelt on the disadvan- 
 
90 AMERICAN SYSTEM OF REVENUE. 
 
 tages surrounding our foreign trade by reason of the 
 restrictive regulations of Britain, which were "abridg- 
 ing the vent of our agricultural produce," and on the 
 wisdom of seeking at home for an indemnification 
 for these external disadvantages, " as well as an occa- 
 sion of resources favorable to national independence 
 and safety." He insisted that the national govern- 
 ment had the power to encourage learning, manu- 
 factures, agriculture, and commerce. He presented 
 import duties as a proper means of encouraging man- 
 ufactures, and suggested also bounties, premiums, 
 exemption of raw materials from duty, drawbacks, 
 the incitement to inventions, with the development 
 of means of communication. His review of the ex- 
 isting industries is elaborate and instructive. The 
 building up of American manufactures he declared 
 would increase immigration, and would establish a 
 steady demand for the produce of the soil in domes- 
 tic markets. 
 
 Congress and the nation accepted the report of 
 Hamilton as proclaiming the true American policy. 
 The statutes were framed in accordance with his 
 teachings. The revolutionary period coming down 
 to the War of 1812 is little more than the expansion 
 and enforcement of the tariffs of Madison and Ham- 
 ilton. The books contain in all fifteen statutes bear- 
 ing upon duties, and they cover thirty-six pages. 1 
 
 1 These statutes are : — 
 
 Act of July 4, 1789, less than three pages, fixing duties. 
 August 10, 1790, two and a half pages, repealing the former, and 
 changing duties. 
 
AMERICAN METHODS AND RESULTS. 91 
 
 The average duties collected in 1791 were on all im- 
 portations 15.34 per cent. They fell to 11.54 per 
 cent, in 1792. They became 19.99 per cent, in 1798. 
 They reached 30.67 per cent, in 1802 on importa- 
 tions which were decreasing. Falling again, they 
 mounted to 37.22 per cent, in 1809. 
 
 The development of our manufactures within this 
 interval of twenty-three years justified the legisla- 
 tion which aimed at that result. In his report of 
 April 17, 1810, Albert Gallatin, then Secretary of 
 the Treasury, estimated their annual product at $120,- 
 
 000,000. 
 
 March 2, 1791, explanatory of duties on chintzes and colored cal- 
 icoes, one third page. 
 
 March 3, 1791, relative to duties on spirits, foreign and domestic, 
 fifteen and one fourth pages. 
 
 May 2, 1792, modifying duties on wines and spirits, and heer; also 
 altering certain other duties, one and one fourth page ; and general 
 provisions hanging the statute to five pages. 
 
 June 5, 1794, concerning duties on spirits, stills, wines, and teas, 
 three pages. 
 
 June 7, 1794, enlarging the dutiable list, one and three fourths of a 
 page. 
 
 Act January 29, 1795, to remedy difficulties in ascertaining certain 
 duties, three pages. 
 
 March 3, 1797, relative to sugar, tea, velvet, plain cotton goods, and 
 cocoa, to raise money to apply on the principal of the debt, one page. 
 
 July 8, 1797, for an additional duty on salt, three fourths of a page. 
 
 May 13, 1800, adding to the duties on sugar and wines, one page. 
 
 March 3, 1804, relative to drawbacks, one half page. 
 
 March 27, 1804, for imposing more specific duties on certain arti- 
 cles, one and three fourths of a page. 
 
 March 3, 1807, repealing the duties on salt, one half page. 
 
 March 4, 1808, to allow old copper, saltpetre, and sulphur to come 
 in free, half a page. 
 
92 AMERICAN SYSTEM OF REVENUE. 
 
 On the classes of merchandise which it was the 
 design to develop the duties were not extreme. On 
 both iron and leather, the rates were gradually- 
 brought up to seventeen and a half per cent. On 
 calicoes they were the same, and had been advanced 
 by the same steps from the original five per cent, 
 which had been collected from them as unenumer- 
 ated articles. Wool raw was kept free, and its man- 
 ufactures had been rated at fifteen per cent, before 
 the beginning of the war. Salt had been placed at 
 ten cents a bushel by the first tariff, and raised to 
 twenty cents in 1797, but it had been put on the free 
 list in 1807. Sugar was the object of considerable 
 discussion, beginning with one cent a pound for 
 brown, and advancing up to two and a half cents, 
 while refined started at three cents a pound and be- 
 fore the war was nine cents a pound. 
 
 INTERNAL TAXES. 
 
 As early as March, 1791, Congress resorted to in- 
 ternal taxes, and they at once aroused opposition. In 
 the succeeding year, Secretary Hamilton was ordered 
 to present a report on the subject. He tried to meet 
 the objections that the system was offensive to lib- 
 erty, injurious to morals, and involved heavy penal- 
 ties and frequent litigation. The taxes fell especially 
 upon spirits, but the term excise was popularly taken 
 to cover the principle of internal taxation. The re- 
 sistance to the law became flagrant, and drew in per- 
 sons of prominence. In Pennsylvania, Albert Galla- 
 
AMERICAN METHODS AND RESULTS. 93 
 
 tin was an officer at a meeting to denounce the 
 system. He published a sketch of the finances in 
 1796, to expose the weakness of the methods of ex- 
 cise adopted. But the country and the courts, which 
 were appealed to on the plea that the law was uncon- 
 stitutional, sustained Congress. The policy was ex- 
 tended. Carriages, sales at auction, vellum, and 
 paper used for legal documents, sugar refined within 
 the United States, and snuff, were included in the 
 scheme of taxation. But the treasury wanted still 
 more money. Two plans were suggested : first, to 
 extend these internal taxes; and second, to impose 
 direct taxes, apportioned among the States. Oliver 
 Wolcott, Hamilton's successor at the head of the 
 Treasury, insisted that " a direct taxation, as odd as 
 it may seem, is essentially necessary to induce a peo- 
 ple to love their government." A statute was enacted 
 to levy direct taxes. But with the coming in of Jef- 
 ferson's administration all internal taxation was abol- 
 ished. The prejudice against the army of officers, 
 who numbered three hundred and fifty-three in all, 
 and the friction and penalties, which aroused con- 
 stant hostility, were the incitement to this action. 
 John Randolph, as chairman of the Ways and Means 
 Committee, charged that it had cost a fifth of the in- 
 come to assess and collect these taxes ; in fact, the 
 cost was less than one ninth. But the vexation and 
 oppression, the hostility to the genius of a free peo- 
 ple, and the multiplication of officers, were assigned 
 as reasons for abolishing the whole system, and they 
 
94 AMERICAN SYSTEM OF REVENUE. 
 
 were accepted as abundantly adequate. Never since, 
 except under the stress of war, has the nation re- 
 sorted to either direct or other internal taxes. 1 
 
 THE PUBLIC LANDS. 
 
 But the public lands afforded an additional argu- 
 ment for the abolition of internal imposts. They had 
 begun in 1796 to bring money into the treasury by 
 sales, and in 1811 the sum had reached the mag- 
 nitude, then unparalleled, of $1,040,237. By 1807, 
 Secretary Gallatin reported that the government had 
 a surplus of over three million dollars unappropriated. 
 The debt had become manageable. The embargo 
 act soon cut down the receipts from customs and 
 tonnage, and a deficiency began to appear in 1809. 
 The country was drifting into conflict with Great 
 Britain. The first chapter in our national finances 
 had been written, and the second was to begin. 
 
 THE WAE OF 1812. 
 
 On the first of July, 1812, to prepare for the con- 
 flict which had been formally declared on the 18th of 
 June, the duties were all doubled, and the increase of 
 one hundred per cent, was to continue for a year 
 after the conclusion of peace. The struggle was one 
 of commerce and of rights at sea. Great Britain had 
 never secured real peace with our country, had never 
 accepted as real our national independence. Grounds 
 
 1 The repeal was carried upon a report by John Randolph, April 
 2, 1802. 
 
AMERICAN METHODS AND RESULTS. 95 
 
 of difference had been left open, and the rivalries of 
 trade were suffered to keep alive animosities on both 
 sides. Certainly in the steps which led to hostilities 
 the commercial elements were prominent. The de- 
 sire of Congress in doubling the duties was to place 
 heavy charges upon every article which might in any 
 form reach our shores from British manufacturers. 
 Our own industries were already varied and exten- 
 sive. The purpose of becoming independent of our 
 great rival, and of all other nations, had taken defi- 
 nite form. The erection of factories and furnaces 
 was not simply a business enterprise ; it had been 
 lifted up into a patriotic duty. 
 
 The importations had aggregated $138,500,000 in 
 1808. They fell to $22,005,000 in 1813, and to 
 $12,965,000 in 1814. The duties on commodities 
 valued at $77,030,000 had averaged 13.07 per cent, 
 in the fiscal year 1812, nearly the whole of which 
 antedated hostilities. The average rates attained in 
 1813 the extreme altitude of 69.03 per cent. This is 
 by far the highest average ever attained in our cus- 
 toms. In 1814 the duties fell to 46.79 per cent. By 
 the Treaty of Ghent peace was declared on the 17th 
 of February, 1815< and on the 3d of March discrimi- 
 nating duties were abolished in the case of nations 
 which had abolished like discriminations against us. 
 The importations amounted to $113,041,274, more 
 than a hundred million dollars more than in the 
 twelve months immediately preceding. The duties 
 fell to the low average of 6.84 per cent., a minimum 
 
96 AMERICAN SYSTEM OF REVENUE. 
 
 which is unprecedented in our records. The statute- 
 books will prove that these fluctuations were due, not 
 to legislation, but to the vagaries of commerce upon 
 an identical basis ; for the war duties would not 
 cease, by their terms, until the 17th of February, 
 1816, and they were in fact continued by act of Con- 
 gress until the 30th of June of that year, and then 
 prolonged at an increase of forty-two per cent, in- 
 stead of one hundred per cent, over the duties before 
 July 1, 1812. But neither of these extensions went 
 into effect, for the revision of 1816 was completed 
 by the 27 th of April of that year. 
 
 THE TARIFF OP 1816. 
 
 Some writers are accustomed to speak of this 
 measure as a free trade tariff. It does not deserve 
 that title. The report of Alexander J. Dallas, Sec- 
 retary of the Treasury, was the incentive to the act, 
 and laid down the principles upon which it was 
 framed and adopted. He marked out three classes 
 of manufactures, according to the degree in which 
 they were produced in this country. In the first 
 class he placed articles of which a full supply could 
 be produced here; in the second class he arranged 
 those which could be produced here only in part ; 
 and the third class included commodities which were 
 only slightly grown or made in this country, or not 
 at all. For these he applied the principle of protec- 
 tion by system. For the first class he would secure 
 the home market, and rely on home competition to 
 
AMERICAN METHODS AND RESULTS. 97 
 
 keep down prices ; for this class he suggested the 
 standard of thirty-five per cent, as the rate of duty, 
 as a rule, with exceptions down to twenty per cent. 
 The second class included iron and its products, and 
 cotton and wool. For iron he favored a rate of 
 twenty per cent. ; for woolen twenty-eight per cent. ; 
 and for cotton thirty-three and one third per cent. 
 The third class was to be placed at such charges as 
 would bring in the best revenue. The bill was re- 
 ported by Mr. Lowndes, of South Carolina, and was 
 finally adopted with the rates on cotton and woolen 
 fixed at twenty -five per cent., to be reduced to 
 twenty per cent, after three years. The debate on 
 the measure was notable for the persons engaged in 
 it, and for the strength of the arguments presented. 
 The treasury wanted 117,000,000 for its budget. 
 Henry Clay proposed to impose duties of thirty-three 
 and one third per cent, on manufactured cottons. 
 Daniel Webster was willing to concede thirty per 
 cent, for two years, twenty-five per cent, for two 
 years, and afterwards twenty per cent. Mr. Web- 
 ster had constituents engaged in importing India 
 cotton, and he feared their business would be de- 
 stroyed, as indeed it was, by the development of 
 American production which followed these rates. 
 Subsequent events rendered the speech of John C. 
 Calhoun the most notable of the debate. Declaring 
 that he had no interest except in the cultivation of 
 the soil, he considered the subject as one connected 
 with the security of the country. So long as we de- 
 
98 AMERICAN SYSTEM OF REVENUE. 
 
 pend on foreign markets, our agriculture as well as 
 our commerce can be destroyed by war. " When 
 our manufactures are grown to a certain perfection," 
 his words are, " as they soon will be under the fos- 
 tering care of the government, the farmer will find 
 a ready market for his surplus produce; and, what 
 is almost of equal consequence, a certain and cheap 
 supply for all his wants. His prosperity will diffuse 
 itself to every class in the community, and instead 
 of that languor of industry and individual distress 
 now incident to a state of war and suspended com- 
 merce, the wealth and vigor of the community will 
 not be materially impeded." He showed how thus 
 taxes could be raised and loans negotiated. Mr. 
 Ingham, of Pennsylvania, declared that the aim was 
 to support the agriculture, manufactures, and com- 
 merce of the country ; the revenue was only an inci- 
 dental consideration. The cotton-growers were dis- 
 covering the value of their staple, and desired to 
 establish a home market for it. Manufactures had 
 grown with great rapidity during the war, and Con- 
 gress was not willing to invite the competition of 
 hatred intent on crushing out dangerous rivals, seek- 
 ing, in the words of Lord Brougham, " to stifle those 
 rising manufactures which the war had forced into 
 existence, contrary to the natural course of things." 
 
 The average rate of duties on all importations was 
 in 1816, 27.94 per cent. ; they were raised to 32.90 
 in 1817, but by a large increase in importations, 
 making the total $121,750,000 in 1818, the average 
 
AMERICAN METHODS AND RESULTS. 99 
 
 of duties fell to 16.78 per cent. The number of 
 articles charged with specific duties was largely in- 
 creased. The application of the rule fixing a mini- 
 mum value on certain commodities still farther oper- 
 ated in the same direction. 
 
 The American people had, during the war, practi- 
 cally lived upon their own productions. The expan- 
 sion of industries was large enough to supply their 
 entire markets. When peace came, foreign competi- 
 tion rushed in like a flood. The duties on iron were 
 raised in 1818, and the rates on wine were reduced 
 in 1819. 
 
 TARIFFS OF 1824 AND 1828. 
 
 The country was urging on Congress a general 
 revision of the schedules, and in 1824 a bill was re- 
 ported dealing with two classes of commodities. On 
 silks, linens, cutlery, and spices new rates were pro- 
 posed, and for iron, hemp, glass, lead, and wool and 
 its products, an advance in the duties was recom- 
 mended. James Buchanan appeared as the advocate 
 of the iron industries ; he declared that in his own 
 state manufacturers and their laborers had been 
 thrown out of employment, and the neighboring 
 farmer was without a market. Henry Clay made a 
 strong appeal for what he then named the American 
 system of protecting home industry, to cure the dis- 
 tress which he portrayed. He relied upon the example 
 of England to justify the measure, and argued that 
 only by this policy could we hope to compete with 
 that great rival. Daniel Webster had been in private 
 
100 AMERICAN SYSTEM OF REVENUE. 
 
 life for some years, and in 1820 had questioned, in 
 a speech in Faneuil Hall, the right of the national 
 government to carry the principle of protection be- 
 yond the incidental results which might ensue from 
 revenue duties. He was now again in Congress. He 
 denied the prevalence of industrial distress in the 
 country, and sneered at an American policy which 
 was derived from foreign example. He insisted that 
 the manufacturers had always been protected, and 
 the question now was simply whether certain rates 
 should be increased. He was opposed to the im- 
 moderate use of the power of protection. He turned 
 to the iron rates, and said that in Sweden, from 
 which transportation cost only as much as for fifty 
 miles of land travel, men could be found to work at 
 seven cents a day. The question is whether we shall 
 employ them for this labor, and let our own people 
 earn five or six times as much in some other occupa- 
 tion, or seek to compete with these wages, and make 
 up for the difference by a tax on consumers. But 
 the act went upon the statute-books, with duties on 
 cotton cloth at thirty per cent., on woolen manufac- 
 tures thirty and thirty-three and a third per cent., 
 and on iron manufactures from three to five cents a 
 pound, and on bars $1.50 a hundred -weight. The 
 average rates on all importations were raised to 47.72 
 per cent, in 1825, and to 50.94 in 1827 ; on the duti- 
 able articles the rates averaged 50.54 in 1825 and 
 53.76 in 1827. 
 
 In 1827 a convention of manufacturers and others 
 
AMERICAN METHODS AND RESULTS. 101 
 
 interested was held at Harrisburg to devise methods 
 for a revision and increase of the tariff. The presi- 
 dential election was impending, and General Jackson 
 wrote a letter in favor of a " judicious tariff," thus 
 setting the example of dodging the question, which 
 candidates and conventions have been apt to follow. 
 Congress was, on political matters, in accord with 
 the party which elected General Jackson to the pres- 
 idency. The demand for an increase of duties could 
 not be resisted. A bill was reported by Mr. Mal- 
 lary, of Vermont, who advocated the principle of 
 protection, and especially showed that on the class of 
 commodities in large part produced in this country 
 duties are not a tax on the consumer. Silas Wright 
 appeared as the advocate of high rates on raw wool, 
 and of a general policy not fully up to the demands 
 of the Harrisburg convention. Mr. McDuffie, of 
 South Carolina, opposed the whole policy. Upon 
 this measure Daniel Webster first took ground for 
 protection. He repelled the charge that New Eng- 
 land had forced the policy on the nation, and in- 
 sisted that the Eastern states had simply accepted 
 the settled policy of the government, and had fixed, 
 to accommodate it, their own pursuits and their own 
 industry. The act of 1828 was the most elaborate 
 tariff which, up to that time, had been enacted. 
 The debate upon it has been pronounced the ablest 
 in our annals upon the general subject. The effect 
 of this act was to carry the average rates of duties on 
 total importations as high as 57.33 per cent., and on 
 dutiable articles 61.69 per cent. 
 
102 AMERICAN SYSTEM OF REVENUE. 
 NULLIFICATION. — COMPROMISE. 
 
 Already the South Carolina delegation had held a 
 meeting in Washington to concert measures against 
 the tariff legislation. Meetings in South Carolina 
 had denounced the act of 1824 as an act of despot- 
 ism. The disposition to treat customs duties levied 
 under the established policy of the government as 
 sectional, and as injurious to the South and its inter- 
 ests, was carefully fostered by the extreme leaders, 
 who sought to magnify the power of slavery. 
 
 The national debt was undergoing reduction ; the 
 treasury was getting rich ; it was wise to reduce the 
 collections from the people. Henry Clay, in May, 
 1830, introduced a resolution for the immediate abo- 
 lition of all duties on articles not coming into compe- 
 tition with similar articles made or produced in the 
 United States, except those on wines and silks, which 
 ought to be reduced. Mr. Hayne, of South Carolina, 
 moved an amendment for the reduction of all duties, 
 and after fair notice, for the ultimate equalization of 
 all rates. The discussion which followed was elabo- 
 rate and spirited. Charges on tea, coffee, salt, and 
 molasses were reduced, but no general action was 
 taken until 1832. 
 
 On the 9th of January, 1832, Mr. Clay renewed 
 his resolution for a reduction of duties on non-com- 
 peting articles. President Jackson also recommended 
 a revision of the tariff. There was no lack of plans. 
 Mr. McDuffie, from the Committee on Ways and 
 
AMERICAN METHODS AND RESULTS. 103 
 
 Means, demanded the change of all rates to a stand- 
 ard of simple revenue. Two members of his commit- 
 tee brought in a minority report for the maintenance 
 of the existing system, with the abolition of duties 
 not involving the protection of home industry. John 
 Quincy Adams, from the Committee on Manufac- 
 tures, sustained the same principle in an able paper, 
 with a bill for carrying out the plan. 1 Mr. McDuf- 
 fie, and Mr. Bell, of Tennessee, led the debate for 
 the Southern interests, and drew the sectional lines 
 very closely, seeking to arouse prejudice against New 
 England. The legislation of the nation found com- 
 petent defenders, and the sectional argument was met 
 by Mr. Burges, of Rhode Island, who talked plainly 
 of the effect of slavery in preventing the establish- 
 ment of manufactures at the South. Amendments 
 were offered by Mr. McDufne to make the duty on 
 cotton and iron twelve and one half per cent., as 
 
 1 In his report made from the Committee on Manufactures on the 
 22d of May, 1832, John Quincy Adams said : " Under that system of 
 policy the nation has risen from a depth of weakness, imbecility, and 
 distress to an eminence of prosperity unexampled in the annals of the 
 world. It was by counter legislation to the regulations of foreign na- 
 tions that the first operations of the government of the United States 
 were felt by the people ; felt in the encouragement and protection 
 given to their commerce ; felt in the fulfillment of the public engage- 
 ments to the creditors of the nation ; felt in the gradual discharge of 
 the debt of gratitude due to the warriors of the Revolution ; felt in 
 the rapid increase of our population, in the constantly and profitably 
 occupied industry of the people, in the consideration and respect of 
 foreign nations for our character, in the comfort and well-being and 
 happiness of the community; felt in every nerve and sinew, in every 
 vein and artery, of the body politic." 
 
104 AMERICAN SYSTEM OF REVENUE. 
 
 he said, " for the purpose of unveiling the monster ; " 
 and Mr. Burges retorted that it was a monster which 
 had stopped the importation of Indian cotton, and 
 created a vast market for the cottons of the South. 
 Mr. McDuffie's amendments were rejected, and the 
 bill was passed. 
 
 This act was the immediate pretext for the nullifi- 
 cation attitude of South Carolina. Mr. Calhoun had 
 in 1831 published his plea that each state has the 
 right to judge for itself whether or not the constitu- 
 tion is invaded by Congress or the national govern- 
 ment, and to protect itself from any consequences of 
 such violation. The state legislature had called a 
 convention to consider the action of Congress, and 
 this body began its sessions on the 19th of Novem- 
 ber, 1832. The tariff law of 1828 and its amend- 
 ment of 1832 were declared null and void, and proc- 
 lamation was made that if the government of the 
 United States should in any way attempt to enforce 
 the tariff laws by means of its army or navy, then 
 " South Carolina will no longer consider herself a 
 member of the federal Union." General Jackson's 
 proclamation of appeal and warning, and of pledge 
 to use the full power of the Union to put down re- 
 sistance to the laws, was dated December 11th. The 
 force bill was passed in February. But the hour for 
 civil war had not struck. Both parties were watch- 
 ing the efforts at compromise in progress in Wash- 
 ington. Mr. Clay was the leader in the movement, 
 and his plan was embodied in his bill introduced Feb- 
 
AMERICAN METHODS AND RESULTS. 105 
 
 ruary 12th, a measure aiming at a gradual reduction 
 of duties while preserving the protective system. Mr. 
 Calhoun was in favor of the object sought by the 
 bill. Mr. Webster opposed any plan which rejected 
 the rule of discrimination, or took away from Con- 
 gress the discretion to exercise all its constitu- 
 tional powers for reasonable protection to American 
 industry. 
 
 But Mr. Clay's compromise was enacted by strong 
 majorities in both houses. Its provisions, besides ad- 
 ditions to the free list, were that, beginning January 
 1, 1834, on all duties exceeding twenty per cent, on 
 value a reduction should be made of one tenth ; 
 after two years a further reduction of one tenth 
 should be made, and then at intervals of two years 
 three like reductions should follow ; and with the 
 first of January, 1843, no duty in excess of twenty 
 per cent, should be collected. The South had won 
 its first great victory, which invited it on to the 
 struggle which destroyed slavery. The Congress of 
 the United States had legislated under threats, and 
 had abandoned the policy which had been established 
 deliberately and after exhaustive arguments, and 
 after forty years of experience. While, however, the 
 duties were thus diminished, the protective system 
 was maintained in all of the relations of the imposts 
 to each other. 
 
 From the War of 1812 to the compromise with nul- 
 lification, a period of twenty-one years, the statutes 
 bearing upon customs duties number eighteen ; four 
 
106 AMERICAN SYSTEM OF REVENUE. 
 
 of them are important ; altogether, they occupy- 
 nearly thirty-nine pages of the law books. 1 The leg- 
 
 1 The acts of this period are : — 
 
 July 1, 1812, imposing an additional duty of one hundred per cent, 
 on rates existing, the increase to continue until one year after the con- 
 clusion of peace, three lines. 
 
 February 25, 1813, imposing a duty on iron wire, one fourth page. 
 
 July 29, 1813, laying a duty on imported salt, with provisions about 
 fisheries, three pages. 
 
 March 3, 1815, abolishing discriminating duties in case of nations 
 which have abolished discriminations against the United States, one 
 fourth of a page. 
 
 February 5, 1816, continuing the war duties of the act of 1812 
 until June 30, 1816, and thereafter imposing forty-two per cent, in ad- 
 dition to the rates previous to July 1, 1812, two thirds of a page. 
 
 April 27, 1816, general revision, four and three fourths pages. 
 
 April 30, 1816, about drawbacks, two and one fourth pages. 
 
 April 20, 1818, methods of administration, five pages. 
 
 March 3, 1819, two acts, one relating to discriminating duties, 
 one fourth of a page ; the other to regulate duties on certain wines, 
 seven eighths of a page. 
 
 May 22, 1824, revision of duties, four pages. 
 
 February 11, 1825, remitting duties on books and maps for the li- 
 brary of Congress, seven lines. 
 
 May 19, 1828, altering certain duties, four and one fourth pages. 
 
 May 24, 1828, relative to discriminating duties, three fourths of a 
 page. 
 
 May 20, 1 830, reducing the imposts on coffee, tea, and cocoa, three 
 fourths of a page. 
 
 May 29, 1830, two acts, one to reduce the duty on molasses, and 
 allow a drawback on spirits from foreign material ; also an act to 
 reduce the duty on salt ; both less than half a page. 
 
 July 3, 1832, in the act to carry out the convention with France, 
 a section of seven lines relative to the duties on wines, and an act con- 
 cerning tonnage on Spanish vessels, one half of a page. 
 
 July 14, 1832, revision, six and one half pages. 
 
 March 2, 1833, to modify the Clay act of 1832 and all other acts, 
 
AMERICAN METHODS AND RESULTS. 107 
 
 islation bears the marks of the chief statesmen of 
 this century in our land. It carried the imposts to 
 the highest rates known to our fiscal annals. Under 
 it our manufactures attained an annual product of at 
 least $450,000,000. The check by nullification was 
 keenly felt, but the vast resources of the nation, with 
 the impetus which had been given, carried forward 
 production in many branches. 
 
 1832 TO 1842. 
 
 The Clay compromise was a sort of compact be- 
 tween the nation on the one side and the states 
 which chose South Carolina as their representative 
 on the other; between Clay and Calhoun, and the 
 ideas for which they respectively stood. Duties 
 which had averaged 44.23 per cent, on the total im- 
 portations, and 47.38 on the dutiable commodities in 
 1831, were carried down in 1834 to 21.83 on the total, 
 and to 40.19 on dutiable goods. In 1837 they were 
 as low as 16.05 per cent, on total importations, and 
 29.18 on dutiable articles. In 1842, the rates on 
 dutiable commodities had reached the average of 
 25.81 per cent. Appeal had been taken to the peo- 
 ple against the tariff, and in the remarkable revolu- 
 tion of 1840 no other question of policy was so prom- 
 inent as that of a restoration in some degree of the 
 rates of duty on competing commodities. Very slight 
 modifications had been made in the tariff by acts of 
 July, 1836, and of September 11, 1841. 
 
 compromise, two pages. Also to explain and amend act of 1832, one 
 and one half page. 
 
108 AMERICAN SYSTEM OF REVENUE, 
 INTERNAL TAXES A SECOND TIME. 
 
 Under stress of the war with Great Britain, resort 
 was tried a second time to both internal and direct 
 taxes. Gallatin, as Secretary of the Treasury, asked 
 for $5,000,000 from internal taxes, and $3,000,000 
 from direct taxes. Congress in special session, in 
 1813, conceded $5,000,000 from the former source 
 only, but in 1814 yielded the other also. The stat- 
 utes authorizing the levies were repealed in 1817, 
 when Secretary Crawford reported a full treasury, 
 and the prospect of a continued surplus. 
 
 TAEIEE OP 1842. 
 
 Millard Fillmore reported a bill, which was passed 
 on the 30th of August, 1842. In the Senate the 
 measure received the support of Silas Wright, then 
 a democratic senator from New York, and without his 
 vote a majority could not have been obtained. The 
 act stopped further reduction of rates under the com- 
 promise, and made a general revision with increase 
 of rates. 1 The average was raised to 30.50 per cent, 
 on the total importations, and to 36.88 per cent, on 
 dutiable commodities on the business of 1844. 
 
 1 In this debate, Mr. Calhoun used this notable language : " It fol- 
 lows that all duties not laid strictly for revenue are purely protective, 
 whether called incidental or not ; and hence the distinction taken by 
 the senator from Arkansas immediately on my left [Mr. Sevier] be- 
 tween incidental and accidental protection is not less true and philo- 
 sophical than striking. The latter is the only protection compatible 
 with the principles on which duties for revenue are laid." 
 
AMERICAN METHODS AND RESULTS. 109 
 
 The report from the Committee on Manufactures, 
 presented in March, 1842, insisted upon specific du? 
 ties as the surest safeguard against frauds, and advo- 
 cated a general standard of thirty per cent., with a 
 discrimination according to circumstances. The com- 
 mittee declared that every branch of industry was 
 paralyzed, and that an excess of importations was 
 one of the causes. A minority report was also pre- 
 sented, and the debate was long and elaborate. It 
 will repay study. 
 
 ROBERT J. WALKER'S REPORT. 
 
 Robert J. Walker of Mississippi, whom President 
 Polk had designated as Secretary of the Treasury, in 
 a report dated December 3, 1845, embodied the argu- 
 ments against protective duties. The agitation for 
 the repeal of'the corn laws was at its height in Eng- 
 land. Mr. Walker caught the spirit of that agita- 
 tion, and used not a few of the points made by its 
 leaders. His report is a document which deserves 
 close consideration as a part of the history of our rev- 
 enue, particularly as it was the inspiration of the 
 tariff of 1846. His position was that all duties should 
 be levied solely for income for the government, and 
 the maximum rates be imposed on luxuries. He in- 
 sisted that all duties should vary with value, and that 
 all specific charges should be abolished. Care should 
 be taken that all should operate as equally as possi- 
 ble throughout the Union. Without proclaiming a 
 horizontal scale, Mr. Walker advocated twenty per 
 
110 AMERICAN SYSTEM OF REVENUE. 
 
 cent, as the standard from which the largest revenue 
 could be collected. He denied that protection en- 
 hances the wages of labor, and he denounced the 
 existing tariff as discriminating in favor of manufac- 
 tures and against agriculture, and urged that if for- 
 eign nations cannot sell us their manufactures they 
 must pay for agricultural products bought here in 
 specie, and as they cannot do that, they will cease to 
 buy. 
 
 In Congress discussion turned in some part on the 
 relative usefulness of specific duties and rates vary- 
 ing with value. The belief that Britain would take 
 much more of our farm products on account of the 
 repeal of the corn laws was urged as a reason for 
 lower charges on manufactures such as that country 
 would send. Mr. Evans, of Maine, urged in objection 
 the notable fluctuations in revenue which occurred 
 under the compromise. From $22,750,000 in 1830, 
 the receipts ranged up to $30,250,000 and down to 
 $21,500,000, and in the fourth year to $14,750,000. 
 In 1836 the revenue from customs was $26,000,000, 
 and in 1837 just one half that sum. Such fluctua- 
 tions affecting trade and production were ruinous to 
 commerce, manufactures, monetary interests, in short 
 to every interest of the country, and to all financial 
 operations of the government. Mr. Webster was the 
 ablest champion of the minority in this debate. He 
 charged that the bill taxed the poor man and the 
 laborer ; it was not a bill for employment ; it was a 
 bill for the relief of the highest and most luxurious 
 
AMERICAN METHODS AND RESULTS. Ill 
 
 classes, imposing onerous duties on the great indus- 
 trial classes, and taking away the means of living 
 from labor everywhere throughout the land. Mr. 
 McDuffie declared that the great effect by reducing 
 the duties on cotton manufactures would be to cut 
 down the enormous and unjust profits of large capi- 
 talists from twenty and forty per cent, to eight or ten 
 per cent. The duties on raw materials to which Mr. 
 Webster had taken exception, he alleged, would be 
 unquestionably favorable to nineteen twentieths of 
 the people of the United States, to the entire valley 
 of the Mississippi, the West, the Southwest, and the 
 South and the Middle States. 
 
 FREE TRADE TARIFFS OF 1846 AND 1857. 
 
 The Senate was equally divided on the passage of 
 the bill, although Mr. Jarnagin, Whig, of Tennes- 
 see, sustained the measure, and it was carried finally 
 by the casting vote of Vice-President Dallas. He 
 stated that " the struggle to exert without abatement 
 the constitutional power of taxation, in such a man- 
 ner as to protect by high duties on imports many of 
 the productions of our own soil and labor from com- 
 petition from other countries, had endured for more 
 than thirty years." He claimed that the policy was 
 meant to be temporary, and that a majority of the 
 people had pronounced against it. The act became 
 a law on the 30th of August, 1846. It consisted of 
 nine schedules, designated by letters of the alpha- 
 bet. In schedule A were placed spirits at a duty of 
 
112 AMERICAN SYSTEM OF REVENUE. 
 
 one hundred per cent. Schedule B contained at forty 
 per cent, spices, tobacco, wines, and preserved fruits 
 and meats. Schedule C was long and rated at thirty 
 per cent, carpets, cotton, linen, silk and wool, glass 
 and leather, sugar, and iron, with minor classes. 
 Other schedules fixed rates at twenty-five, at twenty, 
 at fifteen, at ten, and at five per cent, respectively, 
 with a free list. Under this tariff the average duties 
 were on total importations 27.70 per cent, in 1847, 
 and they fell to 21.68 per cent, in 1856. 
 
 In 1857 another reduction of duties was made. By 
 the act of March 3, 1857, from twenty to twenty-five 
 per cent, was taken off from most of the imposts, and 
 the free list was greatly enlarged. In debating this 
 measure, Mr. Granger, of New York, declared that 
 three times Congress had resorted to an increase of 
 duties to remedy financial distress in the land. In 
 1821 the tariff brought relief, and the effect was so 
 obvious and gratifying that the higher tariff of 1828 
 was enacted, and for ten years the country was 
 blessed with a prosperity never before equaled. By 
 the sliding scale of Mr. Clay's compromise the coun- 
 try found itself without funds and without credit, 
 and production was greatly checked. The tariff of 
 1842 justified the. expectations of its most sanguine 
 friends. In an evil hour a change was made. Pro- 
 tection, he insisted, was vastly more important than 
 revenue, but both could be secured at once. Mr. 
 Boyce, of South Carolina, objected to the tariff of 
 1846 that it had too many schedules, occasioning per- 
 
AMERICAN METHODS AND RESULTS. 113 
 
 plexity and confusion. Mr. Morrill, of Vermont, fa- 
 vored the reduction of the sum collected and of the 
 surplus in the treasury, and maintained that the wise 
 policy was protection, moderate but certain. Mr. 
 Covode, of Pennsylvania, objected to the measure be- 
 cause it discriminated against American manufac- 
 tures. The tariff of 1857 preceded by a few months 
 the great commercial and industrial revulsion of the 
 same year. 
 
 By that tariff, the average duties were carried 
 down to 15.43 per cent, on the total importations 
 and 19.56 per cent, on dutiable commodities on the 
 commerce of 1859. These rates had not been paral- 
 leled in the experience of the republic, except in the 
 troubles attending the difficulties preceding and im- 
 mediately following the War of 1812. With those 
 exceptions the average of duties had not been so low 
 since 1797 as they were in 1859. 
 
 The influences which led to secession were those 
 which enacted the tariffs of 1846 and 1857. The de- 
 mands of the extreme South and the hostility to the 
 producing interests of the North were inspired by de- 
 votion to slavery. The desire to avoid conflict in- 
 duced many patriots to yield to the claims and argu- 
 ments of Southern leaders, like Walker, who spoke 
 for Mississippi, McDuffie, who stood for South Caro- 
 lina, McKay, who was one of the brightest sons of 
 North Carolina, Lewis, who ably represented Ala- 
 bama, and the strong men whom Virginia and other 
 Southern states chose to legislate for them. 
 
114 AMERICAN SYSTEM OF REVENUE. 
 
 The period between nullification and secession 
 covers twenty-eight years. The statutes bearing on 
 duties number only five, but they were radical in 
 their nature ; and the contrast between the tariff of 
 1842 and those of 1846 and 1857 is striking, as it 
 was keenly felt by all the interests of the country. 
 The law books devote thirty-three pages to the legis- 
 lation relating to duties within this interval. 1 
 
 If the purpose had been deliberate to drive gold 
 out of the country, it could not have been more ef- 
 fectually carried out than by the tariffs of 1846 and 
 1857. The importations became unhealthy in mag- 
 nitude, and the balance of trade was continually 
 against us. The consequence was when the rebellion 
 became flagrant, the nation was poor in its coffers, 
 and the people were lacking in gold. The financial 
 tasks were greatly magnified when the great struggle 
 was forced upon the government. If the policy of 
 the nation had not been changed in 1846, no one can 
 now question that the United States would have been 
 in much better condition to meet the strain and pres- 
 sure which were requisite for preserving the Union. 
 
 1 These acts are as follows : — 
 
 July 4, 1 836, abolishing discrimination against Portugal and reduc- 
 ing duties on wines, one half of a page. 
 
 September 11, 1841, levying twenty per cent, on certain articles 
 then free, and fixing the free list, two and one half pages. 
 
 August 30, 1842, general revision, nineteen pages. 
 
 July 30, 1846, to reduce the duties on imports, seven and one fourth 
 pages. 
 
 March 3, 1857, reducing the duties on imports, three and three 
 fourths pages. 
 
AMERICAN METHODS AND RESULTS. 115 
 THE MOBEILL TARIFF. 
 
 The bill which has become well known as the Mor- 
 rill tariff, and which, with increments and changes, 
 has stood for over twenty years, was introduced by 
 Hon. Justin S. Morrill, of Vermont, on the 12th of 
 March, 1860, and passed the House of Representa- 
 tives in May of that year. In the House the bill was 
 supported in chief by John Sherman, of Ohio, with 
 Mr. Morrill ; Thaddeus Stevens, of Pennsylvania, was 
 also prominent in the discussion. The opposition was 
 represented by Mr. Barksdale, of Mississippi, Val- 
 landigham, of Ohio, Phelps, of Missouri, and others. 
 The poverty of the treasury and the excessive im- 
 portations threatening American production were 
 urged on the one side ; while on the other, the ques- 
 tion of method was raised, and in some cases simple 
 obstruction seemed to be the object. The principles 
 underlying import duties were considered with large 
 breadth and great vigor. The Senate refused to act 
 upon the measure in that session ; and at the next ses- 
 sion, as the Committee on Finance was so constructed 
 as to fail to represent the majority of the body, a 
 special committee was appointed with instructions to 
 report the bill back within a week. Secession was 
 rampant when, on the first of February, Mr. Simmons, 
 of Rhode Island, brought up the bill, and advocated 
 its passage in an exhaustive speech. Senator Hun- 
 ter, of Virginia, led the opposition. He admitted 
 that additional revenue was needed, but he wanted 
 
116 AMERICAN SYSTEM OF REVENUE. 
 
 to raise the lower duties then collected by a certain 
 percentage and to reduce the free list. Only after 
 conference between the two houses did the bill pass. 
 Mr. Morrill estimated that it would produce $65,- 
 000,000 a year ; Mr. Sherman agreed that in times 
 of prosperity that expectation would be justified, but 
 for a year or two the receipts could not be so much. 
 He explained that the taxable lists contained no arti- 
 cle not contained in previous tariffs. 
 
 A general increase was made in rates, and many 
 duties were changed to specific sums from rates vary- 
 ing with value. Iron in bars was changed from 
 twenty-four per cent, to $15 a ton ; window-glass from 
 fifteen per cent, to a charge of from one to five cents 
 a square foot ; woolen manufactures from twenty-four 
 per cent, to twelve cents a pound, and twenty-five 
 per cent, on value. Cottons were changed from nine- 
 teen per cent, to specific prices on the square yard 
 with ten per cent, added. Copper, which had been 
 free, was subjected to an impost of two cents a pound. 
 On woolens generally with specific rates an addi- 
 tional charge by value was made to compensate for 
 the duty levied on raw wool. 
 
 Seven states had proclaimed ordinances of seces- 
 sion before this act was passed, and the demands of 
 the national government at once began to increase 
 with a rapidity calculated to paralyze weak minds. 
 The special session of Congress, which assembled on 
 the fourth of July, 1861, had no more important task 
 than to provide money for the national treasury. 
 
AMERICAN METHODS AND RESULTS. 117 
 
 Mr. Stevens, from the Committee on Ways and 
 Means, however, announced that no general revision 
 of the tariff would be undertaken. By an act which 
 bears date August 5, 1861, the rates were advanced, 
 and tea and coffee, with some other commodities, 
 were subjected to duty. The like process of general- 
 increase was carried still farther by the act of De- 
 cember 24, 1861. The aim was the same in the stat- 
 ute of July 14, 1862. By joint resolution of April 
 29, 1864, all duties, except upon white paper, were 
 increased fifty per cent, for sixty days. On the 30th 
 of June, 1864, a permanent increase was provided 
 for. Mr. Morrill in explaining the bill declared that 
 its primary object was to increase the revenue, and 
 at the same time to shelter and nurse our domestic, 
 products, from which at that time we were drawing 
 much the largest receipts into the treasury. March 
 3, 1865, another bill was passed to adjust the duties 
 on imports to the internal taxes which had been aug- 
 mented. On the 28th of July, a law of four pages 
 was found to be necessary for corrections and adjust- 
 ment of imposts. March 2, 1867, the imposts on 
 wool were increased. 
 
 At this point the war revenues culminated. The 
 process of decided reduction was begun by the act of 
 July 14, 1870. Under that statute the rates on teas, 
 which had been twenty-five cents a pound, were made 
 fifteen cents ; coffee, which had been five cents, was 
 made three cents ; pig-iron, which had been rated at 
 $9 a ton, was carried down to $7. Spices were gen- 
 
118 AMERICAN SYSTEM OF REVENUE. 
 
 erally reduced. Other imposts were changed in a like 
 spirit. The estimated decrease in duties was $29,- 
 000,000 a year, from the operation of this law. Tea 
 and coffee were placed on the free list May 1, 1872. 
 On the first of June, 1872, another act was passed still 
 further cutting down the war imposts. It was re- 
 ported by Mr. Dawes, of Massachusetts, and one of 
 its provisions was to strike off ten per cent, from the 
 rates' collected on most of the commodities, and to 
 put others into the free list. The effect of the acts 
 of May and June, 1872, was estimated to be the re- 
 duction of the receipts from customs to the extent 
 of $44,374,721 a year. 
 
 The business reaction which produced the panic of 
 1873, and the consequent falling off in government 
 receipts, in addition to the estimated results of leg- 
 islation, led to the restoration of this ten per cent., 
 March 3, 1873. No important changes in duties 
 occurred until the appointment of the tariff commis- 
 sion, May 15, 1882, and its report leading to the act 
 of March 3, 1883. 
 
 In this period of the civil war, extending already 
 for twenty-seven years, if we run back to the tariff 
 of 1857, the demands of the treasury have reached 
 ■ a magnitude unparalleled in this country, and seldom 
 equaled in any land. The legislation has been ade- 
 quate to those gigantic drafts. The statutes num- 
 ber forty-one, but most of them are brief and of 
 little significance. Seven laws were of vital conse- 
 quence, first in bringing in money, and then in re- 
 
AMERICAN METHODS AND RESULTS. 119 
 
 ducing the surplus revenue. The total space in the 
 books devoted to the statutes bearing on duties within 
 this period is one hundred and forty-three pages, but 
 the important acts cover less than one half of this 
 matter. 1 
 
 1 The following is the index : — 
 
 March 2, 1861, Morrill tariff, to provide for outstanding treasury 
 notes, to authorize a loan, and to regulate and fix the duties on im- 
 ports, twenty pages. 
 
 August 5, 1861, to provide increased revenue from imports, etc. ; 
 the tariff sections occupy nearly three pages. 
 
 December 24, 1861, to increase the duties on tea, coffee, and sugar, 
 one half of a page. 
 
 July 14, 1862, increasing temporarily the duties on imports, seven- 
 teen and one half pages. 
 
 March 3, 1863, modifying duties, one page. 
 
 June 30, 1864, to increase duties, sixteen pages. 
 
 March 3, 1865, amendments, two and one half pages. 
 
 March 14, 1866, extending time for goods in warehouse, one half 
 of a page. 
 
 March 29, 1866, to amend the duties on wool, one eighth of a 
 page. 
 
 May 16, 1866, imposing a duty on live animals, nine lines. 
 
 July 28, 1866, to protect the revenue, four pages. 
 
 March 2, 1867, to provide increased revenue from imported wool, 
 three pages. 
 
 March 25, 1867, levying duties on umbrellas and springs, one eighth 
 of a page. 
 
 March 26, 1867, admitting certain works of art free, one half of a 
 page. 
 
 July 23, 1868, admitting certain statuary free, seven lines. 
 
 February 19, 1869, admitting certain machinery free for repair 
 only, one eighth of a page. 
 
 February 24, 1869, regulating duties on copper, one half of a page. 
 
 July 14, 1870, in the act reducing internal taxes, ten pages are 
 devoted to the tariff. 
 
120 AMERICAN SYSTEM OF REVENUE. 
 REPEAL OE THE MOIETY LAWS. 
 
 In the process of mitigating the national burdens, 
 the correction of severe methods attracted much at- 
 
 December 22, 1870, amending the preceding concerning imposts 
 on sugar, one half of a page. 
 
 January 30, 1871, of bonded warehouses, one fourth of a page. 
 
 February 10, 1871, to prevent smuggling, one page. 
 
 March 5, 1872, admitting certain works of art free, one eighth of a 
 page. 
 
 April 5, 1872, admitting goods for relief of sufferers by Chicago 
 fire free, one half of a page. 
 
 May 1, 1872, making tea and coffee free, nine lines. 
 
 June 6, 1872, to reduce imposts, eight pages. 
 
 June 10, 1872, to refund certain duties, one eighth of a page. 
 
 February 14, 1873, to refund certain differential duties, one half of 
 a page. 
 
 March 1, 187.3, to carry into effect the treaty of Washington, one 
 and three fourths page. 
 
 March 3, 1873, brief amendments, one page. 
 
 May 9, 1874, relative to imported fruits, one fourth of a page. 
 
 June 3, 1874, extending time for benefits of refunding acts, one 
 fourth of a page. 
 
 June 18, 1874, admitting free articles for the Centennial Exhibi- 
 tion, one fourth of a page. 
 
 June 22, 1874, to repeal moieties, six pages. 
 
 February 8, 1875, to amend existing customs duties, two and one 
 fourth pages. 
 
 March 3, 1875, to protect the sinking fund, one and two thirds 
 page. 
 
 March 3, 1875, to restrict refunding of duties, one page. 
 
 August 15, 1876, to carry into effect Hawaiian treaty, one half of a 
 page. 
 
 July 20, 1876, imposing penalties for selling without paying duties 
 articles from the Centennial Exhibition, one half of a page. 
 
 July 1, 1879, making quinine free, five lines. 
 
AMERICAN METHODS AND RESULTS. 121 
 
 tention. The moiety system, by which customs offi- 
 cers were rewarded by one half of the moneys re- 
 covered for service as informers as well as witnesses 
 and judges, was as old as the government. The 
 statute which repealed it accepted and applied the 
 doctrine of personal rights and of opposition to ar- 
 bitrary measures under the forms of law, and proved 
 that duties on imposts can be collected without in- 
 quisition and without despotic methods. 
 
 ACT OF THE TARIFF COMMISSION. 
 
 The chairman of the Finance Committee in the 
 Senate estimated that the changes made by the act, 
 based on the report of the Tariff Commission, would 
 reduce the receipts from customs by $45,000,000 an- 
 nually. They have for the half of the fiscal year 
 actually shown a diminution indicating less than 
 $20,000,000 a year. The new tariff establishes fif- 
 teen schedules besides the free list, and under these 
 schedules are classified commodities by their material 
 and nature. This statute was also intended to take 
 $34,790,334 from the internal revenue ; but, owing 
 to the increase in the distillation of spirits, the net 
 diminution will prove to be only about $24,500,000. 
 
 June 14, 1880, relative to duties on hoop iron, three fourths of a 
 page. 
 
 May 4, 1882, concerning discriminating duties beyond the Cape of 
 Good Hope, one eighth of a page. 
 
 March 3, 1883, in the act to reduce internal taxation, and for 
 other purposes, thirty-six pages relate to duties. Act of the Tariff 
 Commission. 
 
122 AMERICAN SYSTEM OF REVENUE. 
 
 The law is probably the most elaborate and detailed 
 tariff ever enacted, and with certain provisions rela- 
 tive to modes of procedure, occupies forty-one pages. 
 It is quite as fair to say that we collect our duties 
 from fifteen well-defined classes, as to exaggerate dif- 
 ficulties by counting three or four thousand articles. 
 
 INTERNAL TAXES A THIRD TIME. 
 
 In the stress of the struggle for the nation's life, 
 resort was had, as twice before, to direct taxes. The 
 act was passed June 7, 1862. The attempt to get 
 money from this source utterly failed, and it was the 
 only failure in all the plans adopted for sustaining 
 the treasury. The single tax levied was only in 
 part collected, when further collections under it were 
 postponed until 1865, and the law was repealed in 
 1867. The experience in internal taxation generally 
 was very different. By act of July, 1862, after- 
 wards expanded, the bravest assessments were made 
 upon every vocation and all classes of personal prop- 
 erty, and individuals and trades and occupations 
 were pursued into all their privacies to get money 
 for the treasury. Every mode of taxation known to 
 men was adopted, except the French octroi, govern- 
 ment monopolies in necessaries of life, and public 
 lotteries. The gradual disappearance of all these 
 burdens has been one of the best evidences of the 
 prudence of our legislation. 
 
AMERICAN METHODS AND RESULTS. 123 
 OUR LAEGBST REVENUES. 
 
 The largest sum ever collected by the United 
 States as revenue was 1519,949,564.38 in 1866. Of 
 this sum, $179,046,651.58 was from customs. From 
 internal revenue was collected $309,226,813.42; 
 from direct taxes, $1,974,754.12 ; from the public 
 lands, $665,031.03 ; and from various miscellaneous 
 sources, $29,036,314.23. 
 
 At this time our internal revenue system was 
 something monstrous. In that year, of the sum pro- 
 duced from this system, 10.7 per cent, came from 
 spirits. Tobacco furnished 5.3 per cent. ; fermented 
 liquors only 1.6 per cent. ; banks and bankers paid 
 1.1 per cent. ; from adhesive stamps we collected 4.8 
 per cent. ; manufactures paid no less than 40.9 per 
 cent, of the total sum ; from the gross receipts of 
 certain occupations, including advertisements, canals, 
 and railroads, insurance and telegraph companies, 
 we derived 3.6 per cent. ; from sales designated the 
 proceeds were 1.2 per cent. ; from special taxes on 
 certain classes of business we collected 4.5 per cent. ; 
 incomes paid the large share of 23.4 per cent ; lega- 
 cies and successions and various minor matters made 
 up about two per cent. 
 
 The taxes on manufactures, with a few exceptions, 
 were abolished in 1868 ; the taxes on incomes, on 
 gross receipts, sales, and special classes of business, in 
 1871. So, in 1873, the total receipts from internal 
 revenue had fallen to $114,075,456.08, and of this 
 
124 AMERICAN SYSTEM OF REVENUE. 
 
 sum, 45.6 per cent, came from spirits, 30.1 per cent, 
 from tobacco, 8.1 per cent, from fermented liquors, 
 3.3 per cent, from banks and bankers, 6.7 per cent, 
 from adhesive stamps, and 5.5 per cent, from arrears 
 of assessments on taxes repealed. 
 
 Now, at the end of ten years, the internal revenue 
 has been reduced to four classes ; to wit, on banks, 
 spirits, fermented liquors, and tobacco, with special 
 taxes on dealers in these articles. 
 
 POUR PERIODS OF BEVENUE METHODS. 
 
 The history of our tariffs and general financial 
 policy divides itself into the four periods which we 
 have been considering. The first period extends 
 from the Revolution to the War of 1812, and is 
 adorned by such names as those of Madison and 
 Hamilton. The second period extends from the War 
 of 1812 to the compromise with nullification. In 
 this interval the leading names are those of Clay and 
 Webster and Calhoun. The third period is that 
 from nullification to secession. We have hardly yet 
 learned to rank any statesmen with the senatorial 
 triumvirate. Millard Fillmore reported the tariff of 
 1842 ; Robert J. Walker was the author of the pol- 
 icy of the tariffs of 1846 and 1857. The fourth 
 period covers the civil war and the return to peace. 
 The Morrill tariff still stands, after manifold 
 changes, as the monument of the ability and shrewd- 
 ness of its author; and John Sherman, in each of 
 the houses of Congress and in the treasury, is con- 
 
AMERICAN METHODS AND RESULTS. 125 
 
 nected with much of our financial legislation and 
 administration. 
 
 Our studies have shown us that the extreme pro- 
 slavery influence in Congress was, in 1832 and again 
 in 1846, that which assailed the traditional policy 
 of the republic in its revenue system. When, in 
 1861, the South attempted to set up a separate con- 
 federacy, it embodied in its constitution the same 
 hostility to domestic manufactures which the leaders 
 of secession had before manifested in their action in 
 the Union. The Southern Confederacy attained the 
 distinction of being the only political body which 
 ever inserted in its fundamental law the doctrine of 
 free trade as it is understood to-day. In the consti- 
 tution of the Confederate States, article 1, section 8, 
 is embalmed in the ruin of the Confederacy this 
 clause : " Nor shall any duties or taxes on importa- 
 tions from foreign nations be laid to promote or fos- 
 ter any branch of industry." That provision stands, 
 or rather has fallen, unique in political history. 
 Neither the Old World nor the New has ever pro- 
 duced its parallel. 
 
 Memory is assisted by recalling the divisions of 
 time. From the organization. of the national govern- 
 ment under the Constitution to the War of 1812, the 
 interval is twenty-three years. From the beginning 
 of that war to the compromise of Mr. Clay is an in- 
 terval of twenty-one years. From that compromise 
 to the rebellion the space is twenty -eight years. 
 We have already lived twenty -three years in the 
 
126 AMERICAN SYSTEM OF REVENUE. 
 
 fourth period, reckoning from 1861. Up to the 
 close of the second period the policy of the govern- 
 ment had been steady and pronounced in favor of 
 levying imposts with the declared purpose of encour- 
 aging home industry. Clay's compromise marks the 
 surrender to the dictation of slavery in financial leg- 
 islation by great reductions of duties, but the prin- 
 ciple of protection was still maintained. In the 
 third period, the strife between the building up of 
 manufactures on the soil and bidding for foreign 
 commerce was fought bitterly and with varying suc- 
 cess. The tariff of 1842 was designed to restore the 
 traditions of the fathers. Walker's report was the 
 proclamation of a new spirit, and it dominated until 
 the sectional demands grew too arrogant, the South- 
 ern states seceded, and appeal was taken to arms to 
 determine what shall be the nature of the civilization 
 which is to control this continent. Principles of rev- 
 enue were involved, if they were not radical elements 
 in the quarrel. 
 
 Except in the tariffs of 1846 and 1857, the prin- 
 ciple of protection has been distinctly recognized 
 and applied in the whole course of our revenue stat- 
 utes, and the abolition of the internal and direct 
 taxes in the instances in which they were enacted 
 was also prompted by the same purpose. Therefore, 
 it is true to say that, with the exception of the inter- 
 val from 1846 to 1861, fifteen years, our laws have 
 steadily applied and enforced the protective princi- 
 ple ; the scales stand at eighty years of the industrial 
 
AMERICAN METHODS AND RESULTS. 127 
 
 system against fifteen years of the system of favors 
 for commerce. 
 
 BATES OP DUTIES. 
 
 On total importations the rates have been : 
 
 Under 
 
 the Tariff of 
 
 1790 . 
 
 1804 . 
 
 1812 . 
 
 1816 . 
 
 1824 . 
 
 1828 . 
 
 1832 . 
 
 1833 . 
 1842 . 
 1846 . 
 1857 . 
 1861 . 
 
 11.54 
 14.07 
 6.84 
 16.78 
 44.74 
 44.23 
 28.99 
 17.37 
 20.13 
 19.09 
 14.21 
 26.08 
 
 Lowest. 
 
 per cent, 
 per cent, 
 per cent, 
 per cent, 
 per cent, 
 per cent, 
 per cent, 
 per cent, 
 per cent, 
 per cent, 
 per cent, 
 per cent. 
 
 in 1792. 
 in 1810. 
 in 1815. 
 in 1818. 
 in 1828. 
 in 1832. 
 in 1833. 
 in 1841. 
 in 1842. 
 in 1856. 
 in 1861. 
 in 1862. 
 
 Highest. 
 
 .67 per cent, in 
 .22 per cent, in 
 .03 per cent, in 
 .72 per cent, in 
 .94 per cent, in 
 .73 per cent, in 
 
 .83 per cent, in 
 .50 per cent, in 
 .49 per cent, in 
 .32 per cent, in 
 .55 per cent, in 
 
 1802. 
 1807. 
 1813. 
 1824. 
 1827. 
 1830. 
 
 1834. 
 1844. 
 1848. 
 1858. 
 1869. 
 
 The rate has not exceeded thirty per cent, since 
 1876 on total importations. Since 1821, when, on 
 dutiable articles, the rate was 30.99, the lowest rate 
 on such articles was in 1861, 18.84. Except that 
 year the lowest was in 1859, 19.56, and the highest 
 in 1830, 61.69. Since 1861 the lowest rate on duti- 
 able commodities was in 1873, 38.14, and the highest 
 in 1869, 48.69 per cent. 
 
 Under the tariff of the Commission the rates are 
 42.08 on dutiable goods. 
 
 The highest average rate of duties ever collected 
 by the United States was in 1813, after the opening 
 of the war with Great Britain, and that rate was 
 69.03 per cent. The lowest average rate was in 
 1815, at the close of that war, 6.84 per cent., when 
 the importations were multiplied nearly nine times 
 
128 AMERICAN SYSTEM OF REVENUE. 
 
 in a single year. These great changes occurred by 
 the variations in commerce without the modification 
 of a single letter in the statutes. 
 
 The average duties on total importations have 
 never exceeded fifty per cent, since 1829, when they 
 rose to 57.33 per cent., nor have they ever exceeded 
 fifty per cent, on dutiable articles since the same 
 year, when they amounted to 61.69 per cent. During 
 the free trade period they ranged on dutiable articles 
 from 19.56 in 1859 to 27.38 in 1852. 
 
 Under the tariffs of the civil war, the average du- 
 ties on dutiable articles have never exceeded 48.96 
 per cent., the rate in 1868, and they have never fallen 
 below 32.62 per cent., the rate in 1862. On the 
 total importations the maximum rate was reached in 
 1869, at 46.55, and after the check of the war, the 
 minimum in 1880, at 29.78. 
 
 THE EREE LIST. 
 
 A large and increasing share of our imports come 
 in absolutely free of duties. Before 1821 no record 
 was kept of commodities imported except such as 
 were dutiable. In that year the free goods imported 
 amounted in value to $2,017,423, while the dutiable 
 commodities were valued at $52,503,411. The free 
 goods were less than one twenty-fifth of the dutiable 
 articles. In 1831 the free goods were valued at $6,- 
 150,680, while the dutiable goods were $89,734,499 ; 
 so that the ratio had risen to about one fifteenth. In 
 1841 after a general but not regular increase, the 
 
AMERICAN METHODS AND RESULTS. 129 
 
 free goods had become worth $61,031,098, while the 
 dutiable articles stood at 161,926,446. In that year 
 almost exactly one half of our commerce paid no 
 duties whatever. By the tariff of 1842 the ratio of 
 free to dutiable articles varied greatly. It was less 
 than one half in 1843, between one fifth and one 
 fourth in 1844, less than one fifth in 1845, and more 
 nearly one fourth in 1846. 
 
 The Walker tariff carried the free goods down to 
 less than one eighth of the dutiable articles in 1848. 
 The ratio was even lower for several years, and was 
 below one tenth in 1854. But it became greater, 
 and was more than one fourth in 1858. 
 
 The exigencies of the war imposed duties on many 
 necessary articles, and in 1864 the free goods were 
 less than one sixth of the dutiable commodities. In 
 1867 they fell down to one sixteenth ; in 1868 to 
 one twentieth, and they kept at that standard until 
 1870. The increase since that year has been so great 
 that the ratio became more than one third in 1873, 
 and since that period has steadily approximated one 
 half of the value of the dutiable articles. The exact 
 ratio in 1882 was §210,579,007 to 1514,060,567. 
 The tendency to an increase of the free list is one 
 of the marked features in the revenue customs legis- 
 lation of recent years. The rule of protection is to 
 admit free everything which we cannot produce our- 
 selves, except luxuries. 
 
130 AMERICAN SYSTEM OF REVENUE. 
 NATIONAL, STATE, AND LOCAL IMPOSTS. 
 
 In 1880 the proceeds of all the imposts and trans- 
 actions of the national government, outside of the 
 movement of the debt, amounted to $333,526,500. 
 In the same year in the United States for state and 
 local taxation, the sum of $312,750,721 was collected, 
 in addition to special assessments which were not 
 reported. While, therefore, we are studying national 
 income we must not forget that the other moneys 
 collected from the American people are now, since 
 the reductions in the government imposts, even 
 greater than the gross receipts into the national 
 treasury. The sources of the revenue of the states 
 for general, school, and local purposes do not vary 
 greatly. Every state, except Pennsylvania, levies 
 charges upon real property. Illinois, New Jersey, 
 and Wisconsin make these charges light. These 
 four states, as well as others, impose taxes upon cor- 
 porations, and these latter are becoming an increas- 
 ing source of revenue in most of the states. In New 
 Jersey in 1883, the railroads paid nearly seven eighths 
 of the state tax. 1 Ohio by its constitution forbids 
 any poll tax, alleging that such charges are grievous 
 and oppressive ; and Maryland, Michigan, Kentucky, 
 Rhode Island, and Pennsylvania adopt the same pol- 
 icy, but all the other states include a tax on persons 
 in their methods. Licenses for the sale of liquor 
 have been generally imposed, and in many states 
 
 1 The railroads paid $677,557 ; all other sources gave $140,000. 
 
AMERICAN METHODS AND RESULTS. 131 
 
 such fees are charged from hawkers and peddlers. 
 The growth of prohibition has banished liquor li- 
 censes from Maine, Iowa, and Ohio ; in the latter 
 state the Scott law requires a heavy tax upon all 
 dealers in beverages. Georgia carries its assessment 
 on personal property down to household furniture, 
 watches, and jewelry, and so does Ohio ; Connecticut 
 has a like rule. Maryland owns tobacco warehouses 
 from which it collects rents ; and many of the states 
 own shares or bonds in railroads, and the title to 
 canals ; Missouri has a tax on merchants and manu- 
 facturers, Minnesota on seed grain, Texas imposes 
 taxes on certain occupations. Virginia seeks revenue 
 from incomes of a defined class. All of our common- 
 wealths, therefore, derive their income from property 
 on the soil, or from corporations, or from certain oc- 
 cupations, or from a poll tax. As between real and 
 personal property the assessments stood in 1880 in 
 the ratio of seventy-seven per cent, of real to twenty- 
 three per cent, of personal property. The wealth of 
 the country bears no such ratio ; but for purposes of 
 taxation the practice has resulted in this division. 
 
 Out of the total of imposts, national, state, and 
 local, in 1880, aside from special assessments which 
 are not reported, only thirty per cent, came from cus- 
 toms. Seventy per cent, fell upon land and domestic 
 industry, or capital invested in it, or savings chiefly 
 derived from it. This truth bears plainly and sug- 
 gestively upon the problem of the right adjustment 
 of national imposts. For commerce should pay its 
 share of the revenue. 
 
CHAPTER V. 
 
 THE INCIDENCE OF IMPOSTS. 
 
 Why are Charges paid to Governments? — Upon whom do they 
 finally fall ? — Droits. — Duties. — National Life. — Charges ad- 
 justed to Services ; to Sacrifices. — Voluntary Offerings. — Direct 
 and Indirect Taxes. — Incidence of the Land Tax. — Taxes on Per- 
 sonal Property. — Imposts on Trades and Occupations. — Stamps. 
 
 — The Poll Tax. — Articles of First Necessity. — Whisky and To- 
 bacco. — Imposts become a Business Risk. — The Stamp upon 
 Matches. — Cigars. — Effects of Imposts on Consumption. — Sugar. 
 
 — Tea. — Coffee. — Salt in France and England. — Incidence of Cus- 
 toms Duties like that of Internal Taxes. — Duties become an Ele- 
 ment of Cost. — Effect of Supply and Demand. — After the Treaty 
 of Ghent British Manufacturers sold in this Country below Cost. — 
 They sought to control our Markets. — British Surplus of Books 
 and Merchandise. — Silks. — Railroad Supplies. — Bessemer Kails. 
 
 — Undervaluations prove that Foreign Producers pay heavily to 
 enter our Markets. — Growth of American Silk Manufacture. — 
 Fall in Prices. — The Law of Incidence. — Imposts relative to 
 Earnings and Capital. — The Friction of Imposts. — Cost of Collec- 
 tion- — Imposts should not be a Terror. — Should be adjusted to 
 accord Largest Measure of Freedom in Property, Labor, and Home. 
 
 Two radical questions call for answer : first, why 
 are moneys paid to governments? and second, upon 
 whom do the charges really fall? The English 
 speak of internal and external duties. The French 
 name government charges droits, rights ; with them 
 there are the rights of import, of export, of octroi. 
 Why are these levies rights ? Why are these pay- 
 
THE INCIDENCE OF IMPOSTS. 133 
 
 ments duties ? You will hear the allegation that the 
 citizen pays so much money for so much defense of 
 his person, and so much for watch and ward over his 
 property. In this view the government is a huge 
 policeman, and nothing more. The state, like the 
 city or town and the county, answers the purpose of 
 a vast engine to put out the fires of violence, to in- 
 sure against flames real and figurative. Moneys are 
 paid to keep the body from outrage and the property 
 from attack, with some reference to funds of foresight 
 against poverty. This is a part of the truth. Life 
 is to be kept secure and quiet, and avenues are to be 
 held open for getting and amassing wealth. A poll 
 tax is advocated on this ground : that every person 
 owes something to the government, and should pay 
 his share for its maintenance, and then that all prop- 
 erty should pay its part of the common cost. But it 
 may cost too much to pick up the farthings of a 
 capitation charge, and the fractions of property may- 
 be so far divided that the expense of levying a tax 
 may eat up the whole assessment. With these reser- 
 vations, however, it is wise and well that the citizen 
 should be a stockholder in the community and the 
 state by contributing to their support. The citizen 
 without property may be regarded as the rock-bot- 
 tom, from which the structure of a revenue may be 
 built. All above that stratum can be included in any 
 calculation. 
 
 But the theory that the state is a monster police- 
 man is only a part of the truth. Society and the 
 
134 AMERICAN SYSTEM OF REVENUE. 
 
 state have a life which is of account in and of itself. 
 In order even to the work of police the state must 
 live. The nature of that life makes the difference be- 
 tween Athens and Guinea. Now, when organization 
 is so controlling an element in affairs, institutions 
 signify more and more. They create the field in 
 which persons act and serve. They afford the oppor- 
 tunities for development and progress. They estab- 
 lish the conditions of education, of mechanism, of art, 
 of all which centres in that much-abused word, cul- 
 ture. As the state is a necessity in the rudest condi- 
 tion of man, it is the instrument which contributes 
 largely to his highest attainments. Patriotism may 
 be an instinct, as the love for parents is an instinct, 
 for it is part of the very breath of existence. It is 
 certainly true that in the broadest and ripest stage of 
 civilization which the world has witnessed, patriot- 
 ism became the chief and noblest virtue. The most 
 dutiful son is not he who relies most on his father or 
 mother, but he who does the most for them. So the 
 true citizen is not he who seeks to get the most from 
 the state, but he who tries to lift up the common- 
 wealth to the worthiest standard. 
 
 This theory of the commonwealth does not call 
 for frequent interference in personal affairs, for med- 
 dling in private concerns. It is the simple recogni- 
 tion of the course of history. The life of nations is 
 distinct from the existence of their leaders, of their 
 multitudes, — something different from their creeds, 
 from their conflicts, from their extensions, and their 
 
THE INCIDENCE OF IMPOSTS. 135 
 
 aggrandizement. Science has not yet defined the 
 elements of human life, but it is all about us. Na- 
 tional life has been the manifestation which has ren- 
 dered all the centuries luminous. The soul which 
 breathed through Egypt is as visible as that of any 
 one of the Pharaohs ; the greatness which was Ath- 
 ens had a spirit as subtle as that of the authors and 
 the artists who were born of it. The England of 
 Henry the Eighth and of his daughter, of Anne and 
 of the Georges, was as real an existence as any bluff 
 Englishman of either age. On this continent is 
 growing up a powep which is other than its units, is 
 broader than its parts, is vital in a sense as exact 
 and absolute as the life of any American from ocean 
 to ocean. 
 
 This national life is a thing to be fostered and de- 
 veloped. Money does not make it, but it helps sus- 
 tain it. Wealth is not its condition, but it affords 
 helps to broaden and elevate it. Every citizen owes 
 to his land love and devotion, and the share of sup- 
 port which he is able to give. How one town be- 
 comes thrifty and enterprising in its people, and how 
 education advances and manhood takes on fresh value, 
 and society flowers and bears fruit, while near to it 
 a neighbor sinks lower and lower in all which ren- 
 ders this world beautiful and productive, all of us 
 may see. How one state or province runs the race of 
 vigor and swiftness and grace, while the other lags 
 behind and plays the sluggard, the chronicles con- 
 stantly tell us. How one nation marches in the fore- 
 
136 AMERICAN SYSTEM OF REVENUE. 
 
 front of civilization, and another gropes and grovels 
 in middle-age darkness, is the spectacle of the globe. 
 
 He fails to appreciate true manhood -who regards 
 the individual simply as a farmer or a mechanic, a 
 lawyer or a preacher, a student or a toiler ; for over 
 and above his tasks he is a man first of all. Just so 
 the state has its tasks, but it has a life broader than 
 they can be ; and in order to perform them, that life 
 must be noble and worthy and many-sided. Even 
 into the humdrum matters of revenue this thought 
 has penetrated. We must give unto Csesar the 
 things which are Caesar's, because government is our 
 roof-tree, and because the character of it goes far to 
 determine our own character. Because there is a na- 
 tional life, the levies upon a people become droits, 
 rights, and the payments which the citizen makes 
 are indeed duties. 
 
 SERVICES AND SACRIFICES. 
 
 Two claims have been asserted relative to the im- 
 posts of government : first, that they should be 
 adjusted in the ratio of the services of the state 
 to the individual; and second, that equal sacrifices 
 should be required of every person for the state. 
 Both propositions involve elements difficult to solve, 
 and calculations wholly at variance with the sim- 
 plicity which must be maintained in any effective 
 revenue system. The state must be sustained, and 
 the support must be adjusted so as to cause the least 
 possible burdens to the citizen, the least obstruction 
 
THE INCIDENCE OF IMPOSTS. 137 
 
 to his operations, the least check to the movements 
 of society. If a plan can be devised by which gov- 
 ernment can secure its revenue with certainty upon 
 conditions which come very near to voluntary offer- 
 ings by all the people in such degree as they may be 
 able to contribute, we approach very closely to the 
 ideal state — to absolute freedom. 
 
 DIRECT AND INDIBECT TAXES. 
 
 Taxes have been defined as direct, on the assump- 
 tion that such are finally paid by those upon whom 
 the assessment is imposed, and as indirect, because 
 the latter are collected back by him who advances 
 the sum. But the classes of imposts which come 
 under the one definition and the other have varied 
 under the explanations of different writers. Locke, 
 for example, insists that all burdens fall ultimately on 
 the land-owner. 1 The classification has some con- 
 veniences, although it has little accuracy. In what- 
 ever form revenue is collected, the payer will seek 
 to throw a part, if not all, of the burden upon some 
 one else. In practice taxes upon real and personal 
 property and upon income and occupations are ac- 
 counted direct taxes ; those imposed as license for 
 dealers in liquors and other commodities and charges 
 on articles of consumption, are accounted indirect 
 taxes. We shall find, however, that the taxes called 
 direct are those which often are multiplied the great- 
 est number of times, and are farthest removed from 
 him upon whom the payment is finally cast. 
 
 1 Works, vol. iv. p. 55. 
 
138 AMERICAN SYSTEM OF REVENUE. 
 
 INCIDENCE OP THE LAND TAX. 
 
 The land tax, as we have seen, has been found to 
 be that which in all times and in all countries, has 
 been most generally relied upon for a large part of 
 the public income. This may be collected upon a 
 valuation fixed once for all, and not subjected to 
 variation from any change in the conditions of trade 
 and production, as has been the rule in Britain and 
 in France ; or the assessment may be annually re- 
 vised, as is the practice in the American states. 
 The levy may be upon the assumed selling value of 
 the property, or upon its products, gross or net, as was 
 the method in Egypt and in Europe at an early day. 
 Stability of returns and the absence of visitation 
 are the recommendations of the permanent valuation. 
 Greater fairness follows from frequent revisal and 
 correction. When the charge is levied upon the 
 products, it falls to some extent upon the skill and 
 industry of the cultivator rather than upon the soil. 
 By whatever system assessed, the land tax has al- 
 ways been the occasion of complaint. In France and 
 Britain criticisms upon the valuations and upon the 
 rates collected are frequent in journals and before 
 the Assembly and Parliament. These come from 
 those who allege on the one hand that the soil does 
 not pay its fair share of the revenue, and on the 
 other from persons who feel that by a change in con- 
 ditions the ratio of taxation has become undue in 
 their case. 
 
THE INCIDENCE OF IMPOSTS. 139 
 
 The incidence of a tax on land varies according to 
 the use of the assessed property and according to the 
 demands to which it responds. The pleasure park of 
 a capitalist, and the mansion of the rich owner, as 
 well as unproductive land in general, will bear itself 
 whatever impost may be placed upon either. The 
 owner is the consumer in the case of the park or the 
 mansion, and he cannot call upon any one to help 
 him pay. For unproductive land the owner is look- 
 ing for profits in the future, and he adds taxes and 
 interest to the capital. Because this class of prop- 
 erty remains valued under a scheme which fails to 
 recognize present prices, complaint is loud in Britain 
 that grave injustice is done. 
 
 All business property feels the same influences as 
 attach to other forms of investment. The plants of 
 factories and furnaces, of wai'ehouses and merchants' 
 stores, pay a tax levied upon them, and it passes at 
 once into the account of expenses of the manufac- 
 turer and the dealer. They advance the sum, but 
 they include it in the outlay upon which they are 
 entitled to profit. The case is the same with the 
 farmer who raises products for profit and not for 
 pleasure ; the tax becomes an element in the cost. 
 The tax of the producer follows the product through 
 the hands of the merchant, who adds his own tax, to 
 the retailer, who also adds his land tax. 
 
 The tax on homesteads and tenement houses is 
 still more frequently multiplied. The operator in 
 the factory or the shop pays the tax if he owns his 
 
140 AMERICAN SYSTEM OF REVENUE. 
 
 house, or lie finds it included in his rent if he is a 
 tenant. He tries to get this tax back in his wages if 
 he can. It thus is joined with the tax on the plant 
 which the manufacturer has paid. It attends the 
 commodity into the hands of the commission mer- 
 chant, who must get his profit on it, into the whole- 
 sale store, where another profit is added to the 
 element of the tax, to the retail dealer, who must 
 augment it, to the peddler, who again wants his 
 profit upon it. 
 
 But it occurs that one commodity is a raw mate- 
 rial for many another article. The original com- 
 modity carries the land tax with it through all the 
 exchanges of trade, and all of these increments must 
 attend it through the modifications of form and 
 use which mechanism may give it ; but into these 
 modifications new charges on land appear from the 
 plant, from wages, and from the profits of managers, 
 and the land tax again to which these managers are 
 subject. 
 
 The land tax must be more multiplied than any 
 other form of impost for the reason that land lies at 
 the bottom of all production. Any impost upon it 
 enters into food and shelter for every producer. No 
 commodity can change form without drawing into 
 itself fresh land taxes. No exchange can take place 
 without involving land imposts for the food of the 
 trader, for the store in which he deals, for every 
 movement of the commodity. Every middle -man 
 multiplies the land tax. Every increment grows not 
 
THE INCIDENCE OF IMPOSTS. 141 
 
 only by its own magnitude and that of its predeces- 
 sors, but also by the greed for gain of every person 
 who handles the article. The snowball gathers size 
 by every revolution. Except in the single case of the 
 home, and most of all the home of the rich, the land 
 tax is more remote from the actual consumer of the 
 matter taxed than any other impost levied in any 
 country. The anomaly is that such a charge has 
 been named a direct tax. 
 
 The land tax becomes a vital part of the cost of 
 every article produced, and the tendency is to mul- 
 tiply it in the degrees sketched. But the landlord 
 may find that tenements are in excess of the demand, 
 and although a tax may be even increased, he may 
 fail to cast any part of it upon the tenant ; he may 
 be compelled to accept the full burden himself. The 
 mechanic may discover that although his taxes or 
 his rents are advanced, the demand for his services 
 does not grow in the same measure, and may rather 
 be less ; in that case he cannot get any return for 
 the tax, but must take it out of means perhaps ap- 
 propriated to other purposes, and his children may 
 be deprived of school-books or of comforts of dress. 
 The factory may learn that the market is glutted 
 with its goods, and the charge set over to meet the 
 land tax must be dropped with perhaps other items, 
 and the commodities sold at such a price as can be 
 got ; so the charge of the government must come 
 out of the stockholders, or out of past savings. The 
 experience of the middle - men may be the same. 
 
142 AMERICAN SYSTEM OF REVENUE. 
 
 They may be unable to cast the tax upon buyers, 
 and may have been forced to pay it to the produ- 
 cers ; and it must be settled out of their gains or set 
 to the account of loss. The retail dealer will have 
 the like story to tell. It is the conflict of traffic. 
 The impost enters into the cost, and the problem 
 who shall pay it is the problem of trade, whether it 
 shall show a profit or a loss. That is largely settled 
 by supply and demand. 
 
 The assumption that the land tax is a direct tax 
 has pervaded many systems of revenue. The truth 
 is that no impost can be more pervasive, can enter 
 into commodities in so many forms, and therefore be 
 aggravated so much and cost the consumer as well 
 as the producer so heavy a payment. It is a blanket 
 mortgage which covers every industry, every saving, 
 every exchange, every employment, every use, every 
 consumption. Involving large costs to levy and to 
 collect, it has been maintained because it is simple, 
 attaches to visible and tangible property, and is sure 
 and steady. The idea that the soil belongs to the 
 state, has often been proclaimed to justify the 
 charges levied, and a modern theorist advocates the 
 imposition of all taxes on the land for this reason. 1 
 
 TAXES ON PERSONAL PBOPEETY. 
 
 Assessments upon personal property may be fol- 
 lowed in much the same manner. On fixed capital, 
 which is not offered for loan, any impost must be 
 
 1 Henry George, Progress and Poverty. 
 
THE INCIDENCE OF IMPOSTS. 143 
 
 paid by the holder, for he has no means to bring 
 others under the burden. But if capital is offered 
 for loan any impost will in some way be charged to 
 the borrower. The imposts on national banks have 
 always been included in the expenses, and dividends 
 have been sought beyond these charges. Imposts 
 upon household furniture, on personal ornaments, on 
 articles not contributing to production, may be re- 
 garded as finally paid by those upon whom they are 
 levied. But even such a tax becomes part of the 
 cost of living of the contributor, and he will try to 
 get it back in some form. An income tax upon those 
 who have retired from business, or are unable to take 
 part in affairs, is finally paid by the person assessed ; 
 but all charges on incomes derived from production 
 and traffic pass into the costs of business, and a con- 
 stant effort is put forth to recover them. In the case 
 of those who are the immediate subjects of the levy, 
 it has been alleged that the income tax checks sav- 
 ings, and becomes therefore fatal to its purpose. But 
 all imposts which cannot be recovered have some- 
 thing of the same effect. 
 
 IMPOSTS ON TRADES AND OCCUPATIONS. 
 
 All imposts upon trades and occupations, all license, 
 and most stamp taxes, belong to the class which pass 
 into the cost of business, and thus are duplicated to 
 the people while the government gets its first levy 
 only. 
 
144 AMERICAN SYSTEM OF REVENUE. 
 THE POLL TAX. 
 
 The poll tax, separate from considerations of in- 
 come or vocation, is probably that impost which 
 really falls finally upon him to whom it is assessed. 
 It is sometimes paid, as in the case of the road tax in 
 this state, in labor. Its rate is seldom large by it- 
 self, for it is adjusted to the poor as well as the rich. 
 The friction from it occurs from this universality 
 and the cost of levying and collection. The term, 
 " direct tax," may more properly be given to this 
 impost than to any other. 
 
 ARTICLES OE FIRST NECESSITY. 
 
 The internal imposts on articles of first necessity 
 are always recognized as indirect, as advanced by 
 the dealer and collected back from the consumer. 
 In normal conditions this is true. Yet it is far from 
 uniformly the case. The seller seeks to get a return 
 from his whole investment, whether in imposts or 
 other items of cost. Bat he cannot always do so. 
 He must accept the conditions of the markets. Dur- 
 ing the prevalence of the highest internal taxes in 
 this country on many commodities, reports occurred 
 that sales were effected at less than the amount of 
 the government imposts. This was found to be the 
 case with whisky and tobacco. Inquiry would some- 
 times develop fraud, sometimes towards the govern- 
 ment by failure to pay the tax, and sometimes to- 
 wards the purchaser, in that the articles were not 
 
THE INCIDENCE OF IMPOSTS. 145 
 
 what they were alleged to be. But cases were dis- 
 covered where the tax had actually been fully paid 
 and the articles were of the standard quality, and 
 where the necessities of the seller compelled him to 
 accept in ready money much less than the cost in- 
 cluding the tax. The experience is of not infrequent 
 occurrence ; a producer or a dealer is forced by stress 
 of his obligations to sacrifice a part of his commod- 
 ities to maintain his credit and carry on his business. 
 This incident of production and of traffic becomes a 
 factor in transactions, great and small. Recent auc- 
 tions of manufactured articles in this country express 
 the excess of supply over the immediate demand, and 
 the attempt to create an equilibrium. Similar auc- 
 tions are common in imported goods of many de- 
 scriptions. The seller takes the risk of accepting a 
 price below cost, but he finds also in some cases that 
 the buyers are more numerous, and their demands 
 greater than will meet the cost ; then profits accrue. 
 This process illustrates how the payer of an impost 
 must put it with other items of cost at the hazards 
 of business. He may get it back in whole or in part, 
 or it may fall upon him finally. He may sometimes 
 find the impost come back manifold. 
 
 The counter proposition finds many illustrations. 
 When the cost of production is reduced, it may take 
 quite a while for the price to fall in the like ratio. 
 The producer and the wholesale dealer struggle to 
 retain the whole advantage of cheaper methods. Im- 
 posts follow the same law. He who is relieved from 
 10 
 
146 AMERICAN SYSTEM OF REVENUE. 
 
 them makes no haste to surrender the gain to any- 
 one else. He tries to keep it as long as he can. 
 Gradually competition compels him to yield more or 
 less, until in time by cheaper production the supply 
 is increased in larger ratio than the removal of the 
 impost, or the cheapening of the cost ; then the con- 
 sumer derives more benefit than either item will by 
 itself express. Or as the more common instance is, 
 the equilibrium of supply and demand is soon estab- 
 lished on a new basis, and the producer and the con- 
 sumer share in the advantage of the tax abolished. 
 The removal of the stamp upon matches at first was 
 followed by no change in price ; soon the price fell 
 more than the rate of the tax. Manufactories were 
 increased, and small producers entered the field from 
 which the operation of the impost had excluded 
 them. The market fell below the difference created 
 by the removal of the tax. The price will be deter- 
 mined by the sharpness of competition. The expe- 
 rience has been similar in tobacco and cigars. Work- 
 men first required a share, if not all, of the tax 
 removed, while the manufacturers were also inclined 
 to keep the difference. But dealer after dealer has 
 conceded more or less of the sum formerly paid in 
 impost, and the wholesale dealer and the retailer, if 
 not the consumer, get the benefit. 
 
 EFFECTS OF IMPOSTS ON CONSUMPTION. 
 
 When the impost enters into the price of the arti- 
 cle, the consumption is as a rule diminished, and to 
 
THE INCIDENCE OF IMPOSTS. 147 
 
 that extent the demand lessened, and thus the effect 
 is counteracted in some degree. On the other hand, 
 the removal of the tax cheapens the commodity, the 
 consumption as regularly increases, and if the supply 
 cannot be made greater the demand affects the price. 
 The effect of a small impost on the use of articles of 
 prime necessity can be studied in the statistics. In 
 Great Britain, from the beginning of the century to 
 1859, the imposts on sugar ranged from 29s. in 1815- 
 1819, to 14s. in 1855-1859, on the hundred weight. 
 Prices followed nearly, but not quite, the movement 
 of the impost. The average consumption of each in- 
 dividual rose from 16 pounds 3 ounces in 1815-1819, 
 to 34 pounds when the tax was abolished, and has 
 since risen to 40 pounds to the individual. The fig- 
 ures with reference to tea are still more curious. In 
 Great Britain, since 1805, the duties on tea were 
 about three shillings a pound, and became nearly 
 four shillings in 1815-1819. They have fallen to 
 one shilling in 1865—1869, and are now sixpence a 
 pound. The consumption of tea was a pound and 
 four ounces in 1815-1819, the period of highest duty, 
 and has grown, especially since 1850, until it has be- 
 come three pounds, and is moving on towards four 
 pounds for each individual. 
 
 In this country tea is not so much in favor as a 
 beverage, and our people show no considerable in- 
 crease in consumption, whether an impost is or is not 
 levied. The rate of consumption was in 1882 1.46 
 pound to each person, and in 1866 it was as low as 
 
148 AMERICAN SYSTEM OF REVENUE. 
 
 .49 of one pound. 1 Coffee is much more the Amer- 
 ican beverage. The price has not varied in accord- 
 ance with the imposts. On the contrary, when the 
 duty was four and five cents a pound in 1862, the 
 price was 11.3 cents ; and after the duty was removed 
 the price advanced to 19.3 cents in 1874. The con- 
 sumption has fluctuated greatly, being as low as 2.24 
 pounds per capita in 1863, with the price at 12.5 
 cents, and as high as 8.07 pounds per capita in 1859, 
 with the price at 9.4 cents a pound. In 1859 no im- 
 post was levied ; in 1863 the duty was five cents a 
 pound. But again no impost has been levied since 
 1870, and the consumption has advanced, with some 
 checks, to 8.25 pounds to each person in 1882, when 
 the price fell to 9.8 cents a pound. 2 
 
 The explanations of the advance in the prices of 
 coffee here after the abolition of the imposts have re- 
 lation to the production in Brazil, which is our chief 
 source of supply, to the export duty in that country, 
 and the causes affecting the markets of the world. 
 The belief that the demand would be considerably 
 increased here by the removal of the duty led our 
 own merchants to seize the profit and join in the ad- 
 vance. 
 
 In France it has been learned that the reduction 
 of one half in the price of salt by the reduction of 
 taxation has multiplied the quantity consumed per 
 capita by two and a half times. The quantity con- 
 
 1 Bureau of Statistics, table 25, No. 3, 1882-3. 
 
 2 Bureau of Statistics, table 28, No. 3, 1882-3. 
 
THE INCIDENCE OF IMPOSTS. 149 
 
 sumed is yet only two thirds of that used in England, 
 where no tax is levied upon it. 1 The salt tax is one 
 of the burdens of France. It confessedly restricts the 
 consumption of this article of prime necessity, and 
 both in agriculture and in the household affects the 
 health of the people. 
 
 In internal imposts we have seen that the charge 
 is disseminated as far as possible by him who first 
 pays it. He will try to buy for less price raw mate- 
 rials entering into his products, in order to meet the 
 impost, and he will seek to collect it as many times 
 as he can from buyers and customers. The mechanic 
 who pays a land tax seeks to get it in wages, the 
 landlord will collect it from his tenant, the trader 
 will estimate his license or tax in the expenses which 
 he must recover, the lawyer asks the price of stamps 
 from his client, and the burden rests upon him who 
 cannot roll it off upon some one else. 
 
 INCIDENCE OE CUSTOMS DUTIES. 
 
 The incidence of charges upon importations does 
 not differ in character from the incidence of other 
 government imposts. Leaving out of account for the 
 moment whatever influence may be exerted upon the 
 production of a country, the duties are paid by the 
 foreign manufacturer or exporter, or by the domestic 
 importer or the consumer, in whole or in part, accord- 
 ing to the demand for the commodities upon which 
 the rates are levied. The effort may be to throw the 
 1 De Parieu's Traits des Imposts. 
 
150 AMERICAN SYSTEM OF REVENUE. 
 
 charge upon the consumer, but the conflicts of trade 
 prevent this result in most cases. If the demand 
 were always equal to the supply, or in excess of it, 
 the consumer must pay the impost. But the supply 
 frequently keeps far ahead of the demand, and the 
 producer must adjust his prices accordingly. He 
 must take what he can get for the wares upon the 
 market. He may refuse to offer any more unless he 
 can get his own prices ; but unless he can afford to 
 hold his commodities indefinitely, he must accept the 
 conditions of trade, even if he has to suffer a loss. 
 During the period just after the peace of Ghent, 
 Bhissli producers threw their goods into this country 
 with theieliberate purpose of breaking down compe- 
 tition and Biding our markets for themselves ; they 
 notoriously fixed pices far below the cost of produc- 
 tion, for the object of^shing out the rising manu- 
 factures. They accepted^ctS 1 ^ the P a y ment of 
 the imposts, and created a cheap ^ arket for the time, 
 in the hope of establishing a cf ar market for the 
 future. The p/rocess is kept a P systematically, for 
 objects which can be underst?° dl It; often happens 
 that the best British editions/ ^ * resn wor ks can be 
 bought in this country, with ^ ne i m P 0S ts added, at a 
 less price than they are off Jre< ^ hy the publishers in 
 London or Edinburgh. r ^he reason is that the de- 
 mand at home has b^ en carefully measured, and 
 rather than permit a gfi nt to occur there, the surplus 
 of an- edition is slr'PP e( l hither, and sold at a low 
 price to close out/ the transaction. In this way the 
 
THE INCIDENCE OF IMPOSTS. 151 
 
 British market is kept firm, while something is re- 
 ceived from the copies exported. The process pre- 
 vails in other trades. When the demand at home 
 falls off, British and European manufacturers send 
 their excess of production to us; and the auction 
 rooms of New York and Boston, or the counters of 
 interior stores, are made attractive at prices less than 
 are asked for the identical goods in London, Birming- 
 ham, Paris, Berlin, Vienna, or Florence. 
 
 But the case will arise when the supply abroad is 
 not above the demand there and here. The manufac- 
 turer, carefully gauging the requirements of the mar- 
 kets, discovers that he can collect not only his im- 
 mediate cost of production, but also all additional 
 charges, and a round profit. He seeks all the profit 
 which he can get. The buyer wants the commodities. 
 The wholesale purchaser has to pay the advance. If 
 he makes his purchases wisely, he finds that he can 
 collect the augmented charges from the retail dealer, 
 and he does so. The retail dealer in turn recovers 
 them from the consumer. But it may happen that 
 the wholesale dealer misses in his calculations, and 
 he is compelled to close out his venture by accepting 
 the impost and more himself ; or the retailer may 
 discover that his supply is in excess of the demands 
 of his market. He again may have to stand the 
 duty, and more too. Frequently this experience 
 varies on the same lot of goods. On a part, the 
 dealer, wholesale or retail, may be able to make the 
 customer stand the portion of the price answering to 
 
152 AMERICAN SYSTEM OF REVENUE. 
 
 the impost on a share of an importation, and on the 
 remainder left upon his hands when the season 
 closes, he may be compelled to bear the burden. The 
 average may be sometimes in his favor, and some- 
 times in favor of the consumer. 
 
 The illustrations are commonplace. Fancy silks 
 from Lyons are crowded into our markets, and fash- 
 ion renders them salable for a time. The purchaser 
 is glad to pay the imposts. The fashion passes away ; 
 the foreign producer is caught with a stock on hand 
 which he cannot carry ; he thrusts them on the 
 market regardless of cost. The commodities which 
 yesterday sold at seven dollars a yard at retail are 
 offered at one dollar. These variations are more 
 common in dry goods, and such commodities as are 
 affected by fashions. They extend, however, to 
 many of the branches of traffic. When the rush for 
 building railroads is at its height, wares required for 
 construction and equipment are sought for, and the 
 seller can make the price. Soon the rush ceases ; the 
 supply created for the greater demand is found to 
 be much in excess, and the buyer who can pay cash 
 promptly is master of the market. He in turn fixes 
 the prices, and he is careful to see that the imposts 
 are thrown back upon the producer or his immediate 
 representative. The history of Bessemer steel rails 
 is classic. The price was $150 a ton, and Americans 
 bought them at that price.. The duty was fixed at 
 $28 a ton, and the consumer undoubtedly paid it. 
 But soon like rails were produced here at home. The 
 
THE INCIDENCE OF IMPOSTS. 153 
 
 foreign maker was compelled to lower his charge. 
 The fall was gradual, and the buyer kept paying the 
 duty. Soon transactions were made directly and in 
 terms with the duties paid by the foreign producer. 
 Such transactions are on record; but the whole mar- 
 ket was affected, and the price tumbled until these 
 rails are sold at $33 or $34 1 a ton, and the producer 
 keeps on accepting the situation, and allowing the 
 American imposts to be thrown back upon him. In 
 England such rails sell to-day at $25 a ton, in the 
 United States at $34. The duty is $17. It is obvi- 
 ous that, with transportation added, the British pro- 
 ducer must bear the greater part, if not the whole of 
 the imposts. 2 
 
 The incidence of customs duties does not vary, 
 therefore, from that of other imposts. The effort is 
 constant to throw the charge upon the consumer, but 
 various influences combat that result. The sum of 
 these influences constitutes the relations of supply 
 and demand. To assert that the consumer always 
 pays the impost is to allege that every investment 
 brings back full returns on all its parts at all times. 
 Experience proves that the truth is far otherwise. 
 The foreign exporter estimates the impost as one of 
 the elements in the cost of his articles in the market 
 which he seeks. He starts with a calculation which 
 will give him large profits. Even in average years 
 he is compelled to accept less than his reckoning. 
 
 1 New York Bulletin, January 23, 1884. 
 
 2 Bureau of Statistics, table 37, No. 1, 1882-3. 
 
154 AMERICAN SYSTEM OF REVENUE. 
 
 In many instances, although the aggregate of his 
 business may be remunerative, he accepts a loss to 
 guard his interests in other directions, or even to 
 open an inquiry for his commodities. But when the 
 supply is increasing, when it has passed the point of 
 equilibrium with the demand, he changes the bases 
 of his estimates ; he reduces his items of cost ; he 
 finds that some one else can produce competing com- 
 modities at a rate to win the market ; he yields first 
 one and then another share of his margins, and for a 
 long period he may be compelled to sell without get- 
 ting back his original outlay. He may be driven to 
 this policy because it may be cheaper for him to use 
 his machinery, even at a loss, and to keep his force 
 of skilled workmen, rather than suffer the one to be 
 eaten by rust and the other to be scattered. 
 
 Officers of the treasury have of late exposed strik- 
 ing instances of undervaluation of commodities im- 
 ported into this country. In many cases silks are 
 invoiced at prices far below the cost of manufacture 
 in Lyons. The same is the case with some woolens, 
 and with various miscellaneous merchandise. By 
 maintaining their own agents in our ports, foreign 
 producers are able to make their own valuations, and 
 to gain advantages for competition here far below 
 the rates in their own home markets. These official 
 statements are the demonstration that in some way 
 the prices of such foreign commodities in our mar- 
 kets are below the prices at the door of the manufac- 
 tories. The explanation is that the foreign producer 
 
THE INCIDENCE OF IMPOSTS. 155 
 
 accepts the whole burden of American duties. In 
 his anxiety to secure at least a part of our trade, he 
 values his commodities far under the wholesale prices 
 at home. He does more ; he carries that valuation 
 below the possible cost of production. His object is 
 to escape a share of the duties which are adjusted 
 according to the value by invoice. Whether he vio- 
 lates any law of this country by his devices or not, 
 he presents a very striking demonstration of the fact 
 that the consumer does not always pay the duty, and 
 that the foreign producer often goes great lengths in 
 order to guard his customer in this country from that 
 charge. 
 
 Silks have been instanced as one of the classes of 
 merchandise with reference to which this process of 
 undervaluation is alleged. In 1860 there were only 
 136 silk manufactories in the United States, and they 
 employed 5,435 persons, and produced $6,607,771 
 worth of fabrics. In 1880 these factories numbered 
 382, employing 33,337 persons, and producing $34,- 
 519,723 of finished goods. 1 In 1860 we imported all 
 but thirteen per cent, of the silks consumed by our 
 people ; in 1880 our factories furnished thirty-eight 
 per cent, of all the silks of every kind which deco- 
 rated our homes and the persons of our inhabitants. 2 
 
 i Report of W. C. Wyckoff in census of 1880. 
 
 2 Suppose that a, five per cent, duty is imposed on foreign silks, 
 and that, in consequence, after a certain interval, half the silks con- 
 sumed are the product of native industry, and that the price of the 
 whole has risen two and a half per cent. ; it is obvious that, under 
 these circumstances, the other half, which comes from abroad, yields 
 
156 AMERICAN SYSTEM OF REVENUE. 
 
 In ribbons and some other styles our factories met al- 
 most the entire demand. This domestic competition 
 has been the cause of the undervaluations of which 
 we have spoken. In the markets of our various cities 
 the result has been felt in the constant reduction of 
 prices. That reduction has been, on the average, not 
 less than twenty-five per cent., and frequently is as 
 much as thirty per cent. 1 Thus, by the effect upon 
 the foreign manufacturer and by developing home 
 production, duties are thrown far away from the con- 
 sumer upon him who bids highest for the market. 
 
 The rule about duties is precisely the same as hi 
 other government charges, in other matters of outlay 
 in business and traffic. The effort is to include the 
 imposts in the receipts for commodities, but shrewd 
 sellers reckon on the average sales more than on any 
 single transaction. The loss on one commodity or 
 on one sale may be the inducement to the customer 
 for many large operations. In any specific sale it 
 may not be easy to say whether the result is loss or 
 gain. The assumption is false that in every sale the 
 items of cost, whatever they may be, are met by the 
 buyer. 
 
 Whatever will raise the supply above the demand 
 must result in advantage to the consumer. If that 
 
 the state five per cent., while the tax levied from the consumers on 
 the whole is only two and a half per cent. ; so that the nation in the 
 aggregate is at this time losing nothing by protection except the cost 
 of collecting the tax, while a loss equivalent to the whole tax falls 
 upon the foreign producers. — Sitlgwick's Political Economy, p. 492. 
 1 Letter from W. C. Wyckoff to Hon. J. A. Kasson. 
 
THE INCIDENCE OF IMPOSTS. 157 
 
 excess is rendered permanent, a fall in price must 
 follow ; but if the ratio is changed without creating 
 such an excess, the consumer will still find that the 
 producer or the dealer must reduce his charges. 
 
 THE LAW OP INCIDENCE. 
 
 The law of incidence may be clearly stated. The 
 tendency is first to charge every impost to the final 
 consumer of the commodity affected ; thus, in arti- 
 cles which enter into new modifications, the tendency 
 is to throw the charge forward upon the last pur- 
 chaser. But against this tendency acts any increase 
 of supply relative to demand. Because land cannot 
 be, as a rule, augmented in quantity, the imposts 
 upon land used for raising crops for sale, or for the 
 homes of those engaged in labor, are cast upon pro- 
 duction and producers, and thus upon consumption. 
 Upon capital engaged in manufactures or farming or 
 in exchange, the tendency is the same, because the 
 sum of capital increases slowly. In the case of com- 
 modities, the incidence will depend upon the ease and 
 rapidity with which the supply can be increased rela- 
 tive to the demand. Duties on tea and coffee have 
 been repealed in this country without immediate re- 
 duction of price, but in time a part of the benefit has 
 reached the consumer. An addition to the duties 
 has not always been placed upon the price. When 
 the impost can be charged upon the consumer, the 
 effort always is to treat it as an element in the cost, 
 on which a profit is to be collected in every change 
 
158 AMERICAN SYSTEM OF REVENUE. 
 
 of owners. This operation magnifies the profits in 
 the branch of trade so affected, and when those are 
 carried above the average, competition enters to ad- 
 just the equilibrium. With the publicity which at- 
 taches to production and trade in these days, any 
 considerable increase in profits in one branch imme- 
 diately increases the competition in it, and leads soon 
 to such an augmentation of supply that the consumer 
 gets the benefit. 
 
 WHAT CLASSES PAY IMPOSTS ? 
 
 Inquiry is often raised concerning the classes upon 
 whom certain imposts fall, dividing these classes ac- 
 cording to their earnings or their capital. The land 
 tax is by theory assessed in the same percentage upon 
 all property, — on the hovel of the poor and the man- 
 sion of the rich, on the few acres of the small farmer 
 and the splendid park of the capitalist, on the little 
 shop of the cobbler and the vast factory of the mil- 
 lionaire. The percentage is the same, and the result 
 is supposed to be equality. But the rate which may 
 seem small to the capitalist becomes a grievous bur- 
 den to the man struggling to hold the title to his 
 little place. In addition the large capitalist under- 
 stands better how to make a tenant or a customer 
 pay his taxes than does the owner of a small home- 
 stead whose thrift is his only capital. Yet further, 
 the process of casting off these imposts upon others 
 brings the larger share of them upon the productions 
 and the traffic which concerns the most people. It 
 
THE INCIDENCE OF IMPOSTS. 159 
 
 becomes true, therefore, that except in the instances 
 of vast parks and costly mansions and unproductive 
 property, the land tax reaches whatever is raised or 
 made, or bought or sold, and thus enters into what- 
 ever is eaten or worn or taken into the home. The 
 land is one of the first necessaries of life, and a tax 
 upon it covers all other necessaries. Internal taxes 
 upon articles of prime necessity are recognized by all 
 as falling most heavily upon those who depend for 
 their livelihood on their daily earnings. 
 
 One other consideration concerning the land tax 
 deserves to be mentioned. It must be paid in a lump 
 for the year. That rule renders it especially heavy 
 for those who struggle to get their money. The re- 
 sult is that cases are many in which the owner, being 
 unable to raise the means to meet the tax at the time 
 fixed, loses his little home or shop or farm. Even in 
 this country the sales of lands for taxes are very nu- 
 merous, and occasion misery and ruin. Ignorance of 
 the requirements of law has brought more than one 
 piece of property to the hammer. The policy of the 
 government must be to insist upon prompt payment. 
 It can take no account of temporary troubles, of sick- 
 ness or absence, or failures to sell crops or wares. 
 The tax-gatherer must have his levy, or he must 
 take the property or report it for sale. 
 
 Doubtless these inconveniences have been the occa- 
 sion of the devices which have been tried for dividing 
 imposts, for calling for payments for licenses to trade, 
 for particular occupations, for some substitute for 
 
160 AMERICAN SYSTEM OF REVENUE. 
 
 large demands at a single time. The hearth and 
 window taxes were devices for this purpose as well 
 as for increasing the payments of the rich, but the 
 inquisitorial methods involved in reaching the infor- 
 mation essential forbade that such imposts should 
 ever become popular. 
 
 Since we have found that relations of supply and 
 demand of commodities determine in large measure 
 where shall be the incidence of all imposts, and that 
 the holder of an excess must pay, while the needs 
 of the purchaser may make him pay, the assertions 
 that all taxes fall upon the land, or that labor must 
 in the last analysis undergo all government charges, 
 or that consumption is alone finally assessed, cannot 
 be sustained. Imposts become a part of the cost of 
 every article, either through the land tax or through 
 special assessments or through licenses or through 
 customs duties, or through more than one of these 
 charges. Like every other element of cost they may 
 become part in either profit or loss. They may be 
 borne by the producer, the middle-man, or the pur- 
 chaser. In any event they are paid out of no partic- 
 ular fund. They may come out of savings in the 
 form of money or in the form of land, or may fall 
 upon the wages or salaries or receipts of current la- 
 bor, or, finally, they may take the form of debt and 
 be paid at last by the sale of gathered property, real 
 or personal, or stand unpaid as a debt. For further 
 analysis, this debt may as a loss stand against savings, 
 current earnings, or by a bankrupt be thrown over to 
 
THE INCIDENCE OF IMPOSTS. 161 
 
 be again charged off against the one or the other. 
 Protective duties tend to stimulate production, and 
 unless the demand is increased in like measure, they 
 must fall to just the extent of this stimulation on the 
 foreign producer or his agent. 
 
 THE FRICTION OF IMPOSTS. 
 
 The incidence of imposts is to be measured in 
 other effects than in mere money. In every charge 
 made by the government the latter is brought into 
 contact with the citizen, and some friction must re- 
 sult. This friction is one of the elements of cost of 
 public charges. In levying taxes upon land, the state 
 touches every owner at least once in every year. 
 But this property is visible, and the visitation may 
 be external, and is not domiciliary. But when the 
 levy reaches furniture and personal articles, inquiry 
 must be close and intimate. In movable property, 
 generally, difficulty arises in determining values and 
 titles. Still more searching must be the question if 
 imposts are to be made upon incomes, which the indi- 
 vidual himself must study carefully and long to de- 
 termine accurately. A single commodity, like salt 
 or tobacco, may be followed with less of inquisitorial 
 methods. But every impost on internal production, 
 on individual trade or traffic, or savings or earnings, 
 must depend for efficiency upon scrutiny which must 
 enter home or shop, and private bureaus and secret 
 papers. The methods tend inevitably to be arbitrary, 
 or they incline to favor the persons who will seek to 
 11 
 
162 AMERICAN SYSTEM OF REVENUE. 
 
 defraud by concealments and understatements. Thus 
 personal declarations are invited and relied upon in 
 several states relative to personal property, and only 
 when suspicion is created investigation occurs and 
 penalties are imposed. American experience relative 
 to the income tax proved that its methods were hos- 
 tile to our traditions, and to our spirit of personal 
 liberty. 
 
 COST OE COLLECTION. 
 
 Imposts of this class which require minute inquiry, 
 and personal visitation, and constant police, are in 
 practice the most costly to levy and to collect. The 
 poll tax has been advocated because it interests every 
 person in the government ; but it has always been 
 found to be expensive in its administration. Mon- 
 tesquieu pronounces the tax on persons more natural 
 to servitude ; that on merchandise more natural to 
 liberty. 1 The expenses attending any system of rev- 
 enue will be affected by the extent of the terri- 
 tory and the density of the population. Thus in 
 Nevada the state taxes are collected upon an allow- 
 ance to the collector of fourteen per cent. This pol- 
 icy comes very near to the old plan of farming out 
 the revenue. 
 
 The customs system requires officers only on the 
 frontiers of a country, and involves a smaller force 
 than imposts gathered from the citizens in their 
 
 1 A poll tax is natural to servitude ; a tax on commodities is more 
 natural to freedom, because it has a less direct connection with the 
 person. — Montesquieu, Spirit of Laws, book xiii. chap. 12. 
 
THE INCIDENCE OF IMPOSTS. 163 
 
 homes. It has been found in practice the system 
 involving the least expense in administration. It is 
 claimed for it that for these reasons the friction is 
 far less than under any other policy of revenue. In 
 Britain the cost of levying and collecting the cus- 
 toms is five per cent., in the United States 3.7 per 
 cent. 
 
 IMPOSTS SHOULD BE PELT AS LITTLE AS POS- 
 SIBLE. 
 
 The tax-gatherer is the traditional enemy who is 
 classed with death. The citizen is able to avoid 
 neither the one nor the other. Yet one school of 
 economists has urged that he should be seen in every 
 community in order that the tax-payer may feel and 
 know the sums which he contributes. The plea is 
 akin to the terrible examples of crime and degra- 
 dation that are paraded before those whom we would 
 control in the right way. But this governing by 
 terror is better suited to former ages than to our 
 days. That Southern statesman who testified that 
 our national government had been felt before the 
 war only in blessing, bestowed the highest eulogy 
 possible. No more reason exists why the money 
 exactions of a government should be felt by the 
 citizen, than why its administration of justice should 
 touch every one palpably, and so as to arouse his 
 attention. Personal liberty is most complete when 
 no outward pressure is appreciated in any way. 
 Courts are held, but in order to be assured of their 
 
164 AMERICAN SYSTEM OF REVENUE. 
 
 value, it cannot be wise to inflict some yearly burden 
 upon tbe body of the people. Legislatures are well, 
 but the annual hazards of change and disturbance 
 are not accounted advantages. A police force is a 
 necessity in the community, but no one believes that 
 it is essential that it shall summon innocent and 
 guilty alike, and parade arrests indiscriminately, in 
 order that citizens may feel and know that such a 
 force is maintained. 
 
 A system of revenue is like any other branch of 
 government. It should do its work noiselessly, with- 
 out annoyance to the citizen, without interruption of 
 industry or traffic, without unnecessary burdens of 
 any kind. It should be like the sun, appreciated for 
 its light and fructifying power. Homes should be 
 exempt from its visitations ; it should touch no per- 
 son aggressively ; it should act openly and not by 
 secret inquisition or by arbitrary methods. If free- 
 dom is a blessing, imposts should be adjusted to ac- 
 cord the largest measure of freedom to every citizen, 
 in his property, in his labor, and, above all, in his 
 home. 
 
CHAPTER VI. 
 
 FREEDOM OP PRODUCTION. 
 
 Imposts obstruct Commerce. — They obstruct Production. — The 
 Statesman must aim First at Freedom for Production, not for 
 Trade. — Quesnay : Agriculture the Only Source of Wealth. — 
 The Mercantile Theory. — Locke. — Adam Smith. — Agriculture, 
 Manufactures, Commerce. — Production different from Transpor- 
 tation and Exchange. — How to build a State. — Distribution and 
 Consumption. — Freedom renders Labor Fruitful. — Burke : " The 
 Revenue is the State." — Labor before Exchange. — Domestic In- 
 dustry Stable. — Commerce Fitful. — Homes. — Henry C. Carey : 
 Diversity of Industry. — Increase of Production. — New Indus- 
 tries offer Fresh Prizes. — Alleged Overproduction. — Sidgwick : 
 "Society is always in a Condition of Underproduction." — Agri- 
 culture and Manufactures. — Statistics of J. R. Dodge of the Ag- 
 ricultural Department. — The Tariff and Production. — Pig Iron. 
 
 — Manufactures in 1850 and Subsequent Decades. — Mining In- 
 dustries. — Wealth per capita. — Gladstone : the American Repub- 
 lic " the Wealthiest of all the Nations." — Testimony of Bismarck. 
 
 — Carlyle. — The Tax-gatherers should touch Production at the 
 fewest Points. — Duties on Imposts limited to the Frontier. — Leave 
 all the Rest of the Country untonched. — No Inquisition. 
 
 The charge has been put forth that imposts on 
 importations are obstacles in the way of free com- 
 merce. The allegation is true. Collections from any 
 branch of enterprise constitute just in so far a re- 
 straint. Customs duties are a check on free trade. 
 The conyerse is more emphatically true. Imposts 
 on production are a restraint on production. Com- 
 
166 AMERICAN SYSTEM OF REVENUE. 
 
 merce and production are so closely allied that what 
 affects the one will more or less reach to the other. 
 Yet they have diverse interests, and each has its 
 own sphere and its own risks and burdens. Any 
 system of revenue must affect production. As we 
 have seen, a land tax enters into every article which 
 comes from the soil or rests upon it. It penetrates 
 food and raiment and home and school. It is multi- 
 plied from the cotton boll to the finest fabric, from 
 the coal and the ore to the machine which does 
 everything but think. Something of this multipli- 
 cation attaches to every form of impost. But it is 
 least, just in the degree that the impost is removed 
 farthest from the work of the husbandman, the arti- 
 san, the operative, the producer of any class. Even 
 if the consumer alone is regarded, his burdens are di- 
 minished just to the extent that the impost is placed 
 nearest to him. Political economy must start with 
 studying production, not consumption. The states- 
 man must aim at freedom, not first or chiefly for 
 trade, but for production. Now what is essential in 
 a revenue system to secure this freedom ? 
 
 Often the various processes of commerce are reck- 
 oned as a part of production. 1 But, for simplicity of 
 language, although transportation may render useful 
 commodities which are at the starting-point without 
 exchangeable value, it is better to regard production 
 as that which transforms material or originates util- 
 ity, while exchange, commerce in all of its variations, 
 1 Henry C. Carey, vol. i. chap. i. 
 
FREEDOM OF PRODUCTION. 167 
 
 only changes the place or ownership of commodities. 
 Thus there is a clear line between agriculture and 
 mechanism in all of its types, on the one hand, and 
 trade on the other; between production and com- 
 merce. 
 
 SOUECES OF WEALTH. 
 
 Quesnay and the school of French thinkers, styled 
 the Economists, taught that all wealth proceeds from 
 the soil, and that agriculture is the only production. 
 The next step was that of the commercial school, 
 which has exaggerated commerce, and claimed for it 
 the commanding rank in the world's pursuits. Yet it 
 is notable that the mercantile theorists insisted upon 
 government restriction and direction of foreign trade. 
 Locke was the real prophet of the modern era, for 
 he insisted that labor lies at the root of all wealth. 
 The chief indebtedness of mankind to Adam Smith 
 is that he expanded and made popular this doctrine, 
 and thus brought labor up to its true relation. He 
 illustrated how labor takes the forms of nature and 
 adds value to them, and thus becomes the chief ele- 
 ment in creating wealth, in its modern phase and ex- 
 tent. If he did not carry his analysis through the 
 complex development the fault was that of his time. 
 With the vast strides of invention and mechanism 
 classification asserts itself. Manufactures have out- 
 run every other branch of industry and enterprise. 
 Agriculture, necessary as it is, and lying at the base 
 of all life, has fallen into a second place, measured 
 by money, and commerce is their servant. These 
 
168 AMERICAN SYSTEM OF REVENUE. 
 
 three, — agriculture, manufactures, commerce, — but 
 the greatest of these is manufactures. So great is 
 the development of commerce, that it deserves to 
 stand apart, and the allied interests also demand sep- 
 arate classification. They are genuine production. 
 Traffic is different from making things. Scientific 
 accuracy justifies the distinction, nor is there any dif- 
 ficulty about it in common practice. 
 
 The producer stands apart from the middle-man. 
 Transportation is not included in production. Com- 
 merce domestic and foreign, the whole field of ex- 
 change, lies outside of mechanism and agriculture, 
 the making of things. To make differs from carrying 
 and selling. Values may be changed by transporta- 
 tion. Internal trade increases riches, but it is not 
 production. Foreign commerce is often a fountain 
 of wealth, but it is not the steady stream which flows 
 from every hill and valley, from every mine and well, 
 from every sinew and muscle. Agriculture, manu- 
 factures, mining, industry applied to earth or matter, 
 to change forms and fit them to use, are production. 
 This is the magician of this age, the creator of 
 wealth, the prophet of a higher development foi r 
 mankind. 
 
 You are to build a state out of the materials of 
 human society. 1 You possess the soil of a great con- 
 tinent. Whom would you summon ? You invite 
 first the cultivators of the earth. You provide for 
 feeding the population which you will gather. You 
 
 1 See Plato's Republic, book ii. : " Let us build a city in thought." 
 
FREEDOM OF PRODUCTION. 1G9 
 
 clothe the workers and their families, and shelter 
 thern. Then you arrange for tools and implements, 
 then for improved homes, for schools and churches. 
 Art will follow, and all the adornments of life. You 
 'fashion your political institutions; you seek to de- 
 velop wealth and culture ; you are busy with produc- 
 tion in its many forms ; you do not trouble yourselves 
 about consumption; that will take care of itself; your 
 aim is to furnish everything essential for human com- 
 fort. Some of these things will have to be secured 
 from abroad, but you must first make something to 
 exchange for whatever is brought in. You can get 
 nothing without paying for it, either in commodities 
 or in money in hand or promised in the future. Your 
 traffic is based on barter. Your production may be 
 fresh and ready for exchange. Gradually you will 
 gather a surplus, and put it into money. You may 
 want to buy in advance of your production, and then 
 you will create a debt which you will pay out of the 
 results of future labor. 
 
 But you begin, not with trade but with produc- 
 tion. Your care is for production and not for con- 
 sumption. The class of population that you seek is 
 that which will make something, will add to the re- 
 sults of labor, either from the soil or from some 
 handicraft. Accumulated production is capital, and 
 you may have use for that. You must ally it with 
 active production, to keep up growth and progress. 
 All the while consumption will be going on. But 
 that is an incident, and not the condition of pros- 
 perity. 
 
170 AMERICAN SYSTEM OF REVENUE. 
 
 You may estimate that production greatly exceeds 
 consumption, and your wealth will grow just in that 
 ratio. You may find consumption exceed production, 
 and just in that ratio you will become poor. In pro- 
 duction in certain types consumption is an element, 
 but you are not seeking tbe destruction of raw mate- 
 rials but the creation of the higher style of commod- 
 ity. Consumption is thus a necessity. You consume 
 food not as an end but to produce strength. You 
 enjoy music for the pleasure which is immediate and 
 the impressions which pass into the being. 
 
 Sismondi alleges that production is a good only as 
 it is followed by corresponding consumption. 1 Then 
 economy is not a virtue, and the accumulation of 
 wealth is not a good. But the common sense of 
 mankind approves of the reasonable saving of earn- 
 ings, the laying up of property, the careful keeping 
 of production above consumption. A French writer 
 insists that " the happiness of states depends less on 
 the quantity of products than on the manner of dis- 
 tribution." 2 But you must plant and reap your 
 crop before you can garner it ; and you must gather 
 it in before you can distribute it. The increase of 
 production does not interfere with wise distribution. 
 On the contrary, the very increase has developed the 
 study of the best laws of distribution. But this proc- 
 ess looks again to saving by all, and to the augmen- 
 tation of wealth among all classes. True science as 
 
 1 In Commercial Wealth. 
 
 2 M. Droz, quoted by Blanqui, p. 479. 
 
FREEDOM OF PRODUCTION. 171 
 
 well as benevolence will seek to provide comforts for 
 every human being. 
 
 But in no case is consumption the aim. It is the 
 strength, the comfort, the pleasure, which you seek. 
 For these you strive to increase the volume and vari- 
 ety of your commodities. The excess of such com- 
 modities above the demands of the hour constitutes 
 the wealth of an individual or a nation. This excess 
 of production over consumption is the triumph of civ- 
 ilization, the measure of progress, the indication of 
 national power and greatness. 
 
 Now political economy can do no better service 
 than to contribute to production, and to its excess 
 over consumption. We have agreed that the gov- 
 ernment should touch the citizen at as few points as 
 possible. But just in the degree that it must touch 
 him it should be its task to incite to the augmenta- 
 tion of the objects of human desire. To that end it 
 should take from him as small a share of his industry 
 as will serve its purpose. For the results of industry 
 when not consumed and exhausted contribute to new 
 results often in an arithmetical ratio and sometimes 
 even in a geometrical ratio. The best service which 
 capital or the products of labor can perform is to 
 fructuate in the pockets of the people. 
 
 Production comes as near absolute creation as is 
 possible for man to attain. The miner takes the ore 
 out of the earth, and it adds to the wealth of the 
 world. It is iron, and it becomes under the mastery 
 of mechanism the machine which drives the locomo- 
 
172 AMERICAN SYSTEM OF REVENUE. 
 
 tive or the factory. It is gold, and it measures the 
 possessions of mankind. The farmer out of the soil 
 brings food for his own and other lands. The fibers 
 of vegetation or of animals are fashioned into rai- 
 ment. Comfort and convenience find servants in the 
 metals which were shapeless, in the forests which 
 sheltered wild beasts. Nature has no element which 
 is not subdued. The barbarian becomes the civilized 
 man. Out of work blossoms all art and all culture. 
 
 FREEDOM OE LABOR. 
 
 Free labor is that which is most productive. The 
 condition of the South to-day proves how much more 
 freedom can contribute to the general as well as indi- 
 vidual wealth, than any system of enforced toil. It 
 is not at the fountain where water gurgles up in flow- 
 ing streams that the thirsty man will pledge his for- 
 tune for a drop. Sahara makes every particle of liq- 
 uid precious as gems. About the mines you pick up 
 nuggets of gold and silver as curiosities. You do not 
 carry coals to Newcastle, because there production is 
 most free from restraint. In the orchard, fruit is 
 cheap. In the harvest field, Ruth may gather food 
 from the loose remnants of the husbandman's garner- 
 ing. Yet a little thing may determine whether a 
 mine shall be worked, whether a farm shall be culti- 
 vated, whether industry shall strive for its rewards, 
 or shall fold its hands and sullenly refuse to contrib- 
 ute its skill to the general wealth. Holland taxed 
 its land until its people surrendered to despair. 
 
FREEDOM OF PRODUCTION. 173 
 
 Spain by its grievous charges crushed out the spirit 
 of its producers. The Flemings groaning beneath 
 the oppressions at home carried manufactures and 
 consequent wealth and progress to England. Britain 
 invited and encouraged the immigrants, and knew 
 the secret that the making of things is the beginning 
 of trade and of riches. 
 
 Whatever limits the liberty of the citizen restricts 
 his labor and the results of it. In Turkey, property 
 is subject to infinite risks of government impositions, 
 and the subject cares little for regular toil, and lives 
 on scanty sums. He hoards what he can get in gems 
 or coin, or other forms which he can readily conceal 
 or remove. He does not set it to work in shop or 
 factory. The nature of the government has been 
 generally the measure of the development of indus- 
 try and of its gains. In his discussions of the French 
 Revolution, Edmund Burke declared that " The rev- 
 enue of the state is the state." Beyond all question, 
 the spirit which enters into the revenue system of a 
 government is a fair type of that which directs all 
 legislation and administration. The struggles for 
 money are the chronicles of man. The state which 
 watches over the citizen will guard well his labor and 
 its rewards. If in every stress a government seeks 
 to defend and encourage its toilers, it will exhibit the 
 best qualities possible, for Burke says again : " The 
 revenue, which is the spring of all power, becomes in 
 its administration the sphere of every active virtue." 
 
174 AMERICAN SYSTEM OF REVENUE. 
 LABOR BEFORE EXCHANGE. 
 
 Labor, and not exchange, is the beginning of all 
 prosperity. In all lands, the numbers engaged in toil 
 are greater than those devoted to trade. In this 
 country, with our marvelous domestic traffic, supply- 
 ing the needs of fifty-five million people, who spend 
 more money than any other like number in the world, 
 the share of the population engaged in all branches of 
 foreign and home commerce is considerably less than 
 one eighth. The exact figures are 1,810,256 persons 
 engaged in trade and transportation against 17,392,- 
 099 in all classes of occupations. At the same time 
 7,670,493 persons are engaged in agriculture, and 
 3,837,112 persons in manufactures, mechanical and 
 mining industries. Or again, in simple production 
 are employed 11,507,605 against 1,810,256 in trade 
 and transportation. Our total foreign commerce at 
 its highest is, of imports $724,639,574, and of ex- 
 ports $833,925,917, or in round numbers, f 1,570,000,- 
 000, less than a third of the value of our manufac- 
 tures, while our exports are between one sixth and 
 one seventh of our manufactures. Even in Britain, 
 the most commercial country in the world, the im- 
 ports are only equal to three eighths of the manufac- 
 tures in annual value. 
 
 As a mere proposition of numbers and of values, 
 the government ought to consider most the producers 
 rather than the traders, in its laws of all kinds. We 
 have also seen that labor in its various forms, all the 
 
FREEDOM OF PRODUCTION. 175 
 
 diversities of production, enter first into the condi- 
 tions of personal and national prosperity. Other 
 considerations belong in this argument. Every moral 
 excellence is based on industry and thrift. Not every 
 person can engage in trade, but every one can do 
 some work, can lend a helping hand to make some- 
 thing. He can till the soil, or gather in crops, or 
 care for cattle or poultry. He can assist in factory 
 or shop ; he can turn out a pin, or set a type, or 
 drive a nail, or carry a hod. Those homes are hap- 
 piest where some at least are regularly occupied in 
 some remunerative employment ; for out of these 
 homes arise the persons who become our students, 
 our thinkers, our artists, our producers, our masters 
 in invention, in development. That employer was 
 not fully right who set an apprentice to carry bricks 
 from one spot to another, and then to return them 
 again, simply that he might be occupied ; but pro- 
 ductive employment is a good thing in itself, over 
 and above its rewards. 
 
 Where the creek turns water-wheels and keeps 
 busy spindle and loom, where steam fashions fab- 
 rics, where iron and steel take on forms of usefulness 
 and power, where human needs are provided for in 
 their greatest diversity, it will be found that brains 
 in the largest ratio are active and fruitful, most per- 
 sons become able to help others as well as them- 
 selves, and the most genuine and steady progress is 
 made in the direction of the best civilization and the 
 most worthy manhood. The largest production, it is 
 
176 AMERICAN SYSTEM OF REVENUE. 
 
 to be observed, is in this country in the largest cities, 
 — not simply the greatest quantity and value of 
 manufactures, but the greatest ratio to the persons 
 employed, for the chief seat of our manufactures is 
 first in New York city, and next in Philadelphia. 
 But wherever mechanism is most skillful, and manu- 
 factures most varied and most extensive, there in this 
 land, and in all lands, you will find the richest blos- 
 soms of all which progress has brought to humanity. 
 Our theme does not carry us to the dens which dis- 
 grace every commercial port, to the degradation 
 which gathers on dock and about harbor, to the 
 shamelessness which dares the day, and has dared 
 the night, wherever sailors seek a port, since Ulysses 
 roamed the sea in dissipation and adventure. 
 
 But virtue seeks home and its quiet and training 
 and pleasures. Production thrives at home. Com- 
 merce is changeful and wandering. It craves excite- 
 ment and novelty. Prosperity resting on it alone has 
 always been unstable. The scepter has passed in 
 turn along the Mediterranean to Spain and Holland, 
 and now to Britain. Venice wedded the Adriatic, 
 but has left no daughter to adorn her palaces. Spain 
 derives consequence to-day from insults to Alfonso in 
 Paris. Britain relies upon her arms and her diplo- 
 macy to hold control of the commerce of nations 
 against a competition which threatens her at every 
 point. Fitful as the ocean, which is its element, 
 commerce is a coquette who cannot be trusted to en- 
 rich and beautify home for all time. Measure the 
 
FREEDOM OF PRODUCTION. 177 
 
 duration of nations ; you will find that the peoples 
 who knew the secret of long life have been those 
 that relied upon their own productions, and made 
 commerce an incident and not a chief dependence. 
 That is the counsel which Egypt utters from her pyr- 
 amids, which China has written in her strange char- 
 acters, and holds at this hour before the eyes of man- 
 kind. 
 
 Let Americans study to build up homes, to root 
 the national prosperity in our own soil, to make 
 every citizen a producer, and to broaden the base of 
 our wealth so that no shock from without can shatter 
 it, or even shake its steady strength. Wars may yet 
 come, and the plea which after the Revolution, and 
 after the War of 1812, led our people to seek to 
 clothe themselves, as well as feed all on our soil, and 
 to prepare to equip armies and to maintain navies, 
 has still its force. But wider than any preparation 
 for conflict is the task of maintaining a free and pros- 
 perous people, for extending comforts to every house- 
 hold, and for guaranteeing a livelihood to every son 
 and daughter of the Union. Production is the begin- 
 ning of wealth ; from it must come the means to buy 
 abroad, as well as to lay up savings for future exigen- 
 cies. The farmer who has the largest crops is he 
 who can spend the most money. It is the mechanic 
 who earns most by his labor who can purchase the 
 most of the results of other people's toil. It is the 
 operative who works regularly who has the largest 
 surplus to invest in comforts and luxuries. The 
 12 
 
178 AMERICAN SYSTEM OF REVENUE. 
 
 merchant knows that when agriculture is fortunate 
 Lis trade becomes most profitable ; when manufac- 
 tures are successful, commerce widens, and reaps 
 richest gains. Traffic varies with the crops, and with 
 production generally. The statesman who seeks to 
 create commerce, apart from the diversity of home 
 industry, undertakes the task of sailing a ship with 
 its masts downward, of navigating a steamship with 
 its hull reversed. If it were true that more revenue 
 could be collected by a system which should foster 
 commerce at the expense of production, surely com- 
 mon sense could not approve of it. Rather would the 
 exclamation burst forth in the sharp tones of Pitt on 
 the stamp tax : " Shall a miserable financier come 
 with a boast that he can fetch a peppercorn into the 
 exchequer, to the loss of millions to the nation ? " 
 
 DIVEESITY OF INDUSTRY. 
 
 Henry C. Carey calls attention to the fact, which 
 is the secret of much of the mechanical development 
 of our times, that " labor is improved in quality by 
 division, and this quality tends to diminish the quan- 
 tity required for producing any commodity." The 
 more skillful the mechanic, the briefer the time 
 within which he can accomplish a given result. This 
 reduction of time is a cheapening of the commodity 
 produced. This is the process that has given to the 
 American people, and to other countries in a less de- 
 gree, such additions to their comforts, which have 
 made home so attractive, and have lengthened the 
 
FREEDOM OF PRODUCTION. 179 
 
 average of human life by removing many of its hard- 
 ships. To this increase of production the philanthro- 
 pist must look for such an amelioration in human 
 conditions as will fight the battle against poverty to 
 the point, if not of its banishment, at least of a miti- 
 gation of its pains. When every nation shall work 
 out its share of this task, some benefit must accrue to 
 every other. With the frequent intercommunication 
 between all parts of the world, the tendency is for 
 any abundance in one land to overflow into every 
 other. The wealth of the Indies, when first intro- 
 duced, pervaded by degrees every channel of com- 
 merce. The better wealth of food and raiment and 
 household comforts cannot be limited in any narrow 
 grooves. The higher the current can be carried in 
 any country, the greater the flow into every other 
 land. 
 
 The best contribution which any people can make 
 to the general good is not to trade, but to produce, — 
 not to make haste to exchange commodities which 
 exist, but to add to the common store, which will be 
 sure to be exchanged as the supply reaches the pro- 
 portions of plenty. Malthus testifies that " a de- 
 cided elevation in the standard of the comforts and 
 conveniences of the English working classes " was 
 caused by the unusual succession of fine harvests in 
 the fifty years from 1715 to 1765. 1 Provide the 
 commodities, and they will surely be distributed, even 
 to the poorest. 2 
 
 1 Political Economy, p. 225. 
 
 2 So far as we limit our investigation to cases where we may as- 
 
180 AMERICAN SYSTEM OF REVENUE. 
 
 With every new industry fresh prizes are offered 
 for skill and efficiency. The army of persons seek- 
 ing work is met with novel invitations and promises 
 of additional compensation. The pressure on the old 
 vocations is diminished, the rewards in them must 
 tend to increase, the whole surface of society feels 
 the coming of a new spirit which stirs it with activ- 
 ity. Every addition to production offers more to be 
 distributed, and carries the share which labor can 
 receive upwards. This share is not given simply to 
 those engaged in the new industry ; it tends to a gen- 
 eral distribution, and all occupations are benefited. 
 Every added industry, like every new regiment or- 
 ganized during the war, summons fresh recruits, and 
 augments the force of production and its aggregate 
 volume. 
 
 ALLEGED OVERPRODUCTION. 
 
 The champion of commerce discovers a Gorgon in 
 the form of overproduction. He tells us we must 
 beware of developing home industry because the 
 markets will not take our commodities. In no coun- 
 try where population is so great and soil so various 
 and occupations so diverse as with us is it possible to 
 produce too much in the aggregate. Always some- 
 body can be discovered who is in want. He has not 
 earned enough to pay for that which he would like 
 
 sume that the primary needs of the human beings considered are an 
 approximately constant quantity, we may clearly lay down that the 
 possible maximum of saving increases as the gross produce of labor, 
 but in a greater ratio. — Sidgwick's Political Economy, p. 160. 
 
FREEDOM OF PRODUCTION. 181 
 
 to have. The equation of commodities to each other 
 may be temporarily amiss. But so long as every- 
 body has not everything which he wants, the pre- 
 tense of overproduction is an economical crime. We 
 may build too many railroads; we may weave too 
 many calicoes ; we may turn out too many blankets 
 and carpets ; but the reason is that the production of 
 some of our people has not been adequate to enable 
 them to take their share of travel or freight or cali- 
 coes or blankets or carpets. Instead of curtailing 
 production, what we need is greater variety of man- 
 ufacture, a more diversified industry. The trouble is 
 that the supply is not in sufficient variety. As the 
 most recent and one of the most instructive of Brit- 
 ish political economists, Sidgwick, in his volume re- 
 cently published, wisely insists : " Society is always 
 in a condition of underproduction." 1 
 
 Famine finds welcome in lands of a single crop, not 
 in the countries in which agriculture is varied. The 
 stress for food which sent the Jews to Egypt was 
 where the dependence was chiefly upon grain. India 
 and the districts of China, which rely in great part 
 upon rice, are the scenes in which starvation revels 
 most frequently, and with most sweeping slaughter. 2 
 
 1 Page 380. 
 
 2 In a single year in the administration of Lord Cornwallis, ten 
 millions perished (in India) of starvation. In the famine campaigns 
 of 1873, 1876, and 1877, a population of eighty millions were suc- 
 cessfully defended at a cost of eighteen millions sterling. The aver- 
 age daily number who received gratuitous relief was 900,000 ; while 
 the average numbers employed on relief works were 1,680,000. — 
 "The Indian Crisis," Quarterly Review, July, 1883. 
 
182 AMERICAN SYSTEM OF REVENUE. 
 
 Ireland has paid the penalty of looking to potatoes 
 as the one crop for food. The warnings have been 
 terrible and often repeated, that peoples cannot trust 
 to one article of farm products. Eastern lands have 
 suffered most severely because there the lack of wis- 
 dom has been perpetuated. But in other countries 
 also the dependence upon one article of food, whether 
 upon fisheries, upon wheat, upon pork, brings sooner 
 or later the penalty of poverty, if not of actual fam- 
 ine. Industrial disasters in like manner fall upon 
 districts which are devoted to an exclusive industry. 
 Long ago a French writer called England la terre 
 classique des crises industrielles. 1 Manchester was 
 almost ruined when cotton could not be gotten at the 
 opening of our civil strife. Lyons has been reduced 
 to grave stress by the failure of the silk- worm. When 
 a crisis comes in the iron trade Pittsburg smokes fade 
 away, and its furnaces become silent. The folly of 
 putting all one's eggs in one basket has passed into 
 an axiom. 
 
 The world has never yet produced as much of all 
 commodities as could be consumed. In this branch 
 or that, an excess has doubtless been created, but the 
 trouble has been that labor has not been sufficiently 
 diversified, and that a mistake has been fallen into 
 with reference to the ratio of commodities to each 
 other. In the world at large, and in any particular 
 land, this has been the difficulty. Civilization has 
 taught no more important lesson than that the con- 
 
 1 Fonteyraud, quoted by De Parieu. 
 
FREEDOM OF PRODUCTION. 183 
 
 dition of all, and especially of the poorer classes, has 
 been improved just as new industries have been in- 
 troduced, and therefore just as the aggregate of pro- 
 duction has been increased. In a purely agricultural 
 period the enjoyments which mechanism brings later 
 are unknown, and so in a purely agricultural land or 
 district before the modern facilities for communica- 
 tion, such luxuries were comparatively few. As man- 
 ufactures are developed, more persons are employed, 
 or at least the sum of their earnings is multiplied ; 
 the articles manufactured pass into consumption, and 
 wealth is augmented. As this process goes on, coun- 
 tries become rich. It is the only method by which 
 men have learned to add to their enjoyments and 
 their possessions. The number of persons suffering 
 from poverty and the degree of abject degradation 
 have been diminished in the precise ratio in which 
 industry has been diversified among men. In any 
 particular land the elevation of the lower elements 
 of the population has gone forward from the same 
 causes. The fertility of the soil may enable a newly 
 settled country for a while to prosper on agriculture 
 alone, but the time comes very soon when all who can 
 profitably engage in tilling the soil are thus occupied, 
 and a path must be found for them to go on to self- 
 support and to wealth in other fields. Too many 
 may crowd into a single vocation, or its product may 
 lose its profitable ratio to the general demand. Then 
 new occupations must be substituted, and the sphere 
 of production must be enlarged. That is the neces- 
 
184 AMERICAN SYSTEM OF REVENUE. 
 
 sity in this country now. When in the old countries 
 the markets are over supplied, the manufacturers 
 themselves, or their agents, ship the surplus to some 
 other point, and sell it at any price which it will 
 bring. This relieves the glut, keeps the mills or fur- 
 naces busy, and guards the demand from falling to a 
 ruinous standard. American producers have not yet 
 indulged in this policy regularly and with delibera- 
 tion. They keep their products on hand and refuse 
 to sell except at a fixed price, or crowd the home 
 market. They have not reached out far enough to 
 prevent their efforts to relieve the glut from affect- 
 ing the current demand. The recent auction sales 
 are subject to this criticism. They have taken the 
 goods off the hands of the manufacturers and their 
 agents, but they have gone in chief part into the 
 very quarters from which the demand for the future 
 is looked for. British manufacturers push their sur- 
 plus as far away from their regular markets as pos- 
 sible. Then they try to get as high a price as may 
 be, but they seek first to keep their regular markets 
 unaffected by the forced sales. Our American man- 
 ufacturers must learn to practice the same arts. 
 Their exports would be largely increased, if they 
 would ship their surplus systematically, and sell 
 abroad at such rates as would capture and hold pur- 
 chasers. The process has begun ; it can be carried 
 much farther with good results. Such a system is 
 better than to shut down mills and furnaces, for 
 prices can be always attained which will involve less 
 
FREEDOM OF PRODUCTION. 185 
 
 loss than such stoppage. An export trade can be 
 established of increasing magnitude, and thus help to 
 the development of home industries in other branches. 
 
 For in every land the cure for apparent overpro- 
 duction is not to stop work and moan over excess of 
 commodities. On the contrary, the secret of pros- 
 perity is to create new manufactures, and to afford 
 occupation to more people, and thus provide them 
 with means to buy enjoyments with which they are 
 not yet familiar. There is no overproduction in this 
 country ; in fact, there is need of extending the oper- 
 ations of industry, and creating the means by which 
 a larger number shall be able to make life brighter 
 and more easy. The sewing-machine has added to 
 the comforts of millions ; the cheapening of dry 
 goods has clothed men and women with a neatness 
 and variety which in other days were the distinction 
 of only the very rich. Our homes are all decorated 
 with conveniences and treasures which invention and 
 diversified labor have bestowed upon us. These com- 
 forts and others like them are to be extended to those 
 who are now without them, by continuing the same 
 process, by extending industry into new walks and 
 providing occupation for many now idle, and direct- 
 ing wasted energies into beneficent directions. Ad- 
 just the ratio of production correctly, and experience 
 will do that, and any apparent excess will find con- 
 sumers, for poverty will be driven farther and farther 
 into retirement. 
 
 Now, this extended production has another advan- 
 
186 AMERICAN SYSTEM OF REVENUE. 
 
 tage. Ifc sets to work persons who otherwise would 
 be idle. It turns to use, in connection with labor, 
 capital which has been, content to rest in bank or to 
 be risked in speculation. With every new industry 
 a field is found by individuals who have played the 
 idler, or have waited for their opportunity. Men 
 have special tastes and aptitudes. A witty scholar 
 has defined idleness to be ill-directed industry. Be- 
 yond question the idle singer of a summer day may 
 have in him the qualities which will conquer success 
 in some occupation which enlists his tastes and his 
 genius. Every invention enlists fresh recruits in pro- 
 duction. Every new vocation rallies some men who 
 have stood idle in the market place. 
 
 AGRICULTURE AND MANUFACTURES. 
 
 Adam Smith pointed out to the American colonies 
 the duty of devoting themselves to agriculture. 1 Say 
 believed the true policy of this country was to culti- 
 vate the soil, to become another Poland. A French 
 essay advocating a commercial treaty with the United 
 States insists that this is still our true policy. Before 
 the Tariff Commission last year a distinguished pro- 
 fessor of political economy declared that : " If it were 
 true that all of our population would, under free 
 trade, take to agriculture, it is mathematically certain 
 that agriculture would support them all better di- 
 rectly than under the present arrangement." 2 This 
 
 1 Wealth of Nations, p. 293. 
 
 2 Report of Tariff Commission, vol. ii. p. 2319, Professor William 
 G. Sumner. 
 
FREEDOM OF PRODUCTION. 187 
 
 is the theory at the bottom of the commercial system 
 of revenue. Our agriculture is varied, and it is fruit- 
 ful ; it has advanced with giant strides. It has at- 
 tained a magnitude which at the outset would have 
 been believed impossible. Yet its products are only 
 a little more than one half in value, if they are so 
 much, of the annual products of our manufactures. 
 In 1880 the products of our manufactures reached 
 the monstrous sum of $5,369,579,191. Our agri- 
 culture amounted at most to $3,600,000,000. The 
 former figures are taken from the tenth census ; for 
 the latter, I am indebted to the statistician of the 
 Agricultural Department, Mr. J. R. Dodge. 1 
 
 1 The following is the statement for which Mr. Dodge is entitled 
 to acknowledgment and thanks : — 
 
 United States Department of Agriculture, 
 Division of Statistics, 
 Washington, D. C, June 28, 1883. 
 Sir, — Yours relative to annual value of productions of agricul- 
 ture is received. You are aware that the census compendium gives 
 an aggregate of " estimated value of all farm productions (sold, con- 
 sumed, or on hand), for 1879," namely, $2,213,402,564. 
 
 These figures are taken, probably by ninety-nine persons in a hun- 
 dred, as the entire value of all agricultural production in the United 
 States. This is very far from the fact, for these reasons : — 
 
 1. The productions of the immense areas of public lands, beef, wool, 
 etc., are not included, or those of private lands not in farms, in the 
 older states. 
 
 2. Milk, meat, poultry, and eggs produced within the limits of 
 towns and villages, and all products of small tracts in the country 
 less than three acres (unless having a value of $500), have no place 
 in the census aggregate. 
 
 3. The census tabulations, which include only products of land in 
 farms, are further limited to products named in the schedules. There 
 
188 AMERICAN SYSTEM OF REVENUE. 
 
 These figures teach marvelous lessons. Our agri- 
 culture has been fostered by our manufactures. Our 
 farms are as numerous and as well cultivated as they 
 could be if all of our people were devoted to the soil. 
 
 are many productions not designated in the census tabulations. It is 
 only intended to sum up the values of the products therein named. 
 Is the corn fodder grown on 62,000,000 acres of land of no value ? 
 Is the straw of 56,000,000 acres of small grains valueless ? The 
 number of farm animals is given, but the value of domestic animals 
 and poultry slaughtered during the year is not mentioned. The value 
 of orchard fruits evidently includes that which is sold, probably, in 
 most returns, limited to apples and peaches named in the schedules, 
 and not including the immense quantities consumed or given away. 
 Then there are numerous small crops, not included in the tabulation, 
 like peanuts in Virginia and Tennessee, peppermint in New York and 
 Michigan, which are not represented in the aggregate. Hop roots 
 have been of some value this year, but they never get into a census. 
 The nuts and wild fruits and medicinal plants of farms and public 
 lands would be included in a broad definition of the products of agri- 
 culture. 
 
 Now this is too large a subject for consideration in a paragraph or 
 two, and I have no time for proper elaboration ; yet I may name an 
 approximate estimate of all the productions of the land area of the 
 United States, without placing an exact value upon each, at the round 
 sum of .$3,600,000,000. This is for the census year, and the relations 
 of quantity to value are such that the difference in recent years would 
 probably be small. 
 
 If meats are not included, for fear of duplication of values, there 
 is immense depreciation of the aggregate, for the pasturage, which 
 makes three fourths of it, is not reckoned. Corn is only used for 
 " finishing " the best class of beef, and for a few weeks' final feeding 
 of swine, and half of it is fed to work animals and used as food of 
 man. The duplications of value from this cause are small compared 
 with the omissions in the constituent values of the census aggregate. 
 Yours respectfully, J. R. Dodge, 
 
 Statistician. 
 
 Hon. Ellis H. Roberts. 
 
FREEDOM OF PRODUCTION. 189 
 
 Invention in mechanism has simplified the tasks of 
 husbandry, has reduced its drudgery, and diminished 
 the number of persons required in its operations ; 
 but aside from such considerations, only about so 
 much agriculture can be developed in any country 
 with a given population. Farmers are not the best 
 customers of each other. When a certain average 
 has been reached, the tendency in all lands is to stop 
 breaking new ground, to be content with the crops 
 planted, to rest upon the homesteads as they are. 
 As the population increases, a fresh impetus is re- 
 ceived; but without any growth of population, agri- 
 culture loses nothing of the sum of its production by 
 the establishment of manufactures. 
 
 The statistician of the Agricultural Department, 
 J. R. Dodge, has enforced this principle by dividing 
 our states according to the number of their inhabit- 
 ants engaged in agricultural pursuits. The first 
 group has farmers to the extent of less than thirty 
 per cent., and the land there is worth §38.65 an 
 acre. In the second group from thirty to fifty per 
 cent, are farmers, and the value of the land is §30.55 
 an acre. In the third group the farmers number 
 from fifty to seventy per cent., and the land is worth 
 $13.53 an acre. In the fourth group the states are 
 chiefly agricultural, and seventy per cent, of the peo- 
 ple are employed on the soil, while the land is worth 
 an average of only $5.18 an acre. In the first group, 
 moreover, the value of the products of the soil is 
 1457 per capita to the cultivator ; in the second 
 
190 AMERICAN SYSTEM OF REVENUE. 
 
 group, $394 ; in the third group, $ 261 ; and in the 
 fourth group the annual products fall to $160 per 
 capita. 
 
 Some of you know the history of many a farm. 
 "While the whole family work it, the product reaches 
 a moderate sum. All the mouths are filled, but 
 there is nothing over. All the boys work ; some 
 with hoe, and some with scythe, and some with flail ; 
 the girls spin and mind the dairy. A factory or a 
 mill is started in the vicinity, and one or two of the 
 boys go off and get employment. The old farm pro- 
 duces just as much without them. The fields are 
 mowed by machinery, threshing is done by horse 
 power, the value of the farm is increased, and the 
 wages of the boys who have left it are added to the 
 riches of the family. 
 
 We stand in the centre of the foremost common- 
 wealth of the Union. It is not only first in its com- 
 merce, but first in its manufactures, and first also, or 
 nearly so, in the value of its agriculture. The con- 
 ditions which surround us confirm the principles. 
 Manufactures are not built up at the expense of agri- 
 culture. On the contrary, they are often a new cre- 
 ation and an absolute addition to production. The 
 old fable tells how dragon's teeth were cast upon the 
 earth, and they sprung up into men. Manufactures 
 are the dragon's teeth which everywhere spring up 
 into extensions of population and of wealth. 
 
 You may see to-day, in the far East, the agricul- 
 ture of the time of Homer. The plow is little 
 
FREEDOM OF PRODUCTION. 191 
 
 more than a pointed stick driven into the earth at 
 a sharp angle. Threshing is yet done by the feet 
 of oxen on the hard ground. On the farms of Da- 
 kota and California steam-plows turn the soil, and 
 wheat, in fields of thousands of acres, is cut and 
 gathered and loaded into wagons by machinery. If 
 we relied upon the Eastern methods, where would 
 we get our food? But for the implements which 
 invention and mechanism afford, how could our fifty- 
 five million people live ? But it is not in this way 
 only that manufacture helps agriculture. It encour- 
 ages it and varies and thus enriches it. 
 
 Without a mill or a furnace or a factory in this 
 county or in this state, our farms would not produce 
 as much in quantity as they do now, for the induce- 
 ment to labor would be less, and the value of prod- 
 ucts would fall off to a very large degree. Burn 
 every mill, shut up every furnace, and your farms 
 would produce no more, and as you would have no 
 market, you would find it hard to sell your product 
 at any price. 
 
 As population grows, the earth brings forth by 
 culture new crops, vegetables, fruit, and the like, 
 perishable and not capable of transportation, but 
 among the most profitable for the farmer. Thus 
 farming gives larger profits just in the degree that 
 manufactures are established near by. 
 
 Whether we take the number of our farms or their 
 value, we shall find that the agriculture of the 
 United States has increased about threefold since 
 
192 AMERICAN SYSTEM OF REVENUE. 
 
 1850. In that year the number of farms was, in the 
 United States, 1,440,073, and their value $3,271,- 
 575,426. By 1880 the number had advanced to 
 4,008,907, and the value to $10,197,096,776. In the 
 same period our manufactures had advanced in an- 
 nual product by five and three tenths times — from 
 $1,019,106,616 to $5,369,579,191. 
 
 What is the dream that even our agriculture, 
 grand as it is, could be a substitute for the manu- 
 factures which enrich our fifty-five million people ? 
 How could the less stand for the greater ? The al- 
 legation is that the profits of manufactures greatly 
 exceed those of like capital and labor in agriculture. 
 Something of this is true. How, then, could the less 
 remunerative support the better and more rapidly 
 growing interest ? 
 
 THE TARIFF AND PRODUCTION. 
 
 The tariff has been one of the influences which have 
 affected our production. In the period of low duties, 
 of practical free trade, our industries languished ; they 
 have been wonderfully developed in periods when the 
 duties have been protective. 1 Pig iron is one of the 
 typical products ; it enters into so many articles, and 
 
 1 " In spite of this sombre picture, the prohibitory system carried in 
 itself the germs of a renovation which has greatly diminished its dis- 
 astrous effects. The incontestable impetus which it gave to production 
 in England, France, and Holland, especially at the beginning, con- 
 tributed much to raise the rate of profit in all the protected branches 
 of industry, and made immense amounts of capital flow in, which 
 also soon became insufficient." — Blanqui's History of Political Econ- 
 omy, p. 320. 
 
FREEDOM OF PRODUCTION. 193 
 
 it comes so readily from the soil with the application 
 of labor in its simplest form in one process. In 1810 
 we produced 53,908 gross tons of pig iron and cast 
 iron. By tbe compromise of 1832 the fires were 
 put out of fifty -seven of the fifty -eight blast-fur- 
 naces which were then in existence. In 1840 the 
 product of pig and cast iron was 315,000 gross tons. 
 Under the free trade policy the production of pig 
 iron showed no rapid extension, and all tbe industries 
 dependent upon it felt tbe check. Tbus, from 1854, 
 the culmination of the effects of tbe Walker tariff, 
 when tbe annual product was 736,218 tons, this in- 
 dustry remained practically stationary, and in 1861, 
 at the time of the change to a strong protective sys- 
 tem, the product was 731,544 tons, — less, actually, 
 than in 1854. Within the next seven years the 
 product ran up so as to become 1,603,000 tons in 
 1868. The increase has been signally steady ever 
 since, until, in 1882, no less than 5,178,122 tons were 
 produced. In 1883 the product was 5,146,972 tons. 
 
 During the past ten years the British furnaces 
 have added 1,751,266 tons to their product, an in- 
 crease of less than thirty per cent. Within the same 
 time our furnaces have added 2,324,564 tons to the 
 annual product, or an increase of nearly fifty per cent. 
 So that under our present revenue system our growth 
 in the development of iron in its simplest form is 
 both absolutely and in percentage far greater than 
 that of Britain. In manufactured, or finished iron, 
 the gain in the United States has been so remark- 
 
 13 
 
194 AMERICAN SYSTEM OF REVENUE. 
 
 able, that in 1882 the production in this country was 
 very nearly equal in total volume to the production 
 of Britain. The case is identical in Bessemer steel 
 rails, and in steel products generally. 
 
 These specific illustrations might be multiplied in- 
 definitely to show that in the interval of the Walker 
 tariff and its successor of 1857, the development of 
 our industries was checked, and that it has been re- 
 vived and greatly extended under the protective pol- 
 icy restored in 1861. But a broader comparison is 
 at hand, upon the total productions of the nation at 
 different periods. The census presents the total re- 
 sults of our manufactures in 1850 at 11,019,106,616, 
 and these are the first full and complete figures gath- 
 ered upon official authority. It is easy to see that 
 the rate of growth during the preceding decades must 
 have been very large to reach such magnitude from 
 the poverty of our beginning. From 1850 to 1860, 
 the growth in annual production was up to $1,885,- 
 861,676, or just about eighty-five per cent, for ten 
 years. Then came^the terrible civil strife, exhaust- 
 ing the life-blood of our young men, and destroying 
 values in many of our states ; yet by 1870, the man- 
 ufactures of the nation were in gold value, $3,385,- 
 860,334, or an increase of $1,699,998,658, and this is 
 seventy-nine per cent, or nearly equal to the preced- 
 ing decade of entire peace. 
 
 In the decade from 1870 to 1880 the increase in 
 production was up to $5,369,579,191, an addition of 
 $1,973,709,857. This increment alone is nearly fifty 
 
FREEDOM OF PRODUCTION. 195 
 
 per cent, of the annual production of the manufac- 
 tures of Great Britain, is within one third of the to- 
 tal manufactures of France, and within one seventh 
 of the annual product of all the German manufac- 
 tures. In mining industries, we have by far out- 
 stripped all rivalry. For statisticians agree that of 
 the world's mining wealth we produce thirty-six per 
 cent., and Great Britain thirty-three per cent., while 
 all other nations produce only thirty-one per cent. 
 
 Statistics furnish even a broader demonstration of 
 the expansion and fruitfulness of all our industries. 
 For investigations based on the census show that 
 while the wealth of the nation was only $308 a head 
 in 1850, it was 1514 in 1860, showing an increase of 
 sixty-seven per cent. It arose to $624 in 1870, with 
 an increase of twenty - one per cent., and in 1880, 
 by an increase of thirty-nine per cent., attained the 
 magnitude of $870 a head. The total wealth of the 
 United States reached in 1880 $43,642,000,000, 1 just 
 in excess of the aggregate for Great Britain, which 
 stood at $43,366,000,000. France was at the same 
 time worth $35,898,000,000, and Germany $29,403,- 
 000,000. 2 " Chambers' Journal " for January, 1884, 3 
 declares that statisticians after calculations " pro- 
 nounced the United States to be not only potentially 
 but actually richer than the United Kingdom," al- 
 though the American wealth per capita is placed at 
 £5 less than the British average. 
 
 1 Bradstreet, January 12, 1884. 
 
 2 Mulhall's Balance Sheet of the World. 
 
 8 The same figures are given by the London Times. 
 
196 AMERICAN SYSTEM OF REVENUE. 
 
 Mr. Gladstone, in his notable article in the " North 
 American Review," October, 1878, on " Kin beyond 
 Sea," declared that the census for 1880 would exhibit 
 the American Republic " as certainly the wealthiest 
 of all the nations." He cites the annual production 
 of the United Kingdom at .£1,000,000,000, or five 
 times that number of dollars ; our manufactures alone 
 in 1880 exceeded this sum in total production, while 
 our agriculture with $3,600,000,000 is to be added. 
 Mr. Gladstone was justified in saying : " While we 
 have been advancing with this portentous rapidity, 
 America [i. e. the United States] is passing us by in 
 a canter. Yet even now the work of searching the 
 soil and the bowels of the territory, and opening out 
 her enterprise throughout its vast expanse, is in its 
 infancy. The England and America of the present 
 are probably the two strongest nations of the world. 
 But there can hardly be a doubt, as between the 
 America and the England of the future, that the 
 daughter at some no very distant time will, whether 
 fairer or less fair, be unquestionably yet stronger 
 than the mother. 
 
 " ' O matre forti filia fortior.' " 1 
 
 The great British premier is not alone in his rec- 
 ognition of our marvelous material development. 
 The German chancellor, who has accomplished so 
 much for his own country, and who proves his con- 
 victions by adopting our example, has officially put 
 on record his testimony. In the Reichstag, May 
 i North American Review, October 1878, p. 181. 
 
FREEDOM OF PRODUCTION. 197 
 
 14, 1882, Prince Bismarck used this expressive lan- 
 guage : — 
 
 " The success of the United States in material develop- 
 ment is the most illustrious of modern times. The Amer- 
 ican nation has not only successfully borne and suppressed 
 the most gigantic and expensive war of all history, but im- 
 mediately afterwards disbanded its army, found employ- 
 ment for all its soldiers and marines, paid off most of its 
 debt, given labor and homes to all the unemployed of Eu- 
 rope as fast as they could arrive within its territory, and 
 still by a system of taxation so indirect as not to be per- 
 ceived, much less felt. The United States found every year 
 a great and growing surplus in its treasury, which it could 
 expend upon national defenses or national improvements. 
 While the American Republic was enjoying this peculiar 
 prosperity, the countries of Europe, which America most 
 relieved by absorbing their unemployed population, were 
 apparently continually getting worse off." "Because it 
 was his deliberate judgment, that the prosperity of America 
 was mainly due to its system of protective laws, he urged 
 that Germany has now reached that point where it is nec- 
 essary to imitate the tariff system of the United States." 
 
 WHY CHANGE OTJB SYSTEM? 
 
 With such results why should Americans seek to 
 disturb a revenue system under which they have won 
 unparalleled prosperity? Why should such home 
 production be endangered for the uncertainties of the 
 troublous seas, for commerce which no nation has 
 ever yet secured except by maritime warfare, or held 
 except at the expense of costly navies ? 
 
198 AMERICAN SYSTEM OF REVENUE. 
 
 This is material progress ; but how much of assur- 
 ance is there in the ringing declaration of Carlyle ? 
 " Show me a people energetically busy, heaving, 
 struggling, all shoulders at the wheel, their hearts 
 pulsing, every muscle swelling with man's energy 
 and will ; I will show you a people of whom great 
 good is already predicable, to whom all manner of 
 good is yet certain, if their energy endure. By 
 very working, they will learn ; they have, Anteeus- 
 like, their feet on mother fact ; how can they but 
 learn ? " l 
 
 The tax-gatherer is the agent of restraint at every 
 point which he touches. He should approach pro- 
 duction at the fewest possible points. He cannot 
 make a demand which does not just in so far affect 
 personal liberty. If to enforce his demand he must 
 enter the home or the shop, must scrutinize the 
 habits and earnings and savings of the individual, 
 the inquisition grows to be a grievance. The gov- 
 ernment which meddles least with the citizen accords 
 to him the broadest freedom. The fewest inquiries 
 it addresses to him who is guiltless of crime and the 
 least it touches his property, the most faithful it is 
 to its obligations. Despotism thrusts itself into all 
 personal concerns, and exacts contributions at many 
 points. The distinction between a free government 
 and despotic systems is just here. The ear of Nero, 
 which listened to every gasp and sigh of the prisoner, 
 is the type of tyranny everywhere. It watches and 
 
 1 Past and Present. 
 
FREEDOM OF PRODUCTION. 199 
 
 it suspects and it surrounds the citizen. Fouche 1 and 
 his police sought out the thoughts of the French 
 people. The Oriental supervision of the subject ex- 
 tended to homes and industries, to person and to 
 property. 
 
 But inquiry into the political conduct of men is 
 less sweeping, and may even be less annoying and 
 offensive, than restriction of their labor and of their 
 food and clothing and private acts. The American 
 people, under the internal revenue system, have found 
 inspectors and assessors ask for a report of their pro- 
 ductions, to assess the tax on manufactures ; for a 
 statement of their sales, to levy an impost upon 
 them ; for an exhibit of all their gains, to determine 
 the tax on incomes ; for a presentation of the prop- 
 erty of the dead, so that the government might take 
 its share from the bequests to widows and orphans 
 and other dependents. The tax on land requires a 
 constant assessment of its advance or fall in value, 
 and in some states the citizen is called upon to make 
 a schedule of all his possessions for the guidance of 
 the tax-gatherer. 
 
 Every such approach within the privacy of the 
 citizen is an infringement of his liberty. It may be 
 necessary for the purposes of the state, but it consti- 
 tutes just in so far a limitation of the independence 
 of the citizen. It is the sound of fetters and of 
 shackles. 
 
 In all lands just as the tax-gatherer has been 
 brought most closely to the subject, and his visits 
 
200 AMERICAN SYSTEM OF REVENUE. 
 
 made most frequent, the complaints have been loud- 
 est. The share of earnings or savings taken has 
 been one of the grounds on which the methods of 
 different periods have been measured. But the near- 
 ness of the infliction, the decree of inquisition in- 
 sisted upon, the closeness to the home and the per- 
 son incident to any plan, have been the standards by 
 which systems have been characterized. 
 
 The special distinction of a duty on imports is 
 that the collection is made once for all. The inquiry 
 relates simply to the introduction of commodities 
 within the borders of the nation. It limits itself to 
 the national frontier. It does not propose to enter 
 the home or the shop of any citizen. It announces 
 that it will collect revenue from that which is 
 brought into the country. It invites the importer to 
 make his declaration of quantities and values. It 
 permits him to deposit the merchandise in a govern- 
 ment warehouse until such time as he may wish to 
 put it upon the market. Only at that time is pay- 
 ment required. Such payment is an advance by him 
 for the retail dealer, who in turn advances his share 
 for his customers ; or, as we have shown, it may be 
 a payment really for the foreign producer. At all 
 events, the individual tax -payer has the choice of 
 meeting the charge or not. He may, if he chooses, 
 refuse to buy imported goods. At one period some 
 Americans, in their hatred of slavery, entered into a 
 compact not to consume any article produced by 
 slave labor, and therefore rejected importations from 
 
FREEDOM OF PRODUCTION. 201 
 
 Cuba and Brazil and other slave countries. The citi- 
 zen may therefore choose for himself whether he will 
 undergo the charge made by the laws. He may even 
 avoid relations to the customs if the business of im- 
 porter is irksome to him. He can so direct his selec- 
 tion of articles of food and clothing and household 
 wares as to reject such as are subject to duty. The 
 individual may thus in the last analysis determine 
 for himself the share of the burdens of the revenue 
 which he will assume. 
 
 The contrary is the case with every other system 
 of revenue. A person cannot well avoid the tax on 
 land in some form. He may decline to own a farm 
 or a homestead, but he must yet pay his tax as a 
 tenant, or if he seeks as a boarder and lodger to 
 limit his contribution, he cannot escape it ; for he 
 must enable his landlord to meet the demands of the 
 tax-gatherer. The theory of every direct tax is that 
 it is operative at once, and is imperative. 
 
 The nation that establishes custom-houses on its 
 frontiers and there collects its revenue, may be crit- 
 icised for erecting a wall about its territory. But if 
 it levies no tax on any process of production, if it 
 requires nothing from its citizens except at that 
 point, it presents as complete a spectacle of freedom 
 as is possible on earth. It affects in no way the 
 choice of vocation by its people. It leaves every 
 man absolutely free to employ his industry as he 
 chooses. It makes no inquisition into any act of its 
 citizens, and they may execute their papers exempt 
 
202 AMERICAN SYSTEM OF REVENUE. 
 
 from any charge by the treasury, and may divide 
 their property by will without contributing any part 
 of it to the government. 
 
 Charge, if you will, that the government main- 
 tains a cordon of officers on its borders to watch 
 what comes in. It does not for its revenue send de- 
 tectives into homes ; it does not ask what its citizens 
 eat or wear, or what they make or raise, or how they 
 deal with each other, or what they do with their 
 property at death. 
 
CHAPTER VII. 
 
 COMMERCE BROADER THAN BARTER. 
 
 Shall a Revenue System protect Production or Commerce in Largest 
 Measure ? — The Balance of Trade no Mystery. — The Individual 
 who buys more than he sells tends to Bankruptcy. — Commerce 
 confers Value. — A Nation's Trade only the Sum of that of its 
 Individuals. — Capital, Earnings, Debt. — The American War 
 Loans. — Say. — Mill. — Blanqui. — Coin and Bullion. — The 
 School of Free Trade. — The Attitude of the Nations. — Buckle. 
 — Broad Humanity. — Profits of Commerce. — Balance against 
 Britain. — Margin of Gains. — The Carrying Trade. — British 
 Capital Abroad. — The "World's Banker. — Prance. — American 
 Commerce. — Immigration. — British Exports and Imports. — Ex- 
 ports and Imports of the United States, — Comparative Growth 
 since 1865. — Admission of Sir Thomas Brassey. — "MacMillan's 
 Magazine.' - — Mr. Gladstone's Prediction of the Commercial Supre- 
 macy of the United States. — No Reason to change our Policy. — 
 British System does not even promote Commerce. 
 
 We have reached the conclusion that freedom of 
 production is the first necessity for any people. Next 
 to it, but secondary in every respect, is the absence 
 of restrictions on trade, foreign as well as domestic. 
 Government cannot help in its legislation and its 
 administration touching the concerns of the people. 
 Theorists may plead that the state shall do nothing 
 to restrict commerce ; the corollary of their plea is 
 that every burden shall be cast upon production. 
 The opposite claim is that every revenue charge shall 
 
204 AMERICAN SYSTEM OF REVENUE. 
 
 be adjusted to favor production ; it inevitably follows 
 that some imposts shall fall upon commerce. The 
 two schools of revenue legislation are divided by this 
 line, in truth : shall the revenue system favor pro- 
 duction in largest measure, or shall it exalt commerce 
 to the first place in its favor ? 
 
 The controversy is between these two policies. 
 The combatants are free production on the one hand 
 and free trade on the other. The adjustment of im- 
 posts is to extend protection and encouragement to 
 the one or the other of these two great interests in 
 preference to the other. Our argument has been 
 that production is more deserving of favor than for- 
 eign commerce, because it lies at the basis of all pros- 
 perity, personal and national ; because it employs 
 more persons ; because it carries comfort into more 
 homes ; because it develops in largest degree the best 
 elements of society and of manhood. Commerce will 
 not be overlooked in any nation in this age. The 
 seas are white with its sails and with the fleece of its 
 smoke. The merchants roam over all lands and dic- 
 tate the policy of great nations. They beat down 
 the resistance of China and force opium upon the un- 
 willing people. They penetrate the heart of Africa 
 to establish factories for the distribution of their com- 
 modities. Cabinets study how to make easy the 
 paths of traffic. European powers rival each other 
 in grasping by diplomacy and force for control over 
 the countries of the East, in order that profit may be 
 gained by commerce. 
 
COMMERCE BROADER THAN BARTER. 205 
 THE BALANCE OP TRADE. 
 
 One problem of trade underlies the questions of 
 revenue which are connected with foreign commerce. 
 Mystery has been thrown about the balance of trade, 
 until the claim that it rests on a basis different from 
 the relations of debit and credit in private transac- 
 tions is put forth with an audacity which has over- 
 whelmed not a few thinkers and legislators. All 
 trade is barter, we are told, and commerce must 
 bring profit to both sides, and every import must 
 have its offset in exports. You cannot sell unless 
 you buy, insists our opponent ; and the pretense that 
 an adverse balance of trade is a detriment, he alleges, 
 is a fallacy. If buying beyond your means is a blun- 
 der and may be a crime ; if running in debt without 
 hope of payment is inexcusable in morals and in 
 practice draws after it its own punishment, then an 
 adverse balance of trade is a threat of disaster, and 
 may signify, if long continued, industrial as well as 
 commercial ruin. 
 
 In the rude days of society, trade was simple bar- 
 ter. Grain was given for shoes, a firkin of butter 
 for a suit of clothes, a load of wood was delivered on 
 account of the minister's salary. The claim is made 
 that all trade to-day is barter. The claim would be 
 as true that every machine is a lever, because all me- 
 chanical appliances can be reduced to the lever in 
 the last analysis. Trade has grown out of barter. 
 But in the wide range of commerce direct exchange 
 
206 AMERICAN SYSTEM OF REVENUE. 
 
 of merchandise rarely occurs. Even in local traffic 
 the producer of one article is seldom brought into 
 contact with the producer of another. Exchange has 
 passed into other hands, and has become an occupa- 
 tion by itself. Even the keeping of the papers which 
 are used in the processes of commerce has become 
 one of the most lucrative and honorable of vocations. 
 You do not pay the farmer in shoes, or clothing, or 
 books, for his grain, or his butter, or his poultry. 
 He has long ago delivered his products and received 
 credit for them. He has perhaps deposited the pro- 
 ceeds in the bank and applied them in the reduction 
 of the mortgage on his farm, or he has invested them 
 in stocks or bonds, or in the purchase of new lands. 
 He has contributed to a church, he has assisted to 
 establish an academy, he has rounded out a sum 
 which he has set aside for his maintenance in old 
 age. If he has debts, he has applied his money upon 
 them ; if he has not, he has used it for buying neces- 
 saries or luxuries, or he has put it aside in savings. 
 This is the process of all classes. The mechanic pur- 
 sues the same course. The merchant uses his profits 
 to enlarge his business, and thus keeps his capital 
 rolling and increasing. The sum of a nation's trans- 
 actions is the sum of these individual experiences: 
 it sends away that which it can sell ; if it wants mer- 
 chandise it buys it ; perhaps it has previously bought 
 more than it could pay for, then it leaves the price 
 of its exports, in whole or in part, to cancel the in- 
 debtedness ; it may desire much more than it has to 
 
COMMERCE BROADER THAN BARTER. 207 
 
 sell, then it runs into debt ; but it may neither have 
 debts to pay, nor want merchandise to offset its sales, 
 then it creates a credit on which it may draw for 
 future use. 
 
 Thus an individual may keep on selling more than 
 he buys, and he will have a large credit to his ac- 
 count with the purchaser or with the banker. Such 
 a man we call rich. He may sell less than he buys, 
 and, after exhausting previous savings, he runs into 
 debt. If this process is long continued he exhausts 
 his credit. Such a person we call poor. He may 
 keep his sales and purchases closely balanced ; he 
 will then be living fully up to his income. Such a 
 person may be thrifty, but he is not increasing his 
 wealth; any misfortune will force him to run into 
 debt. If the best he can do in prosperous times is 
 to keep even with the world, adversity signifies ruin 
 to him. The sum of such experiences of many indi- 
 viduals is the experience of the nation which they 
 compose. 
 
 In order to know from his sales and purchases 
 whether an individual is growing rich or poor, we 
 must be informed of other conditions with reference 
 to him. It is essential to learn whether he has a 
 credit balance to begin with, or whether he is in debt 
 at the start of the transactions which we are to ex- 
 amine. We must be told also whether he has other 
 operations besides those expressly submitted to us ; 
 is he engaged in work which must be taken into ac- 
 count, or is the dealer on the other side running up 
 
208 AMERICAN SYSTEM OF REVENUE. 
 
 other charges against him ? With all of these data 
 presented, it is not hard to tell whether a man is 
 making money or losing it. Neither is it hard to 
 tell in the vastly broader fields of national commerce, 
 whether the profit or the loss is in excess on the one 
 side or the other. 
 
 The balance of trade is not a mystery. It involves 
 many items, as may the account between a number 
 of persons. When all of the details are gathered, 
 the sums are only a matter of footing and compari- 
 son. No aggregation of persons, such as we call a 
 nation, can violate the laws which apply to the trade 
 of individuals, without paying the penalties which 
 the individuals separately must pay. It is the indi- 
 viduals who suffer in adverse commerce as it is the 
 individuals who gain when commerce is profitable. 
 The operations of the farmer are not mere barter. 
 The operations of the manufacturer are not mere 
 barter. The transactions of the merchant at retail 
 or wholesale are not barter. Commerce is as varied 
 as the necessities of mankind, and as the devices for 
 ministering to human luxury. Its devices are as 
 curious and changeable as the tricks of men for get- 
 ting rich, and as the machinery of communication 
 and transportation. 
 
 Commerce itself confers value. It carries the corn 
 which may be burned as fuel in Iowa to the markets, 
 which will pay for it in diamonds for the maidens of 
 the Western fields, or in teas from China or coffee 
 from Brazil. The tables and the parlors of all lands 
 
COMMERCE BROADER THAN BARTER. 209 
 
 are adorned with Oriental colors which the merchant 
 exchanges, after many processes, for the petroleum 
 of our wells or the rifles of our arsenals. The carry- 
 ing of the diamonds from South Africa is a part of 
 their price to us, and the transfer of our grains to 
 Liverpool enters into the cost to the consumer there. 
 The share of transportation in the value of all mer- 
 chandise becomes an item in the balance of trade. 
 The nation which receives pay for the carrying trade 
 can expend such earnings for imports and not run in 
 debt. The people who have, been long the world's 
 bankers must get much merchandise to pay for the 
 loans which they have made, for the banking facili- 
 ties which they have afforded. Such a nation may 
 also continue for a long period to buy goods from 
 all lands on credit, before it can be charged with 
 poverty. 
 
 Except for these considerations, the nation which 
 sells more than it buys is getting rich. The nation 
 which continually sells less than it buys is getting 
 poor. Measure the growth of a nation's exports, and 
 you can determine its material progress. Offset 
 against them its imports and any service it may ren- 
 der in carrying or in banking, and the balance is as 
 inevitably a true statement of the condition of the 
 nation as are like figures expressive of the condition 
 of the individuals, who are in this case the nation 
 itself. 
 
 Eliminating, for simplicity, the matter of trans- 
 portation, the equation of exports and imports is the 
 u 
 
210 AMERICAN SYSTEM OF REVENUE. 
 
 true statement of a nation's commerce not only, but 
 of its progress or decadence in wealth. 
 
 Let us not fail to do justice to the carrying trade. 
 The producer is more useful than the porter. It is 
 true that merchandise may be comparatively useless 
 in one place and of extreme value elsewhere. But 
 the first element in the value is the creation of the 
 merchandise. The porter will have nothing to carry 
 in the absence of the producer. In due time the 
 producer can secure some one to carry his goods, if 
 he has any to be transported. A rough estimate is 
 that one tenth of the foreign commerce of the world 
 is to be credited to transportation. Naturally those 
 who are first in production may not be first in the 
 carrying trade. Holland at one time, notwithstand- 
 ing her small territory and her comparatively small 
 contribution to the world's merchandise, controlled a 
 large share of the ocean carrying trade. The same 
 distinction has now fallen to Great Britain. 
 
 The accumulation of wealth is going on all the 
 while before our eyes. The farmer lays up money 
 from his labor and his products. The mechanic 
 makes gain from the work which he does and the 
 wares which he turns out. Even the merchant reck- 
 ons his business on what he sells and not on what 
 he purchases. In every case the wealth is gathered 
 from that which goes out. From the farm or the 
 workshop or the store it is the export which brings 
 profit, and the excess of it over that which comes in, 
 over the import, is the credit balance. A nation's 
 
COMMERCE BROADER THAN BARTER. 211 
 
 trade and business is only the sum of that of the in- 
 dividuals of which it is composed. It is governed by 
 the same laws and must be subject to the same prin- 
 ciples. Then the nation which exports more than it 
 imports is adding to its wealth, if it gets pay for its 
 exports. 
 
 The individual may accept for the products of 
 his farm, for his wares or his merchandise, either 
 other products or wares, or he may deliver his goods 
 in return for debts before incurred, or he may sell 
 them on credit. These are for the individual the 
 only forms of trade. They are also for nations the 
 only forms of traffic. 
 
 The capital which the individual has in hand is 
 not to be reckoned in the profits of any transaction. 
 It must be accounted for separately. The debts 
 which he incurs can even less be taken into account 
 as a share of gain. If in any trade he uses up his 
 capital or runs in debt, he in both cases cripples him- 
 self. Either process, persisted in, involves complete 
 failure for the person. The like experience must be 
 that of the aggregated person which is styled a na- 
 tion. Nation or individual can pay for commodities 
 in services, but if the sum of the commodities re- 
 ceived, including services, constantly falls below the 
 sum of the commodities and services given out, the 
 drain must fall on accrued capital or pass into debts ; 
 in either case the adverse balance is damaging. The 
 individual and the nation may waste inheritance and 
 savings ; the nation and the individual may run into 
 bankruptcy. 
 
212 AMERICAN SYSTEM OF REVENUE. 
 
 In the case of individuals we do not always know 
 whether the adjustment is to be made from past sav- 
 ings or from future credits ; from payments out of 
 capital or to take the form of debts ; but the purchase 
 of more than one earns or produces brands the spend- 
 thrift. The adverse balance of trade with individuals 
 is understood by everybody. Examples of it are fre- 
 quent in the community. Spend more than you earn, 
 and you enter the path to ruin. Whether you are 
 nation or man, the law is absolute. In the case of 
 nations, the aggregation of capital may permit the 
 process to go on for years, for a generation ; and es- 
 tablished credit may add another generation, for trade 
 permits the payments of yesterday's purchases to cre- 
 ate credit for to-day and to-morrow and perhaps for 
 the next day. The fluctuations of trade may enable 
 the debtor of yesterday to become the creditor of to- 
 morrow ; the demand for services may enable indi- 
 vidual or nation to offset the indebtedness of to-day 
 by the services of another day. 
 
 The balance of trade between nations does not 
 differ from the balance of trade between persons and 
 communities. When a man buys beyond his means, 
 and keeps on doing it, his fate is sure. Every season 
 the process of trade between the farming districts 
 and the trade centres goes on. The farmer may sell 
 his hops, his grain, his cattle, and he may take back 
 commodities equal to his sales. Then he saves noth- 
 ing and creates no obligation. Or he may buy less 
 than his products bring, and then, in some form, he 
 
COMMERCE BROADER THAN BARTER. 213 
 
 will get a balance to his credit, available for settling 
 up the mortgage on his lands, or for investment in 
 some form. When farmers buy beyond their pro- 
 duction, or when they cannot get pay for their prod- 
 ucts, there befalls the land the worst form of panic 
 and distress. Then the farmers as a class have cre- 
 ated a balance of trade adverse to themselves. When, 
 on the other hand, they sell their crops and pay for 
 what they get, and leave no debts, they prevent that 
 adverse balance ; and when as a class they lay up 
 money, they establish a balance in their own favor. 
 Then the country is rich, where, with an adverse 
 balance, it felt the pressure of poverty. The law is 
 identical for manufacturers and for capitalists. If 
 the producing classes anywhere buy more than they 
 can pay for, they are punished by financial stress. 
 If the capitalist lays out more than his income, the 
 adverse balance of trade catches him in its clutch, 
 and may even crush him into utter poverty. 
 
 Now, between individuals the government has 
 nothing to say. Every man can buy all he can get 
 credit for. Every part of the country can adjust its 
 purchases to its own desires and the temper of the 
 dealers. So can the individuals in this land, in their 
 relations with those of every other nation. The sole 
 question which concerns us is whether imposts should 
 be so adjusted as to encourage purchases beyond the 
 means of our people to pay for ; whether it is a good 
 thing to be sought by governmental policy, for our 
 citizens to be squandering their patrimony on foreign 
 
214 AMERICAN SYSTEM OF REVENUE. 
 
 commodities, or running into ruinous indebtedness to 
 foreign merchants. If between individuals an ad- 
 verse balance is not desirable, if he who spends more 
 than he produces is condemned by the common sense 
 of mankind, then the policy of the government ought 
 not to encourage such waste and prodigality on the 
 part of the nation as a whole. 
 
 Explanation is possible of large purchases for the 
 nation or the individual, but of itself an adverse bal- 
 ance of trade is damaging for both, the one and the 
 other. It means drain upon capital or debt, or both. 
 The revenue system which aims at such results, or 
 accepts them willingly, must be false. 
 
 THE AMERICAN WAR LOANS. 
 
 The very broadest illustration of the manner in 
 which an adverse balance of trade may be created 
 was afforded just after our civil war. The United 
 States had afloat over $2,200,000,000 in interest-bear- 
 ing securities. They had been sold at home, but for- 
 eign capital was sought by those who were dealing 
 in these bonds. Before 1870, from one half to one 
 third of this vast debt was transferred to foreign 
 holders. The operation involved the transfer of 
 some money, but in far greater part this country took 
 commodities for its bonds. Through the machinery 
 of commerce the merchant was induced to buy goods 
 and transfer his bills of exchange to holders of bonds, 
 who shipped them instead of money. Our railroads 
 bought very largely of rails and other supplies in the 
 
COMMERCE BROADER THAN BARTER. 215 
 
 same way. The debt existed, and it was a conven- 
 ience for our capitalists to sell the tokens of it to for- 
 eign investors. This series of transactions concen- 
 trates the experience which generally covers a long 
 period of time. The nation had in its official capacity 
 run into debt to its own people, and therefore we are 
 able to trace the movement of capital much more 
 clearly than would be possible if the debtors were in- 
 dividuals. But the principle is identical. If individ- 
 uals had incurred the obligations to the same extent, 
 the consequences would have been precisely the same. 
 The country took commodities of every kind : those 
 which contributed to the vast railroad inflation which 
 precipitated the panic of 1873, the luxuries which im- 
 poverished families, the wares which came into com- 
 petition with the labor of our mechanics. At one 
 time, it was estimated that Europe and Britain held 
 $750,000,000 of the bonds of the American govern- 
 ment, and $450,000,000 of state and railroad securi- 
 ties. 1 For these representatives of our indebtedness 
 we had received less than $100,000,000 in money. 
 For all the rest the country had taken commodi- 
 ties. Commerce revels in such transactions. This is 
 not barter ; it is exchange, with all of its diversities 
 and problems. The vast debt had to be met. For- 
 
 1 It is stated by Mr. Wilson in his volumes on the Resources^/ 
 Modern Countries, that in the interval between 1866-1875, 37,000 
 miles of railway were constructed in the United States, at a nominal 
 cost of several hundred millions sterling. From £70,000,000 to £100,- 
 000,000 were raised in Europe by the sale of bonds. — Brassey's For- 
 eign Work and English Wages, p. 22. 
 
216 AMERICAN SYSTEM OF REVENUE. 
 
 tunately, while we have had precious metals to ship 
 in part pay, the Old World has needed our provis- 
 ions and other products. The monstrous debt, which 
 might well lead our financiers to tremble, has been 
 canceled. 
 
 At this time less than $100,000,000 of our govern- 
 ment bonds is held abroad, and this sum could be re- 
 turned in any year without detriment to our business 
 prosperity. 
 
 Such experiences enable us to judge of the arbi- 
 trary assumptions of certain writers. Say insists 
 that nations pay for products only with products. 
 Even Mill says that the produce of a country ex- 
 changes for the produce of other countries at such 
 values as are required, in order that the whole of her 
 exports may exactly pay for the whole of her im- 
 ports. 1 In the generations, this may prove true. 
 The savings which we call capital have resulted from 
 products, but at any period they have taken this 
 other form, and certainly nations can pay for prod- 
 ucts in capital. Britain is doing this very thing to- 
 day, and is able to do it for a long time. A debt is 
 not a product, and yet nations may incur immense 
 debts for products. The public debts of European 
 powers will probably never be canceled. It is con- 
 ceivable that without utter bankruptcy indebtedness 
 may take the shape of long obligations, on which in- 
 terest only will be paid. In this case nations will 
 not pay for products with products. The constant 
 1 Political Economy, b. iii. ch. xviii. 
 
COMMERCE BROADER THAN BARTER. 217 
 
 danger exists in all traffic on credit that the indebt- 
 edness will never be canceled. Against that danger 
 of utter bankruptcy and disgrace Say and Mill have 
 taken no precaution. A wise theorist will not neg- 
 lect such a contingency. A system of revenue which 
 
 , invites it cannot be too severely condemned. 
 
 i 
 
 COIN AND BULLION. 
 
 Blanqui expresses a common allegation that super- 
 stitious regard for the precious metals lies at the bot- 
 tom of the apprehensions of an adverse balance of 
 trade. 1 Coin and bullion are like other commodities 
 in many respects, and a nation like our own which 
 produces gold and silver can afford to include them 
 in its exports. Yet a marked difference may assert 
 itself. The export of any other commodity creates 
 no serious pressure and no general distress. Wheat 
 or cotton or iron or grain may be exported, and the 
 price can never reach the point at which ruin will be 
 threatened to industry, and commerce be paralyzed. 
 Yet these results do follow from the excessive ship- 
 ment of gold and silver. The story of the aggregate 
 of debtors is summed up in that of the individual. 
 While the creditor is content to take for his products 
 what the debtor can turn out from his farm or his 
 
 1 Paper money has driven out coin wherever ita presence has di- 
 minished the value of coin, in spite of the penalty of death inflicted 
 on the smugglers. The fear of paying for foreign commodities with 
 the precious metals is a vain fear ; the precious metals never go from 
 one country to another to pay pretended balances, but to seek the 
 market where they will bring the most. — Blanqui, p. 311. 
 
218 AMERICAN SYSTEM OF REVENUE. 
 
 factory or his furnace, there is no distress for the 
 debtor. On the contrary, the process is regarded as 
 a sign of prosperity. The sales which cancel his ob- 
 ligations are healthy trade. But the instant that the 
 creditor insists upon money, upon an adjustment of 
 the account in coin, the stress occurs. If the money 
 can be raised bankruptcy is avoided, but the means 
 for carrying on production may be taken away, and 
 the channels of trade be dried up. The sum of all 
 debtors is identical with the aggregate of such expe- 
 riences. The means of production are taken away, 
 and the channels of trade dried up. 
 
 This is the reason why an adverse balance of trade 
 is dangerous for man or country. Gold and silver 
 are not wealth, nor are they more precious than 
 other commodities. But they represent more than 
 anything else savings, capital, and they are the 
 medium in which, on demand of the creditor, debts 
 must be paid. Therefore it is waste to ship an ex- 
 cess of gold and silver, and it is ruin to base trade on 
 the promise to pay them in the future, beyond the 
 prospect of prompt production. 1 
 
 1 The indebtedness of nations results from the relative totals of all 
 the amounts expended by each upon the other, whether in payment of 
 produce and manufactures, or for the purchase of shares and public 
 securities, or for the settlement of profits, commissions, or tributes of 
 any kind, or for the discharge of the expenses incurred in foreign 
 residence or travel : in fact, from the entire payments or promises to 
 pay which pass between the respective countries. The liability is 
 identical in effect, whatever its origin may be. — Goschen, Foreign 
 Exchanges, c. ii. 
 
 Sidgwick, p. 227, says : " Every such liability has to be liquidated 
 
COMMERCE BROADER THAN BARTER. 219 
 THE ATTITUDE OE THE NATIONS. 
 
 The French author Blanqui declares that "No 
 enlightened man in Europe believes in the marvels 
 of the balance of trade." 1 He leaves us to under- 
 stand that he means that no enlightened man be- 
 lieves that it is dangerous for a country to run on in 
 commerce so that its imports shall continue to ex- 
 ceed its exports. With that understanding his state- 
 ment is radically at variance with the truth. The 
 school of free trade protests that it is of no conse- 
 quence how long such an adverse balance is kept up, 
 indeed that the volume of imports is the measure 
 of wealth. But the legislation of every country in 
 Europe, except Britain and Holland, proceeds on 
 the conviction that it is not well to spend your 
 capital or to run in debt, as a continuous process. 
 When capital is great, when a country is the 
 banker of the world, when vast profits are collected 
 out of the carrying trade, the evils of the process 
 may be diminished or postponed. But the laws of 
 mathematics are not changed to please any school 
 of theorists. The experience of mankind controls 
 the action of men and of nations. When exports in 
 the average of years equal or exceed the imports 
 with the services rendered, then commerce con- 
 tributes to national prosperity. When purchases 
 
 by the transmission either of money, or of an order to receive money, 
 payable in the foreign country." 
 1 Page 312. 
 
220 AMERICAN SYSTEM OF REVENUE. 
 
 abroad are for a long period of time greater than 
 the sales abroad, then the scales of industry and of 
 trade must show the consequences, and poverty must 
 take the place of wealth. 
 
 Buckle, with a half-wisdom not uncommon with 
 him, declares that " it would be as absurd to attempt 
 to impoverish a people with whom we trade, as it 
 would be in a tradesman to wish for the insolvency 
 of a rich and frequent customer." x The fallacy here 
 is in the assumption of a wish to impoverish anybody. 
 Blanqui borrows the same thought in implying that 
 by the protective system nations try to injure one 
 another. 2 A tradesman, to return to Buckle's illus- 
 tration, does not try to impoverish a customer, when 
 he refuses to buy himself more than he can pay for. 
 Neither does a country try to injure another, when it 
 seeks to prevent an adverse balance of trade. The 
 best customer is he who buys no more than he can 
 promptly settle for, and keeps himself in a position to 
 continue his purchases. The worst customer is the 
 spendthrift, who squanders his patrimony and then 
 asks for credit to which he is not entitled. The 
 worst injury which a great nation can inflict upon its 
 neighbors and the world is to waste its capital, and to 
 incur indebtedness which it cannot pay. The very 
 best service which one people can render to another 
 people, and to mankind as a whole, is to add to 
 the common production, to buy only what can be 
 promptly paid for, and to avoid debts which may 
 
 1 History of Civilization, vol. i. p. 157. 2 Page 316. 
 
COMMERCE BROADER THAN BARTER. 221 
 
 bring disaster upon the entire commercial and in- 
 dustrial interests of all nations. 
 
 One of the anomalies of revenue discussion is that 
 those who insist that our legislation must not be 
 adjusted to foster our own industries, plead strongly 
 that we should legislate in a spirit of broad human- 
 ity, and seek to help all mankind. They denounce 
 statutes which favor our own people as conceived in 
 hostility to other nations. Now there is a very good 
 rule that charity begins at home. The first duty of 
 a nation is to take care of itself, and of them all not 
 one has yet exhausted all of the resources for ele- 
 vating and developing its own people. Until a gov- 
 ernment has provided all of the conditions essential 
 to the prosperity of its own people, to the fullest de- 
 velopment of production at home, it has no right to 
 trouble itself about the welfare of other countries. 
 
 PROFITS OF COMMERCE. 
 
 The plea is urged that profit accrues to individuals 
 from imports, and therefore this is an addition to the 
 general wealth. For example, a cargo valued for 
 duties, and stated in the records at $50,000, may be 
 sold in detail for $70,000. Is not the wealth of the 
 country augmented by the sum of the increase ? In 
 figures, as between the inhabitants of this country, 
 there is a distribution on this basis. But the power 
 to pay debts abroad is not enforced ; the treasure of 
 the country is not augmented. In the settlement 
 with the foreign manufacturer or his agent, the ag- 
 
222 AMERICAN SYSTEM OF REVENUE. 
 
 gregate population of this country is not any better 
 off by the nominal increment, either for canceling 
 past obligations or for obtaining new commodities. 
 Simply for convenience the body of purchasers in 
 this country is spoken of as a unit, as the country 
 itself. It is clear that the distribution of imports on 
 the one basis or the other between the individuals 
 does not change the problem as it relates to the en- 
 tire body of them. This is not a case to juggle with 
 statistics. If the people of the United States as a 
 body buy more abroad than they sell abroad, the 
 difference must be paid for. The sum of what they 
 have to sell abroad is the credit column from which 
 all adjustments must come. At home, profits may be 
 great or small, and may come from imports or from 
 home production. If a debt is to be paid abroad, 
 the resources must be derived from the common 
 fund, and while individuals may be benefited by the 
 nominal profits on imports, the people as a body can 
 settle obligations only by the exports, past, present, 
 or future. In other words, the case is again iden- 
 tical with that of a person. If the people buy abroad 
 more than they sell, they must pay from past savings 
 or from current productions, or must run in debt. 
 This item of profits in trade within our own ter- 
 ritory does not change the elements of the real prob- 
 lem, and surely does not create any new resources by 
 which the nation can settle adverse balances. 
 
COMMERCE BROADER THAN BARTER. 223 
 BALANCE OF TEADE AGAINST BRITAIN. 
 
 An adverse balance of trade has not brought ruin 
 to Great Britain. Such a balance has continued for 
 more than a quarter of a century. In 1882 it had 
 reached a round hundred million pounds, or five hun- 
 dred million dollars. If that country can go on 
 creating such a balance, and increasing it steadily, 
 then the example may be safely followed, urges some 
 zealous advocate of free trade. This is the staple 
 argument of the school. But notice, first of all, that 
 wise statesmen in Britain are greatly depressed at 
 the industrial condition of the entire realm, and not 
 of Ireland only. They are asking, almost with dread, 
 whether influences are not busy which are full of 
 danger. But let us assume that British commerce 
 is very prosperous, and brings in every element of 
 profit which is claimed for it. 
 
 Surely no country any more than an individual 
 can keep on buying commodities without paying for 
 them. How then does Britain pay for the imports 
 in excess of its exports ? One claim is often urged 
 that the sum of the apparent balance stands for the 
 profits of the British capitalist. But no mathema- 
 tician can reckon any such results in trade. On an 
 aggregate of £306,660,714 of exports, no such sum 
 as thirty-three per cent, of profit can be supposed to 
 be received. It is to be admitted that the exports 
 are stated in official documents at the price with- 
 out addition of transportation, and the imports are 
 
224 AMERICAN SYSTEM OF REVENUE. 
 
 brought in with all charges paid. But the relation 
 of these two sums is not that of profit and loss di- 
 rectly. For all of these transfers imply many oper- 
 ations which involve expenses not entering into the 
 custom-house reports. As well might a merchant 
 insist that when he had reckoned the original price 
 of his purchases, and the sum of his sales, he had 
 struck his balance and determined his profits. His 
 details of expenses for administration, for destruc- 
 tion, for a thousand incidentals, must be included. 
 
 Britain has for the present the carrying trade of 
 the ocean. For this service it is earning money. It 
 can afford to take commodities in exchange for it. 
 No other nation performs any such service in extent 
 or value ; and consequently no other can buy so much 
 in excess of its imports. This service is a commod- 
 ity which fails to be reckoned in the exports. Just 
 what this service is, statisticians widely differ. Sup- 
 pose it amounts to five per cent, of the total com- 
 merce of Britain, it is then £35,000,000 a year, a 
 little more than one third of the adverse balance. 
 
 But of the British imports not less than nearly 
 one fourth comes from the United States. The com- 
 modities thus represented are in many cases produced 
 from British capital, and are in part a return for its 
 earnings. British capital is in the ranches of Col- 
 orado, in the sheep ranges of Texas, in the iron 
 works of Ohio and Pennsylvania, in the banks of 
 New York, in varied manufactures and enterprises 
 of all parts of our land. The sum of this capital 
 
COMMERCE BROADER THAN BARTER. 225 
 
 invested here is not known, but all can see that it is 
 increasing. Estimates of its amount range as high. 
 as .£200,000,000. Five per cent, on that sum will 
 give £10,000,000 annually, for which Britain can 
 afford to take our products without expecting to re- 
 turn us commodities. 
 
 Another adjustment of this adverse balance of 
 trade is found in the sums which emigrants send back 
 to family and friends. Sir Thomas Brassey in " For- 
 eign Work and English Wages," * estimates these re- 
 turns at £19,800,000 from 1848 to 1876, or £1,100,- 
 000 a year. These figures take no account of the 
 fortunes earned and taken home by those who return 
 from Australia and India to die on their native soil. 
 
 Still in addition Britain is the banker of the world, 
 even more than Holland ever was. Capital belong- 
 ing in all lands may receive its dividends in London. 
 The London banker may be willing to receive goods 
 instead of money in the course of international ex- 
 change, settling with his principals as may be satis- 
 factory. From these four sources, and these alone, 
 can Britain repay the balance which its commerce 
 shows against it, except as it trenches directly on its 
 hoarded capital, or creates debt to be hereafter ad- 
 justed. 
 
 The problem of British prosperity depends largely 
 upon the degree to which these latter processes are 
 going on. British statesmen must discuss these ques- 
 tions for themselves. Britain may stand the appar- 
 
 i Tage 261. 
 15 
 
226 AMERICAN SYSTEM OF REVENUE. 
 
 ent drain upon its resources. No other country in 
 the world could endure this drain for the generation 
 which has passed. Certain it is that our country has 
 no such carrying trade, no such reserve of capital 
 invested elsewhere, no such world - wide system of 
 banking, to enable it to create an immense balance 
 of trade against itself. For Americans the only safe 
 rule is not to buy abroad any more commodities than 
 they can pay for with commodities as they are pro- 
 duced year by year. 
 
 Any system of revenue which invites an adverse 
 balance of trade is therefore dangerous for us, how- 
 ever it may prove for Britain. The theory of free 
 trade aims at just that result. The boast of its ad- 
 vocates is that they seek to increase the volume of 
 foreign trade, and, to begin with, an increase of im- 
 ports. That is the obvious significance of reducing 
 duties to favor commerce. 
 
 FBANCE. 
 
 Let us admit that a reduction of duties will, as a 
 rule, increase the importation of the article relieved 
 from imposts. As a matter of fact that is the 
 teaching of experience. But seldom do exports find 
 that they are adjusted to any new equation. They 
 are seldom increased. They are often diminished. 
 France under the second empire sought to augment 
 its commerce by abandoning the traditional and his- 
 torical policy of Colbert and Sully. Cobden suc- 
 ceeded in securing the reciprocity treaty for Britain 
 
COMMERCE BROADER THAN BARTER. 227 
 
 in 1860. The credit balance was over five hundred 
 million francs for France in 1861, before the effect of 
 the treaty was felt. But it was changed to the other 
 side, and was five hundred million francs against 
 France in 1864, increasing to six hundred million 
 francs in 1866. 
 
 Immediately on the fall of the empire in 1871 the 
 exports began again to exceed the imports, and in 
 1875 they were nearly four hundred million francs 
 in excess. 
 
 Since that year the exports have never risen to 
 such magnitude, while the imports have increased, 
 and the adverse balance in 1881 was over 1,300,000,- 
 000 francs. No wonder that France is complaining 
 grievously of poverty in spite of the thrift of its 
 people and the greatness of its master-spirits. 
 
 AMERICAN COMMERCE. 
 
 Our own foreign commerce has been cited as dis- 
 proving the principles which have been announced. 
 For in many years of our history we have imported 
 larger volumes of merchandise than we have exported. 
 One element in the calculation is omitted from the 
 official statements, and it has been of continuous and 
 very important effect. The tide of immigration has 
 added year by year to our material wealth, reckon- 
 ing only the money and not the human value of the 
 new-comers. The most careful estimates substan- 
 tially agree that counting the personal property 
 which they bring, the immigrants add on an average 
 
228 AMERICAN SYSTEM OF REVENUE. 
 
 at least one thousand dollars for each person to our 
 wealth. Abraham Lincoln gave the weight of his 
 authority to this standard. Mr. Graham, a British 
 authority cited in Brassey's " Foreign Work and 
 English Wages," 1 accounts this money value of im- 
 migrants at £175 a head, or $875. In order to be 
 beyond question within the truth, let us place the 
 estimate at the very lowest, $500 for each person. 
 This is an importation which does not need to be 
 paid for. It becomes at once an addition to our cap- 
 ital. It has enabled us in the past to adjust adverse 
 balances with the Old World. It has contributed to 
 our producing power, and multiplied our riches. In 
 1820, for example, this movement brought us 8,385 
 persons. Our imports exceeded our exports by $4,- 
 758,331, but the immigrants were worth to us over 
 $4,192,500, and thus we found no difficulty in paying 
 the debt. In 1840 our immigration was 84,066. Our 
 foreign trade showed a balance in our favor of $25,- 
 410,226. The increase of capital by immigration is 
 to be reckoned at over $42,000,000. There is no 
 wonder that our prosperity advanced by rapid strides. 
 By 1860 the immigrants numbered 150,237. The 
 balance of trade had been steadily against us since 
 the adoption of the Walker tariff of 1846, with the 
 exception of only two years. It was in 1860, $20,- 
 040,062. That sum is not the measure of our foreign 
 relations, for the wealth brought by the immigrants 
 amounted to $75,000,000, and kept us solvent and 
 1 Page 260. 
 
COMMERCE BROADER THAN BARTER. 229 
 
 strong. By 1880 the volume of immigration had 
 reached 457,257, and its addition to our wealth at- 
 tained the magnitude of $228,000,000. At the same 
 time while our imports of merchandise had become 
 $667,954,746, our exports had mounted to $823,946,- 
 353, showing a balance in our favor of $167,683,912. 
 In 1882 our imports were $724,639,574, while our 
 exports of domestic merchandise were $733,239,732. 
 Our favorable balance thus fell to $25,902,683. But 
 it was enforced by immigration of 788,992. These 
 people, equaling some states in numbers as well as in 
 productive power, brought us $394,000,000 in money 
 value. They enable us to meet demands upon us 
 from abroad ; but still more they require that our 
 legislation shall consider production as deserving of 
 its favor beyond any claims of commerce. 
 
 A CONTRAST BETWEEN THE UNITED STATES AND 
 BRITAIN. 
 
 British trade itself constitutes a complete warning 
 for every other country, in which capital is not in ex- 
 cess, to beware of favoring other interests at the cost 
 of home production. The corn laws were passed in 
 1846. It is the practice to take the trade of 1840 as 
 a fair exhibition of the situation before Peel's legisla- 
 tion, and 1854 as the first typical year succeeding it. 
 In 1840 the excess of imports over exports of British 
 produce was £8,695,260, and was 8s. 9d. for each 
 person of the population. In 1854 the excess of im- 
 ports became .£55,204,327, or £2 for each person. 
 
230 AMERICAN SYSTEM OF REVENUE. 
 
 When we reach 1860 this excess had become £74,- 
 639,646, or per head £2 12s. 5d. By 1870 the ex- 
 cess of imports over exports reached £103,670,671, 
 or per head £2 6s. 5d. In 1881 it was £162,999,- 
 811, or £4 13s. 4d. per head. The exports have 
 grown in forty-one years by £182,613,938, but the 
 imports in the mean time have run up by the sum of 
 £335,018,489, or by very nearly twice the amount. 
 
 We are concerning ourselves all the while with, 
 the effect of a revenue system. On that account our 
 comparison must be made with Britain. We are 
 forced to follow this course, but in no unfriendly 
 spirit ; but first, because that nation confessedly 
 leads the world in commerce ; second, because no 
 other country exceeds our records either in exports 
 or imports ; and third, because it is the only im- 
 portant representative of nominal free trade. We 
 are told that the development of British commerce 
 should compel us to adopt the British system of col- 
 lecting moneys for government purposes. The argu- 
 ment to that end relies wholly upon the extension of 
 British commerce. Let us inquire what we have to 
 gain. Since 1840 Britain has multipled its imports 
 by more than six times. That is a good result, and 
 has led to great boasting. In the mean time the 
 United States has also increased its imports more 
 than six times. S^ince 1840 Britain has multiplied 
 its exports by more than four and a half times ; in 
 the same period the United States has multiplied its 
 exports by eight times. 
 
COMMERCE BROADER THAN BARTER. 231 
 
 During this interval of forty-two years the United 
 States has borne the brunt of a terrible civil war. 
 Yet in foreign commerce our growth has been equal 
 in imports to that of Britain, and in exports we have 
 grown twice as rapidly. 
 
 Compare the movement of foreign commerce in 
 both of these great nations since 1865. During these 
 years Britain has multiplied its imports by one and 
 four tenths ; the United States has multiplied its im- 
 ports within the interval by nearly two times. Britain 
 has increased its exports by less than one third, while 
 the United States has multiplied its exports by six 
 and four tenths. Since 1865 the increase in British 
 imports has been $629,751,020, and our increase has 
 been in imports $403,919,108, less absolutely than 
 that of Britain, but a much larger percentage. In 
 exports our increase in this period has been $746,- 
 985,699 ; while the British increase has been $340,- 
 934,765. In other words, we have gained in exports 
 nearly twice as much absolutely as Britain has gained, 
 and over twenty times as great a percentage. 
 
 The official figures upon which these comparisons 
 are based are taken from the " Statistical Abstract " 
 of Britain and a document bearing a like title from 
 the Bureau of Statistics of the United States. By 
 these reports it will be seen that in the years stated 
 imports and exports were as follows : — 
 
 UNITED STATES. 
 
 Exports: 1840, $111,660,561; 1881, $883,925,- 
 947 ; increase very nearly eight times. 
 
232 AMERICAN SYSTEM OF REVENUE. 
 
 Imports : 1840, 198,258,706 ; 1881, $642,664,628 ; 
 increase more than six times. 
 
 Exports : 1865, 1136,940,248 ; increase to 1881, 
 $746,985,699 ; 6.4 times. 
 
 Imports : 1865, $238,745,580 ; increase to 1881, 
 $403,919,048 ; increase nearly two times. 1 
 
 GREAT BRITAIN. 
 
 Exports: 1840, £51,308,740; 1881, £234,022,- 
 678 ; increase by 4.5 times. 
 
 Imports: 1840, £62,004,000; 1881, £397,022,- 
 489 ; increase by over six times. 
 
 Exports: 1865, £165,835,725; increase to 1881, 
 £68,186,953, or $340,934,765 ; a little more than one 
 third. 
 
 Imports: 1865, £271,072,285; increase to 1881, 
 £125,950,204, or $629,751,020; or an increase of 
 less than one half. 
 
 SOME BRITISH AUTHORITIES. 
 
 Sir Thomas Brassey, in the work already cited, 2 
 makes this admission: " If we test the comparative 
 efficiency of British labor by the amount of exports, 
 we shall see that we have lost ground chiefly in our 
 trade with the great manufacturing countries, where 
 the supply of capital and labor has been abundant, 
 and where we have to encounter a serious protective 
 
 1 If the imports of 1 882 be taken for comparison the increase is 
 $485,893,994, or more than two times. 
 
 2 Page 157. 
 
COMMERCE BROADER THAN BARTER. 233 
 
 tariff." And again : l " Excluded from the principal 
 manufacturing countries by a protectionist policy, it 
 is to the colonies and to the half-civilized countries 
 that we must look for new openings for the expan- 
 sion of our trade." On the other hand, Lyon Play- 
 fair, in "MacMillan's Magazine" for February, 1882, 
 concedes that in addition to cheap food, " the gen- 
 eral conditions for productive industry, I would even 
 say for productive supremacy, prevail in the United 
 States." 2 But he adds, with a mistaken narrowness : 
 " The conditions of prosperity in the United States 
 are internal and not external." Is it not proved that 
 out of internal prosperity external prosperity must 
 be developed ? 
 
 These must be the types of facts which led the 
 present British premier to acknowledge in his article, 
 Kin beyond Sea, 3 the " menace which, in the pro- 
 spective development of her resources, America offers 
 to the commercial preeminence of England. On this 
 subject" — these are his words — "I will only say 
 that it is she alone who at a coming time can, and 
 probably will, wrest from us that commercial suprem- 
 acy. If she acquires it, she will make the acquisi- 
 tion by the right of the strongest ; but in this in- 
 stance, the strongest means the best." 
 
 Accordingly we have no reason for changing our 
 revenue system to that of Britain. We have main- 
 
 1 Page 258. 
 
 2 MacMillan's Magazine, February, 1882, p. 329. 
 8 North American Review, October, 1878, p. 180. 
 
234 AMERICAN SYSTEM OF REVENUE. 
 
 tained the highest ratio of growth in our agriculture 
 which any statistician ever estimated. At the same 
 time we have far surpassed every other land in the 
 extent and variety of our manufactures. But more 
 than this is true. Even in foreign commerce we are 
 running a winning race with our only rival. Our 
 rate of increase in imports since 1865 has been far 
 greater than that of Britain, and in exports we have 
 gained over twenty times as rapidly as Britain and 
 twice as much in absolute volume. 
 
 In every way Britain is proving that a revenue 
 system which aims to favor commerce at the expense 
 of production does not even promote commerce. 
 
CHAPTER VIII. 
 
 FALLACIES ABOUT MARKETS. 
 
 The Place to sell and the Place to buy. — Commerce Complex and 
 Continuous. — Creating Foreign Markets. — The Trade with Bra- 
 zil. — The Trade with China. — Great Britain and the United 
 States. — The Home and the Foreign Market. — McCulloch's Fal- 
 lacy. — Two Deposits. — The Whole Apple, or only a Part. — Mar- 
 kets and Government Charges. — Revenue collected at Home. — 
 Aggregate of Taxation. — Shall Labor or Trade support Markets t 
 
 — Britain and its Revenue System. — Mr. Gladstone's Statement 
 about Manufactures. — Sir Eardley Wilmot. — Nineteenth Century. 
 
 — Raw Materials. — Wool. — Germany. — Protected Industries. — 
 Boots and Shoes. — Our own Markets the Best for us. 
 
 Everybody has heard the cant assumption, that 
 we must buy in the cheapest market and sell in the 
 dearest. It is one of those phrases which pass for 
 wisdom, and yet simply conceal the problem which 
 is presented for solution. It is announced as one of 
 the axioms of political economy. For that reason it 
 deserves to be analyzed. Commerce has become one 
 of the most complex affairs, involving considerations 
 so various, and often so conflicting, that it appeals to 
 every faculty of the mind, and to every energy of the 
 muscles. The truth has many times been brought 
 very close home to the most enterprising and most 
 diligent, that one must sell where he finds a pur- 
 chaser, while he is forced to buy in the market 
 
236 AMERICAN SYSTEM OF REVENUE. 
 
 which offers. Experience embodies the rule: Sell 
 where you must, and buy where you can. , 
 
 If you have the cash in hand, you can seek out 
 your market and force the seller to accept your 
 terms, if his stress is greater than your own. You 
 can then go to the cheapest market. But this is sel- 
 dom the case. Really, you want to sell more than 
 you want to buy. You are willing to lay out a part 
 of the results of your sales in purchases, if the sale is 
 satisfactory. But you cannot buy at all, unless you 
 can first sell. In the course of trade, the time comes 
 when you must sell in order to meet your obligations. 
 You desire to get the best price possible. The crisis 
 arrives when only a week or a day separates you from 
 bankruptcy. You must sell to save your credit, to 
 keep your manufactory in operation, to prevent utter 
 ruin. The market is most desirable for you in which 
 you can dispose of your commodities. As a matter 
 of experience, this is the market in which you must 
 buy. You must buy in the same market in which 
 you sell. It is the equation between sales and pur- 
 chases which determines for you whether the market 
 is the best one for your purposes. You can better 
 pay ten dollars in grain or potatoes or wood or cot- 
 ton or tobacco or shoes or woolens or iron, for these 
 you have, than you can pay one half that sum in gold 
 and silver, which you do not possess. It will prove 
 much more economical to pursue this policy; for un- 
 less you can sell your own commodities, the price, 
 whatever it may be, will be too great for you. In 
 
FALLACIES ABOUT MARKETS. 237 
 
 the desert, or on shipboard in a wreck, all treasure is 
 cheap. That will be the best place to buy the mer- 
 chandise which may be at hand. But it cannot be put 
 to use. The cheapness is no advantage. The com- 
 modity elsewhere precious ceases to be valuable for the 
 very reasons which make it cheap at that spot. That 
 market is desirable where commodities are not only 
 to be paid for by such articles as you have to give in 
 exchange, but also where they can be turned to use. 
 
 On the other hand, the fallacy is only less com- 
 plete that you should sell in the dearest market. If 
 commerce were a single transaction, the rule would 
 be simple. But it is a continuous process. The 
 profits come not from a single sale, but from a con- 
 stant flow of commodities outward, and returns which 
 are remunerative. The merchant who establishes 
 the reputation of maintaining high prices loses his 
 customers. A market, however broad, becomes dis- 
 advantageous by the like policy. The attempt to 
 extort the last farthing in a sale is not the wisdom of 
 commerce. The highest price in a given transaction 
 may be the ruin of what might have proved a steady 
 source of healthful profit. You should sell where you 
 can, to develop a reciprocal trade. If by selling your 
 cloths or machines to a farmer you can get him to 
 buy other wares, and enable him to earn the means 
 to maintain a regular trade with you, a lower price 
 will well reward you, while if the exchange were to 
 stand by itself the return would be wholly inade- 
 quate. 
 
238 AMERICAN SYSTEM OF REVENUE. 
 
 The very clearest market to buy in, in the long 
 run, is that in which you cannot hope for regular 
 sales of the commodities from which you must secure 
 the means of buying at all. The worst market to 
 sell in, whatever the nominal price, is that from 
 which you cannot expect regular traffic. 
 
 Profits come from the steady flow of a trade which 
 may be determined by neither the greatest cheapness 
 of purchase nor dearness of sale, but by community 
 of interests, and by its influence on the increase of 
 production. 
 
 Great Britain finds the United States its best cus- 
 tomer, although it is notorious that by reason of com- 
 petition here British commodities are sold in our 
 markets at much lower prices than in India or China, 
 and in many instances lower than within a mile of 
 their manufacture. But by very large production it 
 is possible to make profit from the sale of great quan- 
 tities of fabrics or general merchandise, and the cer- 
 tainty and quickness of the returns render a small 
 margin satisfactory. 
 
 In addition, Great Britain is forced to buy from us 
 a great deal of its food and a large share of its raw 
 cotton. It can most conveniently pay us by shipping 
 its surplus of manufactures and accepting the very 
 lowest profits upon it ; while it is true that in buy- 
 ing in the cheapest market, it is beyond question that 
 British manufacturers are often accepting the United 
 States as the cheapest market also for selling their 
 wares. Often their surplus is sold here at less than 
 
FALLACIES ABOUT MARKETS. 239 
 
 the cost of production. But this is when the surplus 
 is in excess of any demand here or elsewhere at the 
 natural standard of prices. 
 
 CHEATING FOREIGN MARKETS. 
 
 The American advocates of favoritism for com- 
 merce tell us that we must buy freely abroad in order 
 to create a market for our own products. This is a 
 like suggestion with one that an individual must buy 
 more than he wants, or where he does not care to 
 buy, in order to sell something in which he deals. 
 This is neither political economy nor common sense. 
 Neither a people nor a person should buy more than 
 he needs or more than he can pay for. If he needs 
 an article, it is wise to purchase it where advantage 
 will return to him by the sale of his own commodi- 
 ties, so that the true rule is to try and buy where you 
 sell. But experience will demonstrate that the best 
 market to sell is not always where you buy. 
 
 Brazil affords a very striking example. In 1882 
 we bought from Brazil $29,540,151 worth of coffee, 
 $1,445,541 worth of hides, and $8,193,878 worth of 
 india-rubber, and all of these articles came in duty 
 free. Our total imports from Brazil in that year 
 were $48,801,878, and that was below the sum of the 
 preceding years. But our total exports to that coun- 
 try in that year were only $9,152,562, and that was 
 fully up to the average for the past decade. 
 
 China is quite as striking a refutation of this plea, 
 that if we buy abroad we make a market for our 
 
240 AMERICAN SYSTEM OF REVENUE. 
 
 own wares ; for in 1882 our imports from that coun- 
 try amounted to $20,250,346, of which no less than 
 three fourths, or $15,899,607, were free of duty, in 
 the form of tea and raw silk and other non-dutiable 
 articles. Our exports to China at the same time 
 were only $6,429,783.* 
 
 With both of these countries we have established 
 relations much more liberal than any other nation 
 in the world offers them. We collect no duties 
 on their chief products, while Great Britain makes 
 tea and coffee the objects of very heavy charges. 
 Yet Britain, in 1882, imported from Brazil $34,- 
 410,720 of value, and exported to that country $86,- 
 626,595. Our cousins, while buying rather more 
 than two thirds as much as we did, sold there four 
 times as much. Surely it is not by buying that we 
 can create a foreign market for our products. The 
 lesson is the same in China. There Britain bought 
 $46,680,460 worth in 1882, and sold only $24,458,- 
 070 worth. The British trade there is much greater 
 than our own. Its imports from China are more 
 than double our own, but it is unable to sell to the 
 Chinese more than about one half as much as it buys. 
 We sell to China less than one third as much as we 
 buy ; but we transact our business with that country 
 far more cheaply, for we are at no such cost for naval 
 display and influence or for diplomatic control. 
 
 Great Britain buys from us more than from any 
 other people. This result is achieved in the face of 
 1 Bureau of Statistics. 
 
FALLACIES ABOUT MARKETS. 241 
 
 the constant friction caused by the British demand 
 for the reduction of our customs duties. The pur- 
 chases are frequently made, not in good will, but sim- 
 ply because they are here secured at the lowest rates 
 or on the best terms. Thus in 1882 we exported to 
 Great Britain, of our own productions, $404,248,031 
 worth. According to the theory of the doctrinaires, 
 who tell us that a nation must buy in order to sell 
 its own commodities, Britain ought to have sent 
 to us commodities of equal or approximate value. 
 But with all the efforts to crowd its wares upon us, 
 by disposing of its surplus at prices less than the 
 cost of production, and the attempt to destroy some 
 of the growing rivals in new branches of competi- 
 tion, Britain sold to us in 1882 only 1154,850,735 
 worth of British and Irish produce. We are, nev- 
 ertheless, the best customer that Britain has in the 
 world ; but we are so because our own production 
 enables our people to buy more commodities than 
 any other equal number of persons on the globe. 
 This is a good market for Britain, and British com- 
 modities are thrust upon us, because our people 
 produce in larger ratio than any other population. 
 The best service that we can render to Britain is to 
 go on with our own policy. We can buy more just 
 in the degree that we produce more. Our markets 
 are the best for Britain, while British markets are 
 still better for us. But in neither case is the axiom 
 verified enjoining that one must buy in the cheapest 
 market and sell in the dearest market; for in the 
 
 16 
 
242 AMERICAN SYSTEM OF REVENUE. 
 
 case of Britain, it buys from us because it cannot get 
 what it wants so promptly and so well elsewhere. 
 Its grain and cotton merchants allege that they make 
 the prices for the world. Just to the extent that 
 their boast is true prices are equal for them from all 
 producers. The British demand here is then not de- 
 termined by price, but by other considerations. Cer- 
 tainly British commodities are sold here at less price 
 than they are sold, reckoning transportation, either 
 at home or in any other market of the world. But 
 this is a vast field for traffic. The British producer 
 and merchant seek to occupy this market at any cost. 
 The vastness of transactions, the illimitable demand 
 for commodities from our people, impel the British 
 manufacturer and trader to look with wistful eyes in 
 this direction, and to desire, before any or all other 
 markets in the world, to enter in and possess that of 
 the United States. 
 
 In 1882 Britain exported to the United States 
 nearly twice as much as to France or Germany, and 
 three times as much as to Holland, while no other 
 country came within much more than one fifth of the 
 values. In the same year Britain bought from the 
 United States more than twice as much as from any 
 other country, and only eleven per cent, less than the 
 total imports from all of the British possessions. 1 
 
 1 Britain exported of British and Irish produce, in 1882, to the 
 United States, £30,970,147; to France, £17,421,212; to Germany, 
 £18,518,024; to Holland, £9,379,737. Britain imported in 1882, 
 from the United States, £88,352,613 ; from France, £39,090,381 ; 
 from Germany, £25,570,985; through Holland, £25,320,709. From 
 
FALLACIES ABOUT MARKETS. 243 
 
 If any increase of trade with Britain could be ef- 
 fected by any change in our revenue system, it could 
 only be by offering such premiums as would make up 
 to British producers the losses which they might in- 
 cur by an aggravated endeavor to compete with our 
 manufacturers, while already we provide for what- 
 ever deficiency occurs in the British food supply, 
 except as India is now trained to raise grain. For 
 the European competition diminishes just in the de- 
 gree that the general condition of Russia and Austria 
 improves, and the people at home are able to eat the 
 wheat and flour which they raise. In other words, 
 Britain takes from us now, on the average, as large a 
 ratio of our commodities as any fiscal policy on our 
 part could force upon her people. It is clear that we 
 buy as much as it is for our interest to take of manu- 
 factures which we can provide for ourselves, of quite 
 as good quality and at as low a price, considering the 
 mode of payment. 
 
 Yet the attempt of those who call themselves free 
 traders is to increase our trade with Britain. The 
 missionary efforts of the Cobden Club have in view 
 that patriotic end. Why should we offer a bounty to 
 have our cotton shipped to Lancashire or Normandy 
 to be weaved, when we can do the work ourselves, 
 and largely with labor which otherwise will not be 
 employed at all ? Why should we neglect our iron 
 ore and seek to take the manufactures of iron and 
 
 all the British possessions the imports were £99,430,897. — Statistical 
 Abstract of the United Kingdom. 1883. 
 
244 AMERICAN SYSTEM OF REVENUE. 
 
 steel from Sheffield and from Birmingham, when 
 men who else would be idle can add to our- national 
 wealth by transforming the ores of Pennsylvania, 
 Tennessee, and Georgia into the highest expressions 
 of mechanism ? Why should we fail to gather our 
 own clothing from the backs of the sheep which 
 roam in the ranges of Texas and California, simply 
 in order to keep up factories in the North of Eng- 
 land, in France, and Germany ? 
 
 THE HOME AND THE EOEEIGN MAEKET. 
 
 McCulloch puts into distinct phrase a fallacy which 
 underlies much of the discussion in favor of free 
 trade. He declares that "the individual who uses 
 only Polish wheat, Saxon cloth, and French silks, 
 gives, by occasioning the exportation of an equivalent 
 amount of British produce, precisely the same encour- 
 ragement to industry here that he would give were 
 he to consume nothing not directly produced among 
 us." 1 It is difficult to account for such blindness on 
 the part of any student who understands the simple 
 rules of arithmetic; for, in the case supposed, the 
 buyer of Polish wheat and Saxon cloth and French 
 silk pays for something made abroad, and sends out 
 of the country, to Poland, Saxony, or France, the 
 equivalent of these commodities. If, on the other 
 hand, he bought home products, his own labor with 
 that of the producers of the wheat and cloth and silk 
 would remain to be added to the general wealth. 
 
 1 Principles of Political Economy, p. 104. 
 
FALLACIES ABOUT MARKETS. 245 
 
 But this is only one element. There is the cost of 
 transportation both ways to be deducted from the 
 value which he receives for his outlay made abroad. 
 
 When one buys foreign produce, he gives to his 
 country simply what he has himself wrought. If by 
 buying domestic produce he develops any industry, he 
 not only keeps at home his own labor, but adds to it 
 that required for the products which he buys. It is 
 a plain mathematical proposition. He who buys 
 abroad casts into the common fund only his own la- 
 bor. If he buys at home, he adds to his own labor 
 in the common fund the value of the materials and 
 labor in the commodities which he buys, and the 
 freight charges both ways. 
 
 The champions of foreign commerce assert that 
 traffic always includes two profits. Hence they al- 
 lege that the opposition to an adverse balance of 
 trade must be based on a fallacy. In the first place, 
 traffic, while it aims at profits for both sides, may 
 result in loss to both sides, and all gain may be swal- 
 lowed up by the carrier and the banker. Commerce 
 is only an effort to get profit, and is not always suc- 
 cessful. In the event when success crowns it at all 
 points, foreign commerce gives only one profit to the 
 domestic participant, while the transportation and 
 the other end of the account confers benefit on for- 
 eign producers and dealers. Domestic trade is an 
 apple, all of which belongs here at home. In the 
 case of foreign commerce the apple must be cut up, 
 and often by far the largest part must be surrendered 
 to aliens on foreign soil. 
 
246 AMERICAN SYSTEM OF REVENUE. 
 
 MARKETS AND GOVERNMENT CHARGES. 
 
 Our immediate concern with these fallacies about 
 markets is only to insist that a revenue system 
 should not be based upon them. It is obvious from 
 national experience as well as from individual paral- 
 lels, that it is folly to try to build up trade by mak- 
 ing purchases in order to tempt others to buy our 
 commodities. Our purchases must be dictated by our 
 own desires and tastes and measured by our means of 
 payment. No reason exists on this ground why our 
 duties should be adjusted in order to expand our 
 imports. Since it is not broad economy to say that 
 we must buy in the cheapest markets, unless they 
 are also the markets in which we can sell, our reve- 
 nue laws should not seek to tempt us to buy abroad. 
 The best service legislation can do is to contribute as 
 well as it may to production, and the buyer will look 
 out for himself. Only when our own is the dearest 
 market to sell in is the dearest market the best for 
 the seller ; for British example is continuous that by 
 selling, even in very cheap markets, the home prices 
 can be maintained. Our own producers have thus 
 far found that at home they have been able to sell at 
 remunerative rates, and they have not been often 
 forced to discharge their surplus on rival countries. 
 When that time comes our exports will be increased 
 to just the extent of that excessive surplus. 
 
 Instead of buying in order to sell, the true rule is 
 to sell in order to buy. The price is secondary, either 
 
FALLACIES ABOUT MARKETS. 247 
 
 in purchasing or selling, in any single transaction, to 
 the effect upon the whole current of industry and 
 trade. To sell in China may be well, but remote 
 trade is always unstable. To sell at home, if you 
 can get your pay, is to rest upon as secure a basis as 
 traffic can present. Buyer and seller have mutual 
 interests. They must expect to prosper or fail to- 
 gether. But the rock-bottom of all trade is produc- 
 tion, and government performs its full share when 
 it adjusts all of its machinery to develop production 
 in all of its phases, and lets commerce take care of 
 itself. 
 
 Every article made at home is burdened with its 
 share of the taxes levied and collected here. The land 
 tax and the charges on food and the common com- 
 forts of life attach to all commodities of domestic 
 product. These become an element in the cost of 
 production, and the effort of all trade is to recover 
 them. In markets like ours the prices are deter- 
 mined in great part by the volume of home produc- 
 tion. Every commodity of foreign origin is put upon 
 our markets with the aim to secure the highest price 
 possible. That is the general law of trade, and it has 
 full application with imported goods, as well as with 
 all others. If the imported article is suffered to es- 
 cape all domestic imposts, the benefit will not accrue, 
 as a rule, to the consumer, but will be pocketed by 
 the importer, by the maker abroad, or by some inter- 
 mediary agent. To exempt foreign goods from all 
 government charges is to open our markets without 
 
248 AMERICAN SYSTEM OF REVENUE. 
 
 charge to competition of foreign labor, to the benefit 
 of the latter. The bounty thus offered to foreign 
 competitors is equal to the average of the domestic 
 taxes. 
 
 The domestic imposts enter into the prices of com- 
 modities in our markets in very unequal degree. As 
 has been shown, the land tax is multiplied by just 
 the ratio that a manufacture becomes complex, and 
 includes many operations. On the average, a well- 
 to-do mechanic must allow about one fourth of his 
 wages for rent, and about one fifth of this sum goes 
 for taxes. This is a rough statement, but it includes 
 the average of many inquiries. This would place the 
 land tax at about one twentieth of the receipts for 
 wages. But this land tax appears in this way in 
 every operation of mechanical production. It must 
 be supplemented by the imposts upon articles of 
 prime necessity. In gross, the total imposts paid by 
 our people in 1880 were very nearly seven and a half 
 per cent, on the total annual product of our agricul- 
 ture and manufactures ; for they were, including 
 state, local, and national charges, $646,277,221. The 
 sum of our agriculture and manufactures was $8,869,- 
 579,191. If these imposts were not multiplied at 
 all, therefore, any imported commodity ought to bear 
 a charge of at least seven and a half per cent., to 
 stand upon the same basis as American wares in our 
 own markets. 
 
 But if you will take your watch in your hand and 
 follow out the many manipulations which the mate- 
 
FALLACIES ABOUT MARKETS. 249 
 
 rial must undergo in order to record tbe seconds and 
 minutes and hours with absolute accuracy, you will 
 find that the industries involved are very numerous. 
 The same is the case with cotton fabrics, from the 
 boll to the delicate stuff which passes for lace or silk, 
 or even to the standard cottons of trade. The calcula- 
 tion contains many elements. Now no charge is paid 
 by the manufacturer, as we have seen, that he does 
 not try to collect with a profit from the wholesale 
 merchant, who again repeats the process with the 
 retailer, and he seeks to get his money back with a 
 profit from the purchaser, who very likely buys in 
 order that he may employ the commodity in some 
 new manufacture. 
 
 This process of repetition varies in different com- 
 modities. It may occur only two or three times in 
 some articles ; it may run up to a dozen times in the 
 more complex manufactures. No skill in mathemat- 
 ics will present all the elements of the problem in 
 all cases. But see: where the process of repetition 
 mounts up to seven times, the government charge 
 equals more than one half the actual original value 
 of the product. The average multiplication of do- 
 mestic taxes must be at least threefold. The com- 
 pensating duties on this account ought to be then 
 twenty-two and a half per cent. 
 
 In this estimate the profits of commerce, domestic 
 or foreign, are not included. For while imposts are 
 in part paid from the profits of commerce, in the long 
 run they must be recovered from production. This 
 
250 AMERICAN SYSTEM OF REVENUE. 
 
 is one of the real problems in the demand for free 
 trade, as the modern phrase runs : Shall the labor 
 and industry, the agriculture and manufactures of 
 this country, pay the charges which are necessary to 
 maintain American institutions, and relieve all for- 
 eign importations from every like burden ? 
 
 The pretense is that the relief of importations 
 from imposts is in the interest of consumers. But 
 bear in mind that consumption adds nothing to the 
 resources of the people ; it only takes away from 
 their ability to pay any charges. Just in so far 
 as our markets are opened freely to foreign produ- 
 cers, our own production must pay the cost. Fair 
 play requires that any foreign commodity brought to 
 our markets shall pay its share of the expense of 
 maintaining the institutions which render that mar- 
 ket desirable. No simpler or more effective way has 
 been adopted, or even suggested, than that of levy- 
 ing customs duties. The fact that some of our own 
 products are burdened with imposts to one half of 
 their original value does not enter the mind of theo- 
 rists. They do not study the equation of taxes. 
 They plead for free commerce ; the burdens of trade 
 afflict them. Free markets are impossible. The 
 only question is, who shall pay the burdens ? Shall 
 commerce be relieved from its due share of imposts, 
 and labor be forced to pay additional charges ? 
 
 Since production is the first condition of any com- 
 merce, shall we not rather adjust our revenue sys- 
 tem to favor industry and to develop our natural re- 
 
FALLACIES ABOUT MARKETS. 251 
 
 sources? For just in so far as we let in foreign com- 
 modities without paying charges in due ratio to those 
 levied upon home products, we offer a bounty for im- 
 portations. 
 
 It is a common and cheap response to say that if 
 we adopt this policy, then other countries will collect 
 from our exports like charges. The first question for 
 us is to determine what is wise for us, and what is 
 practical sense. If we place all producers upon an 
 equal footing in our own markets, we can do no more 
 in justice to our own industries. But as a matter of 
 fact, every nation does seek, and will seek, its own 
 advantage in its adjustment of imposts. 
 
 If a nation cannot feed itself, it is forced to favor 
 the introduction of food even by such a bounty as 
 .exemption from imposts. When the nation reaches 
 the point that it cannot clothe itself, it must also 
 admit fabrics on a like footing. If a nation devotes 
 itself to enterprise outside of its own borders and 
 secures a large share of earnings on the sea, and its 
 home production falls below its consumption, it can- 
 not do less than offer a premium to the world, to give 
 it something to carry, and to bring it commodities of 
 all kinds for its support. 
 
 GREAT BRITAIN AND ITS REVENUE SYSTEM. 
 
 Let us be specific. Britain never struck off her 
 protective duties until the proof was brought home 
 by a famine in Ireland, 1 and her own inability to 
 
 1 Fawcett, Protection and Free Trade. 
 
252 AMERICAN SYSTEM OF REVENUE. 
 
 afford adequate relief, that the British islands do not 
 produce provisions sufficient for the support of their 
 inhabitants. 1 With that demonstration came the 
 farther lesson that in clothing and household com- 
 forts the production on the islands was not, and is 
 not, equal to the requirements of the people. Ocean 
 carrying may be profitable. It depends upon the 
 will and the wealth of other nations in large part. 
 A country which must seek its returns in considera- 
 ble degree from such an occupation naturally offers 
 premiums for its development. The markets of 
 Britain are free, so far as they are free, because the 
 necessities of the British people cannot be supplied 
 without constant appeal to other lands. But these 
 markets are rendered free by imposts upon the peo- 
 ple, especially on some articles of prime necessity, 
 and by excise charges, which have become very 
 nearly per capita burdens. The poor of Britain pay 
 by far more than their share of the imposts of the 
 government. The cry is loud and long that the cap- 
 ital of the realm, and particularly its land, does not 
 meet its due part of the imposts. 
 
 At the same time the invitation to foreign com- 
 petition has struck British production blows of the 
 
 1 See the speeches of Richard Cobden and John Bright from 1842 
 to 1846. At a conference between Mr. Bright and Sir Thomas Ac- 
 land, February 22, 1843, the latter said : " In ten years, perhaps, the 
 people might amount to three or four millions more, and then no 
 science, no skill, no industry, applied to agriculture, would be capable 
 of enabling it to supply a sufficiency of food for the country." — Life 
 and Times of John Bright, p. 139. 
 
FALLACIES ABOUT MARKETS. 253 
 
 most serious character. Mr. Gladstone at Leeds, in 
 1881, 1 declared that the United Kingdom was pay- 
 ing every year $225,000,000 for manufactures which 
 it ought itself to furnish. The official statistical ab- 
 stract enforces the declaration. From 1854 to 1880, 
 the imports of manufactured articles have increased 
 by 406 per cent., while the exports of such articles 
 have increased by only 123 per cent. The imports 
 of articles partly manufactured have increased in 
 the same period by only 90 per cent., of raw mate- 
 rials by only 84 per cent. And even of food mate- 
 rials the imports have in the interval increased by 
 only 213 per cent. In other words, the dependence 
 of Britain on other countries for manufactures has 
 grown within this period nearly twice as rapidly as 
 its power to buy food abroad. Sir Eardley Wilmot, 
 a member of Parliament, has put forth some startling 
 statistics 2 showing how the British markets are pass- 
 ing out of British control. He shows that in ten 
 years Britain has paid $1,400,000,000 for ten arti- 
 cles of manufacture. As a consequence production 
 by the people in the realm is diminishing in many 
 branches. 
 
 A notable article in the " Nineteenth Century " for 
 June, 1883, 3 demonstrates that in the flax industry 
 since 1861, in England and Scotland, 203,500 spin- 
 dles have been stopped, and within six years 85,000 
 
 1 Speech at Leeds, October 8, 1881. 
 
 2 In a recent pamphlet. 
 
 8 Falling Trade and Factory Legislation, by A. W. Finlayson. 
 
254 AMERICAN SYSTEM OF REVENUE. 
 
 have been stopped in Ireland, making a decrease of 
 290,500 spindles, or 18.05 per cent. These stoppages 
 have thrown 20,000 hands out of employment. In 
 woolens the exports have within fifteen years fallen 
 off 26.05 per cent., while the imports have increased 
 within twenty years nearly seven fold. In silk the 
 British manufacture is less to-day than it was in 
 1871, and the imports of raw silk have fallen in ten 
 years from 8,000,000 to 3,000,000 pounds. Sugar 
 refining has become almost a lost art, and only one 
 refinery stands on the Thames where at least twenty 
 formerly were active. The iron and steel industries 
 are commonly taken as the type and measure of Brit- 
 ish prosperity, and the exports as the test of their 
 extent and growth. In 1871, the total British ex- 
 ports of iron and steel were 3,169,219 tons, and in 
 1881 they were 3,820,225 tons, no marked advance ; 
 in 1882 the exports rose to 4,350,297 tons, an in- 
 crease so slight as only to emphasize the lesson. 
 
 That lesson is that in the name of commerce Brit- 
 ish production is sacrificed to foreign competitors, and 
 the development of the industries natural to the soil 
 is stunted. The British markets may contribute to 
 foreign trade, may lead aliens to glut supply by the 
 surplus of other lands ; but the result is deadly to all 
 the interests which constitute national wealth, and 
 especially such as promote individual progress and 
 the elevation of the body of the people. Mr. Glad- 
 stone was right at Leeds in urging that Britain 
 ought to make more of the manufactures which it 
 
FALLACIES ABOUT MARKETS. 255 
 
 uses. Sir Eardley Wilmofc is right in demonstrating 
 that production is hampered by shackles which check 
 the energies and vigor of the great people whom he 
 addresses. In the attempt to force trade abroad, the 
 British policy has trodden under foot the muscle and 
 the thrift and the producing power upon which alone 
 a nation can permanently rear the structure of pros- 
 perity. The markets which are best are those which 
 rest upon home interests, and are extended by the 
 push and flow of home production. 
 
 We want to employ our labor in agriculture and 
 manufactures, and to sell our products. Thus far 
 we have found by far the best markets at home. 
 The example of Great Britain proves to us that by 
 abolishing customs duties, instead of extending our 
 export trade in its ratio to importations we should 
 certainly bring in foreign commodities to compete 
 with our own labor, and should sacrifice our produc- 
 tion to the chance of getting a share of the ocean 
 carrying trade. 
 
 Thus far in human history no nation has ever won 
 and long held the mastery of the seas for commerce, 
 except at the price of war and the maintenance of a 
 very costly navy. The story of foreign markets has 
 always been a record of strife and of diplomacy, with 
 armies and navies to sustain them. We seek com- 
 merce only upon the basis of peace. Our domestic 
 trade exceeds the traffic of five times the same num- 
 ber of people anywhere else in the world. We offer 
 the best markets to everybody else, and therefore also 
 
256 AMERICAN SYSTEM OF REVENUE. 
 
 the best markets to our own producers. The nations 
 which in all ages have sought the prizes of commerce 
 have gone as Jason went to seek the golden fleece, 
 at the sacrifice of home attractions and rewards. 
 The American policy has wisely been to foster pro- 
 duction, and to seek foreign trade only through the 
 strong currents which may flow beyond our shores 
 because of abundant prosperity at home. We sell 
 because we produce more than we can use ; and then 
 we buy, because while our necessities can be sup- 
 plied at our own doors, we are able to indulge in our 
 tastes, and even our whims, from the surplus of our 
 earnings. 
 
 RAW MATERIALS. 
 
 A suggestion just now pressed with vigor applies 
 to this matter of markets in relation to the revenue. 
 The proposition is that to gratify the desire to get 
 raw materials more cheaply we ought to reduce the 
 customs duties upon them. But the radical question 
 is whether that is the best way to render all such mate- 
 rials more accessible at practicable prices. For exam- 
 ple, is the way to get cheap wool to reduce the duties 
 on that commodity ? to get cheaper iron ought we to 
 let foreign iron in free of duty ? Let us take these 
 articles for tests. Where will you look for the cheap- 
 est iron ? Is it not at the mouth of the ore-bed, at the 
 door of the blast-furnace? Can you ever get wool 
 on better terms than directly off the sheep's back ? 
 
 We have already illustrated how under low du- 
 ties the production of pig iron kept at the mini- 
 
FALLACIES ABOUT MARKETS. 257 
 
 mum, while under fair rates of customs the increase 
 has been large and continuous, and has outrun the 
 development of that industry in any other land. We 
 have not begun to open the ore-beds of the oldest 
 states, and in the newer regions the ore lies almost 
 on the surface, ready to work. The maximum rate 
 of growth has not even been approached. In the 
 cities labor is lying idle which can be turned at once 
 into this occupation ; why should it not be put to 
 use ? All over the land capital is tempted into spec- 
 ulation simply because regular employment for it is 
 not brought home with sufficient directness to the 
 persons who hold it. Bring the labor and the capi- 
 tal together under favorable circumstances, and we 
 can make every kind of iron as cheaply as it is made 
 anywhere else in the world, with the single allow- 
 ance of rates of wages. Hence no reason exists why 
 we should not greatly multiply our production in this 
 line, and contribute to the building up of many new 
 branches of mechanism among our people. The way 
 to bring down the price of iron is to increase the pro- 
 duction of it right here on our own soil. Certainly 
 we ought not to offer a premium in the reduction 
 of duties for foreign producers to pour their sur- 
 plus into our markets. Beyond any question iron is 
 cheaper here than it could ever have been rendered 
 by any other method than by vast mining and blast- 
 ing enterprises by our own people. 
 
 Another strong appeal is addressed to Congress, 
 to abolish the duties on wool, on the plea that manu- 
 17 
 
258 AMERICAN SYSTEM OF REVENUE. 
 
 factnrers will thus be assisted. Notwithstanding the 
 extension of the use of this staple in garments, and 
 the demand for it created by the improvement in the 
 condition of artisans and laborers, during the past 
 sixty years the price of the raw material has not ad- 
 vanced, but has on the finer grades shown a decided 
 falling off, from sixty to sixty-eight cents a pound in 
 1824 to forty-two to forty-four cents a pound in 1883. 
 On the other hand, the coarse grades have kept fully 
 steady or tended to advance. We need now cheaper 
 wool. To-day, with Australia, the United States is 
 the largest producer of wool on the globe. Great 
 Britain handles the largest quantity of the staple, 
 but it is only as middle - man. Any reduction of 
 duties would tend, as it has tended before, to lead to 
 the killing off of sheep in this country, to the pur- 
 chase of foreign wool, and to the advance at an early 
 day of the charge made by foreign merchants for the 
 raw material. At the same time, the disposition to 
 raise the prices of foreign wools has been checked 
 and overcome, and the river Plate and Australia 
 have been unable, even with the aid of British mid- 
 dle-men, to dictate terms to our factories. 
 
 The growth of the wool production in this country 
 has been very encouraging. Already from Vermont 
 fine breeds of animals are shipped to other lands, and 
 from that state all over this continent the produc- 
 tion of fine wools has extended. In southeast Ohio 
 the finest wools are obtained by the most successful 
 of our manufacturers. Instead of discouraging this 
 
FALLACIES ABOUT MARKETS. 259 
 
 source of wealth we should strive to extend it. Our 
 own experience teaches us how to extend it and how 
 to get cheap wool. That experience also presents a 
 warning what course to avoid. 
 
 From 1850 to 1860 was the period of the Walker 
 tariff and its successor, avowedly free trade projects. 
 The increase in the production of wool in this coun- 
 try was from 52,516,959 pounds in 1850 to 60,264,- 
 913 pounds in 1860, — an increase of fifteen per 
 cent. From 1860 to 1870 the production ran up to 
 100,102,387 pounds, an increase of over sixty per 
 cent. Again from 1870 to 1880 the wool clip was 
 increased, according to the figures of the census 
 tables, to 155,681,751, or fifty-five per cent. But 
 the estimates of the expert who examined the whole 
 field reach the total of 240,000,000 pounds, or two 
 and a half times the product of 1870, and four times 
 that of 1860. The first effect of the tariff of 1846 
 was to carry down the prices of wool, but as soon as 
 the foreigu dealers were able to get control of the 
 market they raised the price against our manufac- 
 turers. On the other hand, since the war closed, un- 
 der the present rates of duties, wool has ruled lower 
 than during the free trade period, and the tendencies 
 are not now upwards. 
 
 The proposition is a very plain one : Is there any 
 possible plan by which wool can be brought down in 
 price more effectually and permanently than by mul- 
 tiplying its production by four within twenty years ? 
 Is not that by far more sure and trustworthy than a 
 
260 AMERICAN SYSTEM OF REVENUE. 
 
 policy which added only fifteen per cent, to the clip 
 within an entire decade ? In coarse wools especially 
 is there need of very rapid extension. No one ques- 
 tions our ability to raise this sort of the staple. By 
 continuing the present policy of developing our wool 
 clip, in another decade we will establish prices such 
 as will dictate the rates to the world. 
 
 Germany pursues the system of admitting its raw 
 materials free of duty, and thus fosters the manu- 
 factures of the last and highest stages. As we have 
 already urged, it is wise to collect the government 
 charges at as great a distance as possible from labor, 
 upon the last form of production. In that way the 
 charge is repeated to the minimum extent. But we 
 can produce all of our own iron, and no reason exists 
 why we should seek the golden fleece anywhere away 
 from our own domain. For these reasons, the exam- 
 ple of Germany is not applicable to our case. The 
 place for us to look for the cheapest iron is in our 
 own ores, and for the cheapest wool, on the backs of 
 our own sheep. 
 
 PROTECTED INDUSTRIES. 
 
 An adroit attempt is made by the advocates of 
 foreign commerce, the theoretical free-traders, of 
 whom David A. Wells is a conspicuous example, to 
 draw a line between what they style " protected 
 industries," and those which are not protected. They 
 count as " protected " those of which the products 
 appear in the tariff schedules. They assume that all 
 
FALLACIES ABOUT MARKETS. 261 
 
 industries not included directly, and by name, in the 
 imposts, do not secure protection through the tariff. 
 This is the plea just made before the Ways and 
 Means Committee. Let us see. You establish a 
 new manufacture under the stimulation of the pro- 
 tective policy. That, these theorists would call a 
 " protected industry." But it has set at work ma- 
 sons and carpenters to put up buildings ; it has re- 
 quired the rudest laborers to dig cellars and to make 
 mortar and carry the hod. New homes are demanded 
 in the neighborhood. Every building interest has 
 been stimulated. The new homes must be supplied 
 with furniture, with decorations extending with im- 
 proved wages. Every mechanical occupation has 
 shared in the advantage. The operatives have been 
 drawn from the farm, from other industries. The 
 standard of pay has been raised along the whole line 
 of labor. Everybody can live better. The compe- 
 tition with the farmer has been reduced, while the 
 demand for his products has been augmented. The 
 farmer gets a share, constant and large, of the advan- 
 tage. The effect of a given duty is to stimulate pro- 
 duction in all its branches, to protect industry in 
 every one of its phases. 
 
 When you seek to raise a chain of which the links 
 are all connected, and to raise it for a considerable 
 height, you need not fasten your hook to every link. 
 If you grip closely a single link, you lift the whole 
 chain as far as that link is raised. 
 
 Here is a lake which you desire to flood over the 
 
262 AMERICAN SYSTEM OF REVENUE. 
 
 whole surface. Can it be necessary to pour so much 
 water over every square yard separately, and will you 
 raise the level only where your stream enters or 
 falls? Let the current touch the lake where it may, 
 let the point of entry be only one, the surface will 
 rise equally, the level will be maintained, and the 
 smooth beauty of the increased depths will adjust 
 itself with a mirror which will tempt the sun and re- 
 flect the clouds. 
 
 Thus under the American policy all industries are 
 protected, and often most those which are not repre- 
 sented in the tariff schedules. The petty pleas based 
 on a classification which assumes that the ocean of 
 our industry is made up of painted cards, piled up 
 by fancy, and lacking cohesion and vitality, are not 
 worthy of the authors or our subject. Our produc- 
 tion is one like the deep, over which winds may sweep, 
 and for the moment terrible depths may appear, and 
 monstrous waves may rise ; but its true surface is 
 more level than earth presents. Whatever benefits 
 American labor at any point confers blessings on 
 every part of its efforts and its products. While any 
 industries are protected by our legislation, our pro- 
 duction is, as a whole, stimulated and encouraged. 
 
 Take boots and shoes as a test. These are not in- 
 cluded in any tariff schedule. Yet in no case is the 
 effect of protection more manifest. For by the high 
 wages in this country, by the standard of comfort 
 and of luxury here maintained, the style and quality 
 of such commodities required by our working-people 
 
FALLACIES ABOUT MARKETS. 263 
 
 are better than in any other land. Here are no 
 clogs, no wooden shoes of any pattern ; but serving 
 maids and apprentices wear on their feet as good 
 material and work as in the Old World any caste or 
 class will demand. This requirement of quality and 
 of frequent change are the impetus to a manufac- 
 ture which has become so extensive. These condi- 
 tions are established and promoted by the protective 
 policy. In the same way the whole level of labor 
 and of employed capital is lifted up. 
 
 We shall therefore get the best markets to buy in 
 as well as to sell in, by fostering our own industries. 
 Even our raw materials will be brought soonest to 
 the lowest standard of price practicable, by produc- 
 ing them from the gifts which a generous Providence 
 has bestowed upon our territory, and contributes in 
 the variety of our climate. 
 
 Why and how our markets are the best, it will 
 not be difficult to show in a consideration of duties, 
 wages, and prices. For the present enough has been 
 shown to forbid any declaration that any improve- 
 ment in our markets can be secured by a change in 
 our tariff laws. 
 
CHAPTER IX. 
 
 DUTIES, WAGES, AND PBICES. 
 
 Many Causes of the Material Development of the United States. — 
 Condition of American Labor. — Benefits of High Wages. — Hap- 
 piness in the United States. — Industrial Activity and Progress. — 
 Robert P. Porter on Wages. — John Bright on English Wages. — 
 A Cotton Mill in Bolton, England, compared with a Cotton Mill 
 in the State of New York. — A Woolen Mill in Scotland and one 
 in New York. — The Consular Reports. — Report of the Peabody 
 Trust in London. — " Chambers' Journal." — Ratio of Capital, La- 
 bor, and Imposts. — Testimony before the Tariff Commission. — 
 Logic of Immigration. — Savings Banks. — Railroad Charges. — 
 Expenses of Government. — Prices of Commodities. — New York 
 and Liverpool Markets. — Details. — Summary. — Cost of Living. 
 — Figures from Consul-General Merritt. — The Charity Organiza- 
 tion in England. — Classes of Expenses. — Living in the State of 
 New York. — How Wages are expended. — Retail Prices in the 
 Country. — Clothing from One Tenth to One Fifth of Expenses of 
 a Family. — Purchasing Power of Money tends to Equilibrium. — 
 Efficiency of Labor. — Example in Cotton. — Wages in Britain and 
 on the Continent. — British Production. — American Results. — A 
 Revenue Policy which will strike down Wages cannot be tolerated. 
 
 The people of the United States have had many- 
 allies in attaining their present elevation of material 
 development. The freshness of the soil has favored 
 agriculture. The gifts of nature in mines, water, cli- 
 mate, have afforded admirable conditions for manu- 
 factures of the most diverse kinds. The quickness of 
 intellect and the facility of hand have developed in- 
 
DUTIES, WAGES, AND PRICES. 265 
 
 vention to an extent unparalleled elsewhere, and 
 have enlisted curious and effective machinery in all 
 branches of industry. To all of these blessings the 
 government has added security and peace and en- 
 couragement by the general current of its legislation, 
 and by the spirit which has almost uniformly pre- 
 vailed. 
 
 Thus the condition of those who depend upon their 
 daily labor is better here to-day than in any other 
 part of the world, not only in the political equality 
 insured to them, and in the moral privileges which 
 surround them, but also in the pecuniary advantages 
 which they can command by industry and thrift. So 
 far as our fiscal legislation bears upon their condition, 
 our theme requires us to consider the causes and the 
 effects. 
 
 BENEFITS OF HIGH WAGES. 
 
 We propose to inquire how customs duties which 
 protect American industry affect wages and prices. 
 For if a governmental policy tends to the lowering of 
 the condition of labor, no humanitarian can excuse 
 it, and very grave considerations of necessity must be 
 shown to justify even its temporary maintenance. 
 You will often hear that the only problem to be in- 
 vestigated is the ratio of wages to prices, and the pur- 
 chasing power of money. As a mere material propo- 
 sition this is in part true. But the scale of wages has 
 reference to many things besides the prices of com- 
 modities in the market. Notably the relation of 
 wages to the cost of a homestead is an element which 
 
266 AMERICAN SYSTEM OF REVENUE. 
 
 the prices current will not always illustrate. The 
 ability of the workman to secure his own home and 
 to keep it, is one of the incidents in his progress and 
 elevation. As a rule, no one will deny that the sell- 
 ing value of land is lower in this country than in any 
 of the nations of the Old World, and is to be paral- 
 leled only in the British colonies and the adjacent 
 states of America. If it were conceded then that 
 prices of commodities in the markets were higher in 
 the United States than they are in other countries, 
 while land is much lower, so that many more persons 
 dependent upon their daily labor own their own 
 homes here than elsewhere, the demonstration would 
 be complete that the higher wages here are a real 
 benefit. This is one of the incontestible facts in our 
 civilization. Americans not only raise and maintain 
 homes, but they are, beyond any other people in the 
 world, the landlords of their own homes. This ad- 
 vantage is not simply one of property ; but it has a 
 moral basis, and contributes to political security. It 
 enables Professor Seeley 1 to declare : " There has 
 never been in any community so much happiness, or 
 happiness of a kind so little demoralizing, as in the 
 United States." Citizens who from their own homes 
 control their own government afford the most favored, 
 spectacle which political institutions can present. 
 This condition certainly exists in the United States. 
 The ownership of their own homes is the demonstra- 
 tion of the superiority of the material and moral cir- 
 cumstances of our industrial classes. 
 
 1 Expansion of England, p. 155. 
 
DUTIES, WAGES, AND PRICES. 267 
 
 In other ways high wages, independently of the 
 prices current, mean more comforts and broader op- 
 portunities. Schools are not much affected by the 
 markets. Travel is not, as a rule, more costly in 
 countries of high wages. Social relations are deter- 
 mined in part by the leisure to enjoy them, but many 
 of them in all countries are costly, and must be met 
 by some expenditure. It is therefore true that many 
 conveniences and enjoyments go with high wages, 
 even if the prices of commodities are carried up in 
 much greater ratio. But when the equation of wages 
 and prices is kept upon the same level, high wages 
 signify the advance of those who labor with their ' 
 hands in all the elements which make up the con- 
 ditions of happiness and prosperity. Comfortable 
 homes tend to diminish at least the brutal crimes. 
 Education lifts the individual up to the possibilities 
 of a riper and more fruitful life. Wealth is certainly 
 one of the powers for the elevation of society as a 
 whole, and the development of cities and states. 
 High wages furnish the lever for lifting up the whole 
 social and political fabric. 
 
 In a period sufficiently long to allow the results to 
 appear, high wages will produce an amelioration in 
 the moral and social condition of the industrial 
 classes which will affect taxation and the cost of gov- 
 ernment. Industry will become more skillful and 
 more productive. It will be facile in invention. It 
 will strike out into new fields. It will borrow what- 
 ever other lands have discovered, and will make use- 
 
268 AMERICAN SYSTEM OF REVENUE. 
 
 ful all the devices of past ages. It will force its way 
 to the front in variety and extent of production. All 
 of this has happened in the United States. The time 
 has not yet gone by when intelligent persons speak 
 of this republic as an agricultural country, and treat 
 its manufactures as a secondary interest. Yet the 
 truth is that the American people have already 
 rushed so far ahead of all competitors, that their 
 manufactures exceed those of Great Britain in an- 
 nual product by at least fifty per cent. They are 
 more than double those of France. They are twice 
 and a half as great as those of Germany. They are 
 'four times those of Russia, and more than five times 
 those of Austria. Within a hundred years, from 
 nothing our industrial progress has brought us to the 
 head of nations in the value of our mechanical pro- 
 ductions, and certainly in their variety and useful- 
 ness. We employ more hands in manufactures than 
 Great Britain employs. We bring from the ore-beds 
 and work more iron than any other nation except 
 Britain, and our increase in this industry is far more 
 rapid than that of any rival. In finished iron our 
 product is already about equal to that of Britain. In 
 steel we surpass Britain in rails, and just fall below 
 it in Bessemer ingots ; in some other forms we are 
 yet behind. 1 In wooden commodities no land can 
 compete with us, as the homes of our people demon- 
 strate. In wool, only Australia surpasses us in its 
 clip ; "our growth is more rapid, and in manufactures 
 1 Report of American Iron and Steel Association, 1883. 
 
DUTIES, WAGES, AND PRICES. 269 
 
 of this staple we are challenging some of the best 
 fabrics of the older countries. In cheaper qualities, 
 the retail prices here are as low as they are abroad. 
 In silks we stand next to France in extent of manu- 
 factures, and supply an increasing share of our own 
 consumption, nor needs the quality shun comparison 
 with rivals in many styles. In glass, we are on a par 
 with either France or England in value of product; 
 in many articles prices are lower here, and the ques- 
 tion of excellence one of dispute. In cotton fabrics 
 our manufacturers equal any competitors, and enter 
 on equal terms the markets of the globe. If in linens 
 we fail to attain the prominence which invites us, 
 in copper and lead, and many minor materials and 
 manufactures, our people need not yield on any field. 
 In the textile industries, in twenty years the number 
 of operatives in England fell off, while in the United 
 States there was an increase of more than one hun- 
 dred per cent. 
 
 We add in annual value $5,369,579,171 to the na- 
 tional production in manufactures, or, some authori- 
 ties insist, as much as $8,000,000,000.! While so 
 much is produced, no reason can be adduced why even 
 in larger measure we cannot meet every demand of 
 our growing population, and by multiplying produc- 
 tion cheapen every comfort and most of the luxuries 
 which civilization has provided for mankind. 
 
 Thus the blessings are combined here of higher 
 wages and cheaper living, on the same grade of com- 
 1 C. S. Hill before Tariff Commission. 
 
270 AMERICAN SYSTEM OF REVENUE. 
 
 forts, than in any other land. Many circumstances 
 contribute to produce this happy combination, and 
 all of our experience proves that our revenue system 
 favors both the high rewards of labor and its most 
 fruitful efficiency. 
 
 STATISTICS OP WAGES. 
 
 We have tried to deal with the broadest lessons of 
 history, with the most radical considerations of na- 
 tional life. Let me now illustrate the demonstrations 
 of statistics. Robert P. Porter, who has been mak- 
 ing this subject a special study, concludes, in an elab- 
 orate address before the Fair Trade Congress at 
 Leamington, England, 1 that wages are from sixty to 
 one hundred per cent, higher in the United States 
 than in Great Britain, and from one hundred to one 
 hundred and fifty per cent, higher than in Germany, 
 France, Belgium, and Holland. These results can be 
 tested often by individual experience. As a result of 
 inquiry among many persons, mechanics from Great 
 Britain, recently immigrated, testify that their wages 
 here are just double what they were at their old 
 home in the same trade, and that they save here a 
 sum precisely equal to their total wages there. 2 
 
 1 November 10, 1883. 
 
 2 Before the Ways and Means Committee at Washington, in 
 March, 1884, among the witnesses was Thomas Williams, an iron 
 puddler, born in England. He had worked five years, he stated, in 
 the iron mills of England, before emigrating to America. His wages 
 there amounted to $1.25 a day, puddling iron, and he did not have 
 steady work, either. "It is said that in England it costs much less 
 
DUTIES, WAGES, AND PRICES. 271 
 
 John Bright, in a speech in Birmingham, March 
 29, 1880, gave very strong testimony indirectly with 
 reference to the general standard of wages in Britain. 
 In criticising the Disraeli administration, he de- 
 nounced it for taking up its time with things far re- 
 mote from the true interests of England, and neglect- 
 ing " artisans such as you are," speaking to his 
 auditors, " with your twenty shillings, or thirty shil- 
 lings, or forty shillings a week." No public speaker 
 in the United States would address workingmen as 
 the recipients of five, or six, or eight dollars a week ; 
 he would naturally set his standard at ten, fifteen, 
 and twenty dollars a week. 
 
 This question of wages is vital to this whole sub- 
 ject. Let me present some recent comparisons, based 
 upon figures for which I am willing to be personally 
 
 to live," remarked Mr. Williams. " I deny that most positively, and 
 I speak from actual experience. My board there cost from $3 to 
 $3.50 a week, and we did not live as the laborers of this country do. 
 For breakfast the English laborers get bread and butter and a cup of 
 tea. Dinner is composed of bread and meat, and if they get an egg 
 with their tea in the evening, they consider it extravagance. There 
 are many women at work in the mills of England, also. They do the 
 unloading of coal, and are kept at other unskilled labor. Their 
 wages are nineteen cents a day." He feared there would be many 
 women doing the work of men in this country ere long if free trade 
 was adopted, because the male laborers conld not more than support 
 themselves. He contrasted the different wages paid laborers in this 
 country with those of free-trade England. At Youngstown the pud- 
 dlers made $5.50 out of the same amount of work English laborers 
 were paid $1.25 for. The laborers at Youngstown, he stated, got at 
 least three times as much money for their work as those in England, 
 and their living cost them about the same. 
 
272 AMERICAN SYSTEM OF REVENUE. 
 
 responsible. In the latest report submitted by Con- 
 sul-General Merritt, he embodies the statement of 
 A. D. Shaw, United States Consul at Manchester, 
 giving the wages in a cotton factory in Bolton, Eng- 
 land. By the side of those figures are placed the 
 actual wages paid in the month of February, 1884, 
 in a representative cotton mill in the State of New 
 York, as given to me by the superintendent : — 
 
 Cavd-grindeis, men, a week . 
 Card-strippers, men 
 Slubber-tenders, girls . 
 Mule-spiimers, men 
 Frame-spinners, girls . 
 Warpers, girls . . . 
 Weavers, men, per loom 
 Weavers, girls, per loom 
 Loom-jobbers, men, per week 
 Mule overlookers, men 
 Mechanics, average . 
 Engine-drivers . . 
 Firemen, average 
 
 Bolton. 
 $5.59 
 5.59 
 4.36 
 5.95 
 2.31 
 4.22 
 1.30 
 
 9.00 
 10.22 
 
 7.54 
 10.22 
 
 5.00 
 
 State of New York. 
 $8.28 
 7.25 
 6.00 
 10.50 
 4.50 
 6.00 
 
 $3 or $9 a week. 
 12.25 
 18.00 
 13.00 
 18.00 
 8.40 
 
 Notice that the American rates are seldom less 
 than fifty per cent, above the British standard, and 
 sometimes, as for weavers, are nearly one hundred 
 and fifty per cent, in advance. 
 
 Even more striking is the contrast in woolens. Let 
 me present side by side the wages now paid in a 
 typical woolen mill in the State of New York, given 
 from the pay rolls for February, and the wages of a 
 woolen mill, in many respects similar, in Aberdeen, 
 Scotland : — 
 
DUTIES, WAGES, AND PRICES. 273 
 
 Wool-Sorters. 
 
 Scotland. New York. 
 
 Overseer $7.50 $18.00 
 
 Men 5.50 12.00 
 
 Dyers, men 3.75 7.00 
 
 Carding. 
 
 Overseer 16.50 30.00 
 
 Card-cleaners 4.50 7.26 
 
 Card-tenders, girls 2.00 4.00 
 
 Spinning. 
 
 Overseer 7.00 18.00 
 
 Men 12.00 
 
 Boys 1.50 4.00 
 
 Warping and Drawing. 
 
 Overseer 7.50 18.00 
 
 Dresser-tenders, women 4.50 men, 10.50 
 
 Children 1.50 3.50 to 4.00 
 
 Weaving. 
 
 Overseers 16.50 30.00 
 
 Section hands 7.50 13.50 
 
 "Weavers 3.75 10.00 
 
 Pattern weavers 5.50 10.00 
 
 Finishing. 
 
 Overseer 15.00 35.00 
 
 Shearers 3.75 7.50 
 
 Pressmen 3.75 8.00 
 
 Burlers, girls 1.75 4.00 
 
 Fine drawers, girls 3.75 6.00 
 
 Giggers and fullers 3.75 7.50 
 
 Observe that the New York wages are much more 
 
 than double those of Scotland, in many cases are two 
 
 and a half times, and will average not far from one 
 hundred per cent, greater. 
 
 18 
 
274 AMERICAN SYSTEM OF REVENUE. 
 
 While comparisons in other trades are not so easy, 
 the cotton and woolen industries fairly illustrate the 
 whole field of industry. 
 
 The most recent investigations fully sustain the 
 results of the exhaustive comparison made by our 
 consuls abroad, and published by the State Depart- 
 ment in 1879. Mr. Evarts then presented a sum- 
 mary of the conclusions, which showed that the rates 
 of wages in the United States were then more than 
 twice those of Belgium, three times those in Den- 
 mark, Germany, and France, once and a half those 
 in England and Scotland, and more than three times 
 those in Italy and Spain. At the same time the 
 prices of the necessaries of life are lower in the 
 United States than in any of the foregoing countries. 
 While the details have changed in some respects, our 
 consuls abroad still cite these figures as substantially 
 a fair statement of the conditions in the several coun- 
 tries at the present time. 
 
 Incidental confirmations can be deduced from un- 
 questionable authority. Thus, in the houses of the 
 Peabody Trust in London, which take in the most 
 thrifty and tidy working people, 3,525 heads of fam- 
 ilies engaged in seventy -four different occupations 
 with 101 persons unclassified, earn, according to the 
 official report of the trustees for 1882, an average of 
 £1 3s. Q\d., or $5.68£. These are picked instances in 
 the chief city of the country. They establish the 
 figures of the consular reports. 
 
 " Chambers' Journal " for January, 1884, 1 gives a 
 1 Page 831. 
 
DUTIES, WAGES, AND PRICES. 275 
 
 condensation of important statistics, which from that 
 source deserves especial notice. That authority- 
 says, — 
 
 "Assuming the produce of labor to be one hun- 
 dred : — 
 
 " In Great Britain, fifty-six parts go to the laborer, 
 twenty-one to capital, and twenty-three to govern- 
 ment. 
 
 " In France, forty-one parts go to the laborer, 
 thirty-six to capital, and twenty-three to govern- 
 ment. 
 
 " In the United States, seventy-two parts go to 
 the laborer, twenty-three to capital, and five to gov- 
 ernment." 1 
 
 This comparison, remember, is not invented to 
 help our argument. It is the unwilling testimony 
 of the world's experience to the superiority of our 
 methods, and not least of our revenue system. 
 
 The prolonged and exhaustive investigation of the 
 Tariff Commission in 1882 brought out a great vari- 
 ety of facts under circumstances which led to care- 
 ful criticism and adjustment. By that test the com- 
 parison of wages was made more complete and satis- 
 factory than is possible by any unofficial attempt. 
 The result is on record. It is that in industrial pur- 
 suits generally the standard of wages is at least sixty 
 per cent, higher here than in Britain, and the differ- 
 ence is still greater against every continental country. 2 
 
 1 The London Times gives the same figures. 
 
 2 In the prolonged hearings before the Tariff Commission of 1882, 
 
276 AMERICAN SYSTEM OF REVENUE. 
 
 Europe maintains a protective policy, so that the 
 comparison with any part of the continent does not 
 
 witnesses often gave statistics of wages in this country and abroad. 
 This testimony is in large part condensed here. 
 
 At Troy, N. Y., hacklers, men, in 1861, received $1 per hundred for 
 dressing. 
 
 Hacklers, men, in 1882, received $2 per hundred. 
 
 Skilled spinners, women, 1861, received 50 cents a day. 
 
 Skilled spinners, women, 1882, received $1 a day. 
 
 Boys and girls, 1861, received 50 cents a week. 
 
 Boys and girls, 1882, received $2.40 a week. 
 
 Unskilled men, 1861, received 50 to 62£ cents a day. 
 
 Unskilled men, 1882, received $1 a day, p. 273. 
 
 In New York (p. 279), we pay from $6 to $8 for spinners, while 
 Scotch and Irish spinners receive the same number of shillings for 
 precisely the same labor. 
 
 Thomas Barbour, Paterson, N. J. (p. 289), also manufactures in 
 Ireland. Average wages, $5.50 a week, including girls from twelve 
 years to forty ; some make $10 a week ; children $3 to $4 a 
 week; a man can make $1.50 to $2 a day. In Ireland or France 
 we pay twice as much wages. 
 
 In saddlery hardware, p. 381, we have men who earn $27 to $30 
 a week. 
 
 In barbed wire, Des Moines, Iowa, average $1.75 a day, p. 1138. 
 
 In cutlery, in United States, $2 a day; in Germany, 50 cents, or up 
 to $1 and $1.25, p. 1940. 
 
 Pig iron, wages in United States double those in England, p. 838. 
 
 Iron ore, labor in Lake Superior mines, $2 a day, or from 30 to 150 
 per cent, above Spanish and Canadian rates, p. 845. 
 
 In ore and iron and stone and brick, cost of labor, 60 per cent, less 
 in England, France, and Germany, than here, p. 1912. 
 
 In Sweden, wages in ore-beds and furnaces, 25 cents » day, and 
 here $1.25 to $1.50, p. 2067. 
 
DUTIES, WAGES, AND PRICES. 211 
 
 bear on the question of revenue, but on other social 
 problems. 
 
 On tin plate, difference in cost of labor between United States and 
 England, about 40 per cent., pp. 2083-84. 
 
 Witness does not think there is 25 per cent, difference in wages of 
 miners between this country and England, and 20 per cent, in pur- 
 suits where much machinery is used, p. 1886. 
 
 Coal and ore miners here earn $1.75 to $2 a day ; in England, 75 
 cents to $1, p. 2214. 
 
 Wages in iron and other mills, 50 per cent, higher here than in 
 England and Europe, and in some lines even 100 per cent., p. 2389. 
 
 In sugar, in Louisiana, field-laborers, 85 cents to $1 a day ; second 
 class, 75 to 85 cents; ditching, building levees, etc., $1.25 to $1.50; 
 sugar-house work, $1.25 to $2.50, p. 549. 
 
 In glass we pay (New Albany, Ind.) from two to four times as 
 much as is paid in Europe for the same labor, p. 938. 
 
 Tables, p. 1190, compare Europe, England, and United States 
 showing this difference. 
 
 Tables, p. 1 532, confirm statement. 
 
 In glass, our wages average 50 per cent, higher than in Belgium, 
 p. 2001. The actual rate is 50 to 60 per cent, higher, p. 2513. 
 
 POTTERIES. 
 
 In potteries, tables for wages in Staffordshire, Eng., and Trenton, 
 N. J., show the English average, $8.69, and the American average, 
 $18.50, latter about 113 per cent, higher, pp. 615-17. 
 
 Wages in Staffordshire have advanced 40 per cent, in thirty years. 
 In Trenton, lower than before the war, p. 762. 
 
 This statement denied, p. 872. 
 
 Tables, pp. 866-68, show fully 100 per cent, average difference be- 
 tween English and American potteries. 
 
 In Cincinnati, we paid $1.25 before the war; now we pay $2.25 to 
 $2.50, p. 872. 
 
278 AMERICAN SYSTEM OF REVENUE. 
 
 IMMIGRATION. 
 
 We can appeal to the nations in a body to declare 
 whether it is not true that the material condition of 
 
 Tables, p. 1980-33, compare foreign and American wages, showing 
 difference sometimes as high as 275 per cent. 
 
 Tables, p. 2129-31, show American wages 126| per cent, over 
 English. 
 
 Clay-pipe makers, $8 a week here and in England, p. 1533. 
 
 Wages in potteries much higher here than before the war, p. 2405. 
 
 LUMEEB. 
 
 In lumber (East Saginaw, Mich.), average wages in saw-mills, $2 
 a day ; in forests, $1.75, pp. 956, 959. 
 
 BILE. 
 
 In silk, wages in Basle, Switzerland, not one fourth those paid in 
 this country, p. 2174. 
 
 Tables, p. 2297, show wages 100 per cent, more here than in Eng- 
 land ; 200 per cent, more than in France ; 300 per cent, more than in 
 Italy, and still more as compared with Germany. 
 
 COTTON. 
 
 Por cotton, highest wages of a spinner here range from $10.08 to 
 $13.36, while in England they are $7.20 to $12, with a reduction of 
 10 per cent., pp. 1699-70. 
 
 MISCELLANEOUS. 
 
 Leather dressers are paid here 35y per cent, more than in Britain, 
 66| more than in France, and 93| more than in Germany, p. 384. 
 
 In photograph albums, price of labor in Germany only about one 
 half that in this country, p. 2445. 
 
 In alkalies, skilled workingmen receive not exceeding $1 a day in 
 England, while the average here is over $2, p. 2495. 
 
 Watchmakers, Providence, $8.89 to $12 a week. 
 
 Gold leaf, $12 to $18 a week, in Boston, p. 660. 
 
 In England, men work for 45 to 50 per cent, of our wages, and in 
 Germany they get only 35 cents for our dollar, p. 1053. 
 
DUTIES, WAGES, AND PRICES. 279 
 
 the industrial classes is better here than in any other 
 land. Political liberty counts for something, doubt- 
 less, in their estimate. But when there is a pressure 
 for the necessities of life, it is not in human nature 
 to exaggerate any considerations above those of get- 
 ting food and shelter for one's self and family. Upon 
 this point the movement of peoples bears unimpeach- 
 able testimony. Against every assertion that the 
 American laborer does not get better wages, whether 
 measured in money or in commodities, the grand 
 army of immigrants from all lands flocking to our 
 shores is the eloquent protest. These immigrants 
 come from the countries which are our rivals in man- 
 ufactures, which have bent every energy to restrict 
 our foreign trade. These immigrants go into man- 
 ufacturing, mining, and the mechanic arts in larger 
 numbers than into any other occupation. While in 
 all occupations the percentage of persons, natives of 
 
 Gold beaters earn $13.50 a week in Philadelphia, p. 431. 
 
 Biscuitmakers would 1 require fifty per cent, more wages than in 
 England or Europe, p. 538. 
 
 Eopemakers, wages in United States 50 to 70 per cent, higher than 
 in England, p. 649. 
 
 Papermakers, wages in England not more than half rate here, p. 
 852. See tables, p. 991, showing increase here of 50 to 100 per cent, 
 since 1860, and difference of much more than double here over Eng- 
 land in 1882. 
 
 Eilemakers, wages here 50 to 100 per cent, higher than in British 
 factories, p. 862. 
 
 Unskilled labor, $1.75 a day in towns and factories, Des Moines, 
 Iowa, p. 1158. 
 
 In rice (Charleston, S. C), after war, wages 40 cents a day, 
 now $1. 
 
280 AMERICAN SYSTEM OF REVENUE. 
 
 all foreign countries, is only twenty, and in agricul- 
 ture is only ten, in the branches of manufactures, 
 mechanics, and mining, the percentage rises to nearly 
 thirty-two. 1 Our immigrants come in largest num- 
 bers for wages and not for land. 
 
 These are our imports ; these are our constant ad- 
 ditions to our wealth, and they add each year to our 
 production. These are the millions who during ten 
 years, during a generation, have testified to the ex- 
 cellence of the American system. Count them and 
 question them. They numbered in 1882 over three 
 quarters of a million persons, — 788,992. Of these, 
 179,423 came from the United Kingdom. Out of 
 every 195 of the population in the British Isles one 
 came to the United States, to live and to seek a bet- 
 ter condition. This migration is generally of picked 
 men and women, of those who have life and hope 
 before them. It fell off for a while after our panic of 
 1873, from which we suffered with all the world. 
 During this period Professor Fawcett found a pretext 
 for arguing that our depression was to be cited 
 against our revenue system. He turned the circum- 
 stance adroitly. But again the tide of migration 
 constitutes an overwhelming proof that the men and 
 women who labor with their hands find America, 
 and not Canada but the United States, the most at- 
 tractive of homes, and the land of most unquestioned 
 prosperity. The immigrants come, and they bid 
 
 1 Report on Statistics of Manufactures, Tenth Census, vol. ii. p. 
 xxxvi. 
 
DUTIES, WAGES, AND PRICES. 281 
 
 father and brother and son to hasten hither. They 
 can measure wages and prices, and the equation 
 which renders saving and improvement possible. 
 Against any theory, any special plea from any quar- 
 ter, I cite these witnesses who have from the Brit- 
 ish Isles, between 1872 and 1882, been 1,175,155, or 
 more than one thirty-fifth of their entire population. 
 From the continent of Europe they have numbered 
 1,996,406. From the whole world the vast army 
 has within ten years reached the multitude of 3,949,- 
 264, more than oar total population when we as- 
 serted our independence. The aggregate is greater 
 than the population of the state of New York in 
 1865, and greater than that of any state in the 
 Union in 1882, with the exceptions of New York 
 and Pennsylvania. These are the forerunners sent 
 before to spy out the land, and they testify in every 
 form possible to all the world, that for workingmen, 
 for those who depend upon their own labor, that is to 
 say for producers and production, no other land com- 
 pares with the United States. 
 
 SAVINGS BANKS. 
 
 One of many methods of comparison of the condi- 
 tion of the industrial classes is by the measure of 
 their savings. Both in Britain and in this country 
 the statistics are quite full on this subject. The 
 post-office savings banks in Britain have been highly 
 commended, because they have invited and encour- 
 aged savings in large degree. In 1882 the total capi- 
 
282 AMERICAN SYSTEM OF REVENUE. 
 
 tal or deposits at rest in all the savings banks of 
 the United Kingdom, including the post-office insti- 
 tutions, was £83,750,402, according to the official 
 " Statistical Abstract ; " that is 1418,752,010. The 
 increase in these deposits was £2,269,297 for the year 
 from 1881 to 1882 ; in dollars this is §11,346,485. 
 From 1880 to 1881 the increase was £2,513,182, or 
 $12,565,910. In no previous year did the increase 
 ever amount to $10,000,000. 
 
 In his annual report for the year 1882 the comp- 
 troller of the currency presents the summary of the 
 returns of the savings banks of the United States. 
 They show that the aggegate deposits in these insti- 
 tutions in 1882 were $1,003,500,000, and the in- 
 crease from the preceding year was from May to 
 May, $28,800,000. 
 
 By deposits greater by more than double, as ten 
 to four, and increasing by nearly three times the 
 swiftness, or as ten or eleven to twenty-eight or 
 twenty-nine, the savings banks of the United States 
 testify that in the equation of wages to prices, in 
 the adjustment of production to the cost of living, 
 this country is better off than Britain. 
 
 This is one demonstration that our revenue system 
 favors our laboring classes. 
 
 EAILEOAD CHARGES. 
 
 Another group of facts affords excellent ground for 
 comparison of the general relations of wages and pro- 
 duction on the one hand, and of prices and the cost 
 
DUTIES, WAGES, AND PRICES. 283 
 
 of living on the other, between the United States and 
 other countries. Into the railroads enter all the con- 
 siderations which affect cost and prices. In this 
 country our distances are vast, and our population 
 scattered as compared with the states of Europe, ex- 
 cept Russia. The audacity of enterprise has pushed 
 these iron ways often far beyond the demands of pop- 
 ulation and trade. They have been built with more 
 regard to rapidity than to economy. They have cost 
 more than they ought in many cases. Speculation 
 has added still more to the capital upon which divi- 
 dends must be earned. It would not therefore be 
 strange, if, in order to get returns on all of the out- 
 lay, the charges for freight and travel were made much 
 higher than in the Old World, where many of these 
 incidental evils have been avoided. Keep in mind 
 that the railroad represents labor in the roadway, in 
 the iron of its tracks, in all of its equipments the 
 highest style of mechanical skill. Keep in mind also 
 that in the management of our railroads high priced 
 labor is constantly required. The wages of all the 
 persons employed about our railroads will average as 
 high as in any other occupations. They may fairly 
 be taken as a just standard of all wages in all occu- 
 pations, for the ratio of unskilled labor is not less 
 than it is in vocations generally. 
 
 The rates of passenger fare are adjusted to the es- 
 timate of the railroad managers of the due equation 
 of the charge to all costs of construction and man- 
 agement. They afford an opportunity to reach some 
 
284 AMERICAN SYSTEM OF REVENUE. 
 
 conclusion on a very large scale of prices here in their 
 relation to wages, and to place them alongside those 
 of the Old World. Now on first-class passengers it 
 is found that the rates are lower in the United States 
 than in any country in Europe, as a general rule. 
 The exceptions are rare, and the comparison is so 
 strikingly in favor of this country as to disarm criti- 
 cism or doubt. 
 
 Our census exhibits the average first-class fares in 
 this country at $2.33 for a hundred miles, or that 
 number of cents for one mile on the average. Even 
 in Belgium, with its limited territory and dense popu- 
 lation and very low wages, the rates are $2.34. They 
 are the same in Norway, where also labor is very 
 cheap. Russia stands next in order of fares, at $2.45 
 to $3.10, but there the government stands behind the 
 roads and the fares are probably unremunerative. In 
 Britain and Switzerland and Germany the fares are 
 from $3.11 to $5 for a hundred miles ; in Sweden, 
 they are $3.04 ; in Holland and Denmark they stand 
 at $3.30 ; in Italy and Portugal, $3.50 ; in Austria- 
 Hungary $3.69 ; in France $3.88 ; in Spain, $4.08 ; 
 in Turkey $5.66, and in Rournania $7. 
 
 It is necessary to make allowance for the element 
 of government control in railroads in some countries. 
 But the authorities seek to place the fares at a just 
 standard, and therefore the comparison cannot be 
 much out of the way. 
 
 Second-class rates are not common in this country, 
 because our people exhibit their sense of equality in 
 
DUTIES, WAGES, AND PRICES. 285 
 
 traveling as in other practices ; and every man likes 
 to ride in as good style as his neighbor. But taking 
 these second-class rates and placing them side by side 
 with European charges, we find that the only coun- 
 tries in which the second-class fares are lower than 
 here are South Germany, parts of Russia, Sweden, 
 Belgium, Norway, and Greece. 
 
 We have no third-class fares on railroads in the 
 United States, because we have no people who are 
 willing to travel as third-class passengers. 
 
 In a different sphere, and yet in no less degree, 
 labor and prices enter into all the conditions of freight 
 transportation by railroad. In Britain population is 
 more dense than here, and for that reason freight 
 is concentrated into larger volumes for a given dis- 
 tance. The cost of moving every ton a single mile 
 ought, therefore, to be less under conditions otherwise 
 similar. But the reverse is true. The cost of rail- 
 road transportation of merchandise is lower here 
 than in Britain, according to the testimony of rail- 
 road experts. The manner in which statistics are 
 kept in Britain prevents comparison in detail by fig- 
 ures. But the radical fact is conceded by those who 
 have studied the problem most thoroughly. The 
 cost in Britain is less than in any European country, 
 unless perhaps Belgium. 
 
 The latest statistics at hand are quite worth study- 
 ing. They show the following rates per ton per 
 mile : — 
 
286 AMERICAN SYSTEM OF REVENUE. 
 
 Cents. 
 
 New England States in 1882 1.7 
 
 Middle States in 1882 1.0 
 
 Southern States in 1882 1.8 
 
 Western States in 1882 1.2 
 
 Pacific States in 1882 3.1 
 
 Average for the whole country in 1 882 1.2 
 
 Average rate for France in 1881 1.66 
 
 Average rate for Germany in 1877 1.685 
 
 Average rate in Belgium 1.5 
 
 This demonstration is that in spite of our vast dis- 
 tances and scattered population, the average cost of 
 transportation is less than even in Belgium, as shown 
 by figures, and less by about the same difference, 
 than in Britain. These railroad statistics include 
 many of the elements which enter into all prices, and 
 go far to sustain the conclusions which are attained 
 by other paths. 
 
 In our coastwise trade, a like illustration of wages 
 and prices can be found. While it is difficult to pre- 
 sent statistics on the subject, it is conceded that in 
 our coastwise marine the freight charges are lower 
 than those of the home fleet of any other nation. 1 
 
 GOVERNMENT EXPENDITURES. 
 
 A very broad group of expenditures connect them- 
 selves with the government, li we confine ourselves 
 to the central administration, to the national govern- 
 ment, to use the American phrase, injustice might be 
 done, because royal institutions are so much more 
 
 1 See article in North American Review for April, 1 884, by Hon. N. 
 Dingley, Jr. 
 
DUTIES, WAGES, AND PRICES. 287 
 
 costly than our republican system. But if we in- 
 clude all the local charges in two countries, taking 
 those which affect cities and counties, or shires and 
 parishes, everything which concerns every department 
 of government, we shall get one of the most complete 
 grounds for comparison. Now in the United States 
 in 1880, the total government charges for the na- 
 tional, state, and local authorities, so far as they could 
 be collected by the census-takers, were 1647,277,221, 
 and out of them was paid on the national debt $84,- 
 425,350, leaving, as the cost of government in every 
 department in this republic, $562,851,871, and this 
 was exactly $11.22 for every person enumerated. 
 
 In Great Britain in the same year the total of na- 
 tional and local taxes was £145,280,234, and this 
 was per capita .£4 Is. 8^., or $19.84. 
 
 So many considerations enter into administration 
 that this comparison is not altogether a just measure 
 of prices. But it has an important bearing upon it. 
 In the old country fewer improvements are called for 
 year by year, and in the cities extravagance is greater 
 here probably than in Britain. The burden of taxes 
 becomes a part of the cost of every article, and in that 
 way, at least, this statement of government charges 
 may be taken as indicating that the cost of living 
 here on a similar level of comfort cannot be greater 
 than in the land in which taxes are so much heavier. 
 
 PRICES OP COMMODITIES. 
 
 If we descend to a comparison of prices by com- 
 
288 AMERICAN SYSTEM OF REVENUE. 
 
 modities we shall come to the like conclusion. In all 
 articles of food, first of bread, of wheat, and corn, 
 and oatmeal, the markets in this country always rule 
 below the British markets, taking the latter as the 
 lowest in the world external to our own. Beef and 
 pork and poultry are also cheaper here than in Britain 
 or on the continent. The rates on the sea-coasts with 
 us are generally, but not always, higher than inland 
 by the cost of transportation. Taking the average 
 rates for the whole Union we find the prices of food, 
 whether flour or meats, or tea and coffee, and even 
 sugar, at retail, are lower here than in Europe. The 
 claim is made that Liverpool fixes the prices of grain ; 
 it determines the rates at which the surplus will be 
 taken. But the home demand decides whether or 
 not any surplus shall be offered abroad at any price. 
 It is certain that the rates here cannot be above those 
 which foreign consumers will pay. 
 
 Let us bring together the New York and Liverpool 
 prices of staple articles at wholesale, as reported dur- 
 ing the current month of February : — 
 
 New York. Liverpool. 
 
 White wheat, hundred lbs. $1.73 $2.08 
 
 Beef, extra India mess, bbl. $24.00 to 26.00 27.00 
 
 Beef, mess, extra, bbl. . 19.50 to 20.00 23.00 
 
 Fresh beef, lb 1025 to .11 $0.11 to .12 
 
 Pork, prime mess, bbl. . 14.50 to 17.00 15.62 to 18.61 
 
 Mutton, lb 06 to .07 .18 to .19 
 
 Eggs, dozen 35 to .37 .38 to .43 
 
 Butter, lb 32 to .35 .36 to .42 
 
 Cheese, lb 13 to .14 .15 
 
 Tea, Congou, lb .205 .2516 
 
 Coffee, lb 1075 to .1090 .11 to .117 
 
 Petroleum, gallon .... .0825 -1525 
 
 Sugar, refined, lb .0710 .062 to .07 
 
DUTIES, WAGES, AND PRICES. 289 
 
 American prices are sometimes twenty per cent, 
 lower, often fifteen per cent, lower, and on the aver- 
 age on these articles more than ten per cent, below 
 the British standard. 
 
 In cotton fabrics of every grade the American 
 buys as low as anybody in the world. As the large 
 producers of the raw material we exercise a measure 
 of control over all markets. While cotton is not 
 king, it is an important factor in the comforts of 
 mankind and in the trade of all lands. We export 
 shirtings and sheetings to Britain, and in the far East 
 we prove that we can adjust prices as low as any com- 
 petitors. 
 
 The commodities which are made of wood, except 
 articles which take value from their age or as curios- 
 ities, can be bought in the United States as cheaply 
 as in any other country. If we import anything in 
 this class, it is because it is costly and outside of the 
 range of common demand. 
 
 No other land can furnish more cheaply the grades 
 of leather in most ordinary use. Boots and shoes 
 and harness, and the miscellaneous wares in which 
 leather enters, are therefore sold here at figures quite 
 as low as anywhere else. We are constantly export- 
 ing leather, and many of its products. 1 
 
 1 As some controversy exists relative to leather, the following par- 
 agraph from the Trade Circular of Boutcher, Mortimore & Co., 
 under date of January 4, 1884, deserves to be cited : — 
 
 American Leather. — At no time during the past year was there 
 any very active demand for hemlock sides, and at one time the large 
 failures in the States and Canada induced holders to sell at very low 
 19 
 
290 AMERICAN SYSTEM OF REVENUE. 
 
 In many of the products of iron we excel other 
 nations, and in steel we are already in the forefront. 
 In iron our progress is most rapid. Thus we are ex- 
 porting agricultural implements, which we can sell in 
 competition with any rivals. In the London news- 
 paper called " Iron," in August, 1881, testimony is 
 given relative to an advanced stage of metal produc- 
 tion. The " Iron " recognizes " the superiority of 
 the tools which are now so largely imported into 
 Britain from America, and which, while remarkable 
 for their quality and finish, are much less costly than 
 the English production." Sir Thomas Brassey con- 
 cedes that we are formidable competitors in edced 
 tools and some kinds of machinery. 1 This testimony 
 deserves to be extended to cutlery of the kinds in 
 every-day use in the household and for personal con- 
 venience. Such utensils as frying-pans, sold in this 
 
 prices, but generally the market was steady, though dull, and the ten- 
 dency during the first half of the year was to lower prices ; damaged 
 of all classes and low-priced sides at all times met most inquiry, and 
 for really prime sides there was always a steady trade, but consumers 
 found that many tannages of English sole leather were relatively 
 quite as cheap, and gave them the preference ; and as a result the 
 quotations for hemlock sides were at the close of December fully one 
 halfpenny per pound lower than at the corresponding period in 1882. 
 Curried splits have been received in considerable quantities through- 
 out the year, and during the past two or three months there has been 
 more inquiry and rates are steady, without much change from those 
 ruling in January last. Rough upper is not represented here, neither 
 are curried skins, both being relatively dearer in the States. 
 
 1 Foreign W ork and English Wages, p. 84. This is attributed to the 
 superior ingenuity of American manufacturers in producing light and 
 well-shaped tools, at a cheap rate, by machinery. (Page 85.) 
 
DUTIES, WAGES, AND PRICES. 291 
 
 country at $4.25 a dozen, bring $4.48 in England. 
 Enameled kettles, sold here at fifty cents, bring sixty 
 cents there. Tools, like masons' trowels, sold in this 
 country for $7.50 a dozen, cost $8.24 a dozen in Eng- 
 land. These are illustrations of the broad statement 
 of the London newspaper. 
 
 Tea and coffee are sold in this country more 
 cheaply than in any part of Europe, and certainly at 
 lower prices than under the heavy British, duties. 
 Sugar pays a very high duty in the United States, 
 and yet, such are the facilities for refining here, that 
 our people find the retail prices as low even as in 
 Britain. Our land is especially rich in petroleum, 
 and it is offered in our markets as cheaply as in any 
 part of the world. 
 
 Official figures show that the value of coal at the 
 mines in Britain was, in 1881, the latest year re- 
 ported, $1.78 a ton. Sir Thomas Brassey places it, 
 two years earlier, at $2.25. 1 This coal was in very 
 large part bituminous. The average value of coal of 
 this kind at the mines in Pennsylvania last year 
 ranged from $1 to $1.75 a ton. The value of anthra- 
 cite, which is in general use in this country, was not 
 far from $2 to $2.25. At equal distances from the 
 mines, coal was sold last year as cheaply in this 
 country as in Britain. The price, for example, in 
 Bradford, England, was $3.89 a ton, with twenty-five 
 cents a ton extra for every mile of drawing. This 
 price is higher than at a like distance from the mines 
 1 Foreign Work, and English Wages, p. 30. 
 
292 AMERICAN SYSTEM OF REVENUE. 
 
 here. For example, at Scranton, anthracite coal is 
 sold at retail at $2.50 a ton, the purchaser paying for 
 hauling. 
 
 The most careful study will prove that all articles 
 of prime necessity, including food in its essential va- 
 rieties and the comforts of life, are cheaper here, not 
 only in their relation to wages but in money, than in 
 any other country. Any difference in the cost of liv- 
 ing will proceed from the desire, and in an important 
 sense the demand, that the person who depends upon 
 his manual labor shall possess more and enjoy more 
 of the comforts and even the luxuries which civiliza- 
 tion has produced. By actual statistics it is demon- 
 strated that, except silks, linens, and woolens, and 
 novelties and commodities which derive their value 
 in large part from fashion, prices rule here as low or 
 lower than in Britain or in Europe. 
 
 COST OP LIVING. 
 
 The demonstration relative to prices and the cost 
 of living can also be rendered absolute mathemat- 
 ically. Consul-General Merritt gives the following 
 as a representative schedule of the expenditures of a 
 carpenter in a colliery district, who has a wife and 
 three children, four, five, and seven years of age. 
 He earns five dollars a week, and he spends it all for 
 these items : — 
 
 Kent $0.72 
 
 Poor rate and school rate 09 
 
 Club 16 
 
DUTIES, WAGES, AND PRICES. 293 
 
 Coal $0.48 
 
 Cheese, 16 cents a pound 32 
 
 Batter 32 
 
 Potatoes, one half peck 16 
 
 Bacon, 16 cents a pound 32 
 
 Butcher's meat, 15 cents a pound 72 
 
 Clothes 48 
 
 Tea, 48 cents a pound 36 
 
 Sugar, 7 cents a pound 28 
 
 Soap, 6 cents a pound 12 
 
 Flour, 4 cents a pound 12 
 
 Candles eight for 12 cents, sixteen to pound 06 
 
 Milk, one quart 07 
 
 Tobacco 12 
 
 Beer 12 
 
 Total $5,02 
 
 These expenses may be classified, for convenience, 
 into these items : — 
 
 For rent and rates $0.81 
 
 For flour and butcher's meat 84 
 
 Other provisions, with soap and candles 2.01 
 
 Coal 48 
 
 Club, beer, and tobacco 40 
 
 Clothes 48 
 
 Total $5.02 
 
 Observe that the rent and rates are less than one 
 sixth, the flour, meat, and other provisions are much 
 more than one half, the fuel is one tenth nearly, 
 while, for the family of five, only two shillings a 
 week, or less than thirteen dollars a year, is allowed 
 for clothing. Let the expenditure for beer, tobacco, 
 and club pass without comment. But you cannot 
 resist the conclusion that for every item except that 
 
294 AMERICAN SYSTEM OF REVENUE. 
 
 of clothing, the articles are such as can be bought in 
 
 the United States more cheaply than in Britain. That 
 
 item of clothing is just one tenth of the total outlay, 
 
 and it must include shoes and cotton goods, which 
 
 also are cheaper in the United States than in the 
 
 United Kingdom. 
 
 These figures are confirmed by investigations 
 
 made under the auspices of the Charity Organization 
 
 Society in England. We do not go down to the slums 
 
 of London, to the dens where families huddle in a 
 
 single room. 1 We take the expenses of living of per- 
 
 1 In a sermon in Bloomsbury Chapel, delivered on Sunday, Decem- 
 ber 9, 1 883, Rev. Stopf ord Brooks compared London with the House 
 of Pride, in Spenser's Faery Queen, and said : " When the Red Cross 
 Knight escapes by the Priory postern, and sees the outcast London 
 of that place, — 
 
 Scarce could he footing find in the f oulle way, 
 
 For many corses, like a great hay stall 
 Of murdered men, which, therein strewed, lay 
 Without remorse or decent funerall. 
 
 London is this palace of Lucifera. No words, as you have heard of 
 late, can exaggerate that which lies behind the stately edifice of our 
 wealth and pride. Here, close at hand to this chapel, there are dens 
 where decent folk live, nine in a cellar scarcely larger than six of the 
 pews in this church, for which they pay five shillings a week. It is the 
 picture of thousands of rooms dwelt in all over this city, the filth and 
 vermin and nameless horrors of which deepen, year after miserable 
 year ; and every improvement made in this town for the sake of the 
 greater comfort and pleasure of the upper classes, without previous pro- 
 vision for housing those whose dens are pulled down, increases this 
 overcrowding, and raises the rent on those whose life is already crushed 
 out of them by overwork, and whose wages for this overwork are 
 starvation wages ; and work is almost as much overcrowded as the 
 dwellings. There are thousands who cannot get any work at all, and 
 whose lives are spent in daily despair, and while their souls are eaten 
 
DUTIES, WAGES, AND PRICES. 295 
 
 sons earning twenty shillings a week, or a trifle less 
 than $5, with a wife and three children to support. 
 Upon a very large group of facts, the summary is 
 that the allowance for meat, " if any," ranges from 
 three shillings, or seventy-five cents, to nine shillings 
 or $2.25. The rent and bread each cost a little more 
 than one fifth of the assumed wages, $1.04 for rent 
 and $1.08 for bread. Only fifty cents a week is al- 
 lowed for clothing the eutire family. For school ex- 
 penses eight cents a week is appropriated ; and for 
 club, that is for the privilege of sitting in a public 
 
 away by this vulture their bodies are burnt up with famine. Famine 
 is common in this town, and especially the famine of children, and the 
 fact speaks well for the brutality of the first city in the world. Then 
 those who do earn wages, say twenty shillings » week, with a wife 
 and children, and a room costing them seven shillings, are eagerly 
 supplied, by the theory that all trade is to be free from interference ; 
 a temptation to which they are peculiarly prone, which it is almost 
 impossible for them to resist, so that a third of their wages never 
 reaches their homes at all. We are preeminent in London in these 
 matters. There is nothing so terrible in any other great civilized 
 city, — no, not Paris or New York ; there is nowhere else in the 
 Christian world such a mass of wretchedness, squalor, and degrada- 
 tion as in England ; in no other country is there such complete and 
 satisfied belief that all that is necessary is done for the poor, or such 
 quiet shoving aside in Parliament of measures necessary for their ele- 
 vation ; and except in countries under wholly irresponsible govern- 
 ment, there is no place where for many, many years the law has so 
 unmistakably taken the side of wealth and rank and power as against 
 povefty and weakness and ignorance. The insolent wealth and 
 flaunting folly of a London season, recorded day by day in the jour- 
 nals of what is called society, have as their background, before which 
 they play their careless comedy, the fires and the woe, the blackness 
 " and the crimes of hell." 
 
296 AMERICAN SYSTEM OF REVENUE. 
 
 house, and for drink and tobacco, a shilling. Other 
 items exhaust the full wages, week by week. 
 
 Like comparisons, carefully extended as far as has 
 been practicable, bring to me, from workingmen in 
 the state of New York in many vocations, and earn- 
 ing wages from $8 to §25 a week, many instructive 
 statements. The sum of many of them shows that 
 they save more or less money, and of their expenses 
 for living, the division ranges thus, for families of 
 from four to ten persons : — 
 
 Kent 12.5 to 25 per cent. 
 
 Bread 6 to 10 per cent. 
 
 Meat 10 to 25 per cent. 
 
 Other provisions 18 to 40 per cent. 
 
 Shoes and cottons 7 to 12 per cent. 
 
 Fuel 7 to 15 per cent. 
 
 Church and charity to 8 per cent. 
 
 Tohacco and miscellaneous small percentage. 
 
 Silks and woolens 10 to 20 per cent. 
 
 Retail prices here and abroad will show the rela- 
 tion of the important articles in this list. The au- 
 thority for the prices is the latest consular reports 
 and the regular quotations in the daily papers. 
 Comparison is made between rural towns in Britain 
 and Utica : — 
 
 Utica. Rural Britain. 
 
 Cents. Cents. . 
 
 Bacon, a pound 14 16 1 
 
 Beef, fresh 12-20 14-31 1 
 
 Butter 30-38 37-42 * 
 
 Coffee 20 28 1 
 
 * Aberdeen Journal, January 5, 1884. 
 
 t Consul General Merritt's report, November 30, 1883. 
 
DUTIES, WAGES, AND PRICES. 297 
 
 Cheese 14 16* 
 
 Eggs, a dozen 38-40 44-50* 
 
 Flour, a pound 035 4 * 
 
 Lamb 16-18 20-26* 
 
 Milk, quart 6 8t 
 
 Mutton, pound 14-18 16-24 1 
 
 Pork 11 16-20* 
 
 Potatoes, a peck 15 32 1 
 
 Sugar, a pound 5-8 5-8 * 
 
 Tea, a pound 40 48 1 
 
 Careful analysis proves that the average family 
 among working people in Britain, when the ability 
 to do so exists, expends for rent about one quarter of 
 its total outlay. In this country this charge is from 
 twelve and a half to twenty-five per cent. When 
 the rate of expenditure rises, the share allotted for 
 rent becomes larger, and upon a total of $1,500 a 
 year may be here as much as one third. For bread 
 and meat abroad rather more than one half goes, 
 while in this country only from sixteen to thirty-five 
 per cent. For groceries in England forty per cent. ; 
 in this country that share is seldom reached. For 
 articles of cotton and for boots and shoes not much 
 less than one eighth is spent here ; and for silks, 
 woolens, and other clothing, from ten to twenty per 
 cent. .These ratios vary, but the outlay for provis- 
 ions tends to increase rather than diminish. In Eng- 
 land the allowance for clothing must always be much 
 less than it is in this country. Here the share for 
 shoes and cottons will be about ten per cent, and for 
 other clothing from ten to twenty per cent, of the 
 total expenditures. 
 
298 AMERICAN SYSTEM OF REVENUE. 
 
 When, therefore, a family starts to set up its own 
 home in this country, it will find that for furniture 
 and cutlery, for the miscellaneous articles necessary, 
 it will be charged for those essential to comfort as 
 low rates as in any part of Britain or Europe. Plain 
 pottery and glass ware are as cheap, and the latter is 
 at least twenty per cent, cheaper here than in Eng- 
 land. The coarser carpets, in which now some hair 
 is introduced, and blankets of like quality, cost no 
 more here than elsewhere. But when luxury is ap- 
 proached, when crockery is of a higher grade, and 
 French and Asiatic carpets are demanded, our people 
 must pay a little more for the commodity. 
 
 But reckoning the saving in furniture and in com- 
 mon articles the total outlay will not necessarily ex- 
 ceed the like preparations in Britain. Naturally the 
 American wants more, and on that account he will 
 expend more. But for the like comforts the outlay 
 here will not exceed the outlay in Britain. 
 
 A careful calculation will prove that since food re- 
 quires about half of the expenditure of the average 
 working family, it will save on these items alone 
 quite enough to make up for the added cost of wool- 
 ens and silks ; for the share of income apportioned 
 to these latter is only a small percentage of the 
 whole. 
 
 Under like conditions rent in this country is not 
 more than in Britain or Europe. Our people de- 
 mand better accommodations and are willing to pay 
 for them. But if we place rent on the same footing 
 
DUTIES, WAGES, AND PRICES. 299 
 
 of cost we concede all that is fair to the old coun- 
 tries. 
 
 Our studies show that for at least three fourths of 
 the usual expenditures of a family, large or small, 
 the prices of articles are in favor of the United 
 States. Upon the same scale of comforts the money 
 cost is less here than in the lands of lower wages. 
 If we concede that in woolens and linens and silks 
 the balance is against us, these articles never amount 
 to one fourth, and as a rule only to from one tenth 
 to one fifth, of the expenditures of a family to which 
 economy is a necessity. The addition to the prices 
 of these classes of commodities cannot counterbalance 
 the savings on food and the other necessaries of life. 
 
 In no land do the prices of even these exceptional 
 articles tend downwards as they do in the United 
 States. The fall in woolens and in silk is the stand- 
 ard complaint on the one hand and boast on the 
 other hand of the manufacturer and merchant. It 
 is only in the novelties, in the fabrics sought for 
 fashion and display, that prices are maintained at the 
 standard of a quarter of a century ago. 
 
 These are the classes of facts which compelled the 
 commissioners to our Centennial Exhibition to bear 
 testimony such as is on record. The French com- 
 missioners declared after their elaborate investiga- 
 tions: "Under the shelter of a prohibitory system " 
 the people of the United States " have organized a 
 powerful industry which rivals England in cheap- 
 ness." The president of the German commission 
 
300 AMERICAN SYSTEM OF REVENUE. 
 
 testified that "the present condition of American 
 manufactures shows the fallacy of the free trade doc- 
 trine, that the productions of a country are raised in 
 price by protective duties." 
 
 By reason of this American equation of wages and 
 prices, in no other country that the sun shines upon 
 is there so steady a movement from the ranks of labor 
 to the ranks of capital, from the shop to the college 
 and the professional chair, from poverty to wealth 
 and culture. With fair health there is no excuse in 
 this land for any person to suffer from want. 
 
 Pauperism increases, but in a less ratio than the 
 population. Not only are large fortunes multiplying, 
 but the number of small fortunes is multiplying in 
 far greater degree. In every manufacturing village 
 you will find families who are laying up from their 
 daily wages sums which become the beginnings of 
 wealth, which insure education for their children and 
 competence for themselves in old age. 
 
 Nor is that all. The tendency of wages in long 
 periods is upwards, while the tendency of the cost of 
 living on the same scale is falling. 1 The civil war 
 carried wages to an abnormal standard, and a fall 
 came soon after peace. But in every vocation wages 
 are to-day higher than they were before the Rebel- 
 lion ; in some occupations they are fifty per cent. 
 
 1 J. S. Mill, in an article published in the Fortnightly Review, says 
 it is yet to be proved that there is any country in the civilized world 
 where the ordinary wages of labor, estimated either iu money or in 
 articles of consumption, are declining ; while in many they are, on the 
 whole, on the increase. 
 
DUTIES, WAGES, AND PRICES. 301 
 
 higher ; in many they are at least twenty per cent, 
 higher. 
 
 With the spirit which now prevails, and with the 
 development of production in this country, the proc- 
 ess must go on. It is a great deal for a nation to 
 absorb three fourths of a million people in a single 
 year and not find its wages fall and its cost of living 
 advance. 
 
 EQUILIBRIUM OP PURCHASING POWER OP MONEY. 
 
 Let us turn to another group of considerations. 
 By the constant and close intercommunication be- 
 tween nations, the purchasing power of money ap- 
 proaches an equilibrium all over the world. The 
 broad differences in the prices of commodities no 
 longer exist. The makers of shawls in the provinces 
 of India and Turkey feel at once the impulse of de- 
 mand in Europe and America. Even in the heart 
 of Africa the gewgaws which formerly could buy 
 kingdoms are only rated as bits of glass or hollow 
 shams. In all lands commerce has penetrated, and 
 the cost of transportation and the hazards of trade 
 serve largely to fix the price which can be secured 
 anywhere among men. This tendency to equilib- 
 rium of prices affects directly the cost of living. 
 Even in Asiatic countries, where people exist on the 
 merest necessaries, the cost of those necessaries has 
 advanced according to the rates existing elsewhere. 
 In the rural districts of France and in Switzerland, 
 where economy attains its maximum, the price of 
 
302 AMERICAN SYSTEM OF REVENUE. 
 
 bread is as high as it can be in Russia or Australia, 
 or in any part of Europe. The articles with refer- 
 ence to which the prices vary seriously in different 
 countries are quite few. They are commonly lux- 
 uries, and are affected by fashion rather than by cost 
 of production or actual substance of value. Thus it 
 follows that the cost of living on anything like the 
 same scale becomes a matter of close comparison 
 rather than of contrast in different lands. 
 
 On the same plane with the same comforts and the 
 same regard to style, the people of the United States 
 live as cheaply as can the inhabitants of any country. 
 The American wants more of what goes to make up 
 the material attractions of life. He wants a neat 
 house, with pretty decorations, and with bright fires 
 and glowing lamps or gas. He wants schools and 
 books for his children, and piano for his daughter, 
 and perhaps painting and other artistic accomplish- 
 ments. The children of the operatives and me- 
 chanics are the leaders of society, and of the move- 
 ments which elevate mankind in" this land. All 
 the preparation which this career implies costs money. 
 The homes which in every comfort would vie with 
 the palaces of Queen Elizabeth or of the great Louis 
 of France, involve expenditures such as the wages of 
 Europe do not allow. But these comforts cost no 
 more here than they cost in European markets. Only 
 here money is better distributed, and reaches in 
 larger measure the hands of the producing classes. 
 Possibly extravagance has penetrated into the ham- 
 
DUTIES, WAGES, AND PRICES. 303 
 
 lets and even to the farms of our country, as well as 
 into the villages and cities. Our people spend more 
 money than their cousins in other lands. But they 
 have more to spend, and they get quite as much for 
 every dollar which they do lay out. 
 
 To some extent this tendency to equilibrium affects 
 the wages of the world. It is beyond question that 
 the pay of all classes, even in the remote districts of 
 Asia, has been raised by the example of America and 
 by the demand for Asiatic products. The standard 
 of wages of European countries has been still more 
 advanced by the emigration of skilled workmen, and 
 by the intelligence received from America of the re- 
 turns which labor receives here. Under Elizabeth, 
 Hume says the wages of ordinary labor in England 
 were eight pence a day. Not all of the advance 
 is due to American influence. Human labor is less 
 easily removed than is its product; commodities can 
 be transferred as the demand varies. Prices are ad- 
 justed by the relation of the supply to the demand. 
 Labor becomes more or less attached to the soil. It 
 requires deliberation and effort to transfer families 
 and every incumbrance which time gathers about 
 them. Thus while the index points towards equality 
 all over the world, the obstructions to advance are 
 many and grave. In the United States wages have 
 been long maintained at their maximum for the 
 world. They have in some vocations fallen some- 
 what as those in European countries have advanced 
 in some degree. But in every department, except 
 
304 AMERICAN SYSTEM OF REVENUE. 
 
 those of art and pleasure, and possibly of high liter- 
 ature, the returns in the United States continue far 
 above the standards which any other country has es- 
 tablished. 
 
 EFFICIENCY OF LABOE. 
 
 Nor is it necessary, as some allege, to reduce wages 
 in order to secure a share of foreign commerce. The 
 other alternative is to increase the efficiency of labor. 
 The advocates of free trade do not deny that the 
 money rate of wages must be reduced if their policy 
 is to prevail. It is confessed in every quarter that 
 American labor is more intelligent and more efficient 
 than that of any other land. It has been brought 
 up to this point by reason of the great prizes offered 
 here to production. The comparison of the cotton 
 manufacture of Great Britain and the United States 
 shows that in the former country the product se- 
 cured from each spindle per year was 112.01 ; in this 
 country it was, in 1880, $18.03, or fifty per cent. 
 greater. 1 From 1865 to 1875 the improvement in 
 England was twenty-three per cent., and in Massa- 
 chusetts one hundred per cent. 2 In other depart- 
 ments this superiority of American labor is admitted, 
 and it is proved by actual comparison of results. 
 Upon this superior efficiency we must rely to win for 
 the United States the supremacy in commerce which 
 this republic has already won in manufactures as well 
 
 1 United States Census, 1880, the Factory System, p. 9. 
 
 2 Brassey, p. 54. 
 
DUTIES, WAGES, AND PRICES. 305 
 
 as in agriculture. The aim and purpose, as well as 
 the direct consequence, of the protective policy is to 
 maintain and develop this superior efficiency through 
 education and adequate rewards. 
 
 GBEAT BRITAIN AND THE CONTINENT. 
 
 Wages in Britain are beyond question higher than 
 on the continent of Europe. Our comparisons have 
 been adjusted to British standards. The plea is urged 
 that in spite of free trade, Britain pays its working 
 people better than the countries on the continent 
 which maintain a protective policy. This is true. 
 Britain continues to reap the harvests of the strong 
 policy of promoting manufactures, which, from the 
 time of Elizabeth into the reign of Victoria, was the 
 distinction of its legislation and administration. The 
 foundations which were laid in courage and main- 
 tained by persistence have served to keep the struc- 
 ture solid against the competition of the world. The 
 colonial system, which has brought so much of the 
 globe to the feet of the British throne, has not ceased 
 to bear fruit. By arms and diplomacy, markets are 
 yet held in India and Turkey and Egypt and the 
 islands of the sea. Constitutional freedom crowns 
 Britain with many of its enduring laurels, and the 
 rewards of the British workingmen are among its 
 prizes. 
 
 But the advance in wages on the continent during 
 the past forty years has been far greater than in any 
 part of the United Kingdom. The development of 
 
 20 
 
306 AMERICAN SYSTEM OF REVENUE. 
 
 manufactures has shown a larger per cent, of prog- 
 ress in the continental countries than in the British 
 islands. Relatively the producing interests of the 
 continent gain more every decade than under all the 
 strain of British energy can be won for the textile or 
 metal or miscellaneous manufactures of Britain, with 
 all the incitement of the control of the markets of 
 the world. Time was when British statesmen could 
 boast that their islands were the master workshop of 
 the world. That era has passed away. Germany 
 and Belgium lead in iron, France in silks, our own 
 and other countries in leather, the United States in 
 cotton and sugar-refining, and in many sorts of metal- 
 working, and in no single industry does the United 
 Kingdom keep up the rate of growth of half a cen- 
 tury ago. Thirty years ago Britain had 850,000 flax 
 spindles, and the continent 190,000, four and a half 
 times more than the continent; now the United 
 Kingdom has 1,292,000, and the continent 1,705,600, 
 or thirty-two per cent, of excess for the latter. Yet 
 " Britannia rules the waves." She holds the ocean 
 carrying trade. In the streets of Liverpool you may 
 hear the constant complaint that foreign sailors are 
 hired to man her ships because they will serve for 
 lower pay. Even in the land where three centuries 
 of strong protection had fortified manufactures you 
 may see the evils which have come from prostrating 
 every interest to commerce as the engrossing and en- 
 gulfing idol. 
 
DUTIES, WAGES, AND PRICES. 307 
 
 AMEBIC AN RESULTS. 
 
 Can foreign commerce offer any prize adequate to 
 justify the check of the progress of this republic? 
 High wages, tending to advance even with shorter 
 hours, are one of the chief incitements to industrial 
 achievements here, to the elevation of the working 
 classes, to the continual merging of the hand-worker 
 into the inventor, and the student into the teacher 
 and the leader of men. Let me be far from claiming 
 for my countrymen superiority over all mankind. 
 But here we find to-day the conditions which, better 
 than anywhere else on earth, may serve to lift up 
 the whole body of citizens, to present the field for 
 individual growth and training, to break down the 
 barriers which shut the unfortunate into outer dark- 
 ness, to incite to tasks which ally the brain with 
 muscle, and set heart and soul to dominate over all. 
 
 A revenue policy which, by the confession of its 
 advocates, will strike down the money wages of pro- 
 ducers, must be the foe of the progress which has 
 been the glory of our republic, and must tend to de- 
 stroy the diversity and the efficiency of labor which 
 have been the chief instruments of our development 
 as a nation, and our improvement as a people. 
 
CHAPTER X. 
 
 ALTERNATIVES OF PROTECTION. 
 
 Sciences of Administration. — Political Economy an Applied Sci- 
 ence. — Cairnes' Classification. — A Professor before the Tariff 
 Commission. — Senior. — The Teachings of Experience. — Polit- 
 ical Economy Eyerybody's Business. — If not by Protective Duties, 
 how shall Government be supported 7 -- The British System and 
 the American System. — Appeal for Pair Trade in England. — 
 The Cobden Club.— Demand to abolish all Customs and Excise. 
 
 — Financial Reform Association. — Direct Taxation asked for. — 
 Opposition here to any Tariff at all. — British Taxes burden 
 Labor. — American Imposts fall on Wealth and Waste. — Duties 
 should be adjusted to protect American Industry at Pair Prices. — 
 The Equation of Wages. — Cotton. — Iron. — Stability the First 
 Need. — German Action. — Exaggeration. — The Chancellor and 
 the Army. — Lasker. — Three Schools of Political Economy. — In- 
 cidental Protection : repudiated by John C. Calhoun. — Legislation 
 must affect Production. — Should be Deliberate and Intelligent. — 
 Duties should be Adequate. — Free Trade and Labor. — Free 
 Trade compels Specializing. — We must provide for Growth of 
 Population. — Free Production enlists Idle Capital and Labor. — 
 Enlarges Competition. — Patents give Monopolies. — Complaints 
 of British Workmen. — Complaint in London " Quarterly " on be- 
 half of Property and Land. — London " Spectator " on Free Trade. 
 
 — The Choice between the American and the British System. 
 
 The Germans maintain in their higher institutions 
 of learning chairs of what they call bureau sciences, 
 or, as we should say, sciences of administration. In 
 this department they class political economy, and 
 
ALTERNATIVES OF PROTECTION. 309 
 
 under it would stand the principles of revenue sys- 
 tems. In it are illustrious such teachers and au- 
 thors as Roscher and Wagner are, and as List, Rau, 
 and Hoffmann and Hermann were in their day. The 
 Germans rightly think that sensible men will seek 
 to get direct benefit from their investigations and 
 studies. Branches there are in which pure reason 
 revels, and which are only remotely connected with 
 the tasks and burdens of daily life. They have their 
 sphere and purpose. But in all of the applied sci- 
 ences the ultimate object is to discover and put to 
 use the knowledge which can be acquired. That is 
 especially true of the natural sciences of which our 
 times have made so much, and which they have 
 brought to such extent and grandeur. It is no less 
 true of political economy, and of that branch with 
 which we have been concerning ourselves. 1 The value 
 of our studies may indeed be measured by the degree 
 to which they can be applied to the solution of the 
 problems which confront us as citizens, and which 
 
 1 Now political economy seems in this respect plainly to belong to 
 the same class of sciences with mechanics, astronomy, optics, chemis- 
 try, electricity, and, in general, all those physical sciences which have 
 reached the deductive stage. Its premises are not arbitrary figments 
 of the mind, formed without reference to concrete existences, like 
 those of mathematics ; nor are its conclusions mere generalized state- 
 ments of observed facts, like those of the purely inductive natural sci- 
 ences, but like mechanics or astronomy, its premises represent posi- 
 tive facts ; while its conclusions, like the conclusions of these sciences, 
 may or may not correspond to the realities of external nature, and 
 therefore must be considered as representing only hypothetical truth. 
 — Cairnes' Political Economy, p. 62. 
 
310 AMERICAN SYSTEM OF REVENUE. 
 
 can be rendered of use in legislation and adminis- 
 tration. 
 
 In the prolonged hearings before the Tariff Com- 
 mission in 1882, Professor Sumner, of Yale College, 
 who is not the most reserved of the advocates of 
 nominal free trade, presented an elaborate paper in 
 which he demanded the repeal of all protective du- 
 ties. One of the commissioners asked him the very 
 natural question, " What system would you advise 
 us to adopt " in their place ? Mr. Sumner's answer 
 was blunt and positive : " I am not a statesman at 
 all; I cannot formulate a revenue system for the 
 country. I have never taken such a matter upon 
 me ; it is quite out of my line." Senior had said 
 long ago : " The economist is not to give a single 
 syllable of advice. His business is neither to recom- 
 mend nor dissuade, but to state general principles." 
 Professor Sumner expanded the thought by declar- 
 ing : " It is the business of congressmen and states- 
 men to provide a revenue, not the business of pro- 
 fessors." 
 
 In this country congressmen and statesmen must 
 come from the ranks of the people. It will be well 
 if they can be selected in no small part from among 
 those who have the advantage of instruction from 
 professors, and who enjoy all the facilities of our 
 great institutions. Instruction which fails to teach 
 men how to meet the questions of citizenship is by 
 that very fact insufficient and prima facie wrong and 
 misleading. Education can have no better aim than 
 
ALTERNATIVES OF PROTECTION. 311 
 
 to train men for the responsibilities of life ; and in a 
 republic no obligation is more important than to 
 know how to frame statutes, and certainly to be 
 able to judge them fairly, and to show how to cor- 
 rect any evils which may exist. Under any govern- 
 ment inequalities will arise ; under any system there 
 will be friction ; under any principle there will be 
 difficulty of just application ; under any legislation 
 there will be complaint. Political science has for its 
 mission to compare the methods which mankind has 
 invented and tried, and to deduce from them the 
 plans which will bring results at the least cost of 
 money and annoyance. Critics of a revenue system, 
 who can propose no remedy for ills, confess that 
 these ills exist unavoidably. With all the expe- 
 rience of mankind it must be possible to point out 
 methods which embody the greatest advantages with 
 the minimum of discomforts and burdens; and pro- 
 fessors who cannot tell investigators what is the les- 
 son of experience, and what are the teachings of pa- 
 tient study of this experience, compel prudent citi- 
 zens to seek enlightenment elsewhere. 
 
 TEACHINGS OF EXPERIENCE. 
 
 In no other matter concerning legislation and ad- 
 ministration has there been such general agreement 
 in all ages and in all lands among men, as with ref- 
 erence to the controlling methods of a revenue sys- 
 tem. We have aimed, in the studies in which we 
 have been engaged, to furnish the foundations upon 
 
312 AMERICAN SYSTEM OF REVENUE. 
 
 which every student can examine statutes and meth- 
 ods, and apply for himself the hoarded wisdom of the 
 world and the current criticism of experts. Our ob- 
 ject has not been to demonstrate that by curious de- 
 vices it is possible to come very near to perpetual 
 motion. Our task has been to show how govern- 
 ments can secure the money necessary for their high- 
 est existence with the least grievance to their people, 
 and with the broadest benefits to every interest. Our 
 privilege has been to prove that industrial freedom 
 demands the first consideration for production, and 
 the second place, certainly in this country, for com- 
 merce. Our purpose has been to enable every citi- 
 zen to answer to any commission of the government, 
 that revenue should be raised on certain principles, 
 and these principles should be applied according to 
 certain rules. For beyond all question the subject is 
 not confined to congressmen and statesmen, but it 
 concerns very intimately every citizen of every land. 
 It is, as Say declared long ago, I 'affaire de tout le 
 monde, — everybody's business. 
 
 We have found that the uniform experience of 
 mankind has pursued well-defined paths, and that the 
 wisest and most successful rulers in all times have 
 aimed by their systems of revenue to develop their 
 home resources, and to cast its share of burdens upon 
 commerce. The founders of the American republic, 
 with a fullness of scholarship, and an acquaintance 
 with the practices of nations, never found elsewhere 
 among an equal number of persons charged with vast 
 
ALTERNATIVES OF PROTECTION. 313 
 
 national interests, deliberately adopted the same prin- 
 ciples. They began by seeking to develop home in- 
 dustry, and by requiring foreign traffic to render its 
 account, and make its contributions to the public 
 funds. In the century in which our institutions have 
 grown and our nation assumed its rank in the fore- 
 front of civilization, this policy has been maintained 
 with a steadiness which rebukes the distrust which 
 some feel of the stability of popular convictions. 
 In all of the Old World, except Britain and Holland, 
 not a single nation refuses to act upon the rule of 
 protecting its own production and assessing com- 
 merce for its part of government charges, and in 
 both of those countries agitation threatens the policy 
 of free trade. On the contrary, Germany in its re- 
 construction, Austria, France, and Russia, have re- 
 cently increased the rates of protective duties col- 
 lected within their domain. Japan, in seeking to 
 introduce the most recent achievements of science 
 and state craft from all of the western nations, has 
 established a protective system of breadth and con- 
 sistence. While Britain pleads for free trade, its 
 colonies, from the West Indies and Canada to the far 
 Australasian islands, insist upon protective duties, and 
 refuse to listen to appeals and arguments from Cob- 
 den Clubs and Chambers of Commerce in London 
 and Liverpool. India, receiving all of its inspiration 
 and direction from Downing Street, and governed in 
 the interest of Britain, until 1882 adhered to pro- 
 tective duties even on such articles as cotton from 
 
314 AMERICAN SYSTEM OF REVENUE. 
 
 Lancashire. The colonies yet protect themselves 
 against the home country. As Alexander Forbes, in 
 the "Economist" for October, 1883, puts it pithily : 
 "The Australian taxes alike imports from Britain 
 and from Batavia." Professor Fawcett, in admitting 
 the existence of protection in India against the home 
 manufacturers, pleads, in " Protection and Free 
 Trade," 1 that "there is no article of general con- 
 sumption except salt, which it is possible to tax, and 
 the duty on salt in India has been strained to the 
 utmost. The proposal to abolish the existing import 
 duties on cotton goods cannot be dissociated from the 
 question : What new taxation is to be imposed to fill 
 the void in the revenue which the repeal of these 
 import duties would create ? " 
 
 This is the real problem of the revenue system : if 
 not by protective duties, how shall government be 
 supported ? Britain has tried to answer the question 
 in its statutes. For India Professor Fawcett quails 
 before enforcing the British methods. The colonies 
 generally refuse to accept them. But however the 
 response is evaded, the comparison is direct between 
 the British system and the American system. The 
 radical difference between them is apparent, and can- 
 not be explained away : the British system casts the 
 whole burden upon home production, seeking to re- 
 lieve foreign trade absolutely. The American sys- 
 tem tries to levy upon commerce the imposts which, 
 distributed in part upon the foreign producer and in 
 l Page 172. 
 
ALTERNATIVES OF PROTECTION. 315 
 
 part on luxuries brought in to our people, and in less 
 measure on necessaries of life, render the charges 
 upon production as light as possible. Now we al- 
 lege that no system can be more unjust than the 
 plan of our transatlantic cousins. Because they have 
 just at present the ocean carrying trade, they are not 
 yet crushed by the burdens. For any people which 
 has not vast aggregated capital and this profit from 
 service on the high seas, the British methods would 
 be quickly destructive. 
 
 DEMAND FOR A CHANGE IN BRITAIN. 
 
 The appeal for fair trade, for the salvation of 
 manufactures from the despotism of commerce, is 
 growing louder and more vigorous before the people 
 and in Parliament. The popular advocates speak in 
 no doubtful tones. The Duke of Portland and the 
 Earl of Salisbury represent their cause in the House 
 of Lords. The clamor on the other side is still 
 louder. At the last annual meeting of the Cobden 
 Club the secession of several members was reported. 
 The chairman declared, " It is useless to disguise the 
 fact that protection is not dead in England." He 
 predicted that " certain politicians may endeavor to 
 restore protection under one guise or another." It 
 was at this meeting that a formal motion was made 
 to abolish all customs and excise. 
 
 This is the radical logic of the British system. 
 There are thinkers and they have followers who ac- 
 cept the tendency and the conclusion. These are the 
 
316 AMERICAN SYSTEM OF REVENUE. 
 
 advanced apostles of " financial reform," who in for- 
 midable publications demand the abandonment of 
 the "wretched sham which now assumes the name 
 of free trade," and, by the substitution of direct for 
 all indirect taxation, seek to secure, instead of " par- 
 tial freedom of trade," the blessed reality. The 
 Financial Reform Association, 1 which formulates this 
 programme, has among its officers not less than 
 twenty-nine members of Parliament, and its denun- 
 ciations of the present policy will bear comparison 
 with any assaults on our tariff for virulence and 
 sweeping generality. This association aims at rais- 
 ing all revenues from direct taxation on land and in- 
 comes. This is the fundamental distinction: Shall 
 we collect revenue by indirect taxation or by direct 
 levies? American practice and American doctrine 
 favor indirect taxation, with its absence of friction 
 and with its protection to home industry. 
 
 NO TAEIPP AT ALL. 
 
 Some Americans do not hesitate to accept the 
 alternative. The Brooklyn Revenue Reform Club 
 recently held 2 an annual meeting and celebrated 
 its position by a supper, at which frank speech was 
 indulged in. Henry Ward Beecher presided, and he 
 pronounced first, for the removal of all duties from 
 raw materials, and concluded by declaring that he 
 does not want any tariff at all. He asserted with 
 force and positiveness that he does not want any in- 
 1 See Financial Reform Almanack for 1883. 2 December 7, 1883. 
 
ALTERNATIVES OF PROTECTION. 317 
 
 direct taxation. 1 Another speaker, who has pub- 
 lished a book on the tariff, insisted that there should 
 be no tariff, and that it should be wiped out abso- 
 lutely and immediately. These gentlemen carry their 
 convictions to their logical conclusions. Free trade 
 is a delusion and a snare while any duties are col- 
 lected on importations. The controversy is well de- 
 fined : it must come between free production on the 
 one hand, casting duties on importations, and free 
 trade on the other side, with the revenue collected 
 from the homes and labor and food of the land. 
 
 BRITISH TAXES REDUCE LABOR. 
 
 Already the British taxes bear upon the laboring 
 classes with undue severity. The stamps and the 
 income taxes brought in, in 1882, £24,054,000, and 
 this sum fell upon those able to pay it; but all of 
 the customs, amounting to £19,275,668, came from 
 tea, coffee, spirits, tobacco, which are consumed by 
 all in nearly like ratios, and therefore are collected 
 almost per capita. The same is true of the excise 
 charges, amounting to £27,170,798. Hence, by the 
 British practice, fully two thirds of the revenue is 
 collected almost as a poll tax in its effect, for it falls 
 not upon persons according to their wealth or gen- 
 eral expenditures, but upon them according to their 
 use of articles of prime necessity, like tea and coffee ; 
 and Laing 2 calls the duty on tea one of the worst 
 
 1 See Brooklyn papers of December 8, 1883. 
 
 2 Fortnightly Review, February, 1884. 
 
318 AMERICAN SYSTEM OF REVENUE. 
 
 taxes possible ; or of such common use as beer ana 
 spirits, which unfortunately are consumed by the 
 working people certainly in as large ratio as by 
 their rich neighbors. 
 
 Richard Cobden declared, in 1865, after his policy of 
 free trade had gone into full effect, that he believed 
 " the income of the government is derived in Britain, 
 in a greater proportion than in any other country, 
 from the taxation of the humblest classes." 1 
 
 John Bright testified that every workingman in 
 Britain " gives at least two hours extra per day of 
 toil and of sweat to support the government." 2 
 
 This is the obvious injustice of the plan which is 
 recommended to us as a substitute for our system. 
 It imposes the charges upon industry and poverty, 
 and checks production. It becomes almost a tax per 
 capita. It favors property at the cost of labor. It 
 sacrifices everything for the benefit of foreign trade. 
 In spite of the prophecy of Cobden, that other nations 
 would be compelled to follow the example which was 
 set when the corn laws were repealed and the protec- 
 tive duties abolished, no other land has believed that 
 the practice of Britain deserves adoption. Its own 
 colonies and its Indian dependencies refuse to ac- 
 cept it. 
 
 i The statement occurs in Mr. Cobden's letter of February 12, 
 1865, to Mr. Gladstone, declining the office of chairman of the Board 
 of Audit. 
 
 2 Speech in Leeds, December 11, 1860. 
 
ALTERNATIVES OF PROTECTION. 319 
 
 AMERICAN IMPOSTS FALL ON WEALTH AND WASTE. 
 
 While the British system is thus very nearly a 
 poll tax in effect, the American system operates to 
 collect the revenue from those who consume most 
 and the greatest variety of articles. By imposing a 
 duty which in fact raises tbe price of any single com- 
 modity, gross inequality is inevitable. Either it will 
 fall upon a single class, and therefore be unjust, as, 
 for example, a duty raising the cost of a mason's 
 tools would do, or, if it is upon tea, it will reach the 
 poor even in larger ratio than the rich, and prove a 
 grievous burden, as the British duty is in fact. But 
 the standard of general expenditure may be taken as 
 at once the measure of wealth and of that waste 
 which is fair subject for imposts. By a broad sched- 
 ule of duties, therefore, just in the degree that the 
 incidence is upon the consumer will the revenue be 
 collected from the wealth and the surplus of the com- 
 munity. Such schedules may be rendered so com- 
 plex as to involve undue expense and friction in col- 
 lection. Until that border is reached, a levy upon 
 general commodities disperses the charges most equi- 
 tably upon the rich and the wasteful. 
 
 This has been the experience derived from the 
 American methods. By a tariff which has covered 
 many commodities, the revenue has been collected 
 without grievance in any quarter, and the distribu- 
 tion has been such as to reach those who have spent 
 the most money. In the instances where the duties 
 
320 AMERICAN SYSTEM OF REVENUE. 
 
 have been thrown back upon the foreign producer 
 the relation has not been changed, for then the labor 
 of this country has been benefited by development 
 without incurring any impost at all. 
 
 The advantage of imposts upon finished commodi- 
 ties over a tax on land or on property is, that the 
 opportunity for multiplication is brought down to 
 the minimum. Especially if the commodities sub- 
 jected to duties are not those of first necessity, the 
 multiplication is prevented, if the collection falls 
 upon the article after it has passed finally out of the 
 area of production. Food and perhaps fuel are the 
 only articles of first necessity, for clothing may be 
 reduced to great scantiness and shabbiness without 
 real suffering, such as hunger and intense cold will 
 involve. Our tariffs impose duties only in very ex- 
 ceptional cases on any article of food, unless sugar 
 may be so regarded, and always with a view to in- 
 crease production. 
 
 In so far as duties are levied upon raw materials, 
 or on commodities which serve for any additional 
 processes of manufacture, there is opportunity for 
 multiplication, unless the duties can be thrown back 
 upon the foreign producer. Here the effect of the 
 creation of home production must be rapid and 
 marked to counteract the disadvantage of this mul- 
 tiplication. In this country we rely upon our vast 
 resources and growing population to correct any evil 
 which may ensue from duties on the materials used 
 in manufactures. Our iron ore is lying in such quan- 
 
ALTERNATIVES OF PROTECTION. 321 
 
 tities, our opportunity for raising wool is so abun- 
 dant, our prospect for development in many phases 
 is so unbounded, that our statesmen have not deemed 
 it wise to sacrifice to the apparent gain of the mo- 
 ment the immense attainments of the future. In 
 Germany and Fiance the policy has been adopted of 
 bringing in most raw materials free of duty. In 
 such old countries where the natural resources have 
 been fully tested, and the chance for vast increase of 
 such materials cannot be rapid and assured, the ar- 
 gument for such free introduction stands apart from 
 the general policy of protection. Their example, 
 however, does not become wisdom for us. With our 
 iron ore lying almost upon the surface, with our 
 sheep-ranches needing only time and care for untold 
 increase, where our metals of all sorts are unlimited, 
 and where only patience and industry are needed to 
 guarantee us all materials at the lowest rates, in 
 very little time, it is far from clear that we should 
 invite competition from abroad to delay the devel- 
 opment which is the pressing requirement of our 
 industrial condition. 
 
 ADJUSTMENT OF DUTIES. 
 
 Under any principle of legislation details will in- 
 volve many considerations. When we have estab- 
 lished the doctrine that protective duties are wise 
 and the best attainable plan for raising revenue, we 
 reach the questions of rates, both absolutely and in 
 their relation with each other. In Britain, internal 
 21 
 
322 AMERICAN SYSTEM OF REVENUE. 
 
 taxes are collected on spirits and certain chemicals. 
 Customs duties are levied to countervail these taxes. 
 The rule is the same here. To offset the taxes 
 which we collect on spirits and tobacco, we levy 
 duties on imports of the like articles. The adjust- 
 ment is obviously just and right. When customs 
 duties are levied on materials which enter into other 
 commodities, it is only equally proper that additional 
 duties should be collected upon the finished manu- 
 facture, in such cases as from the conditions it is 
 probable that on the average the first duty must 
 be paid even in part here. That is the ground of 
 the adjustment which has prevailed upon woolens. 
 Since a duty is levied upon raw wool, that rate is 
 collected upon the finished fabric, with a separate 
 rate deemed necessary for the fabric apart from the 
 wool in its first cost. 
 
 Generally, customs duties under the protective sys- 
 tem should be placed at the standard which, while 
 guarding the treasury from unhealthy surplus, will 
 prevent foreign commodities from destroying our in- 
 dustries in any branch, and yet will forbid American 
 producers from charging excessive prices for their 
 wares. This is generally the equation of difference 
 between wages here and abroad, although, by rea- 
 son of the greater facility and efficiency of Amer- 
 ican workmen, the real rate may be even less than 
 this difference implies. Thus in cotton fabrics the 
 duties are below any relation of the equation of 
 wages. Capital has ceased to have an interest in 
 
ALTERNATIVES OF PROTECTION. 323 
 
 duties on cotton; and as home competition would be 
 reduced if the protection were removed, established 
 factories would command the market. But labor 
 employed in cotton is especially interested in main- 
 taining and extending home competition. Therefore 
 the duty remains to serve its protective purpose, but 
 even in larger measure as a source of revenue, pure 
 and simple. In cottons, however, the protective pur- 
 pose cannot be wholly subserved until we manufac- 
 ture the crops which the South produces, and send 
 them abroad in the shape in which the world will 
 use them. It is one of the shames, of our industrial 
 progress that the cotton which we produce is yet sent 
 to Lancashire and to Normandy to be wrought into 
 fabrics for sale. When we can spin and weave all 
 of our own cotton, the duties on cotton goods can be 
 dispensed with, but not until then. We ought not 
 to complain of our growth, for we have increased 
 our annual product from 1115,681,774 in 1860 to 
 $210,950,383 in 1880, nearly double. 
 
 In our iron industries the opportunities for ex- 
 tension impose grave obligations upon the Ameri- 
 can statesman and the American citizen. Our ore- 
 beds cry aloud for the work and the enterprise whicli 
 will transform them into looms and locomotives and 
 steamships. Not one burden of tax should be im- 
 posed upon the ore until it has come forth to do bat- 
 tle for us in the markets of the world, and to carry 
 our flag on the sea. Not one favor should be ex- 
 tended to commerce at the cost of our own produc- 
 
324 AMERICAN SYSTEM OF REVENUE. 
 
 tion, until we have done very much more than has 
 yet been accomplished to bring out the wealth which 
 nature has put under our feet. 
 
 Every duty should be moderate in order that it 
 may be permanent. Stability is the first need of our 
 industries. Our labor has become organized, and it 
 would be a vastly more difficult task to scatter the 
 operatives of our factories and mills, than it was to 
 disperse the vast armies which put down the Rebel- 
 lion. For the latter passed at once into the grand 
 array of production. The destruction of the iron 
 industry in this country would turn loose on every 
 other trade thousands of men competing for employ- 
 ment. Even the unsettling of industry shakes the 
 whole structure of our society. Changes will be nec- 
 essary in any series of schedules for revenue, but 
 they should be made only in the calmest spirit, and 
 only for the gravest public reasons. 
 
 Germany is dealing with the matter of revenue 
 very radically. Prince Bismarck is laboring with 
 vigor to relieve the states of the empire from the 
 burden of collecting moneys for the maintenance of 
 the imperial establishments. He finds that depend- 
 ence upon the several states for revenue tends to dis- 
 integration. In this country the attempt to collect 
 a direct tax through the state machinery for national 
 purposes has been three times tried, and never with 
 good results. Such a plan came to us from the old 
 confederation, but it was abandoned in 1802 as soon 
 as the system of Hamilton was perfected. For the 
 
ALTERNATIVES OF PROTECTION. 325 
 
 War of 1812 it was again resorted to as a temporary 
 expedient, but its unpopularity led to its early re- 
 peal. During the Rebellion it was the only device 
 for raising revenue which failed signally. Bismarck 
 finds like difficulty, and he relies upon American 
 methods in large degree for raising funds. He car- 
 ries theories of governmental intervention to an ex- 
 tent which our people would regard as savoring of 
 communism. But with reference to customs duties 
 he adopts the American theory and practice as far 
 as he can. In establishing a monopoly for tobacco 
 he goes back to mediaeval arts. But his anxiety is 
 to separate the revenues of the central government 
 from those of the states, or perhaps rather to ren- 
 der the empire superior to the states in all financial 
 measures. For our purposes the lesson to be drawn 
 is that United Germany, without the complications 
 of old methods to hamper it, has deliberately chosen 
 a strong protective policy as essential for its own 
 profit and strength in Europe. In this course, it is 
 not too much to say that the great chancellor is sus- 
 tained by the leading scholars of his country, and by 
 the ablest thinkers and writers who have rendered 
 the German name illustrious during this century. 
 
 Exaggeration is possible under any system, and all 
 extreme is bad. The course of the German as well 
 as French authorities in excluding American pork, 
 on the pretense that it is diseased, is such an exag- 
 geration of a desire to protect the farmers of those 
 countries. But the injury to our producers will be 
 
326 AMERICAN SYSTEM OF REVENUE. 
 
 slight, if the incident shall teach us self-reliance and 
 self-development. The German chancellor fears the 
 drain upon the brain and sinew of Germany, as he 
 beholds the young men whom he wants for his ar- 
 mies hastening to the farms and shops and general 
 enterprise of America. His return of the resolution 
 of our House of Representatives is based on his dread 
 of the attractions of our institutions and of our indus- 
 tries, in quite as large degree as on his disapproval 
 of the career and teachings of Lasker. 
 
 THE E1TAL SCHOOLS. 
 
 Three schools of political economy have claimed 
 the attention of mankind at different intervals. 
 They have been styled, according to their theories, 
 the physiocratic or agricultural, the mercantile, and 
 the industrial schools. They may be regarded as 
 depending in large degree on the estimates which 
 are made by their advocates, of land and its uses, of 
 commerce and its scope, and of labor and its opera- 
 tions in the sphere of human effort and achievement. 
 It is to be noted, however, that the title mercantile 
 was accorded to the school which sought in zealous 
 energy to lift production above commerce. In like 
 manner Adam Smith, who is the chief apostle of the 
 industrial school, has been cited as the scientific 
 founder of the free trade theory. But Quesnay, in 
 urging his physiocratic creed, grasped a half truth. 
 The mercantile school claims Sully and Colbert as its 
 masters, and its general doctrines have prevailed in 
 
ALTERNATIVES OF PROTECTION. 327 
 
 all lands, with various expansions and illustrations, 
 for it has maintained the harmony of agriculture 
 with trade. It was left for Adam Smith to exalt 
 labor, and to become the teacher of the great fact 
 that labor underlies all human prosperity and cre- 
 ates all the wealth which the world can possess. 
 When this labor is employed on the land, it devel- 
 ops agriculture, and deserves consideration in that 
 sphere. When it is enlisted in manufactures, which 
 is by far the chief field of modern industry, it at- 
 tains to a magnitude which compels the notice of 
 statesmen. In commerce no less it is an element of 
 vast moment. But labor is the master consideration 
 in all of these departments. 
 
 This is the point to which all schools of political 
 economy lead the student of revenue. Agriculture, 
 as the earliest and most vital of human interests, 
 should never be burdened by a feather which can be 
 kept from its shoulders. Next to the production of 
 food, which must be preserved free, on any just the- 
 ory of legislation, and yet is burdened in all lands, 
 comes the general production which has created civil- 
 ization. Commerce, the minister of exchange, is the 
 natural collector of imposts, and its competition is 
 the best distributor of the imposts. For this coun- 
 try, certainly, commerce is the agent of luxury, or 
 at least of taste and convenience. We need hardly 
 go abroad for one article essential to our necessities. 
 We need not in our poverty pay one cent to the 
 support of our government in its national character. 
 
328 AMERICAN SYSTEM OF REVENUE. 
 
 When we begin to enjoy comforts and luxuries, and 
 to revel in superfluities, we can contribute in the 
 same ratio to the charges of legislation and adminis- 
 tration. 
 
 INCIDENTAL PROTECTION. 
 
 Certain statesmen in these days appear as the 
 champions of what they call " incidental protection." 
 Mr. Calhoun long ago showed very conclusively that 
 this phrase is misleading and deceptive. The sched- 
 ules of a tariff may include accidental protection, as 
 he well said, but unless the aim is direct and intel- 
 ligent this accident may fall like other accidents 
 where the mischief may be great or even fatal. The 
 vast concerns of our domestic industries are entitled 
 to the most deliberate and careful attention. The 
 very best and most skilled intelligence cannot serve 
 them too well, cannot assist them in their contribu- 
 tions to the progress and prosperity of the country 
 more than wisdom and patriotism require. 
 
 Every revenue system must bear upon production 
 either with friendly or hostile hand. Can it be wise 
 to leave the effects of the heavy charges which gov- 
 ernment must make to be the result of chance, to be 
 either the incident or the accident of reckless legis- 
 lation ? The very least which can be demanded is 
 that intelligence shall rule, and that whatever policy 
 is adopted it shall be directed by the highest pru- 
 dence and the most careful deliberation of its bear- 
 ings on the interest of the greatest numbers of our 
 people, on the concerns which are vital to every ele- 
 
ALTERNATIVES OF PROTECTION. 329 
 
 ment of civilization and growth, on active produc- 
 tion. 
 
 Our revenue legislation, then, should be intelligent, 
 and its bearing upon production should be deliberate 
 and carefully studied, directed by purpose and by 
 reason. If we aim at protecting our industries, the 
 methods employed should be adequate to that end; 
 the tariff should be sufficient for the object ; the du- 
 ties should be enough to help American labor. Even 
 if these duties first enhance prices, they will soon de- 
 velop such home competition as will carry down the 
 prices, and the danger of duties of too high a rate 
 is, that they will advance competition to a point be- 
 yond the healthy standard. But this equation is soon 
 determined by experience. Every new industry or 
 extension of manufactures draws upon capital either 
 idle or employed in less intimate relation to labor, 
 and it enlists fresh hands either from other employ- 
 ments or from the ranks of idlers. It must add to 
 the sum of production, and thus to the fund from 
 which expenditure must come. It tends immediately 
 to increase wages by augmenting the volume of work. 
 It sets the currents of trade into greater activity, and 
 contributes to the material amelioration of all classes. 1 
 
 1 It is an economic disadvantage that any commodity should be 
 produced at a distance from the market in which it is nominally sold, 
 and if in any case this disadvantage can be got rid of, without incur- 
 ring any equally serious drawback through the production at home 
 of some commodity hitherto exported from abroad, the resulting dim- 
 inution of trade would be obviously a mark of industrial improvement 
 and not of retrogression. — Sidgwick, p. 214. 
 
330 AMERICAN SYSTEM OF REVENUE. 
 ADMISSIONS ABOUT FBEE TBADE. 
 
 Sidgwick admits that " under a system of free 
 trade, if any important class of producers in one of 
 the trading countries is undersold by similar produ- 
 cers elsewhere, it may be impossible for some time to 
 find employment for all of them at home nearly as 
 remunerative as that in which they were previously 
 engaged, — even leaving out of account the loss of 
 acquired skill, which, in some cases, would constitute 
 an important inducement to emigration." J The sta- 
 bility of employment is one of the advantages which 
 domestic trade secures, and this affects directly the 
 markets, and contributes to the welfare and to the 
 profits of both the seller and the buyer. 
 
 In a very thoughtful work which comes from Cam- 
 bridge University, on the " Growth of English In- 
 dustry and Commerce," Professor Cunningham de- 
 clares that " with a perfectly free trade, it would prob- 
 ably be impossible for any country to refrain from 
 specializing. 2 . . . No nation would be likely to con- 
 sist permanently of a mingled population, of whom a 
 large part were engaged in tillage, and another large 
 part were in manufacturing." He, however, explains 
 that, by reason of government interference to protect 
 laborers by reducing hours of labor, and to enforce 
 education and apply moral restrictions, England does 
 not fully exemplify free trade. But the principle 
 remains that the British policy is to create special 
 
 1 Political Economy, p. 495. 2 Page 410. 
 
ALTERNATIVES OF PROTECTION. 331 
 
 industries. The result is, that while foreign com- 
 merce is the chief boast of the realm, every domestic 
 industry has justified the declaration of this author 
 that "the guiding power of private enterprise in 
 seeking out and developing the most profitable in- 
 dustries is on the wane." At its best, this tendency 
 to sink out of general and diversified production is 
 not the aim of the American people. This republic 
 is broad enough to maintain every sort of employ- 
 ment to which human ingenuity and skill can possi- 
 bly be turned. We need to-day, not the exclusion 
 of any branch by tendencies towards free trade, not 
 a diminution of the mingling of vocations and occu- 
 pations, but rather the multiplication of industries, 
 so as to afford to every man employment in that field 
 in which his tastes and talents and energies can earn 
 the largest rewards. 
 
 But further : In this country population is con- 
 stantly increasing. In the lifetime of many now 
 adults the census will show not less than two hun- 
 dred million persons seeking for occupation and food 
 within the territory of the United States. They 
 must consist of a mingled population ; they must 
 combine manufacturing with tillage and pasturage. 
 They must, while they foster special industries, also 
 diversify their productions. They must not simply 
 buy, but they must raise and produce everything es- 
 sential to the comfort and even the luxury of man- 
 kind. With such a future, it would be a crime for 
 American legislation to contribute to the narrowing 
 
332 AMERICAN SYSTEM OF REVENUE. 
 
 of our field of production, and to adopt a revenue 
 policy which, by consent of its advocates, seeks to 
 favor foreign commerce rather than diversified indus- 
 try on our own soil. 
 
 FREE PRODUCTION. — CAPITAL AND LABOR. 
 
 The whole effect of a revenue system which pro- 
 tects home industry is to extend the employment of 
 labor and capital here within our own borders. By 
 drawing from agriculture some of the surplus work- 
 men, it advances wages in that department. By in- 
 creasing occupations, and thus the demand for labor; 
 it carries up the standard of wages in every sphere. 
 In the same way it affords returns to capital. It 
 transforms the funds of speculation or of wastefulness 
 or of idleness into productive capital, putting them 
 into factories and furnaces and shops, and expending 
 them for materials and for wages. The protective 
 clauses of a tariff serve to recruit the armies of labor 
 out of the ranks of the listless and careless, and to 
 make the streams which have been lazily humming 
 the melodies of drowsiness vocal with the glad cho- 
 ruses of iron and steel and woolen and cotton and 
 silk. The idle naiads are changed into the ministers 
 of progress and the creators of every blessing of civ- 
 ilization. 
 
 The allegation is urged that protection does not 
 increase the volume of capital or of labor in any 
 land. It possesses a shadow of truth, but the con- 
 clusion is far from just that capital and labor are not 
 
ALTERNATIVES OF PROTECTION. 333 
 
 enlisted in new vocations and rendered manifold more 
 fruitful. I know a brook which springs in the far-off 
 hills, and comes leaping down their sides, beautifying 
 its banks and enriching the meadows all along its 
 course. Before any tariff, this brook sang its song 
 and served its mission of beauty. Only a few farms 
 ran down to its waters, and the cattle idly ruminated 
 as they were reflected from its bright surface. The 
 homesteads of thrifty families were decorated by its 
 meanderings. But, long ago, prudent manufacturers 
 saw that this beauty could be rendered helpful, and 
 they built factories, and cotton and woolen are 
 weaved by the force of the musical waters, and the 
 smoke of furnaces rises above them, and millions of 
 money are coined along the stream which nature 
 gave and enterprise has made its handmaid. In just 
 this way the protective policy has often lifted idle 
 capital and unemployed labor into activity and fruit- 
 fulness. 
 
 The tendency of other methods is, as Cunningham 
 illustrates, to narrow the basis of industry. It would 
 be unjust to charge that this is in the direction of 
 monopoly. The word is much abused. It is certain 
 that a system of revenue which offers premiums for 
 additions to production in every field cannot be justly 
 put under the imputation of developing such influ- 
 ences. Complaint is frequent in Britain that the 
 government is meddling more and more with the fac- 
 tories, with the hours of labor, with the regulations 
 of mills and mines, with the homes and the condi- 
 
334 AMERICAN SYSTEM OF REVENUE. 
 
 tions of the laboring people. The pressure of their 
 necessities and sufferings may compel this course. 
 But it is not freedom either of production or trade. 
 
 Freedom here has increased the industries included 
 under the tariff schedules, so that the establishments 
 which were 123,025 in 1850 were, in 1880, 253,840; 
 and the persons employed have grown from 957,059 
 in 1850 to 2,738,950 in 1880. The annual wages 
 which were $236,755,464 in 1850 were, in 1880, 
 1947,919,674, and the total production has become 
 greater than can be shown in any other land. 
 
 Such a development inevitably tends to broaden 
 competition. Yet we hear critics complain of mo- 
 nopoly in our manufactures. The whole field is open 
 for all. In no other land is there such complete 
 liberty, and in no other sphere is there less of the 
 evil of combination. Outcry is raised because cop- 
 per, which is protected, is largely in the control of a 
 few persons who manipulate prices. Something of 
 this is true, but the remedy is in conceding for a 
 while such inducements as will develop our copper 
 mines in all parts of the Union, and thus break down 
 combinations. It is not in manufactures or in min- 
 ing products that " corners " are most frequent, and 
 certainly it is not in such commodities that " corners " 
 are most pernicious. Unless patents interfere, pro- 
 duction will receive such an impetus by attempted 
 combinations, that abundant remedy will soon be pro- 
 vided for the evil. The curse of " corners " falls on 
 food and like articles of prime necessity, which are 
 
ALTERNATIVES OF PROTECTION. 335 
 
 not included in the tariff schedules. It has been in 
 wheat and corn and barley, in beef and pork and 
 lard, that combinations have been formed, which have 
 oppressed the community, and ruined many of the 
 operators. Such markets have rivaled Wall Street 
 in speculation. The tariff has rarely served as even 
 a pretext for "corners." 
 
 Both in Britain and in the United States special 
 privileges are conferred under the patent laws. These 
 are not part of the revenue system, although that is 
 often held responsible for the exactions which patents 
 permit. The right of an inventor to reward for his 
 ingenuity deserves to be recognized. Whether abuses 
 are not consequent upon the unlimited control ac- 
 corded to devices for applying the powers of nature 
 is worth investigation. Often a simple mechanical 
 invention affixes charges upon articles of common 
 use which add in undue ratio to their price. The 
 very cheapening of processes of manufacture is di- 
 verted to establish mastery over the making and the 
 sale of the commodity. Thus it has been charged 
 that certain patents relative to the making of screws 
 have concentrated the manufacture and the trade 
 into few hands, and have enabled the owners to 
 maintain prices which are exorbitant. In the case 
 of barbed wire the same charge is urged. Patents 
 on making steel are held to keep the benefits in few 
 hands. The country understands how, by reason of 
 the patents upon the telephone and other electrical 
 appliances, the charges which have to be endured 
 
336 AMERICAN SYSTEM OF REVENUE. 
 
 have served to confer suddenly vast fortunes upon a 
 few persons. In various processes of manufactures 
 patents have operated in the same way. In several 
 instances patents have affected commodities which 
 have also been subject to protective duties. This 
 double charge is not defensible. But it would be 
 difficult often to exclude articles from the schedules 
 of a tariff simply because some inventor had dis- 
 covered methods for bringing down to a low figure 
 the cost of production. The life of a patent is not 
 over seventeen or twenty-one years. After the privi- 
 lege expires the whole benefit accrues to the commu- 
 nity. No revenue system is to be confounded with 
 the rewards which legislation provides for inventors. 
 In the latter class will be found every instance of 
 monopoly which has ever been asserted against Amer- 
 ican manufactures. In not a single case can that 
 term be applied to the effect of any tariff which our 
 statute books have ever contained. 
 
 COMPLAINTS OS" THE BRITISH PEOPLE. 
 
 British workmen feel their burdens, and their com- 
 plaints are loud and threatening. A circular signed 
 " Fair Trade and Justice," distributed in the manu- 
 facturing towns of Britain, is fraught with the whole 
 argument against the policy of the empire. It ex- 
 poses the hollowness of boastings over commerce 
 while the mills and factories are idle, of the asser- 
 tion that food is cheap while there is no employment 
 to provide it. This circular denounces the " devilish 
 
ALTERNATIVES OF PROTECTION. 337 
 
 system which goes under the name of free trade " as 
 " unlicensed swindling." It speaks of dangers ahead, 
 and declares that " the working classes are beginning 
 to rally, and woe be to law and order if their rising 
 is not prevented by a timely interference of the leg- 
 islature to sweep away this curse of one-sided rob- 
 bery." The whole policy, the circular asserts, is "a 
 pernicious system which is fraught with danger to 
 the empire." Surely this is not the inducement 
 which can be held out to the American people to 
 abandon the policy by which they have marched to 
 the forefront of nations in manufactures as well as in 
 general prosperity. 
 
 Another complaint arises in behalf of property and 
 land. You will find it in the London " Quarterly " 
 for January, 1884. 1 The writer, speaking as an Eng- 
 lishman, says : — 
 
 " While we have been enduring an added income tax of 
 one or two pennies in the pound to reduce our national 
 debt, our total indebtedness has increased in ten years from 
 about 840 to above 900 millions ; our total taxation has in- 
 creased from about 83 to about 106 millions. This has 
 occurred, moreover, in a period of depressed or slowly reviv- 
 ing trade ; so that beyond question both our debt and tax- 
 ation have risen much more rapidly than our wealth, and 
 have become a heavier burden on the national income." 
 
 The entire article is a severe criticism on the fall- 
 ing off of the excise, and the tendency to cast addi- 
 tional imposts on income and land. 
 
 i Page 91. 
 22 
 
338 AMERICAN SYSTEM OF REVENUE. 
 
 Another significant utterance relative to the British 
 revenue system comes from the London " Spectator." 
 This language indicates that free trade is not forti- 
 fied beyond assault, and that its wisdom is challenged 
 in high quarters. The " Spectator " speaks as a par- 
 tisan, opposing the return of the conservatives to 
 power, and this is its argument : — 
 
 " The return of the conservatives to power would cer- 
 tainly mean a raising of various indefinite but passionate 
 hopes that the policy of free trade was to be abandoned 
 for a policy of retaliatory tariffs. We do not deny that 
 Sir Stafford Northcote has carefully avoided committing 
 himself to any policy so insane. But Lord Salisbury has 
 declared again and again that inquiry into the operation 
 of what is generally known as free trade is only reasona- 
 ble ; Mr. James Lowther has gone in boldly for protection ; 
 Lord Eandolph Churchill has spoken of a system of free 
 imports with the utmost contempt, and has declared his be- 
 lief that the free trade policy is an utter failure ; and such 
 views as Mr. Ecroyd's are widely diffused through the 
 conservative party. Every one knows how malleable Sir 
 Stafford Northcote has ofteu proved in the hands of his go- 
 ahead followers. And no one with the smallest political 
 sagacity can deny that a change of government now would 
 lead to a very general hope of the partial restoration of a 
 system of protection. It would be the first great blow at 
 the policy of free trade to restore the conservatives to 
 power at the present time." 
 
ALTERNATIVES OF PROTECTION. 339 
 
 THE CHOICE. 
 
 Practically, the contest is between the British sys- 
 tem on the one hand, and the American system on 
 the other. Yet in Britain the assault upon custom 
 houses and the excise lacks no feature of the aggres- 
 siveness which inspires the advocates of free trade in 
 the United States. There the contest is clear and 
 bold over a plan for imposing all charges upon the 
 land, upon homes and farms and plants of industry, 
 and their earnings and savings. Commerce is not 
 content with the favoritism which has enriched it. 
 It is quite as zealous in trying to cast upon produc- 
 tion every charge of the government. In all discus- 
 sion, this advanced guard of the logic underlying 
 legislation must be taken into account. 
 
 In this country, on the other hand, the policy has 
 been from the beginning to favor industry here on 
 our own soil. To that end duties have been levied 
 upon commerce, deliberately, and with studious ad- 
 herence to principle. The design has been to draw 
 from commerce its due share of the revenue. Even 
 if this share should come out of our own people, that 
 would be quite as easy for them as imposts upon 
 land or other property, or on consumption or voca- 
 tions. But as a matter of experience, it has been 
 demonstrated that always a very large part of cus- 
 toms duties is thrown upon the foreign producer or 
 his agent. In every instance, after a period varying 
 with the character of the commodity, for every in- 
 
340 AMERICAN SYSTEM OF REVENUE. 
 
 dustry established in this country lower prices have 
 been established than prevailed before the duty was 
 imposed. "We look for foreign trade through the tri- 
 umphs of our industry. Just as our grain and our 
 meats and our cotton, and our tobacco, our leather, 
 and our petroleum have entered the markets of the 
 Old World, so our watches and our cutlery, our agri- 
 cultural implements and machinery, our calicoes and 
 our carriages, our musical instruments, our paper, our 
 drugs and chemicals have won their foothold. 
 
 Foreign commerce must always be the concern of 
 a few; production enlists the many. The British 
 system claims a monopoly of favor for trade by sea ; 
 the American system places foreign trade on the 
 same level with other occupations, but gives it a rank 
 after domestic industry. It. casts upon trade by sea 
 a share of the burdens involved in maintaining the 
 government. Seeking freedom for every interest, it 
 begins by insisting upon freedom for the handiwork 
 of the multitude, for the production which lies at the 
 beginning of all wealth. 
 
CHAPTER XI. 
 
 THE RIVALRIES OF COMMERCE. 
 
 The Protective System interferes with Commerce, but asserts Indus- 
 trial Freedom. — The War of 1812 and the Rebellion hurt our Car- 
 rying Trade. — The Price of British Commerce. — John Bright on 
 Wars waged by Britain. — Professor Seeley's Expansion of Eng- 
 land. — The Spanish War and English Foreign Trade. — Three 
 Centuries of Conflict. — Pitt. — Carlyle. — £100,000,000 spent in 
 Thirty Years in Avoidable Wars. — Turkey and Egypt. — Greater 
 Britain. — Trade of the Colonies. — Protection of Colonies against 
 the Home Country. — The Home Country collects Duties on the 
 Tea of India. — Imports and Exports of Britain, Germany, France, 
 the United States. — Turkey and Egypt a Part of the British Pos- 
 sessions in Fact. — The Colonial Trade not Foreign Commerce. — 
 Duration of Nations. — War and Commerce. — State Interference 
 in Britain. — George J. Goschen. — Herbert Spencer. — Freedom 
 at Home. 
 
 The crucial point of criticism against the protec- 
 tive system is that it interferes with commerce. But 
 it asserts industrial freedom in the whole range of 
 production. The appeal is urged to abolish protec- 
 tive duties, especially in order that we may find a for- 
 eign market for our wares. In addition to this plea 
 is a demand that we shall by removing duties restore 
 our flag to the ocean. The assumption that we can 
 secure the carrying trade by sacrificing our manufac- 
 tures is not sustained by anything but phrases. We 
 lost a share of the ocean carrying first by the War 
 
342 AMERICAN SYSTEM OF REVENUE. 
 
 of 1812, which was waged directly to drive our ves- 
 sels from the waters, and succeeded in checking our 
 maritime progress. We had made vast gains, when 
 again the War of the Rebellion enabled foreign pow- 
 ers, under the flag of the Confederacy, to strike a 
 deadly blow at our merchant navy. The introduction 
 of iron for ships contributed to supplant our wooden 
 clippers by steam-vessels, and we have not yet recov- 
 ered the lost ground. Nor is it the first or the most 
 important task which devolves upon American enter- 
 prise. Until we have still further extended our home 
 production, and carried still further the net-work of 
 our railroads, we have labors quite as imperative as 
 any foreign rivalry can prompt. Capital and indus- 
 try are getting better returns in these home enter- 
 prises than ocean service can now promise. When 
 these fields are fully tilled, American courage and 
 foresight will tempt the seas once more. There are 
 those who believe that we are wandering unprofita- 
 bly in these home domains. It is a fact that we are 
 devoting all our energies here. When shall the move- 
 ment begin to the ocean traffic ? We can wait. By 
 and by the march will commence, and by and by our 
 enterprise, after a delay and struggle as trying as 
 those of Xenophon in his retreat, will shout : Tha- 
 lassa, Thalassa; the sea, the sea. But for the present 
 the ocean carrying trade is held by Britain. It is a 
 source of wealth and power to that country j so is its 
 commerce. 
 
THE RIVALRIES OF COMMERCE. 343 
 
 THE PRICE OP BRITISH COMMERCE. 
 
 How has Britain secured its position on the ocean ? 
 What has been the price which has been paid for 
 preeminence in foreign trade ? No nation has ever 
 yet secured the control of commerce by a change in 
 revenue systems, by any adjustment of its govern- 
 ment charges. We want no commerce which we do 
 not win on the fields of fair competition. We refuse 
 to maintain a costly navy to force our commodities 
 on unwilling peoples. We have always declined 
 every suggestion to conduct our diplomacy in the in- 
 terest of foreign trade, except as it is welcomed by 
 the peoples whom we go to seek. The course which 
 we are pursuing has never before been pursued by 
 any great nation. The story of commerce has been 
 a story of violence and grasping greed. The wars 
 of the world have been in large part incited by the 
 purpose to extort treasure and commodities, and to 
 thrust the products of the aggressive power upon re- 
 luctant peoples. 
 
 John Bright has more than once presented the 
 terrible summary of British wars. He has not in- 
 deed traced them to commerce, as Professor Seeley 
 has so effectively done. But he has shown the ex- 
 haustive outlay of blood and treasure which Britain 
 has so long suffered from, and which drains her re- 
 sources at this hour. At Birmingham, in 1880, he 
 said : " I believe if we could have an accurate ac- 
 count of all the governments of England have done 
 
344 AMERICAN SYSTEM OF REVENUE. 
 
 — the ministers, the cabinets — during the last hun- 
 dred years or more, we should find that nine tenths 
 of that time, thought, and labor had been devoted to 
 matters abroad, connected with wars, conquests, an- 
 nexation, gunpowder, and glory, and perhaps not 
 more than one tenth had been expended upon the 
 true interests of England." : In Glasgow, in the 
 same year, in his address as Lord Rector of the Uni- 
 versity, he declared: "Since the beginning of the 
 century less than one fifth of all our expenditure has 
 been in civil government ; more than four fifths have 
 been expended in wars past or wars prepared for the 
 future." 2 In London, in 1883, he summed up Brit- 
 ish history by saying : " We have had two centuries, 
 
 — I will say nothing of the time beyond that, — we 
 have had two centuries of almost incessant wars ; 
 and during these wars we have spent thousands of 
 millions of treasure, produced by the toil and the 
 sweat and often by the misery of millions of our 
 countrymen, and sacrificed hundreds of thousands of 
 lives, with an amount of agony which no imagination 
 can picture, and with a sacrifice of blood which it 
 would be impossible to gauge." s The great orator 
 was impressing his hearers with the enormity of war. 
 His eloquence is no less instructive as pointing out 
 the cost to Britain of the commerce upon which the 
 realm now depends for its prosperity. 
 
 For all the history of the world the example of 
 
 1 Robertson' 8 Life and Times of John Bright, p. 504. 
 
 2 lb. p. 533. s lb. p. 540. 
 
THE RIVALRIES OF COMMERCE. 345 
 
 England is a summary and a condensation. Our 
 cousins have been no worse than their rivals. They 
 have sought their own interests regardless of the 
 welfare of others or of the demands of humanity. 
 They have followed in the footsteps of all commer- 
 cial nations. Nor has commerce been worse than 
 other causes which have tempted to aggression and 
 expansion. But since trade has engrossed in such 
 large degree the energies and ambitions of mankind, 
 it has proved, in the later centuries especially, the 
 occasion and incitement to the movements of govern- 
 ments and the determining influence in diplomacy 
 and national policies. 
 
 Professor Seeley, of Cambridge, has condensed the 
 spirit of English history for centuries in a short vol- 
 ume, recently from the press, entitled " The Expan- 
 sion of England." He declares with Ranke that it 
 was trade which brought on the War of the Spanish 
 Succession, for France was trying, through Spain, to 
 acquire power in the New World. It was for trade 
 that Europe sought this New World, and for trade 
 the nations struggled to possess and to hold colonies 
 here. It has been for trade also that England and 
 France have been putting forth their hands into Asia 
 and Africa to open pathways for speculation and for 
 enterprise. The imposing spectacle which Professor 
 Seeley presents is the grouping of the wars, from the 
 Commonwealth in the seventeenth century to the fall 
 of Napoleon, as a century of conflict between France 
 and England for America and India, — that is di- 
 rectly for foreign commerce. 
 
346 AMERICAN SYSTEM OF REVENUE. 
 
 But much farther back than the Commonwealth 
 goes the struggle of England by arms to establish 
 foreign trade. The Spanish Armada, which fright- 
 ened Elizabeth, was a gigantic effort to hold the New 
 World and its traffic for Spain. When the Armada 
 went to pieces and to the bottom, British commerce 
 received an impulse which has been enduring. Pro- 
 fessor Seeley says, "that Spanish war was the in- 
 fancy of English foreign trade." That was in 1588, 
 — three centuries ago. Trade-rivalry prompted the 
 war of the Commonwealth against Holland. Eng- 
 lish statesmen asked for the destruction of that 
 Protestant power, in the age of strong religious feel- 
 ing, to aggrandize commerce. The restored Stuarts 
 followed the policy of Cromwell and the Common- 
 wealth. The English navy was founded then. Crom- 
 well took Jamaica from Spain ; and Charles the Sec- 
 ond acquired Bombay from Portugal and New York 
 from the Dutch. 
 
 Thus in world-strife British commerce was cradled. 
 In 1745 the French ambassador at St. Petersburg 
 complained of the maritime despotism of England. 
 Out of that alleged despotism have followed what- 
 ever wars England has been engaged in. During the 
 Seven Years' War on the Continent, William Pitt 
 declared : " If I send an army to Germany, it is be- 
 cause in Germany I conquer America." Carlyle, in 
 his " History of Frederick," uttered the same refrain : 
 " The soul of all these controversies and the one 
 meaning they have," he found in the struggle for 
 
THE RIVALRIES OF COMMERCE. 347 
 
 the New World. Napoleon sought to strike Eng- 
 land in India, as Louis XIV had tried to check its 
 progress in America. Over its trade policy osten- 
 sibly at least came the revolution which created the 
 United States. The War of 1812 was directly a 
 commercial strife. The advance of Russia towards 
 India led the allied armies into the Crimea. Laing 
 says that within the last thirty years Britain has 
 spent £ 100,000,000 in avoidable wars. 1 For the sake 
 of its commerce England has maintained its costly 
 navy, as well as waged these continental and bloody 
 struggles. What has it cost Britain to establish the 
 commerce which it to-day possesses ? In the aggre- 
 gate of its monstrous debt, in the weight of its crush- 
 ing taxes, in the records of battles won and lives 
 lost, the lesson is written in plainer teachings than 
 words or figures can convey. 
 
 It has been for trade also, in part for the defense 
 of the path to India, that England has expended its 
 means and exhausted its diplomacy upon Egypt and 
 Turkey. The massacre of Sinkat and the surrender 
 of Tokar are only a part of the price paid for the 
 trade of Egypt and the path to India. For trade 
 England has devoted so much attention to China, 
 before and since the opium war. In a word, Pro- 
 fessor Seeley's suggestive studies may be supple- 
 mented by the declaration that British arms are 
 used and British diplomacy is maintained with all of 
 its expenditures and complications, to sustain and ex- 
 
 1 Fortnightly Review, January, 1884, p. 80. 
 
348 AMERICAN SYSTEM OF REVENUE. 
 
 tend British commerce. In its wars and its foreign 
 offices of all kinds Britain has paid, and is paying, a 
 high price for its commercial supremacy. 
 
 Just what is that supremacy to rival which we 
 are asked to change our revenue system and our 
 traditional policy ? What is this structure of com- 
 merce, based on centuries of conflict, and sustained 
 by diplomatic establishments in every nation? In 
 the very suggestive work which has already fur- 
 nished us with texts, Professor Seeley dwells upon 
 Greater Britain, which has been created by the ex- 
 pansion of England. It includes the colonies in 
 America and Australasia, and the possessions in 
 India. These are the elements of Greater Britain, — 
 these are the parts of the British empire. Is it a 
 united nation, — is it to be treated in fairness as a sin- 
 gle power ? Germany is made up of separate states. 
 It is considered as one nation. Austria-Hungary is 
 divided in many interests ; to the outer world it is 
 an allied entity. Consider then that Great Britain, 
 the British empire, is a nation with separate parts. 
 Our republic has its thirty-eight states. It is for 
 external purposes a single nation. In estimating our 
 commerce we treat the trade between the states as 
 internal traffic, and we never include in our foreign 
 commerce anything but the traffic with other peo- 
 ples. 
 
 This point is important because it is true, as the 
 Earl of Dunraven asserts : 1 " Our [the British] only 
 
 1 MacMillan's Magazine, January, 1881, p. 251. 
 
THE RIVALRIES OF COMMERCE. 349 
 
 chance of increasing or maintaining our trade lies in 
 the development of our colonies." That conviction 
 prompts the suggestion, that " the mother country 
 and the colonies might be drawn closer together by 
 the abandonment of free trade and the formation of 
 an imperial zollverein, or Greater Britain customs- 
 union." John Morley considers the project, and 
 deems it impracticable. It is so, but without any 
 such union we can see the relations of colonial trade 
 to the home country. 
 
 No fairness exists in treating Britain for certain 
 purposes as a congeries of colonies and possessions, 
 and for other purposes as a united empire. When 
 the separate German states collected customs duties 
 from each other, complaint was loud and fierce of the 
 restrictions upon commerce. If our states were to 
 set up custom houses upon their boundaries, a rad- 
 ical limitation would be placed upon traffic. Yet by 
 such a device we could multiply manifold the figures 
 by which our commerce would be stated. For that 
 domestic traffic is far larger in volume and in value 
 than the entire commerce of Britain as it is displayed 
 in official returns. 
 
 WHAT IS BRITISH COMMERCE? 
 
 Now Britain is held up before our eyes as the 
 model to be followed, for free trade has no ground to 
 stand upon except the example of that single power. 
 Yet the colonies collect duties, and protective duties 
 too, upon the commerce of each other and of the 
 
350 AMERICAN SYSTEM OF REVENUE. 
 
 mother country. In spite of all the burdens which 
 India has brought upon the empire, even India, until 
 1882, collected customs duties upon British cotton 
 manufactures, and such free trade apostles as Pro- 
 fessor Fawcett justified the practice by reason of the 
 poverty of India and the pressure of its financial 
 burdens. The home islands are glad to receive from 
 the colonies everything which they can send free of 
 duty, for they need food and raw materials. But 
 upon tea England collects heavy duties, and tea is 
 one of the products of British India. The imports 
 from the British possessions in India were, in 1882, 
 £39, 921,127, nearly one tenth of the entire imports 
 from all lands, foreign and British. 
 
 Consider this fact, then. Britain collects at home 
 duties on such a product of its Indian possessions. 
 The colonies protect themselves against each other 
 and against the home islands in their various manu- 
 factures. Is this the feast of free trade to which this 
 country has been so zealously invited ? 
 
 Aside from the commerce of these parts of Greater 
 Britain, of the united British empire, what is the 
 commercial supremacy to which our envy is directed ? 
 You will find in the "Statistical Abstract of the 
 United Kingdom " that the commerce of England is 
 reported with the British possessions and with for- 
 eign countries. Very clearly in any comparison 
 which we are to make between that country and our 
 own, we must take simply its foreign trade to com- 
 pare with our foreign trade. Nobody even claims 
 
THE RIVALRIES OF COMMERCE, 351 
 
 that, measuring our domestic traffic as well as our 
 foreign trade, Britain comes anywhere near us in vol- 
 ume or value. But in the endeavor to depreciate our 
 commerce, the figures are always cited of British com- 
 merce, including exports to the outlying possessions 
 and colonies of the empire, and imports from them. 
 
 Take, however, the commerce of Britain with for- 
 eign countries, and we shall see what it is that has 
 been bought by centuries of war and by all the ef- 
 forts of diplomacy. Now in 1882, the total imports 
 of Britain from foreign countries were £313,588,711, 
 or $1,567,943,555. 1 The exports to foreign countries 
 of British and Irish products were £156,646,727, or 
 $783,203,635. 2 
 
 In 1880 the imports of Germany were $680,544,- 
 000, and the exports were $731,064,000. These fig- 
 ures are less than those of the United States on both 
 sides of the column. 3 
 
 In 1881, which is the latest year for which offi- 
 cial figures are at hand, France imported for home 
 consumption 4,946,448,000 francs, or $989,289,600, 
 while in the preceding year the figures were just over 
 $1,000,000,000. The exports of France were in the 
 
 1 Statistical Abstract for the United Kingdom. Thirtieth Number, 
 p. 37. 
 
 2 lb. p. 67. 
 
 8 The Almanack de Gotha for 1883 gives the following returns of 
 
 German commerce, in marks : — 
 
 1879. 1880. 
 
 Imports 3,773,200,000 2,835,600,000 
 
 Exports 2,775,700,000 3,046,100,000 
 
352 AMERICAN SYSTEM OF REVENUE. 
 
 same year 3,612,442,000 francs, or $722,488,400. 
 This commerce like that of Britain is based on cen- 
 turies of war and ages of diplomacy. 
 
 Notice that the imports of Britain are almost one 
 third greater than those of France, but its exports 
 are less than ten per cent, in excess of those of its 
 immediate neighbor. 
 
 Observe that the imports of the United States in 
 1883 were $723,180,914 ; in 1882, $733,239,732, and 
 in 1881 they were $833,925,947. Our exports were 
 in 1882, $724,639,574, and in 1883 they were $804,- 
 223,632. 
 
 Thus the imports of Britain are larger than ours 
 as those of France are ; the imports of Germany are 
 less than ours. But our exports, which are the true 
 measure of a country's wealth and growth, already 
 exceed those of either France or Germany. The ex- 
 cess of Britain over us in exports, excluding the trade 
 with its own possessions, was in 1882 less than £12,- 
 000,000 or $60,000,000, and in 1883 our exports were 
 greater than the British exports by $21,000,000. 
 
 But the assertion of British power in Turkey and 
 Egypt has been quite as expensive as any cost of 
 administration could possibly prove. Both of these 
 countries are dependent upon Britain in such a de- 
 gree that their trade is under British control. It is 
 practically a real part of British commerce, as com- 
 pletely as that between England and Ireland. For 
 any just comparison Turkey and Egypt should be 
 treated as British possessions in an estimate of for- 
 
THE RIVALRIES OF COMMERCE. 353 
 
 eign commerce. Upon this basis British imports 
 from foreign lands were, in 1882, $1,504,804,580, and 
 the exports thereto were $738,838,405. In other 
 words the true foreign exports of actual Britain were, 
 in 1882, something more than our own, and less by 
 $65,385,227 than were our exports in 1883. 
 
 If we accept the entire volume of commerce of 
 Britain, including all of its traffic with its colonies 
 and possessions, we have no reason to change our 
 revenue system to follow in its footsteps. For our 
 increase in both exports and imports has been far 
 more rapid. In the period since the close of the Re- 
 bellion, we have developed in our commerce with 
 strides with which Britain has not kept pace. At 
 the same rate of increase, before another decade has 
 passed our exports will exceed those for which the 
 old country has paid so high a price, and our imports 
 will be quite as large as discretion will justify. For 
 in this interval of eighteen years, we have gained in 
 exports over twenty times as rapidly as our great 
 rival. 1 
 
 With foreign countries the exports of Britain since 
 1865 have increased by ,£47,038,275, and this is less 
 than one fourth of the exports to the same countries 
 in that year. To the British possessions the exports 
 have in the same period grown by £40,790,863, 
 which is an increase of four fifths. This trade is 
 really domestic traffic, and is far less than the devel- 
 opment of commerce, for example, between our East- 
 
 1 See ante, p. 231. 
 33 
 
354 AMERICAN SYSTEM OF REVENUE. 
 
 ern and Western states. British example, like our 
 own, demonstrates that it is the market which is 
 bound to us by national ties, by ligaments of state, 
 in which we trade most freely. The questions of 
 revenue charges affect traffic in much less degree 
 than other considerations which lie at the founda- 
 tions of states and determine the relations of peoples. 
 The share of British commerce which grows most 
 rapidly, and that even advances much more slowly 
 than our foreign trade, is that with the colonies and 
 dependencies. 
 
 WAR AND COMMERCE. 
 
 British experience does not differ from that of 
 other nations. It has been cited simply because it is 
 mosb fresh, and bears most directly upon the compar- 
 isons which are invited by the attempt to transfer the 
 British revenue system to this republic. Commerce 
 is the modern expression for national power in the 
 minds of many persons. It has always been so. 
 Mastery on the sea, strength of ships, from the days 
 of the triremes to those of the iron-clad steamships, 
 have been only the counterpart to armies, and have 
 been measured as instruments for conquest and for 
 the maintenance of prizes won in war. The aggran- 
 dizement of nations has been the aim of those who 
 sought trade in far distant lands, and force has been 
 the dependence of most nations in their quest. War 
 has served to extend commerce, and commerce has 
 brought on war. Even into great religious conflicts 
 the element of mercantile profit has entered. The 
 
THE RIVALRIES OF COMMERCE. 355 
 
 crusaders saw the treasures of the East, and lusted 
 after them only less than after the holy sepulchre. 
 The shores of the Mediterranean are covered with 
 the wreck of states which aimed to control the trade 
 of the nations, and to use it as an instrument for ex- 
 tending their military power. Upon that historic sea 
 Carthage and Venice rehearsed the tragedies which 
 Spain and Holland and France and England after- 
 wards performed on the broader stage of the great 
 Atlantic for the control of the New World. Human 
 greed has impelled to unceasing strife, and ambition 
 has both used this gnawing hunger for treasure and 
 been used by it. 
 
 Our studies do not permit the full elucidation of 
 the impressive lesson that those nations have been 
 enduring, and that foreign commerce has stood the 
 changes of time for the longest period, just in the de- 
 gree that home production has been most diversified 
 and most extensive. The career of Venice was bril- 
 liant while its manufactures were most prosperous, 
 and even Florence flourished in its grandeur of art in 
 largest degree when its woolens were in most favor 
 at home, and its mechanics contributed most to its 
 wealth. It was the variety of the fabrics of Holland, 
 the skill of its workmen, and the enterprise of its 
 manufacturers, which, more than the ships of Van 
 Tromp and De Ruyter, rendered its policy and ambi- 
 tions dangerous to England. The brief supremacy 
 of Spain is hardly an exception. Ferdinand and Isa- 
 bella listened to the appeals of the representative of 
 
356 AMERICAN SYSTEM OF REVENUE. 
 
 a commercial city, and started in a career which won 
 glory, and opened an abyss into which the national 
 prosperity was hurled. 
 
 In the ages of violence the countries of agriculture 
 and of domestic production were the countries in 
 which governments endured for long periods. The 
 story of the shepherd kings is the story of compar- 
 ative length of dynasties. The pyramids stand to 
 proclaim how a nation may endure for centuries, re- 
 lying upon its own industry and developing its own 
 resources. The chronology of China puzzles anti- 
 quarians and historians, and serves to show how a 
 nation may thrive and maintain millions of inhabit- 
 ants and confront all the dangers of centuries. Not 
 to Egypt and not to China do we look for the model 
 to be adopted. But neither is it well for us to rush 
 along the paths which have led so many nations 
 through a brief career of show and greed to sudden 
 ruirj or early decay. 
 
 Without the century-battles for mastery, France 
 and England would have divided the trade of the 
 New World. France fought and lost. Was the con- 
 test, grand as it was, worth the pains of defeat and 
 the burdens which it has entailed ? England fought 
 and won, only to lose the brightest jewel of its 
 crown. Did its armed controversy for the New 
 World bring to it rewards adequate for the hazards 
 and the sacrifices ? 
 
 Is the commerce of Asia worth what Britain has 
 already paid for it, in its armies and navies and dip- 
 
THE RIVALRIES OF COMMERCE. 357 
 
 lomatic expenditures, — for its strife with Bonaparte, 
 for its armed attitude towards all of Europe as well 
 as Asia, for its hostility towards Russia, for the Cri- 
 mean War, for the Berlin Conference ? Is India pay- 
 ing for its cost to-day ? Is Turkey, which is simply 
 a defense for India, not a burden which is growing 
 almost too heavy to bear ? Is Egypt, with its blood- 
 shed and its dangers, just the field in which British 
 Christianity bears its most perfect flower ? The pol- 
 icy of centuries cannot be changed at will. Britain 
 cannot give up India, cannot abandon Turkey, dares 
 not withdraw from Egypt, cannot even cease its in- 
 terference in China. France finds it necessary to 
 keep up its aggressions in Tonquin. 
 
 Until now commerce has been carried to unwilling 
 peoples at the point of the bayonet and the mouths 
 of Paixhan and Armstrong guns. British commerce 
 is the resultant of centuries of the maintenance of 
 the policy copied from every preceding power which 
 has held the mastery of the seas. Whatever else it 
 is, it is not the consummation of free trade. It is 
 simply the echo of the drum-beat which Webster rep- 
 resented as following the sun around the world. It 
 is the crystallization of the smoke of cannon. It is 
 the modern phase of conquest by arms. 
 
 If we were able, do we want foreign commerce 
 at such a price ? If we were able, do we wish to 
 maintain armies strong enough to penetrate to the 
 heart of Asia, to the valleys of Africa ? If we were 
 able, do we want to reach out for the Soudan, and 
 
358 AMERICAN SYSTEM OF REVENUE. 
 
 send forces to fight the false prophet in his deserts ? 
 If we were able, do we care to build and support 
 navies competent to cover all seas ; to stand off the 
 harbors of Peru to hasten its overthrow ; to bombard 
 Alexandria, to hold the Suez Canal ; to look on 
 while France compels China to yield up Anam and 
 Tonquin ; to watch and wait for every opportunity 
 to thrust our wares wherever disaster creates want, 
 and violence supplants industry ? 
 
 This is really a question of revenue. You will find 
 no trouble with'any surplus if you adopt this policy. 
 You can multiply the expenses of your government 
 so that imposts will run up to the standard of the 
 years of the Rebellion. Do not deceive yourselves. 
 Foreign commerce presupposes a large navy, and will 
 bring with it a costly army. If you seek to force 
 your products on countries which do not seek for 
 them, you must not only degrade the wages and the 
 character of your workingmen, to reduce prices, but 
 you must pursue the traditional policy by which 
 alone in the past nations have held control of for- 
 eign markets. You must be strong enough to de- 
 fend your competition in Asia and Africa. You must 
 have ships to convoy your merchantmen when hos- 
 tilities threaten. You must compete with Britain in 
 its diplomatic force and display in Constantinople 
 and Pekin, in Rio Janeiro, and at the mouth of the 
 Congo and the Zambesi. 
 
 Unless the policy had been already adopted, unless 
 the burdens had been already assumed, unless the 
 
THE RIVALRIES OF COMMERCE. 359 
 
 practices of centuries had become inwrought into 
 every fibre of national action, no people in the world 
 would to-day pay such a price for foreign commerce. 
 The foremost thinkers of England are asking whether 
 India and its trade are worth the price which they 
 cost. In spite of all the outlay, in spite of the strife 
 and the stress, the trident of the ocean must pass 
 with the power "which production will bestow. We 
 could not secure foreign commerce if we wanted to, 
 by parodying the career of Britain. The centuries 
 have advanced in their march. We are to win, if at 
 all, in the future, and not in the past, and by the 
 methods of the future, and not by those which are 
 rusty and weak with age. 
 
 The world comes to us for food because we pro- 
 duce it abundantly. Our agricultural implements 
 are sent to far-off lands because of their excellence. 
 Our clocks and watches keep time on every degree 
 of latitude, because they testify to the best skill of 
 our artisans. Our cotton and our leather are bought 
 because no one else can furnish equal quality so 
 cheaply. Our sheetings and our calicoes crowd those 
 of Lancashire in Manchester itself, and win superior 
 favor in far Eastern markets, upon their own merits. 
 Our cutlery challenges Sheffield at its best, because 
 it proves the taste and ingenuity of our mechanics. 
 To what McCulloch calls the cuckoo-cry of free trade, 
 that we must leave commerce alone, the loud de- 
 mand of American industry is that government must 
 keep its hands off of production. 
 
360 AMERICAN SYSTEM OF REVENUE. 
 
 Make and you will sell. Multiply your produc- 
 tions and the world will come to you to buy. Spare 
 the money which armies and navies cost, and leave 
 it to fructify in the pockets of the people, and you 
 will provide the conditions of the cheapest because 
 the most efficient industry, the most varied because 
 the best rewarded production, and you will also es- 
 tablish the most attractive markets in which to buy 
 and to sell that civilization has ever offered. The 
 search for the gold which lies at the foot of the rain- 
 bow of foreign commerce has ceased to be even 
 amusing. The quest has been the ruin of nations 
 enough. 
 
 STATE INTERFERENCE. 
 
 The demand that government shall keep its hands 
 off the individual does not relate to commerce alone. 
 British policy does not leave commerce to itself. 
 It seeks by every effort to extend trade every- 
 where. The traditions which sustained wars of cen- 
 turies, which reached out for the New World, which 
 grasped India, which took hold of the islands of the 
 Southern Seas, have driven Britain to bleed and suf- 
 fer in Egypt and to enter the heart of Africa ; still 
 to make a pet of foreign trade, still to carry British 
 fabrics with all the influence of navies and armies, 
 and all the arts of diplomacy. Against them, it is 
 the American policy to array only the powers of 
 peace, only the genius of our inventors, only the skill 
 of our artisans, only the enterprise of our traders, 
 only the overflowing tides of our varied production. 
 
THE RIVALRIES OF COMMERCE. 361 
 
 The history of the world proves that there is no 
 free trade, and no commerce ever received more of 
 government favor and patronage than that of the 
 country which misuses the title. Our own experi- 
 ence as a nation proves that the path in which our 
 glory is to be won, our wealth assured, is that of free 
 production. 
 
 Two voices reach us from Britain which command 
 our attention, concerning the relations of government 
 to the people. One voice rises out of the contests of 
 practical politics, — it is that of George J. Goschen, 
 a leader in Parliament, conspicuous in finance, and 
 connected in many ways with the administration of 
 local as well as national affairs. The other voice 
 rises out of the retirement of one of the most stu- 
 dious and original of modern thinkers, Herbert 
 Spencer. Both of these voices warn the United 
 Kingdom of the advance of government into the inti- 
 macy of individual life, into the relations of men with 
 each other. Mr. Goschen spoke at Edinburgh re- 
 cently, and illustrated how the government is inter- 
 fering in education, in trade and manufacture, in the 
 hours of labor, the treatment of workmen, the build- 
 ing of ships, and notably in the new laws relating 
 to land contracts. Mr. Goschen points out the ten- 
 dency to hold government morally responsible for 
 the existing evils in society, and to look to it for 
 remedies. He sees in all this movement the dan- 
 ger of sapping the old English love of personal lib- 
 erty, and he points out the inevitable increase of 
 
362 AMERICAN SYSTEM OF REVENUE. 
 
 taxation and of the concentration of power. John 
 Bright complained that such measures have the same 
 effect as the increase of the tariffs of foreign coun- 
 tries. 1 The sum of Mr. Goschen's conclusions is that 
 " the time has gone by when the cry of laissez /aire 
 (hands off, do not meddle) was respected," and that 
 "liberty has been made to yield to the daims of 
 morality." 'The whole theory upon which even the 
 shadow of free trade has been based has broken 
 down. 
 
 Herbert Spencer in his latest essay, entitled " The 
 New Toryism," 2 and continued in his startling de- 
 scription of " The Coming Slavery," 3 exposes the 
 whole drift of modern legislation in Britain, by the 
 sweeping declaration : "'Either directly or indirectly, 
 and in most cases both at once, the citizen is at each 
 stage of this compulsory legislation deprived in one 
 or other way of some liberty which he previously 
 had." Accordingly he finds that " most of those 
 who now pass as Liberals are Tories of a new type." 
 The efforts to use Parliament to remove grievances, 
 to correct the evils of irresponsible authority, and in 
 due course to check the abuses which flowed from 
 parliamentary action, have trained the British people 
 to seek through Parliament the cure of evils outside 
 of the sphere of politics. The central fact again is 
 
 1 Speech in Manchester, September 13, 1877. 
 
 2 Contemporary Review and Popular Science Monthly for February, 
 1884. 
 
 8 In the same magazines for April, 1884. 
 
THE RIVALRIES OF COMMERCE. 363 
 
 that the plea that British policy springs out of the 
 principle of freedom for the individual, is contra- 
 dicted by every page of the statute-books in recent 
 years, and by the whole drift of popular thought. 
 
 These two notable voices serve to herald the en- 
 tire movement of parties and leaders in Britain, per- 
 haps also in Europe. For the plans devised for the 
 relief of the London poor, in their terrible distresses, 
 whether proposed by Tories or Liberals, appeal to 
 the state for radical action. The entire factory code 
 testifies to abuses which demand the full force of 
 the government to correct. Mr. Gladstone's whole 
 ground of argument and of legislation with reference 
 to Irish affairs accepts the responsibility of the gov- 
 ernment for the poverty of the tenants and for the 
 burdens under which they are staggering, and he 
 bravely sets himself about relieving the accumulated 
 evils of the island. If in Irish affairs the Tories in- 
 dict the premier for socialistic tendencies, in the pu- 
 rification of the slums of the capital city they run 
 before him in sacrifice of the traditional rights of 
 property, and in schemes for using the state as the 
 grand almoner of permanent charities. 
 
 The lesson for us is that the exclusively commer- 
 cial policy of Britain has brought the realm face to 
 face with the gravest problems which can confront a 
 nation. Every one of them points to heavier expen- 
 diture, and to consequent increase of government 
 charges. Suppose it were true that commerce is free, 
 is not interference in all domestic affairs too high a 
 
364 AMERICAN SYSTEM OF REVENUE. 
 
 price to pay for the nominal advantage? Can we 
 not well afford to let our revenue system rest on the 
 solid rock on which our practice has placed it, and 
 devote our attention yet awhile to favoring produc- 
 tion without meddling in any degree with personal 
 liberty? Better freedom throughout the land for 
 every occupation and every person, than the pretense 
 of non-interference at a few sea-ports. 
 
•punjSti^ fo uowuvdxg T 
 S8AT909J JOqiq UOITOpidod JO l^MOjS QVfl t£)IM 'AJM^noO 
 
 qx\% uq TF M. PIO 8C W u ! s 8 ^^ AiO[ eq^ joj a^qis 
 -uodsaj si qoiqA\ 'auop3 jfyissaoan jo sssa^s cjaasajd aqj 
 qoa 'sjaqumu jo qsruo eq^ ^oa si q.j , .£ep 13 eouad ^qSra 
 ^ pred {p4\. sbav joqiq 'sn s[p} auinj-j 'etui^ s^qpq 
 -■ezqjj ui puiqSug; uj •jfep 13 oubjj 13 jreq — 'X j^res 
 puimou qsoai aq^ paAiaoaj oiireqaata aqq. saSy 8jp 
 "PIW 9t W u ! sdojng uj "aoiAjgs reuosjad joj spuuuigp 
 pa^imqun paojojua japu 9q^ 'qdA'Sg; ui su 'pire 'reun 
 -sg^mgui ugaq aA^q saS^M ajaqj, 'sgp^niioo p^ua 
 -ijq jo AnnuiA*). §uipuij§ gq^ jo p]o^ ugaq babi] 110^ 
 ■AJ!umoo Aq pug ■e.ig Aq '^u9uiuj9ao§ oq^ jo adA - } gq:j 
 no a" jpq. u^o j pui3 'doqs ui piTB uiji3j uo pred ugaq 
 9Ai3q qoiqM sgS'BAi. jo pjijputqs gqq. am Moqg "aAisnp 
 -xa ^soui a^s'BO pui? ^u'bSoji'b ^sora uaaq s^q raspodsap 
 ajaqAi !js9Aio[ uagq seq joqiq joj Kvd aqj, "ppo^ pjQ 
 aq^ ui ajaqMAjaAa pajreAgjd s^q qoiqM. g^sijo aq^ jo 
 !jno umojS aAEq A*aq^ 'raopjjas ^uaiouB aq^ jo qsanb 
 -gq gq^ gj^ Aaqx ■AEp-oq. pooqqaAq -e joj aju^s aqq. 
 Aq 'uoi^pdod jo A^isuap Aq pasnBo ^ou aji3 saS'e.di. 
 Ai.oq ■uoiireiapisuoo jgq^o siq^ si reoip'Bj Ajg^ 
 
 •woaaajLa: axv ssrovAi 
 
 •soi^qod puB Appos ui 
 su \[9M. sb ep'BJ^ pu^ aoq^^ ui T u 'renpiAq)ui AJ9A9 ui 
 OAqB puB aAipi3 ^soui si \\im. aajj qoiqAY ui are^s aq 1 ; 
 st „ oqqudaj siq; qiaq^ uoiipjj'epap s^gpag Jossajojj 
 jo q;iu^ gq^ parej^suomgp gA^q gm. snqx •uoi^'bu ■e 
 jo uoipnpojd aq;} raoij uapjnq ^jaAa '^ui'BJijsgj: £ J9Aa 
 
 •afiNZAau do msxsas nvoiusmv 999 
 
CHAPTER XII. 
 
 CONCLUSION. 
 
 Fallacy of Free Trade. — Fact of Freedom of Industry. — State In- 
 terference most Beneficent when exerted in Behalf of Industry. — 
 Freedom most Fruitful in Production. — Free Will most Active in 
 the United States. — Low Wages the Bequest of Ancient Serfdom. 
 
 — They increase with Population. — They advance with Liberty. 
 
 — Extent of Territory does not compel High Wages. — Destruc- 
 tion of Caste. — Soldiers. — Clergymen. — Lawyers. — Doctors. — 
 Salaries and Earnings. — Science and Industry. — Pay of Skilled 
 Mechanics. — Rewards of Production. — Advantages of such Re- 
 wards. — Professor Seeley's Declaration. — Our Continental Posi- 
 tion. — Our Diversified Production will develop Commerce. — Our 
 Flag will return to the Ocean to stay. — Mr. Gladstone's Predic- 
 tion of our Commercial Supremacy the Echo of our Home In- 
 dustries. 
 
 Against the fallacy of free trade stands the fact 
 of the freedom of industry. Here is the vital point 
 of the discussion which we have been pursuing. This 
 is the complete justification of the American system 
 of revenue. In whichever way you turn you must 
 accept the demonstrations of history. 
 
 If you tolerate state interference with industry at 
 any point, it renders its best service in fostering pro- 
 duction at home. If you magnify industrial free- 
 dom, that freedom is nowhere so important, nowhere 
 bears such ripe and nutritious fruit as in removing 
 
368 AMERICAN SYSTEM OF HE VENUE. 
 
 must be free from caste; you must offer adequate 
 rewards to manhood. 
 
 OCCUPATIONS. 
 
 Civilization, which has stricken down caste, has 
 lifted up the laborer. Science has adopted him as 
 its ally and heir. With his hand on the valve of the 
 locomotive the engineer holds traffic subject to his 
 will. At the telegraph instrument the operator 
 takes part in the councils of capital and of state- 
 craft. The master of the machinery, in factory or 
 press-room, ceases to be a servant, and increases his 
 personal value by every horse-power which he con- 
 trols. 
 
 Thus it results that the tournament of the world 
 has changed its fields and its weapons. Men no 
 longer strive with lance for a lady's favors. They 
 struggle with matter to change its forms and add to 
 its value. He who can render industry more varied 
 or more efficient, who can turn any element or gift 
 of nature to novel use, is the winner of the prize. 
 
 The world has not outgrown its demand for sol- 
 diers, and perhaps it never may. But they are not 
 now the only favorites of fortune and of mankind. 
 Society will not dispense with professional men, al- 
 though they do not stand so far above the level as in 
 generations ago. We will call upon lawyers when 
 we get into strife over property, and they are neces- 
 sary to the social structure which protects the per- 
 son. While sickness comes doctors will maintain 
 
CONCLUSION. 367 
 
 better pay and higher consideration. With the ad- 
 vance of personal liberty the pay of the producers 
 in every class has become higher. 
 
 The improvement of the material condition of 
 peoples has kept even pace with their gain in polit- 
 ical institutions. With the breaking down of the 
 monarchy in France the people everywhere secured a 
 larger share in the rewards of production. You can 
 follow the march of wages in the progress of the 
 British constitution. Through the continental na- 
 tions constitutional liberty has either immediately 
 preceded or at once followed considerable ameliora- 
 tion in the condition of the industrial population. 
 
 Wages have been high in America, in the British 
 colonies only in less degree than in the United States ; 
 they have attained a similar standard in Australia, 
 not simply because of the unbroken soil and broad 
 expanse of territory, but because the spirit of inde- 
 pendence inspired the early settlers, and has ruled 
 with unchallenged sway. But the expanse of mil- 
 lions of square miles, untried by the plow, has not 
 created an industrial class on the Congo or the Niger, 
 or in Zululand, or at the foot of the Andes, or on 
 the banks of the Amazon. For freedom has not set 
 up its altars there. Even on the banks of the Nile, 
 where power has ruled with as great grandeur as 
 anywhere on earth, where population can go and 
 trade, can reach quickly and cheaply, there is no in- 
 dustry, there is no civilization. Mere acres under 
 whatever sun and sky will not create wealth. You 
 
370 AMERICAN SYSTEM OF REVENUE. 
 
 ence to clergymen than to the other professions. A 
 gentleman who is carefully studying the subject re- 
 ports that only one hundred and eighty ministers in 
 this country receive a salary as high as $5,000 a 
 year ; a very few are paid a larger sum. In the 
 Episcopal Church, out of 3,559 ministers, 2,090 re- 
 ceive $1,000 or more. In the Presbyterian Church 
 North, out of 5,218 ministers, 3,100 attain that stand- 
 ard. In every other denomination reported, the 
 number receiving so high a salary is far less than one 
 half. A table on the next page presents instructive 
 details. 
 
 Among physicians, pretty diligent inquiry justifies 
 the estimate that not one in a hundred receives from 
 his profession as much as $8,000 a year ; not four in a 
 hundred can count upon $5,000 annually ; not seven 
 in a hundred will earn $1,000 ; perhaps one fifth will 
 receive $2,500. If a total of one third be set down 
 at $2,000 and upwards, the figures will be liberal. 
 Then the earnings descend rapidly. One fifth will 
 earn less than $1,500 a year. The next one fifth 
 will strive for $1,000 a year. In every hundred this 
 will leave over one fourth to keep body and soul to- 
 gether at $600, $500, or often less, as the full returns 
 for education and service. 
 
 Among lawyers great prizes are nominally more 
 numerous ; but the number of those who starve, or 
 eke out an existence by outside operations, is also 
 greater. In a considerable number of estimates, only 
 five in a hundred overrun $5,000 a year from legal 
 
CONCLUSION. 369 
 
 their calling. So long as there is a soul which longs 
 for immortality clergymen will be -welcome in home 
 and pulpit. 
 
 But with expanding industries, with developing 
 science, new professions have gained favor. Com- 
 merce has its spheres in which high training and 
 strong intellects are needed and are well rewarded. 
 So has the varied mechanism of this age. In the pro- 
 fessions, hundreds are starving in this country, in the 
 foolish pride of a decayed caste. In the walks of 
 production wealth invites every man who will bring 
 brains and industry, which will win skill. The sala- 
 ries which are, on the average, highest in this coun- 
 try to-day, are those of skilled mechanics, and espe- 
 cially those who are competent to administer large 
 establishments. Add experience and judgment to 
 science and trained skill, and furnace and factory, 
 mine and mill, enterprise in varied forms, will prof- 
 fer compensation dependent only upon ability and 
 fidelity. 
 
 The demand for professional men, under the old 
 classification, is limited ; that for skilled labor in its 
 manifold forms is widening far beyond the supply. 
 Inquiry as broad as I have been able to conduct has 
 forced upon me the conclusion that, of all who enter 
 the three learned professions, including college grad- 
 uates with all of their advantages, not one half, in 
 this country, earn an average of one thousand dollars 
 a year from their professions. 
 
 Figures more in detail can be obtained with refer- 
 
 24 
 
372 AMERICAN SYSTEM OF REVENUE. 
 
 business. Perhaps five more will receive $3,000 a 
 year. Another five will earn $2,500 annually. If 
 the annual earnings of one fourth are set at $2,000 
 and upwards the estimate will err on the side of lib- 
 erality. One tenth, in addition, receive $1,500 a 
 year. No calculation can bring the number getting 
 $1,000 a year from their profession to one half of 
 those on the rolls as in active practice. One fourth 
 do not earn $500 annually from legal business. 
 
 The number of lawyers and doctors, as well as 
 clergymen, who, after pursuing a college course, fail 
 to earn more than from four to six hundred dollars 
 a year, can hardly be less than one fourth of the en- 
 tire enlistment. To not one third of the total num- 
 ber in these professions is a steady income assured 
 equal to $2,000 a year. Outside of the largest cities, 
 not one twentieth ever acquire a settled income of as 
 much as $5,000 a year from their professions. 
 
 On the other hand, a good mechanic, who has 
 health, cannot well fail to earn as much as $600 a year, 
 — $750 is a common rate, — and special skill com- 
 mands, in almost any vocation, from $800 to $1,250. 
 It may safely be stated that by far more persons earn 
 from $1,200 to $1,500 a year in mechanical occupa- 
 tions than in the professions. The parallel can be 
 carried farther. As overseers and superintendents 
 skilled men are in constant demand at salaries rang- 
 ing from $2,000 to $3,000 a year, and the places are 
 many which will return such salary steadily. In the 
 grades of still greater compensation, manufactures 
 
CONCLUSION. 
 
 371 
 
 5 m n m £ % g."E. 5T 
 fcrc'a*£ r &'ti'o —■ 
 
 
 
 5 
 
 
 
 
 
 
 a a t»a 
 
 
 CO 
 
 o 
 
 
 
 
 
 c 
 
 3 
 
 
 ^JcnMOJCocooacoco^i 
 
 go i^- *- ci on hooo cjt'vU.^i'co'eD'kD o"co 
 S£^co>— 'co>-'i£ : UT:0ai#-toiw>fc*'-'>--> 
 CiCOfcOOlSOSOOQOh-iQll— '-q COO CI CO 
 
 o 
 
 co!r J f l-< Oi l-J CO OS CO CO CO CO H=* 
 
 -|0"01COmvJWOKO)OOa>rf-OH 
 OtDOlO&OOOWOMoifflOi*' 
 
 o-^oofflWMoooio-itstooooaH 
 
 H 
 fed 
 
 +i 
 
 +"= 
 
 
 +i 
 
 w 
 d 
 
 H 
 
 C 
 
 go 
 
 H 
 
 H 
 tsl 
 
 CO 
 
 MO 
 
 O O 
 
 +"<= 
 
 5 3 tfi. ^ ©r C* rfnt* CJ tf» ^ O* CT OS CO C£ tf- 
 
 O ~ J^ /•--! £Vm ,— i r-»« fl.«s i-*i *-*! r^»i TT> f" > <~> <T~} C^> TT1 
 
374 AMERICAN SYSTEM OF REVENUE. 
 
 entering a vocation where he may, even in poverty, 
 serve God and man. The doctors will care for our 
 bodies on such pay as they can get. The lawyers 
 we may be sure will secure their own fees whether 
 they win our cases or lose them. In the mean time 
 the production, which has become the most prolific 
 in the annals of our race, summons recruits to its 
 service. 
 
 This is my response to the complaint that our rev- 
 enue system keeps labor high in this country, and 
 thus interferes with commerce. Our markets are al- 
 ready, both for buyer and seller among our people, 
 the most desirable that can be attained. Our for- 
 eign trade is growing in every healthy direction, 
 more rapidly than that of any rival. Above all, our 
 production exceeds that of any equal number of per- 
 sons known to history. The consequence is that the 
 rewards of industry are steadily greater here than 
 anywhere else. You know that the Greek word poet 
 signifies a maker, not simply the framer of verses, 
 but one who makes in any sphere. In a sense which 
 Athens never reached, the American people are 
 poets, for they make things rare and marvelous as 
 well as useful. This is the triumph which has been 
 won by the maintenance of the highest rates of 
 wages ever paid for labor in any land at any time. 
 
 These high rewards for labor must draw increasing 
 numbers into the ranks of production, into factory 
 and mill, to forge and engine. Natural ability and 
 energy will win prizes for those who with every dis- 
 
CONCLUSION. 373 
 
 in their various forms offer prizes more numerous 
 and on a more liberal scale than can be obtained in 
 the professions. The only exception, in these days, 
 is not to be found in the pulpit or in medicine and 
 not in regular law practice, but with the few persons 
 who enlist in the service of the largest operators in 
 stocks and railroads. This is not legal practice ; it 
 is service, almost menial, to speculators and jobbers, 
 who seek, often, to set aside law and trample on 
 justice. 
 
 ADVANTAGES OP SUCH REWARDS. 
 
 These liberal earnings in actual production afford 
 opportunity for study and for all of the comforts 
 •which civilization provides. They permit the exten- 
 sion of every convenience and accomplishment to 
 one's family ; they tend to liberalize society and to 
 adorn it. Wealth offers privileges, and it imposes 
 obligations. The distinction of our country is that 
 its prizes are offered not simply to the professions, 
 but in larger and more general measure to the pro- 
 ducers. Where education is allied with experience, 
 it has many advantages in the competition. But 
 many a man mistakes, and assumes that education, 
 especially a college course, will prove a substitute for 
 that training which only time and toil can bring. 
 
 The demand is for skilled labor, with brains and 
 education behind it. Let it be far from me to warn 
 out of the professions any who are called to them. 
 Let the clergyman prove his devotion by unselfishly 
 
376 AMERICAN SYSTEM OF REVENUE. 
 
 every invention, by every improvement in produc- 
 tion, by every achievement of science. In the mean 
 time, if the choice is forced to that, better, far bet- 
 ter American homes, with schools and churches and 
 freedom, than foreign markets bought by degrading 
 our labor and playing the parrot to any rival, by 
 war and costly diplomacy. 
 
 Professor Seeley declares of Britain that " a mari- 
 time vocation was that to which she was called by 
 nature herself." 1 She is insular ; we are continen- 
 tal. Nature has called this republic to a task dis- 
 tinctively its own. It is that of extending and 
 diversifying human production, of training men, of 
 elevating all the homes of our producers. 
 
 Upon this diversified production foreign commerce 
 must be developed. With agriculture so productive, 
 with manufactures so masterful, with mining indus- 
 tries outstripping the world, we must be able to win 
 a share of the carrying trade. We will on the sea, 
 as on land, conquer the balance caused by high 
 wages. 
 
 I remember well sitting on the slope of Vesuvius, 
 and beholding on the blue waters far below an Amer- 
 ican ship-of-war, from which the Stars and Stripes 
 were floating under the blue Italian skies. The hope 
 came to me that again our flag shall return to the 
 seas, for trade and for all the missions of peace. 
 Nor do I doubt that it will return. It will be im- 
 pelled upon the broad currents of our industrial pros- 
 1 Page 126. 
 
CONCLUSION. 375 
 
 advantage strive without ceasing. Our education is 
 not responsible for the failure of graduates to enter 
 the spheres where fortune and social power invite 
 them. The personal mistake of individuals crowds 
 the professions, and leaves the first places in manu- 
 factures to aliens, or to those who have not received 
 the lessons of science and of history. Remember 
 that out of the ranks of the Union army came gen- 
 erals who rendered valuable service and attained to 
 deathless honor. But after all, the chiefs who were 
 the foremost in battle, and to the end carried the 
 nation to victory, were educated soldiers. Labor has 
 no Annapolis or West Point. The field of fortune 
 in production stands wide open for whoever will ally 
 brain and education with manual labor and persist- 
 ent industry. 
 
 This is the full flower of the American system of 
 revenue. It offers the highest prizes of life to the 
 American mechanic and producer, — the prizes of 
 wealth, and everything which wealth can secure. It 
 has already broadened the arena of honorable occu- 
 pation far beyond the professions, and has broken 
 down even the semblance of caste which attached to 
 them. Professor Seeley's declaration crystallizes the 
 sum : " There is more happiness in the United States, 
 and of a less demoralizing kind, than in any other 
 country." Better that happiness than foreign com- 
 merce, purchased by sacrificing it. Foreign trade 
 will come when we get a good ready. We are pre- 
 paring for it by every addition to our industry, by 
 
CONCLUSION. 377 
 
 perity. Perhaps the improvements in the making of 
 steel will afford the form of vessel which, like our 
 wooden clippers of the days before the war, will rival 
 in cheapness and speed all competitors. Perhaps 
 capitalists will be willing to accept lower dividends 
 than they are earning now in railroads and tele- 
 graphs. Perhaps Britain will drift into a great naval 
 war, and will lose her commercial power as she 
 gained it. In some way, and in due time, I know 
 our flag will return to the ocean, and will win for us 
 our full share of all the prizes of foreign trade. With 
 unparalleled production to sustain and defend it, with 
 a continent facing two oceans for ports, and for every 
 resource, when the American flag shall recover its 
 place on the great deep, it will go there to stay. Mr. 
 Gladstone's prediction of our coming commercial su- 
 premacy is the echo of all our home industries. 
 
380 
 
 INDEX. 
 
 Bismarck and his policy , 49, 324 ; on the 
 development of the United States, 
 197. 
 Blanqui and Charles the Fifth, 47 
 complains of the spread of protec 
 tion, 79 ; on balance of trade, 219 
 on gold and silver, 217 ; on the effect 
 of protective duties, 192. 
 Books and merchandise, 150. 
 Boots and shoes, 262. 
 Bounty to foreign competitors, 247. 
 Brassey, admission of Sir Thomas, 232. 
 Brazil, 70, trade with, 239; trade with 
 
 Great Britain, 240. 
 Bright, John, on burdens on British 
 workingmen, 318 ; on state interfer- 
 ence, 362 ; on wages, 271 ; on wars of 
 Britain, 343. 
 Britain. See Great Britain. 
 British budget for 1882, 61. 
 
 capital in the United States, 224. 
 carrying trade, 224, 331, 376. 
 colonies, 58, 66, 73, 313, 314, 348, 
 
 350. 
 commerce, conquest by arms, 
 357; not free trade, 357, 360; 
 price of, 343, 354. 
 conservatives against free trade, 
 
 338. 
 free trade, cuckoo cry of, 359. 
 markets passing out of British 
 
 control, 253. 
 policy protective until 1846, 60 
 possessions, 58, 73, 350. 
 production, 304. 
 
 products taxed in Australia, 314. 
 property owners, complaints of, 
 
 337. 
 revenue, 60, 61. 
 
 revenue system, 251 ; assailed at 
 home, 61 ; burdens home pro- 
 duction, 317 ; does not even 
 promote commerce, 229 ; favors 
 commerce, 58 ; injustice of, 315. 
 tariff, 61. 
 taxation, " Quarterly Review " 
 
 on, 337. 
 trade with the United States, 238, 
 
 241. 
 wars, John Bright on, 343. 
 workmen, complaints of, 336. 
 Brooklyn Revenue Reform Club, 316. 
 Brooks, Rev. Stopford, on the degrada- 
 tion of London, 294. 
 Brougham's proposal to stifle American 
 
 manufactures, 59, 98. 
 Buchanan, James, 99. 
 Buckle on foreign trade, 220- 
 Building a state, 168. 
 Bureau sciences, 308. 
 Burke on revenue, 173. 
 Business risk, imports a, 142, 153, 157. 
 Business of statesmen, 310 ; of every- 
 body, 312. 
 Business plants, taxes on, 139. 
 Buy where you can, 236. 
 
 Cfesar, Augustus, 37, 38. 
 
 Cairnes, Professor, declares political 
 economy an applied science, 309. 
 
 Calhoun, JohnC, for nullification, 104 ; 
 for protection, 97; influence on the 
 tariff, 124, influence on Clay's com- 
 promise, 105 ; on incidental protec- 
 tion, 108, 328. 
 
 Canada, 70, 73, 313. 
 
 Capital and imposts, 142, 151, 157, 332. 
 in trade, 211. 
 to labor, ratio of, 275. 
 
 Capitation tax, 31, 37, 51, 133. 
 
 Carey, Henry C., on diversity of indus- 
 try, 178. 
 
 Carlyle, Thomas, 198, 346. 
 
 Carrying trade, 176, 2U8, 210, 341 ; of 
 Britain, 224, 341, 376. 
 
 Carthage and commerce, 355; and its 
 revenue, 32. 
 
 Caste made wages low, 366- 
 
 Causes of the development of the Unit- 
 ed States, 2b4. 
 
 Change in British sentiment, 336. 
 
 Charges by our coastwise fleet, 286 ; 
 paid by merchants, 28, 30, 49. 
 
 Charity Organization Society in England 
 on cost of living, 294. 
 
 Charity begins at home, 221. 
 
 Charles the Fifth, 47. 
 
 Checks to free trade, 165, ?03. 
 
 Children of operatives, 302. 
 
 China, cost of trade of, 347, 357 ; dura- 
 tion of, 356 ; trade with Britain, 240 ; 
 trade with the United States, 239. 
 
 Chinese revenue, 39, 66. 
 
 City douanes, 51, 53. 
 
 Civilization and labor, 368. 
 
 Civitate Dei, 21. 
 
 Classes and imposts, 158 ; spring from 
 force, 20. 
 
 Class taxes, 35, 36, 48. 
 
 Clay, Henry, 97, 99, 102, 104, 105, 124. 
 
 Clay's compromise, 104, 105, 107, 110, 
 112, 125. 
 
 Clergymen and their salaries, 370. 
 
 Clothing in the United States and 
 abroad, 295, 297. 
 
 Cobden Club favors abolishing all cus- 
 toms and excise, 315 ; reports protec- 
 tion not dead, 315. 
 
 Cobden, Richard, admits British reve- 
 nue is derived unduly from the poor, 
 318 ; his prediction not fulfilled, 80, 
 318 ; his treaty with France, 54. 
 
 Coffee, 68, 102, 118-120, 148, 157. 
 
 Colbert, raises French customs,-52, 326. 
 
 Collecting revenue, cost of, 64, 93. 
 
 Colonial trade, not foreign commerce, 
 349 ; growth of, 353. 
 
 Colonies, American, 83. 
 
 British, 58, 348; protective du- 
 ties collected in, 314, 350. 
 Butch, 63; Phoenician, 33. 
 
 Commerce and diplomacy, 356. 
 
 and industry, contests between, 
 
 339. 
 and peace, 255. 
 and production, 165, 168, 377. 
 
INDEX. 
 
 Abolition of all customs, 315. 
 Accumulation of wealth, 210. 
 Aeharnians of Aristophanes, 76. 
 Acland, Sir Thomas, on failure of food 
 
 supply ia England, 252. 
 Adams, John Quincy, report, 103. 
 Adjustment of duties, 321. 
 Admissions about free trade, 330 ; con- 
 cerning immigration, 225 ; of Profes- 
 sor Cunningham, 330 ; admission of Sir 
 Thomas Brassey, 232. 
 Advance in wages in Britain and on the 
 
 continent, 305. 
 Advantages of high wages, 265, 307, 373. 
 Adverse balance of trade dangerous, 218. 
 Aggrandizement of nations, 354. 
 Aggregate of imposts, 248. 
 Agricultural theory of economy, 326. 
 Agriculture, 38, 90, 97, 98, 167, 181, 190 ; 
 and imposts, 130, 138, 157, 166; and 
 manufactures, 168, 183, 186, 192 ; and 
 national life 35'3 ; increase of, since 
 1850, 191 ; persons engaged in, 174 ; 
 product of, in 1880, 187 ; Say on, 186. 
 Alleged over-production, 180. 
 Alternatives of protection, 308. 
 American colonies and England, 58. 
 American colonists against any taxes, 83. 
 confederation, 84. 
 development, allies in, 264. 
 flag on the ocean, 341, 376, 377. 
 imposts, incidence of, 101, 150, 319. 
 labor, efficiency of, 304. 
 manufactures, Brougham's pro- 
 posal to stifle, 59, 98 ; French 
 commissioners on, 299 ; growth 
 of, 194, 268 ; superiority of cer- 
 tain, 290. 
 methods and results, 82. 
 people, condition of, 264, 266, 302, 
 
 307- 
 policy of peace, 360. 
 production, German commission- 
 ers on, 299. 
 results, 82, 307, 374. 
 revenue legislation favors pro- 
 duction, 313 ; not complex, 86 ; 
 the earliest, 85. 
 shipping, 341, 377. 
 statesmen and the tariff, 85. 
 system, flower of , 375 ; justifica- 
 tion of, 365 ; taxes, wealth, and 
 waste, 319. 
 
 American tariff experience, 313. 
 
 tariff of 1789, 88 : of 1790, 89 ; of 
 1791, 89; of 1812,94; of 1816, 
 96, 97 ; of 1813, 99 ; of 1819, 99 ; 
 of 1824, 99 ; of 1828, 101 ; of 
 1836, 107 ; of 1841, 107 ; of 1842, 
 108, 124, 125 ; of 1846, 111, 124, 
 126; of 1857, 112, 124,126; of 
 1860, 115 : of 1861, 117 ; of 1862, 
 117 ; of 1864, 117 ; of 1865, 117 ; 
 of 1867, 117; of 1870, 117; of 
 1872, 118 ; of 1873, 118; of 1883, 
 118, 120. 
 war loans, 214. 
 
 Argentine Confederation, 70. 
 
 Aristophanes and Athenian revenue, 34 ; 
 and protection, 76. 
 
 Aristotle favors protection, 36. 
 
 Armies necessary to commerce, 358. 
 
 Asia, cost of its commerce, 356. 
 
 Assyrian revenues, 31. 
 
 Athena and Poseidon, 77. 
 
 Athens and its methods, 34, 35, 76; 
 chooses industry before commerce, 77. 
 
 Attica and its revenues, 34. 
 
 Attitude of the nations on trade, 219. 
 
 Auctions and imposts, 145, 151, 184. 
 
 Augustus Caesar, 37, 38. 
 
 Australia and protection, 73, 313 ; taxes 
 imports from Batavia and from Brit- 
 ain, 314. 
 
 Austria, 48, 49, 75, 313. 
 
 Austria- Hungary, 67, 70, 71. 
 
 Authority, argument from, 80/ 
 
 Bacon, Lord, views of, on government, 
 21. 
 
 Balance of trade, adverse, dangerous, 
 218 ; against Britain, 223 ; against 
 France, 227 ; and the United States, 
 227 ; Blanqui on, 219 . no mystery, 208. 
 
 Banker of the world, 225- 
 
 Bankruptcy of an individual, 211. 
 
 Barter the beginning of commerce, 205 ; 
 commerce broader than, 203. 
 
 Batavia, products taxed in Australia, 
 314. 
 
 Bavaria, 70, 71. 
 
 Beecher, Henry Ward, against all indi- 
 rect taxation, 316. 
 
 Belgium, 64, 68, 70. 
 
 Benevolences of Henry the Eighth, 57. 
 
 Bessemer rails, 152. 
 
382 
 
 INDEX. 
 
 Domestic imposts and foreign commodi- 
 ties, 250. 
 trade and shipping, 341. 
 trade gives two profits here, 245. 
 
 Douanes, city, 51, 53. 
 
 Droits, 132. 
 
 Duration of nations, 355. 
 
 Duties, 71, 132; adjustment of, 321; ad 
 valorem, 88, 110 ; discriminating, 88, 
 95 ; export, 29, 34, 40, 66 ; on leather, 
 92, 112 ; on sugar, 68, 91-93, 112, 119 ; 
 solely for income, 103, 109 ; specific, 
 87,99,109,110,116; wages and prices, 
 264. See also Customs Duties ; Hates 
 op Duties. 
 
 Earliest American revenue legislation, 
 85. 
 commercial treaties, 34. 
 Earnings and imposts, 158, 161 ; earn- 
 ings in trade, 212 ; of professional 
 men, 389, 370. 
 Economist, Senior on sphere of the, 310. 
 Economists, genuine, 310, 327. 
 Economy, agricultural theory of, 326. 
 Education and industry, 373. 
 Efficiency of labor, effect of, on exports, 
 232 ; greaterin the United States, 304 ; 
 the impetus to commerce, 304. 
 Egypt, cost of trade of, 347, 352 ; reve- 
 nues of, 28, 39, 7>', 71, 75 ; part of Brit- 
 ish possessions, 352. 
 Election of 1840, 107. 
 Elizabeth, Queen, and commerce, and 
 
 wars for trade, 346. 
 Emigration, Professor Fawcett on, 280. 
 Employment and population, 174 ; sta- 
 bility of employment, 330. 
 Employments in the United States, 174. 
 England and American colonies, 58. 
 and France, wars of, 345, 355. 
 and industrial crises, 182. 
 expansion of , 345 ; failure of food 
 supply in, 252 ; fair trade in, 
 61, 315, 336; growth of tobacco 
 prohibited in, 60; how her com- 
 merce has been gained, 343 ; pro- 
 tection in, 59, 79, 315, 338 ; rev- 
 enue of, 55 ; war with Holland, 
 346, 355. 
 English navy founded, 346. 
 English restrictions on American colo- 
 nies, 58. 
 Equality in condition, 300. 
 Equation of commodities, 181 ; of ex- 
 ports and imports, 209. 
 of sales and purchases, 236. 
 of taxes, 2a0. 
 
 of wages and prices, 267, 300. 
 Equal rights, 18. 
 
 Equilibrium in purchasing power, 301. 
 Europe, protection in, 73, 313 ; wages in, 
 
 100, 270-272, 274, 305, 367. 
 Everybody's business, 312. 
 Evidence on wages before Tariff Com- 
 mission, 275. 
 Evolution of nations, 22. 
 Exaggeration in Germany, 325. 
 
 Exchange, 16, 166, 215 ; its two sides, 
 245. 
 
 Excise of 1791, 92. 
 
 Exclusive industries, disasters from, 181. 
 
 Expansion of England, 345. 
 
 Expenses of living clat-siried, 293. 
 
 Experience of mankind, ii5, 81, 311. 
 
 Export duties, 29, 34, 4U, 66. 
 
 Exports and imports, equation of, 209. 
 of .France, 351 ; of Germany, 351 ; 
 of Great Britain, W£5, "SJS, 'Sol, 
 253, 351 ; of gold and silver, 
 217 ; of the United States, 174, 
 229, 231, 352. 
 
 Fact of freedom of industry, 365. 
 Fair trade in England, 61, 315, 336. 
 Fallacies about markets, 235. 
 Family outlay, 292, 2yd. 
 Famine in Ireland, 251 ; in lands of a 
 
 single crop, 181. 
 Farmers and the tariff, 9i>, 97, 98, 110, 
 139, 244 ; debts and credits of, 206, 
 212,213; of the revenue, 35, 38, 39, 
 53, 58, 64. 
 Farms, imposts on. 157, 247. 
 Fawcett, Professor, admits spread of pro- 
 tection, 80. 
 against retaliatory duties, 62. 
 on famine in Ireland, 251. 
 on emigration, 280. 
 on protection in India, 314. 
 Fees, 34, 71. 
 Fillmore, Millard, reports tariff of 1842, 
 
 108, 124. 
 Final payment of imposts, 132, 160. 
 Financial reform in England, 62, 316. 
 
 tasks increased by free trade, 114. 
 Finished commodities, imports on, 320. 
 Fir.-t American tariff, 85, 83. 
 Flag, American, on the ocean, 341, 376, 
 
 377. 
 Florence, 451 ; commerce of, 44 ; reve- 
 nue of, 43. 
 Flower of the American system, 375- 
 Fluctuations in importations, 95. 
 
 in revenue under low duties, 110. 
 Food and its cost, 295, 297. 
 Food supply, failure in England, 252. 
 Force bill of 1832, 104. 
 Foreign balances of the United States, 
 how adjusted, 215. 
 commerce, rainbow of, 360. 
 commodities and domestic im- 
 posts, 250. 
 competition checked by protective 
 
 duties, 322. 
 debt, how paid, 225. 
 exchanges, J. S. Mill on, 216. 
 goods, prohibition ou, 29, 32. 
 markets, creating, 239 ; and pro- 
 tective duties, 341. 
 trade, and home labor, 250, 374; 
 and tariff, 226, 233 ; Buckle on, 
 220 ; gains on, 223 , McCulloch 
 on, 244 ; of Great Britain, 351 ; 
 to be secured through extension 
 of domestic industry, 340, 376 ; 
 
INDEX. 
 
 381 
 
 Commerce and revenue,, 246. 
 
 and the national government, 84. 
 
 and wages, 358, 374. 
 
 and war, 94, 176, 255, 343, 346, 
 
 354, 367, 358. 
 Asiatic, 356. 
 
 barter, the beginning of, 205. 
 British, 357. 360 ; the price of, 
 
 343, 354. 
 broader than barter, 203 ; com- 
 plex and continuous, 235 ; con- 
 fers value, 2U8 ; conflict for, 
 343 ; development by diversified 
 production, 376. 
 English, how gained, 343. 
 importance of, 168. 
 national, the sum of individual 
 
 trade, 206. 
 natural collector of imposts, 327 ; 
 navies necessary to, 358 ; not 
 production, 166 ; not secured 
 by change of revenue, 341 ; ob- 
 structed by imposts, 165. 
 of the United States, 227. 
 persons engaged in , 174 ; profits 
 of, 221, 245 ; quest of, ruinous 
 rivalries of, 36, 165 ; should pay 
 its share of the revenue, 131 ; 
 treaties of, 34, 54 ; two profits 
 in, 245 ; Tyrian, 33 ; Venetian, 
 42, 355. 
 rivalries, 36, 341. 
 Commercial school, 167. 
 rivalries, 36, 341. 
 supremacy of the United States, 
 
 233, 377. 
 treaties, 34, 54. 
 Commissioners for customs in the colo- 
 nies, 83. 
 Commodities, equation of, 181 ; prices 
 
 of, 287, 292, 296. 
 Comparisons with Britain, 231, 351 ; 
 
 why made, 230. 
 Competition and customs duties, 149, 
 
 156, 160, 322, 329. 
 Complaints of British workmen, 336 ; of 
 British property owners, 337; of the 
 tax-gatherer, 199. 
 Concentration of power, 362. 
 Conclusion, 365. 
 
 Confederacy, Southern, forbids encour- 
 agement to industry, 125. 
 Confederation, the American, 84. 
 Conflict for commerce, 343. 
 Conservatives in Britain against free 
 
 trade, 338. 
 Constitution, Madison on the, 86. 
 Constitutions, 19. 
 
 Consular reports on wages ,2(2, 274. 
 Consumer and imposts, 146, 166. 
 Consumption, effects of imposts on, 146 ; 
 of coffee, 148 ; of salt, 143 ; of sugar, 
 147 ; of tea, 147 ; relation of, 146, 170, 
 172. 
 Contents, table of, 5. 
 Contest between commerce and indus- 
 try, 339. . Qa 
 Continental Congress and duties, 8b. 
 
 Contrast between the United States and 
 Britain, 229. 
 
 Convention at Harrisburg, 1827, 100. 
 
 Corporations taxed, 68, 71, 123, 130. 
 
 Cost of collecting revenue, 64 93, 162; 
 of living, 274, 292, 294, 296, 297 ; of 
 maintaining markets, 250. 
 
 Cotton manufactures, 269. 322 ; increase 
 of, 323. 
 mills, efficiency in, 304 ; wages 
 in Cheshire and in New York, 
 272. 
 
 Cottons, duties on, 92, 97, 100, 103, 104, 
 111, 112, 116. 
 
 Crises, industrial, 182. 
 
 Cromwell and protection, 75, 78. 
 
 Crusades and oriental treasures, 355. 
 
 Cunningham's, Professor, growth of 
 industry and commerce of England, 
 330. 
 
 Custom Houses, Buskin on, 79- 
 
 Customs duties, 26, 37, 40, 51, 57, 60, 
 61, 66, 71, 86, 90; abolition of all, 315; 
 cheapness of collection of, 163 ; and 
 competition, 149, 156, 160, 322, 329 ; 
 distributed, 153; fall in part on for- 
 eign producer, 155 ; incidence of, 149, 
 153; limited to the frontier, 200; 
 might have been collected in Amer- 
 ica, 83 ; not inquisitorial, 201 ; once 
 for all, 200 ; proceeds of American, 
 89, 110, 118, 121, 122 ; voluntary pay- 
 ments of, 210. 
 
 Customs Union of Great Britain, 349. 
 
 Dallas, Alexander J., report as Secre- 
 tary of Treasury, 96. 
 Dallas, George M., vice-president, car- 
 ries tariff of 1846, 111. 
 Dawes, Henry L., 118. 
 Debates on the tariff, 97, 99, 101, 103, 
 
 105, 109, 110, 113, 115, 117. 
 Debts in trade, 211. 
 Demand for skilled men, 369. 
 Demands for change in Britain, 336. 
 Denmark, 70, 71. 
 Diplomacy and commerce, 356. 
 
 of Britain, 347- 
 Direct tax at Athens, 35; of 1791,93; 
 of 1813, 108 ; of 1862, 121. 
 imposts on London and the Jews, 
 
 56. 
 taxation advocated by Secretary 
 
 Oliver Wolcott, 93. 
 taxes, 137, 142, U4, 316. 
 Disasters resulting from exclusive indus- 
 tries, 181. 
 Discriminating duties, 88, 95. 
 Distress relieved by the tariff, 112. 
 Distribution, 170 ; of imports, 221. 
 Diversified production will develop com- 
 merce, 376. 
 Diversity of industry, 178, 331, 376. 
 Divine right, 18. 
 
 Divisions of time in our revenue, 123. 
 Dodge, Professor J. R., Letter from, on 
 products of agriculture, 187 ; statis- 
 tics of, 189. 
 
384 
 
 INDEX. 
 
 ment against free trade in, 64 ; re-ve- 
 nue of, 62, 71, 74. 
 Home and foreign markets, 244. 
 
 labor and foreign trade, 250, 374. 
 markets, Sidgwick on advantages 
 
 of, 329. 
 production, prices determined by, 
 247. 
 Homes, 177, 265, 302 ; and markets, 376 ; 
 
 freedom for, 164, 364. 
 Humanity and revenue, 221. 
 Hungary, 49. 
 
 Immigrants enter manufactures, 279. 
 
 Immigration, admission concerning, 
 225 ; extent of, 227, 278 ; testimony 
 about wages and cost of living, 281 ; 
 to United States, money value of, 
 227. 
 
 Importations, fluctuations in, 95. 
 
 Imported goods, undervaluation of, 154, 
 250. 
 
 Imports and domestic imposts, 250 ; and 
 exports, equation of. 209 , distribution 
 of, 221 ; of France, 351 ; of Germany, 
 351 ; of Great Britain, 229, 241, 253, 
 351 ; of Great Britain, from India, 
 350: of the United States, 89, 95, 98, 
 174, 229, 231, 352. 
 
 Imposts, aggregate of, 248 ; andagricul- 
 ture, 130, 138, 157, 166 ; and auctions, 
 
 145, 151, 184 ; become an element in 
 cost, 139, 143, 150, 160; aDd capital, 
 142, 151, 157, 332; and classes, 158; 
 and earnings, 158, 161 ; and personal 
 liberty, 198, 201 , and services, 136; 
 and sacrifices, 136 ; consumer and, 
 
 146, 166 ; effect of on consumption, 
 146 ; effect of, on consumption in 
 1866, 122 ; effect of repeal of, 146 ; 
 final payment of, 132, 16U ; friction of, 
 144, 161, 163 ; incidence of, 101, 132 ; 
 law of incidence of, 157 ; in the United 
 States in 1880, 129 ; multiplication of, 
 140, 142, 143, 157, 166, 248, 319 ; nat- 
 ural collector of, 327 ; obstruct com- 
 merce, 165; on farms, 157, 247; on 
 finished commodities, 320 ; on per- 
 sonal property, incidence of, 142 ; on 
 production, 247 ; on salt, 38, 53, 67, 
 68, 70,92, 102, 106, 161; reason for, 
 136 ; restrain production, 165 ; should 
 favor freedom, 164, 166 ; should not 
 be felt, 1B3 ; terror in, 163. 
 
 Incidence of American imposts, 101, 150, 
 319 ; of customs duties, 149, 153 ; of 
 imposts, 101, 132 ; of imposts, law of, 
 157 ; of imposts on occupations, 143 
 of imposts on personal property, 142 : 
 of income tax, 143 ; of land tax, 138, 
 157, 158 ; of licenses, 143 ; of taxes on 
 movables, 142, 159, 161 ; of taxes on 
 necessary articles, 144; of taxes on 
 persons, 144 : on wealth and waste, 
 319. 
 
 Incidental protection impracticable, 328. 
 
 Income tax, 35, 37, 48, 52, 68, 123, 143, 
 161 ; friction of, 161 ; incidence of, 143. 
 
 Increase of agriculture since 1850, 192 ; 
 of debt and taxation in Britain, 337 ; 
 of production, 192. 195 ; of wealth. 
 195. 
 
 Indebtedness of farmers creates panic, 
 213 ; of nations, 218. 
 
 Independence, national, 177. 
 
 India and its revenue, 31, 69, 74; and 
 protection, 74, 314 ; cost of trade of, 
 345,357, 359 ; struggle for, 347. 
 
 Indirect taxes, 137, 316. 
 
 Individual rights, 19. 
 
 Industrial activity and progress, 267. 
 crises, 182. 
 freedom, 464. 
 theorists, 326. 
 
 Industries, growth of, under the tariff, 
 334 ; protected, 260. 
 
 Industry and commerce, contest be- 
 tween, 339 ; and education, 373 ; and 
 science, 368, 373 ; before commerce 
 in Athens, 77; diversity of, 178, 331, 
 376 ; freedom of, 365. 
 
 Ingham, Samuel D., of Pennsylvania, 98. 
 
 Injustice of British revenue system, 
 315. 
 
 Interference of the state, 360, 365. 
 
 Internal and external taxes, 83. 
 
 Internal taxes, 48. 52, 92, 144, 157, 199 ; 
 incidence of, 142, 157 ; of 1791, in the 
 United States, 92 ; abolished, 93 ; of 
 1813, in the United States, 108 : abol- 
 ished, 108; of 1862, in the United 
 States, 121, 122, 199. 
 
 Introduction, 15. 
 
 Ireland, famine in, 251; manufactures 
 of, suppressed, 60. 
 
 Iron and steel in Britain, 193 ; in the 
 United States, 192, 268. 
 
 Iron, duties on, 92, 97, 100, 103, 112 ; 
 116, 117 ; how to make cheap, 256 ; 
 manufacture of, 320 ; mills, wages in, 
 270 : prices of various articles, 288, 
 296. 
 
 Italian republics, 41 ; spared labor in 
 taxation, 43. 
 
 Italy, 70. 
 
 Jaikson, Andrew 101, 102, 104. 
 Japan, 70, 74, 313, 
 Judicious tariff, 101. 
 Justification of the American system, 
 365. 
 
 "Kin beyond Sea," 196, 233. 
 Kings as traders, 28, 30, 32, 57. 
 
 Labor, American, efficiency of, 304 ; and 
 capital, ratio between, 275 ; and civili- 
 zation, 368; and revenue systems, 
 307, 330 ; and wealth, 158, 167 ; be- 
 fore exchange, 174 ; effect of effici- 
 ency of, on exports, 232 ; freedom of, 
 172 ; in commodities, 248 ; restric- 
 tions on, harmful, 172, 203 ; skilled, 
 prohibition on, 36, 42, 58, 75 ; under- 
 lies human prosperity, 327. 
 
 Land, prices of, 266 ; property in, 142. 
 
INDEX. 
 
 383 
 
 trade will be restored to the Unit- 
 ed States, 377. 
 Forms of trade for individuals and na- 
 tions the same, 206, 212. 
 France, 51, 68, 70, 71, 74 ; and England, 
 wars of, 345, 355 ; balance of trade 
 against, 227 ; Cobden's treaty with, 
 54 ; exports of, 351 ; imports of, 351 ; 
 octroi duty in, 53, 72; patents in, 52, 
 69 ; protection in, 52, 54, 78 ; tobacco 
 monopoly in, 54 ; workingmen in, 54. 
 Franklin on taxing the colonies, 83. 
 Free cities, 69. 
 
 homes or free ports, 364. 
 labor most fruitful, 172. 
 list and dutiable goods, 128. 
 markets impossible, 250. 
 production or free trade, 204, 339. 
 trade and labor, 330, opposition of 
 British Conservatives to, 338 ; 
 checks to, 165, 203 ; compels 
 special industries, 330 ; cuckoo 
 cry of British, 359 ; increases 
 financial tasks, 114 ; movement 
 against, in Holland, 64 ; McCul- 
 loch on, 359 ; not proved by his- 
 tory, 361 ; of Great Britain, 349. 
 will, most active in the United 
 States, 366. 
 Free-trade countries, 73. 
 Freedom and imposts, 137, 164 ; for 
 homes, 164, 364 ; industrial, asserted 
 by protective duties, 341 ; most benefi- 
 cent in production, 365 ; of industry, 
 365 ; of labor, 172 ; of production, 
 165, 203, 365 ; the gift of nature, 19. 
 Freight charges and general prices, 285. 
 French commerce, 226. 
 
 commissioners on American man- 
 ufactures, 299. 
 tariff schedules, 55. 
 ■workingmen and imposts, 54. 
 Friction of imposts, 144, 161 ; should be 
 
 as light as possible, 163. 
 Frontier, duties collected only on the, 
 200. 
 
 Grains on foreign trade, 223. 
 
 Gallatin, Albert, denounces excise, 92 ; 
 secretary of the treasury, 91, 94 ; re- 
 ports a surplus, 94. 
 
 Genuine economists, 310, 327. 
 
 George, Ilenry, on land taxes, 142 ; on 
 poverty and progress, 142. 
 
 German commissioners on American 
 production, 299. 
 
 Germany, 47, 49, 70, 71, 74, 313, 324, 
 325 ; exports of, 351 ; imports of, 351 ; 
 protection in, 49 ; raw materials in, 
 2*50. 
 
 Ghent, treaty of, 95, 150. 
 
 Gibbon on Koman methods, 37, 38, 78. 
 
 Gifts, 30, 39. 
 
 Gladstone, W. E., and British manufac- 
 tures, 253 ; declares the United States 
 the wealthiest nation, 196 ; " Kin be- 
 yond Sea," 196,233; predicts commer- 
 cial supremacy of the United States, 
 
 233, 377 ; urges extension of state in- 
 terference, 363. 
 
 Gold and silver, Blanqui on, 217 ; ex- 
 ports of, '111. 
 
 Gold driven from the country, 114. 
 
 Goschen, George J., on state interfer- 
 ence, 361. 
 
 Government, and the people, 361 ; must 
 interfere, 203 ; origin of, 17 ; Otis 
 (James) on, 19 ; restraints of, 21 ; title 
 of, to authority, 19 ; views on, of Gro- 
 tius, Hobbes, Locke, Rousseau, and 
 Herbert Spencer, 17, 18 ; views on, of 
 Plato, Sir Thomas More, and Lord Ba- 
 con, 21. 
 
 Government charges in the United 
 States, France, and Great Brit- 
 ain, 275. 
 charges and general prices, 286. 
 interference in Britain, 330. 
 revenue, 25. 
 
 Grain, tax on, 28, 30, 31, 56. 
 
 Granger, Francis, of New York, 112. 
 
 Great Britain, 55, 68, 70, 71, 74, 79; 
 and the Continent, 305 ; contrast be- 
 tween United States and, 229 ; balance 
 of trade against, 223 ; collects duties 
 c_l its domestic trade, 350 ; customs 
 union of, 349 ; diplomacy of, 347 ; ex- 
 ports of, 223, 229, 231, 253, 351 ; im- 
 ports of, 229,231, 253,350, 351; in- 
 crease of debt and taxation in, 337 ; 
 iron and steel in, 193 ; manufactures 
 of, 253 ; private enterprise, waning in, 
 331 ; savings banks in, 281 ; Seeley 
 on maritime vocation of, 376 ; su- 
 premacy of, 343, 349 ; trade with China, 
 240 ; true foreign commerce of, 352 ; 
 wages in, 100, 270-272, 274, 305, 367. 
 See also Britain ; British ; England. 
 
 Great Charter and customs on mer- 
 chants, 56. 
 
 Greece, 34, 70, 71. 
 
 Greeley, Horace, on early American, 
 statesmen, 85. 
 
 Grotius on social compact, 17. 
 
 Growth of American manufactures, 194, 
 268 ; of colonial trade, 353 ; of com- 
 merce of the United States and Brit- 
 ain, 230 ; of industries under the tar- 
 iff, 334 ; of population in the United 
 States, 331. 
 
 Hamburg enters the Zollverein, 50 ; 
 
 revenue of, 69. 
 Hamilton, Alexander, and first tariff, 87, 
 
 124 ; first report from the treasury, 
 
 89 ; report on manufactures, 89. 
 Happiness in the United States, 266. 
 Harrisburg, Convention at, in 1827, 100. 
 Harvests, Malthus on, 179. 
 Hayne, Robert T., of South Carolina, 102. 
 Hebrew revenue, 30. 
 Henry VIII., benevolences of, 57. 
 History proves there is no free trade, 361. 
 Hobbes on government, 18. 
 Holland and England, 346, 355 ; colonies 
 
 of, 63 ; manufactures of, 355 ; move- 
 
386 
 
 INDEX. 
 
 New World, struggles for, 58, 345. 
 
 New York, wholesale prices in. Liver- 
 pool and, 288. 
 
 Non-interference at seaports, 364. 
 
 Norway, 70. 
 
 No tariff at all, 315, 316. 
 
 Nullification, 104; to compromise, 102, 
 124. 
 
 Obstacles to commerce, imposts, 165, 
 203 j to the Union, 84. 
 
 Occupations, persons employed in vari- 
 ous, 174. 
 
 Occupation taxes, 38, 40, 48, 69, 123, 
 143 ; incidence of, 143. 
 
 Ocean, American flag on the, 341, 376, 
 377. 
 
 Ocean trade, how recovered, 377 ; must 
 follow production, 360. 
 
 Octroi of France, 53, 72. 
 
 Old World methods, 26. 
 
 Opposition to any tariff at all, 315. 
 
 Order from conflict, 20. 
 
 Origin of government, 17 ; of protec- 
 tion, 75. 
 
 Otis, James, on government, 19. 
 
 Our greatest revenues, 122. 
 
 Overproduction, 180. 
 
 Panics, 113, 118. 
 
 Passenger fares and general prices, 283. 
 
 Patentes in France, 52, 53, 69. 
 
 Patents confer monopoly, 335. 
 
 Patriotism, 134. 
 
 Peabody Trust, report on wages, 274. 
 
 Peace, American policy of, 360 ; and 
 commerce, 255. 
 
 Peculiar sources of revenue, 69. 
 
 Peloponnesian war, 36. 
 
 People and the government, 361. 
 
 Peppercorn financiers, William Pitt on, 
 178. 
 
 Period from the revolution to the war 
 of 1812, 90; from 1812 to nullifica- 
 tion, 105; between nullification and 
 secession, 114 : of the civil war, 118. 
 
 Persia, 32, 75. 
 
 Personal liberty and imposts, 198, 201. 
 property, incidence of imposts on, 
 
 142. 
 service, 28, 33, 35, 72. 
 
 Persons, tax on, 35, 38, 48, 56, 130, 144 ; 
 natural to servitude, 162. 
 
 Phoenician colonies, 33. 
 commerce, 32. 
 revenue, 32. 
 
 Physicians and their earnings, 370. 
 
 Pbysiocratic school, 326. 
 
 Pig-iron, development of, 192 ; in the 
 United States and Britain, 193. 
 
 Pitt, William, for customs duties in the 
 colonies, 83 ; on peppercorn finan- 
 ciers, 178 ; seeks in Germany to con- 
 quer America, 346 ; taxation no part 
 of governing power, 83. 
 
 Place to sell and to buy, 235. 
 
 Plato's Republic, 2L 168. 
 
 Poets are makers, 374. 
 
 Political economy an applied science, 
 309 ; Professor Cairaes on, 309 ; 
 defined, 15 ; everybody's busi- 
 ness, 312; is it a science, 24, 
 309 ; must promote production, 
 166 ; schools of, 326 ; sphere of, 
 16, 312; Sidgwick's, 80, 181; 
 Stewart's, 60. 
 science, mission of, 311. 
 ties and markets, 354. 
 
 Poll-tax. See Capitation Tax, and Per- 
 sons, Tax on. 
 
 Population and employment, 174 ; and 
 wages, 366 ; growth of, in United 
 States, 331. 
 
 Porter, Robert P., on wages, 270. 
 
 Portugal, 70. 
 
 Poseidon, Athena and, 77. 
 
 Poverty and progress, 142. 
 
 Poverty in London, 294. 
 
 Power, concentration of, 362. 
 
 Preface, 3. 
 
 Price of British commerce, 343, 354. 
 
 Prices, determined by home production, 
 247 ; equation of wages and, 267, 300 ; 
 lowered by the tariff, 339 ; of com- 
 modities, 287, 292, 296 ; of land, 266 ; 
 of leather, 289 ; retail, in New York 
 State and rural Britain, 296. 
 
 Private enterprise, waning in Britain, 
 331. 
 
 Privileges by patents, 335. 
 
 Prizes offered to producers, 368, 373. 
 
 Problem of revenue, 314. 
 
 Production, 16, 165, 179 ; and commerce, 
 165, 168, 377 ; and national duration, 
 355 ; and revenue, 246, 328 ; and tar- 
 iff, 192 ; and trade, question between, 
 204 ; and wages, 374 ; British, 304 ; 
 freedom of, 165, 203, 365 ; importance 
 of, 168 ; imposts on, 247 ; increase of, 
 192, 195 ; ocean trade must follow, 
 360 ; persons engaged in, 174 ; re- 
 strained by imposts, 165 ; sacrificed to 
 commerce in Britain, 254 ; stimulated 
 by protective duties, 161, 194 ; the 
 condition of commerce, 250. 
 
 Productive supremacy of the United 
 States, 233, 359. 
 
 Professional men and their earnings, 
 369, 370. 
 
 Profits of commerce, 221, 245. 
 
 " Progress and Poverty, 1 ' by Henry 
 George, 142. 
 
 Prohibition on foreign goods, 29, 32 ; on 
 skilled labor, 36, 42, 58, 75. 
 
 Property in land, 142. 
 
 Prosecutions in Prussia, 49. 
 
 Protected industries, 260. 
 
 Protection and modern nations, 73, 81 ; 
 alternatives of, 308 ; at Athens, 76; 
 begins in the United States with the 
 Constitution, 86 ; Cromwell and, 75, 
 78; favored by Aristotle, 36 ; favored 
 by Calhoun, 97 ; German commission- 
 ers on American, 299 ; in all Europe, 
 73, 313 ; in Australia, 73, 313 ; in Aus- 
 tria, 49, 74 ; in British colonies, 73, 
 
INDEX. 
 
 385 
 
 V^ 
 
 Land tax, 28, 30, 31, 36, 38, 40, 48, 51, 
 55, 62, 67, 71, 130, 138, 142, 157, 161, 
 166, 247 ; causes complaint, 139 ; fric- 
 tion of, 161 ; Henry George on, 142 ; 
 incidence of, 138, 157, 158 ; multiplied 
 more than any other, 140, 142, 159, 
 166, 247 ; must be paid in a lump, 159. 
 
 Law in the last analysis, 22. 
 
 L wyers and their earnings, 370. 
 
 Leather, duties on, 92, 112 : prices of, 
 289. 
 
 Legacies and successions tax, invented 
 by Augustus, 38 ; collected, 69, 123. 
 
 Legislation, American, shows eighty 
 years of protection to fifteen of free 
 trade, 126 ; before 1812, 90 ; from 1812 
 to 1832, 105 ; from 1832 to 1842, 107 ; 
 from 1857 to 1883, 118 ; from nullifi- 
 cation to compromise, 102 ; from nul- 
 lification to secession, 114 ; of man- 
 kind, 81 ; restrictive, 361 ; should be 
 adequate, 329 ; should be deliberate, 
 328 ; should be intelligent, 329. 
 
 Liberty and wages, 366, 367 ; infringed, 
 198. 
 
 Licenses, incidence of, 143. 
 
 Life, national, 23, 134. 
 
 Liquor taxes, 67, 89, 92, 102, 106, 111, 
 112, 123, 137, 144. 
 
 List, Frederick, 84, 309. 
 
 Liverpool, wholesale prices in New- 
 York and, 288. 
 
 Living, cost of, 274, 292-294, 296. 
 
 Living expenses, 292, 293. 
 
 Loans, 57, 60, 214. 
 
 Local taxes, 72, 129, 247; enter into 
 cost of commodities, 247. 
 
 Locke, declares labor the only source of 
 wealth, 167 ; on government, 17, 19 ; 
 on incidence of all taxes on land, 137. 
 
 London and its degradation, 294. 
 
 " Spectator " on restoration of 
 protection, 338. 
 
 Lotteries taxed, 69. 
 
 Lowndes, William, reports tariff of 1816, 
 97. 
 
 Madison, James, on the Constitution, 
 86 ; on the tariff, 86, 124. 
 
 Making things the beginning of riches, 
 168. 
 
 Mallary, Rollin C, of Vermont, reports 
 tariff of 1828, 101. 
 
 Malthus on fine harvests. 179. 
 
 Mankind, experience of, 25, 81, 311. 
 
 Manufactures, agriculture and, 168, 183, 
 186, 192 ; Brougham's proposal to stifle 
 American, 59, 98 ; cotton, 269, 322 ; de- 
 velopment of, 180, 182, 190, 192, 289, 
 299; importance of, 167; French com- 
 missioners on American, 299 ; increase 
 of, since 1850, 194; influence of, on 
 land, 189 ; monopoly in, 334 ; of Great 
 Britain, 253 ; persons engaged in the 
 United States, 174; product of, in 
 1810, 91 ; in 1830, 107 ; in 1850, 194 ; 
 in 1860, 194 ; in 1870, 194: in 1880, 
 187, 194 ; royal, 33 ; taxed, 28, 40, 123. 
 
 Markets and homes, 376 ; and imposts, 
 246 ; and political ties, 354 ; cost of 
 maintaining, 250 ; creating foreign, 
 239 ; fallacies about, 235 ; foreign and 
 home, 244 ; must we buy in the cheap- 
 est and sell in the dearest? 236 ; sac- 
 rifices for, 59, 98, 150, 152 ; shall la- 
 bor or trade support them ? 250 : the 
 best, 237, 255, 263, 360. 
 
 McCullocb on foreign trade, 244 ; on 
 free trade, 359. 
 
 McDuffie, George, of South Carolina. 
 101, 102, 104, 111, 113. 
 
 Matches, repeal of stamp on, 146. 
 
 Mechanics and their wages, 372. 
 
 Megara and Athens, 36. 
 
 Mercantile theorists, 167, 326. 
 
 Merchants pay charges, 28, 30, 49. 
 
 Merritt, Consul- General E. A., report of, 
 272, 292. 
 
 Mexico, 70. 
 
 Military service, 72. 
 
 Mill, J. S., on foreign exchanges, 216; 
 on wages, 300. 
 
 Mines, 28, 33, 34, 38. 
 
 Mining industries in United States and 
 other nations, 195. 
 
 Ministers and their salaries, 370, 371. 
 
 Modern nations, sources of their reve- 
 nue, 66, 71 ; and protection, 73, 
 81. 
 practices abroad and at home, 66. 
 
 Moiety laws repealed, 120. 
 
 Money, purchasing power of, 301. 
 
 Monopolies, 54, 58, 67 ; by patents, 335 ; 
 in manufactures, 334. 
 
 Montesquieu on poll-tax, 162. 
 
 More, Sir Thomas, views on government, 
 21. 
 
 Morrill, Justin S., 113, 115-117. 
 
 Morrill tariff, 115. 
 
 Movables, incidence of taxes on, 142, 
 159, 161. 
 
 Multiplication of imposts, 140, 142, 143, 
 157, 166, 248, 319. 
 
 National commerce, the sum of individ- 
 ual trade, 206. 
 duration and production, 355. 
 government to levy taxes and reg- 
 ulate commerce, 84. 
 independence, 177. 
 life, 23, 134 ; agriculture and, 356. 
 Nations, aggrandizement of, 354 ; dura- 
 tion of, 355; elements of, 22; evolu- 
 tion of, 22 ; have distinct characters, 
 23 ; how divided relative to protection, 
 73 ; indebtedness of, 218 ; necessary, 
 23, 25 ; their authority cited, 73, 81. 
 Navies necessary to commerce, 358. 
 Navy, maintained to support trade, 347 ; 
 
 of England founded, 346. 
 Necessary articles, incidence of taxes 
 
 on, 144. 
 Netherlands, revenue of, 62, 70, 71, 74- 
 New England and the tariff, 101, 103. 
 New industries make fresh prizes, 180, 
 190. 
 
388 
 
 INDEX. 
 
 ed States, 266, 477 ; on maritime vo- 
 cation of Britain, 376. 
 Selling in order to buy, 205, 246. 
 Sell where you must, 236, 246. 
 Semper ab omnibus ubique, 81. 
 Senior on sphere of the economist, 310. 
 Serfdom bequeathed low wages, 366. 
 Service, personal, 28, 33, 35, 72. 
 Services and imposts, 136; in trade, 
 
 211. 
 Shaw, Consul A. D., on wages, 272. 
 Sherman, John, 115, 116, 124. 
 Shipping and domestic trade, 341 ; res- 
 toration of American, 341, 377. 
 Shipping, first American charges on, 88. 
 Sidgwick, Henry, on advantages of 
 home markets, 329 ; on free trade and 
 labor, 330 ; on underproduction, 181 ; 
 political economy, 80, 181 ; protective 
 duties may fall on foreign producer, 
 155 
 Silk, duties on, 31, 99, 102. 
 Silks American, production of, 155, 269 ; 
 fall in prices of, 156 : surplus of, 152 ; 
 undervaluation of, 154. 
 Silver and gold, Blanqui on, 217. 
 Sismondi and consumption, 170. 
 Skilled labor, prohibition on, 36, 42, 58, 
 75. 
 mechanics and their earnings, 
 
 372. 
 men, demand for, 369. 
 Slavery, 102, 103, 105, 125, 200. 
 Slums of London, 294. 
 Smith, Adam, 167, 186, 326. 
 Socialistic tendencies, 363. 
 Social compact unknown to history, 18. 
 Society a necessity, 17. 
 Solomon's House of Lord Bacon, 21. 
 Solomon's importations and trade, 30, 
 
 75. 
 South Carolina, 102-104, 107, 112. 
 Southern Confederacy destroys our 
 commerce, 342 ; its constitution 
 prohibits protection, 125. 
 leaders, 101-103, 105, 107, 113, 115, 
 124. 
 Spain and its revenue, 62, 67, 70, 71. 
 Spanish war and foreign trade, 346, 355. 
 Specializing industries under free trade, 
 
 330. 
 Specific duties, 87, 99, 109, 110, 116. 
 "Spectator" on restoration of protec- 
 tion, 338. 
 Spencer, Herbert, on state interference, 
 369. 
 on the state, 18. 
 Spoils and tributes, 28, 31, 34, 39. 
 Stability needed, 324. 
 
 of employment, 330. 
 Stamp tax in the colonies, 83. 
 Stamps, 68, 69, 71, 123 ; on matches, re- 
 peal of, 146. 
 State, sphere of the, 21, 134, 361. 
 State interference, 360-363, 365 ; in- 
 creases taxation, 363 ; renders its best 
 service in fostering production, 365. 
 State taxes, 72, 248. 
 
 Statesmen, American, and the tariff, 85. 
 
 business of, 310. 
 Statistics of wages, 270. 
 Stevens, Thaddeus, 115, 117. 
 Stewart's " Political Economy,*' 60. 
 Stuarts and taxation, 57. 
 Sugar, consumption of, 147 : duties on, 
 
 68, 91-93, 112, 119. 
 Sumner, Professor William G., before 
 
 Tariff Commission, 186, 310. 
 Superiority of certain American manu- 
 factures, 290. 
 Supremacy of Great Britain, 343, 349 ; 
 
 of the United States, 233, 359, 377. 
 Surplus, at Athens, 35 ; commodities, 
 
 59, 98, 145, 150, 152, 184 ; in treasury, 
 
 94, 102, 108. 
 Sweden, 70. 
 Switzerland, 70. 
 Systems of revenue, choice between 
 
 American and British, 339. 
 
 Table of revenue of modern nations, 71 ; 
 
 of salary of ministers, 371. 
 Tariff and foreign trade, 226, 233 ; and 
 production, 192 ; British, 61 ; debate 
 on, 97, 99, 101, 103, 105, 109, 110, 113, 
 115, 117; distress relieved by, 112; 
 experience, American, 313 ; for reve- 
 nue, 103, 108, 109 ; influence of Cal- 
 houn on, 124 j judicious, 101 ; legisla- 
 tion not complex, 86 ; Madison on the, 
 86, 124 ; prices lowered by, 339. 
 Tariff Commission, 186, 275, 310 ; and 
 
 wag-es, 275. 
 Tariffs. See American Tariffs. 
 Task of the United States, 376. 
 Taxation and Stuarts, 57 ; indirect, 
 316 ; no part of governing power, 83 ; 
 of corporations, 68, 71, 123, 130, 162 ; 
 of manufactures, 28, 40, 123 ; of States 
 and local divisions, 67, 129, 248 ; 
 " Quarterly Review " on British, 337 ; 
 state interference increases, 363. 
 Taxes, American colonists against, 83; 
 class, 35, 36, 48 ; direct, 137, 142, 144, 
 316 ; equation of, 250 ; incidence of, 
 142, 157 ; indirect, 137, 316 ; internal, 
 48, 52, 92, 144, 157, 199 : on business 
 plants, 139 ; on farms, 139 ; on mova- 
 bles, incidence of, 142, 169, 161; on 
 necessary articles, 144 ; on occupa- 
 tions, 38, 40, 48, 69, 123, 143 ; on per- 
 sonal property, 142 ; on sales, 123 ; on 
 tenements, 139 ; State, 72, 248. 
 Tax-gatherer, the agent of restraint, 198 ; 
 
 complaints of the, 199. 
 Tea, 68, 88, 91, 92, 102, 117-120, 147, 148, 
 
 157, 317, 350. 
 Telegraphs taxed, 68, 71, 123. 
 Tenements, taxes on, 139. 
 Terror in imposts, 163. 
 Testimony, before the Tariff Commis- 
 sion on wages, 275 ; of Chancellor 
 Bismarck, 196 ; of French and Ger- 
 man commissions, 299 ; of the na- 
 tions, 73. 
 Theorists, mercantile, 167, 326. 
 
INDEX. 
 
 387 
 
 313 ; in England, 59, 79, 315, 338 ; in 
 France, 52, 54, 78 ; in Germany, 49 ; 
 in India, 74, 314 ; in Japan, 74, 313 ; 
 in Rome, 78 ; of industries, 260 ; ori- 
 gin, 75 ; practiced by Julius Csesar, 
 47, 78 ; prohibited by Constitution of 
 Southern Confederacy, 124; "Spec- 
 tator " on restoration of, 338 ; spread 
 of, 80 ; stimulates production, 161, 
 194. 
 
 Protective duties, and a foreign market, 
 341 ; and the carrying trade, 341 ; as- 
 sert industrial freedom, 341 ; Blanqui 
 on the effect of, 192 ; collected in Brit- 
 ish colonies, 314, 350 j enlist idle cap- 
 ital and labor, 332 ; may fall on for- 
 eign producer, 155 ; should be ade- 
 quate, 329 ; should be changed only 
 for reason, 323 ; should be moderate 
 to be permanent, 324 ; should favor 
 American labor, 323 j should offsetin- 
 ternal taxes, 250, 322 ; stimulate pro- 
 duction, 161, 194 ; system interferes 
 with commerce, 341 ; will check un- 
 due foreign competition and excessive 
 prices, 322. 
 
 Prussia, its revenue, 48, 68, 70, 71. 
 prosecutions in, 49. 
 
 Public lands, 28, 30, 31, 33, 34,36,40, 
 51, 67, 71 ; of the United States, 67, 94. 
 
 Purchases and sales, equation of, 236. 
 
 Purchasing power of money, 301. 
 
 "Quarterly Review" on British taxa- 
 tion, 337. 
 
 Quesnay and his school, 167, 326. 
 
 Question between production and trade, 
 204. 
 
 Railroad charges, 283, 285. 
 
 Railroads, their testimony about wages 
 and prices, 283 ; taxed, 68, 71, 123, 130. 
 
 Rails, Bessemer, 152. 
 
 Rainbow of foreign commerce, 360. 
 
 Rates of duties in 1789, 88 ; from 1791 
 to 1809, 91 ; to 1812, 94; from 1812 to 
 1815,95; 1816 to 1817,98; from 1824 
 to 1827, 100 ; in 1828, 101 ; from 1831 
 to 1842, 107 ; 1844, 108 ; from 1846 
 to 1856, 112 ; in tariff of 1857, 131 } 
 in tariff of 1861, 116 ; lowest and high- 
 est under several tariffs, 126. 
 
 Ratio of labor to capital, iu the United 
 States, Prance, and Britain, 275; of 
 various items of expenses of living, 
 293, 296 ; of wages to prices, 265. 
 
 Raw materials, 32, 90, 111, 140, 256, 
 320 ; in Germany, 260. 
 
 Recent revenue legislation protective, 74. 
 
 Reform, English financial, 62, 316. 
 
 Relations of government to the people, 
 
 Rent, share of, in cost of living, 293, 
 
 297. 
 Repeal of imposts, effect of, 146. 
 Republic, Plato's, 21, 168. _ 
 
 Restoration of American shipping, 341, 
 
 377. 
 
 Restraints on production, 165 ; restric- 
 tions imposed by England on Ameri- 
 can colonies, 58 ; on commerce, 36, 
 165 ; on labor, harmful, 172, 203 ; on 
 trade, 203. 
 
 Restrictive legislation, 361. 
 
 Retail prices in New York State and ru- 
 ral Britain, 296. 
 
 Retaliatory duties, Professor Fawcett 
 against, 62. 
 
 Revenue and commerce, 246 ; and hu- 
 manity, 220 ; and production, 
 246,328; Burke on, 173; cost of 
 collection, 64 ; farmers of, 35, 
 38, 39, 63, 58, 64 ; fluctuations 
 of, under low duties, 110 ; must 
 favor production, 204 ; of Assy- 
 ria, 31 ; of Attica, 34 ; of Car- 
 thage, 32; of China, 39, 66 ; of 
 Egypt, 28, 39, 71, 75 ; of Eng- 
 land, 65 ; of Florence, 43, 451 ; 
 of Great Britain, 60, 61 ; of 
 Hamburg, 69 ; Hebrew, 30 ; of 
 India, 31, 69, 74 ; of modern 
 nations, 66, 71 ; of Prussia, 32, 
 48, 68, 71 ; of Rome, .36, 78 ; 
 of Spain, 62, 67, 71 ; peculiar 
 sources of, 69 ; problem of, 314 ; 
 standard, 103, 109 ; uniformity 
 of laws of, 25, 81 ; voluntary 
 payments of, 137, 200. 
 legislation, earliest American, 85 ; 
 American, favors production, 
 313. 
 systems and labor, 307, 330. 
 
 Revolutionary period, 90. 
 
 Revolution started from revenue, 83. 
 
 Rights at sea, 94 ; individual, 19. 
 
 Rivalries of commerce, 36, 341. 
 
 Roman methods, Gibbon on, 37, 38, 78. 
 
 Rome and its revenue, 36, 78. 
 
 Rouuseau on social contract, 18. 
 
 Royal manufactures, 33. 
 
 Ruskin on custom houses, 79. 
 
 Russia, 70 ; and its methods, 68, 71, 
 75. 
 
 Sacrifices and imposts, 136. 
 
 Salaries of clergymen, 370. 
 
 Sales and purchases, equation of, 236 ; 
 tax on, 123. 
 
 Salt, consumption of, 148 ; imposts on, 
 38, 53, 67, 68, 70, 92, 102, 106, 161. 
 
 Savings banks in the United States and 
 Britain, 281. 
 
 Say and agriculture, 186; nations pay 
 for products with products, 216 ; on 
 sphere of political economy, 312. 
 
 Schools of political economy, 326. 
 
 Science and industry, 368, 373 ; of rev- 
 enue, 309. 
 
 Sciences of administration, 308. 
 
 Sea, rights at, 94, 
 
 Seaports, non-interference at, do4. 
 
 Secession, 104, 113, 115, 116, 124. 
 
 Seeley, Professor, expansion of Eng- 
 land, 345 ; on free will in the United 
 States, 366 ; on happiness in the Unit- 
 
INDEX. 
 
 389 
 
 Time, divisions of, in our revenue, 123. 
 
 Tobacco, growth, prohibited in England, 
 60 ; monopoly in France, 54 ; tax, 67, 
 70, 93, 112, 122, 123, 144, 161. 
 
 Tonnage dues, 88. 
 
 Trade, adverse balance of, dangerous, 
 218 ; and production, 204 ; and war, 
 345 ; attitude of the nations on, 219 ; 
 restrictions on, 203 ; services in, 211. 
 
 Traders, kings as, 28, 30, 32, 57. 
 
 Transportation, 168, 219. 
 
 Treasury, surplus in, 94, 102, 108. 
 
 Treaties of commerce, 34, 54. 
 
 Treaty of Ghent, 95, 150. 
 
 ■Tributes and spoils, 28, 31, 34, 39. 
 
 True foreign commerce of Britain, 352. 
 
 Turgot proposes a single impost, 52. 
 
 Turkey, 70 ; cost of trade of, 347, 357 ; 
 part of British possessions, 352. 
 
 Two profits in commerce, 245. 
 
 Tyrian commerce, 33. 
 
 Underproduction, 181. 
 
 Undervaluation of imported goods, 154, 
 250. 
 
 Uniformity of the laws of revenue, 25, 
 81. 
 
 United States, abolition of internal taxes, 
 92, 93, 108; and Great Britain con- 
 trasted, 229 ; balance of trade and, 
 227 ; Bismarck on development of, 
 197; British capital in, 224; British 
 trade with, 238, 241 ; causes of their 
 development, 264 ; commerce of, 227 ; 
 commercial supremacy of, 233, 377 ; 
 declared by Gladstone the wealthiest 
 nation, 196 ; development of pig-iron 
 in, 193 ; employments in, 174 ; ex- 
 ports of, 174, 229, 231, 352 ; foreign bal- 
 ances of, how adjusted, 215 ; growth 
 of population in, 331 ; happiness in, 
 266 ; has a task, 23, 376 ; imports of, 
 89, 95, 98, 174, 229, 231, 352 ; imposts 
 in, in 1880, 129 ; iron and steel in, 192, 
 268 ; mining industries in, 195; money 
 value of immigration to, 227 ^persons 
 engaged in manufactures in, 174 ; pro- 
 ductive supremacy of, 233, 359 ; pub- 
 lic lands of, 67, 94 ; savings banks in, 
 281 ; Seeley on free will in, 366 ; trade 
 with China, 239 ; wages in, 110, 270, 
 272, 274, 305, 372 ; wealth of, 195 ; 
 workingmen in, 265. 
 
 Utopia, 21. 
 
 Venetian commerce, 42, 355. 
 
 Venice and its manufactures, 355 ; and 
 
 its revenues, 41 ; and protection, 46. 
 Virtue has a sphere in revenue, 173. 
 
 Vital point in the discussion, 365. 
 Voluntary payments of revenue, 137, 
 
 200. 
 
 Wages, advantages of high, 265, 807, 
 373 : and commerce, 358, 374 ; and 
 liberty, 366, 367 ; and population, 366 ; 
 and prices, equation of, 267, 300 ; and 
 production, 374 ; and revenue sys- 
 tems, 307 ; benefits of high, 265, 307, 
 373 ; consular reports on, 272, 274 ; ef- 
 fect of caste on, 366 ; evidence on, be- 
 fore Tariff Commission, 275 ; in Brit- 
 ain and in Europe, 100, 270-272, 274, 
 305, 367 ; in the United States, 110, 
 270, 272, 274, 305, 372 ; John Bright 
 on, 271 ; J. S. Mill on, 300 j low, be- 
 queathed by serfdom, 366 ; of me- 
 chanics, 372 ; Report of Peabody Trust 
 on, 274 ; Robert P. Porter on, 270 ; 
 statistics of, 270 ; tend upward, 303, 
 320 ; the type of government, 366. 
 
 Walker, Robert J., Secretary of the 
 Treasury, report, 109, 124, 125. 
 
 War and commerce, 94, 176 , 255, 345, 
 346, 354, 357, 358 ; and trade, 345 ; 
 loans, 214 ; how adjusted, 215 ; of 1812, 
 59, 94, 341, 347 ; Peloponnesian, 36. 
 
 War revenues, culmination of, 117, 122. 
 
 Wars for America and India, 58, 78 ; for 
 commerce, Peloponnesian, 36 ; Span- 
 ish succession, 78 ; with France, 78, 
 345, 355; with Holland, 79, 346, 355; 
 with China, 40, 347, 357- 
 
 Washington signs the first tariff, 85. 
 
 Waste and wealth taxed, 319. 
 
 Wealth, accumulation of, 210 ; and la- 
 bor, 158, 167 ; increase,of , 195 ; of the 
 United States and other nations, 195. 
 
 Wealthiest of all nations, 196. 
 
 Webster, Daniel, 97, 99, 101, 124 ; for 
 protective duties, 101, 105, 110. 
 
 Wholesale prices in New York and Liv- 
 erpool, 288. 
 
 Wool and woolens, duties on, 92, 97, 99- 
 101, 112, 116, 119. 
 
 Wool, growth of production of, 258, 268 ; 
 how to get it most cheaply, 256 ; prices 
 of, 258 ; Silas Wright on, 101. 
 
 Woolen mills, wages in Scotland and 
 New York, 272. 
 
 Workingmen against the British system, 
 336 ; in France, 54 ; in United States, 
 265. 
 
 Wright, Silas, on wool, 101 ; on tariff of 
 1842, 108. 
 
 Zollverein, 50, 66, 69. 
 
':.:•"■' 
 
 •,V.V,' 
 
 wXvv' 
 
 -.*,•:■ 
 ■JWm