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 Protection versus free trade.The scienti 
 
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PROTE CTION 
 
 VEBSUS 
 
 FREE TRADE. 
 
 THE SCIENTIFIC VALIDITY AND ECONOMIC 
 
 OPERATION OF DEFENSIVE DUTIES 
 
 IN THE UNITED STATES. 
 
 HENRY M. HOTT. 
 
 NEW YORK: 
 D. APPLETON AND COMPANY, 
 
 1, 8, AHD 5 BOND STREET. 
 1886. 
 
Hri7j"r 
 
 copteight, 1s35, 
 Bt d. appleton aisid COMPAHT. 
 
PEEFAOE, 
 
 The following pages are the result of a friendly chal- 
 lenge to me by an eminent Professor of Political Economy 
 in a New England college to investigate that science, espe- 
 cially its teaching in relation to protective tariffs. The 
 challenge was accompanied by the confident prediction : 
 " If you pursue it to any length, you will certainly come 
 to throw overboard, with scorn, the Pennsylvania notion 
 that the way to grow rich is to stop, by law, profitable 
 production " ; together with the Professor's formulated 
 conclusion : " Protection, poisonous in every root and fiber, 
 droops and dies the moment the light of common sense 
 and rational inquiry falls upon it." 
 
 Layman though I was, I could not well refuse to take 
 up the gauntlet thus thrown down by the Professor. 
 
 In the intervals of business engagements I have underv 
 taken the investigation. It has been done with reasonable 
 thoroughness, and, so far as I know, with impartiality and 
 freedom from desire of controversy. If it betrays a con- 
 troversial spirit, it is because it is provoked ; and even that 
 may add something of interest to a discussion otherwise 
 rather dry and abstract. What "common sense" and 
 faculty of " rational inquiry " I possessed have been fairly 
 given to the work. It could not be denied that I started 
 with a certain prejudgment in favor of the protective 
 
IV 
 
 PREFACE. 
 
 scheme. Tliat, however, was no other than the general 
 conviction, expressed by Dr. William Koscher, the distin- 
 guished Professor of Political Economy at the University 
 of Leipsic, that " the person who has only a modest opinion 
 of the power of his own reason, and therefore a just one 
 of the reason of other men and other times, will not believe 
 that a system like the industrial protective system, which 
 the greatest theorizers and practitioners favored for cent- 
 uries, and which governed all highly developed countries 
 in certain periods of their national life, proceeded entirely 
 from error and deception." Nor, again, did I believe that, 
 in a nation with the quick and trained commercial instincts 
 of the Americans, such a system could be founded in mere 
 greed, jobbery, and congressional log-rolling. If the prac- 
 tice had been found expedient, some reasons could be found 
 justifying it. 
 
 The inquiries, then, necessarily led to a study of the 
 play and interaction of the economic forces, as ordinarily 
 expounded in the formal treatises on political economy. 
 I found, in detail and specifically, what I had only felt 
 before in a general way, that the whole underground of 
 that science had been wrongly chosen, and that the whole 
 superstructure was now being taken down by the younger 
 school of economists, both in Europe and the United 
 States. I have deemed it proper to submit, at some length, 
 the destructive criticism to which the current official politi- 
 cal economy has been subjected. 
 
 Of all the forces and their combinations, as usually 
 treated, I find only four pertinent to the discussion pro- 
 posed : 
 
 Fvrst. The object of all our efforts is " the satisfaction 
 of our desires." This will be found to be a more manage- 
 able motive than " wealth " for the labor and abstinence of 
 men gathered together in society. 
 
PREFACE. y 
 
 Second. " Commodities are paid for with commodities." 
 In international commerce, imports must be paid for witli 
 exports — in tlie long run, imports must balance exports. 
 
 Third. While "division of labor" has been the pivot, 
 the fulcrum on which the industrial world has been moved, 
 and while the special aptitude of each individual producer 
 furnishes the materials for domestic exchange, and supe- 
 rioritj, at some point, the materials for international trade, 
 the law announced by Adam Smith ifi the law of the case : 
 " Division of labor is limited by the extent of the market." 
 That is, in other words, the advantages of a " division of 
 labor" may be lost by the want of an adequate market in 
 which the products of the labor at the point of superiority, 
 embodied in commodities, may be sold. 
 
 Fourth. In a given area, as of a nation, where the 
 owners of capital and the owners of labor speak the same 
 language, live under the same laws, and act under the same 
 moral, political, social, and economic motives, thus render- 
 ing labor and capital therein substantially mobile, the com- 
 petition of capital with capital and of labor with labor is 
 effective. Over such an area, competition tends to equalize 
 the recompense of all the capitals and the rewards of all 
 labor. A monopoly in such a nation is impossible. 
 
 The inquiry, also, involved an analysis of the nature 
 and number of the desires for which a given people seek 
 satisfaction, and the means of satisfying them. It proved 
 not at aU impossible to deal with the aggregate desires of 
 a nation as a unit, and to treat the problem as if it was the 
 case of an individual. 
 
 Suppose an individual, an average American farmer, 
 with a number of workmen, all of high skill, energy, and 
 industry, in possession of certain fertile fields, with stores 
 of building-material, stones, timber, fuel, and certain ma- 
 chinery, out of which, by his labor, he could supply a large 
 
^ PREFACE. 
 
 proportion of his and their wants directly by production, 
 and the remaining portion of their wants, indirectly, by 
 exchanging the surplus of their natural products. Let 
 hun be surrounded, at a greater or less distance, by neigh- 
 bors who have fields like his, only less productive, with 
 artisans who could make his sleds, harrows, harness, cotton 
 and woolen goods, dishes, and so on, the product of handi- 
 craft industries; not with less labor, but for lower money- 
 price; and besides, stocks of merchandise, consisting of 
 tea, coffee, sugar, tropical fruits, drugs, medicines, and, if 
 you please, wines and cigars. The fanner now works his 
 lands to their capacity, and gathers his crops of wheat, food, 
 cotton, and tobacco. He already thus has, in his garnered 
 fruits and grains, something more than half the subsistence 
 of himself and workmen. For the rest, he proposes to 
 exchange his surplus — to trade the things he does not want 
 for the things he does want. "We will suppose (for it will 
 subsequently appear that if anything is legitimate in the 
 science of political economy, it is a supposition) the annual 
 value of his crops to be $10,000. To feed his family and 
 pay the cost of raising the things he raises on his fields 
 will cause him an outlay, say, of $6,Y00. This leaves him 
 $3,300 with which to supply his outstanding want of 
 clothes, carpets, nails, hats, farming-utensils, tea, coffee, 
 sugar, medicines, fruits, wine, and cigars. The inherited 
 traits and historical traditions of this farmer are such as to 
 make all these wants legitimate ; they are desires which he 
 is willing to gratify. Upon making the effort to market 
 his surplus he finds he can only sell $700 worth ; his neigh- 
 bors will only buy, because they only want, $700 worth. Of 
 this sum he spends haK — $350 — for drugs, medicines, 
 fruits, wine, tea, coffee, and sugar, which climate and other 
 reasons forbid him to produce. The other half — $350 — ^he 
 lays out in certain commodities which he and his workmen 
 
PREFACE. yii 
 
 have not as yet the skill and patience to imdertate to pro- 
 duce. There remains yet on his hands $2,600 with which 
 he would, if he could, buy his hats, coats, carpets, shirts, 
 dishes, nails, etc., for himself and his workmen. ' But there 
 is no market to take them ofE his hands in excess of $350 
 worth, in addition to the $350 worth already sold ; nor did 
 his neighbors ever have a surplus of manufactured goods 
 equal to his demand. According to the abstract principles 
 of political economy, his neighbors on the poorer soils 
 ought to stop cultivating them to the extent of the addi- 
 tional $2,600 worth of his products, and turn their sldll 
 and energy to the production of the hats, coats, etc., that 
 he wants to buy with that surplus. But, in point of fact, 
 the farmer finds that they do not do so ; that they do, under 
 natural causes and inherited traits, still till their native 
 soils to within a narrow margin of their fertility. Besides, 
 laborers move freely to the farm from the neighborhood, 
 still further disturbing the commercial equilibrium between 
 the two communities ; but this only made the farmer less 
 dependent on his neighbors to make things for him, for 
 now the migration of the workmen themselves takes the 
 place of a trade in the products of their labor. 
 
 Therefore, finding upon examination that he can make 
 all these things on the farm, and with as small an expenditure 
 of labor and skill (both of which he has) as his neighbors, 
 he proceeds to make them. Why ? Because he found no 
 other way to satisfy all his desires. Although up to $700 
 worth he could buy them abroad and cheaper, beyond that 
 amount he must make them himself or go without them, 
 for he can not huy them at all, for the reason that he does 
 not bring acceptable pnrchase-money in his hands. Eather 
 than go without them, he proceeds to make them on the 
 best conditions attainable under his natural and acquired 
 resources. The desires are natural to him, and the manu- 
 
Yiii PREFACE. 
 
 facture is natural to him. The manufacture of the $2,600 
 worth is natural, but it is more, it is necessary, and is an 
 indispensable part of his supply. Its naturalness does not 
 depend on the price his neighbors charge, nor their willing- 
 ness to accept the commodities he ofEers in exchange, but 
 upon the actual amount of labor it costs him to produce 
 them. 
 
 If this had been merely an industrial group, formed on 
 strictly commercial priaciples, there would have been no 
 more workers in it than were necessary to produce the $700 
 surplus. But this sQciety happened to be formed of men 
 fleeing from the hardness and oppressions of life elsewhere, 
 and who were not moving on economic motives alone. It 
 was composed of picked men, of the highest type, brooking 
 no masters, having the common bonds of kindred, lan- 
 guage, habits, laws, love of religious liberty, and seK-gov- 
 ernment — all of which our benignant farmer permitted 
 them to enjoy in the fullest degree. The group made by 
 these social, moral, and political considerations determined 
 the size of the industrial group. The political entity be- 
 came the industrial entity. This made them sufficiently 
 numerous to disturb their commercial equilibrium with 
 their neighbors, and consequently the $2,600 surplus lay 
 useless in their hands. When they found that their labor 
 in factories, furnaces, and machine-shops, on looms and 
 potter's wheels, was as productive as that on fertile fields, 
 the surplus food recovered its utility and exchange value, 
 as subsistence for the laborers whom all these inducements 
 had drawn together. The farmer now proceeds to "or- 
 ganize the industries" of that political entity ; especially, 
 as he has never experienced any lack of capital in any en- 
 terprise which promised adequate returns. 
 
 This farmer, in this determination, has simply accepted 
 the limitations imposed on his external exchanges. His 
 
PKEFACE. j^ 
 
 mental resolution, thus forced on him, not to try to Ivy, 
 but to make, has imposed a prohibitory tariff upon all 
 that portion of his necessary supply which he does make. 
 He has now, in the language of the economist, imposed re- 
 strictions on his exchanges; that is, he does restrict the 
 exchanges with his neighbors, but, to a greater extent, he 
 enlarges the exchanges which take place on his own farm. 
 He has got himself in a place where, in the language of 
 the free-trade writer, he collects taxes of himself. It is 
 not taxation, it is simply the cod of the increased comfort 
 which follows upon the increased consumption he is now 
 enabled to indulge. If it be taxation it is voluntary, inas- 
 much as it is undergone for the sake of the satisfaction of 
 his desires. He can stop the taxation if he will lessen his 
 satisfactions. Abundance and cheapness have been equal- 
 ized upon the lowest and only temis open to him. He 
 has, however, subserved his true economic purposes, and 
 has realized the true end of all his efforts. The ratio be- 
 tween effort and enjoyment has, in his case, been reduced 
 to a minimum. He was reduced to the alternative of 
 wanting fewer things, or making them, on his farm, for 
 himself. Being a civilized man, he chose the latter ; being 
 a vertebrate, he could not do business on the basis of being 
 a hermit-crab. 
 
 But, inasmuch as the constant pressure of the neighbors 
 to sell the paltry amount of $350 (which he could really 
 better do without, but which some of his people insisted 
 on having) introduces confusion and friction between his 
 own producers and consumers, stops his mills, makes his 
 workmen stand idle, and prevents him and them getting 
 what they want, he imposes an import duty on these 
 goods, sufficient to equalize their cost with that of his home 
 product ; and the sum thus received goes into his treasury, 
 for the common use of himself and all his laborers. This 
 
X PREFACE. 
 
 farmer, now, has imposed on himself "a tariff for review- 
 nue^'' " with vncidental protection," or rather a tariff for 
 protection, with incidental revenue. 
 
 All this time there were certain dogmatic thinkers 
 (very few of them were hand-workers) who said they, per- 
 sonally, could make better bargains away from home, if, 
 having got into their pockets the high wages which they 
 had received for " services " rendered to their co-workmen, 
 they might be allowed to spend it among the neighbors to 
 whom they had rendered no services ; and urged their in- 
 alienable right to pursue their own interests, so destructive 
 to the interests of the little community. But, the farmer 
 seeing that they, at best, could only get a part of the $350 
 worth of imported manufactures, and that the rest of his 
 workmen must go without the $2,600 worth which they 
 might otherwise make and enjoy, acting for the society, 
 promptly put his foot down on this line of uneconomic 
 as well as selfish conduct. 
 
 I think it will not be questioned that, if a farmer found 
 himself in these surroundings, he could only supply all his 
 wants, and those of his workmen, in the way supposed.; 
 and that, by so doing, he would not only increase the 
 population and " wealth " of the commimity on the farm, 
 but, thus "regulating commerce," would promote their 
 "general welfare"; and he would do this on the true 
 premises of political economy. 
 
 If we find a nation relatively in the like condition and 
 environment, the principles of the science of political 
 economy will be equally applicable to it. This applica- 
 bility will depend on the closeness of the correspondence 
 in the facts. The analogy will be found unexpectedly 
 complete ; especially in the fact that, in any event, about 
 nine tenths of the manufactures in the "protected" in- 
 dustries must be produced at home, under American con- 
 
PREFACE. xi 
 
 ditions. What the tariflE does — and all it does — is to com- 
 pel the foreign producer to spend as much in getting into ■ 
 the American market for the other tenth as the American 
 producer does. 
 
 Our question is, therefore, I conceive, a national ques- 
 tion and not a cosmopolitan one. 
 
 The operation of the four principles indicated is seen 
 in the illustration : 
 
 First. The satisfaction of the farmer's desires; these, 
 in their niunber, kind, and intensity, will depend on the 
 kind of man he is, and will determine the kind of effort he 
 makes to satisfy them. 
 
 Second. His "imports must be paid for with his ex- 
 ports " ; that is, by his external trade he can get nothing 
 into his territory except in pay for what he sends out of 
 his territory. 
 
 Third. " Division of labor is limited by the extent of 
 the market " ; that is, if he can not sell the total product 
 of his work, when applied to his most advantageous indus- 
 try, his labor will not be as profitable as it might otherwise 
 be, and he might as well stand idle for a part of the time. 
 What he makes when he would otherwise be idle costs him 
 nothing. 
 
 Fov/rih. When he turns his labor and capital to his own 
 fields and workshops, under effective competition and the 
 perfect mobility of these factors of production, no monop- 
 oly can grow up within his little territory. 
 
 When the individual or the community discover that 
 they need certain commodities, but can not buy more value 
 than they can sell, by reason of not offering acceptable pay, 
 and, at the same time, can produce them with no greater 
 cost of labor and abstinence in overcoming the obstacles 
 which nature presents than other individuals or other com- 
 munities, they natwrally set about making them by the 
 
xii PREFACE. 
 
 direct act of production. In the case of a nation, the na- 
 tional legislature provides for the domestic production and 
 exchange, by imposing some sort of restriction on the for- 
 eign exchange. 
 
 Possibly, my friend the Professor is not aware of the 
 full contents of " the Pennsylyania notion." He seems to 
 think pig-iron is the only god of that people. The first 
 corporate determination of that State, at least, shows what 
 one great Commonwealth, finding itself in the predicament 
 of our farmer, did, and exactly the reasons for doing it. In 
 the preamble to her tariff act, passed on the Wth day of 
 Sej/teniber, 1785, just one hundred years ago, it was thus 
 recited : 
 
 " An act to encourage and protect the manufactures of 
 this State, by laying additional duties on the importation of 
 certain manufactures which interfere with them. Whereas, 
 divers useful and beneficial arts and manufactures have been 
 gradually introduced into Pennsylvania, and the same have 
 at length risen to a very considerable extent and perfection, 
 insomuch that during the late war between the United States 
 of America and Great Britain, when the importation of Euro- 
 pean goods was much interrupted, and often very difficult 
 and uncertain, the artisans and mechanics of this State were 
 able to supply, in the hours of need, not only large quantities 
 of weapons and other implements, but also ammunition and 
 clothing, without which the war could not have been carried 
 on, whereby their oppressed country was greatly assisted and 
 relieved : and, whereas, although the fabrics and manufact- 
 ures of Europe and other foreign parts, imported into this 
 country in times of peace, may be afforded at cheaper rates 
 than they can be made here, yet good policy and a regard to 
 the well-being of divers useful and industrious citizens, who 
 are employed in the making of like goods in this State, de- 
 mands of us that moderate duties be laid on certain fabrics 
 
PREFACE. xiii 
 
 and manufactures imported, which do most interfere with, 
 and which (if no relief be given) will undermine and destroy 
 the useful manufactures of the like kind in this country ; for 
 this purpose : 
 
 " Sectiost 2. Be it enacted, and it is hereby enacted, by 
 the Representatives of the Freemen of the Commonwealth 
 of Pennsylvania, in General Assembly met, and by the au- 
 thority of the same, that further and additional duties, here- 
 inafter specified, shall be levied, collected, and paid, on the 
 importation into this State of certain goods, wares, and mer- 
 chandise, .enumerated and particularized in this act" — and 
 the act goes on to enumerate more than seventy articles. 
 
 Herein will be found, I think, a fair exposition of the 
 motives kot " to stop by law profitable production," but 
 rather, by enlarging the domestic exchanges, to substitute 
 a new form of production in order to provide for the " sat- 
 isfaction of the desires " of all the people. " The freemen 
 of the Commonwealth of Pennsylvania " then knew what 
 they wanted, and the most feasible and cheapest scheme 
 for supplying their wants. They stood at the beginning 
 of things, and saw them clearly enough. The " notion " 
 spread rapidly through all the States of the confederation ; 
 so much so, that the purely commercial convention, called 
 by the late colonies in 1786, resulted in the formation of 
 the Constitution of the United States in 1787. The pres- 
 ent Constitution was undeniably dictated by commercial 
 necessity. Mr. "Webster said, in his speech to the citizens 
 of BufEalo, in June, 1833 : " The protection of American 
 labor against the injurious competition of foreign labor, so 
 far, at least, as respects general handicraft production, is 
 knovra, historically, to have been designed to be obtained 
 by establishing the Constitution." And Mr. Choate, in 
 the Senate, March, 1842, said: "A whole people, a whole 
 generation of our fathers, had in view, as one groundwork 
 
xiv PKEFACE. 
 
 and purpose of tlieir new government, the acquisition^ of 
 tlie means of restraining by governmental action the im- 
 portation of foreign manufactures for the encouragement 
 of manufactures and of labor at home; and desired, and 
 meant to do this, by clothing the new government with 
 this specific power of regulating commerce.'''' 
 
 There is, then, the jural power, under the Constitution, 
 to enact a prohibitory tarifE even, if economic principles 
 justified it. Whether they do or not, it is the purpose of 
 the following pages to determine. Anyway, such a tariff 
 is not unconstitutional. 
 
 I have not dealt in statistics, which are hable to no end 
 of combinations and no end of disputation. Comparisons 
 are impossible for want of the second term of the compari- 
 son, to wit, another people, like ours in traits and physical 
 resources, developed under free trade. 
 
 There have been no assumptions made in the argument. 
 The contribution made by American labor in the commodi- 
 ties produced in the protected industries is a necessary part 
 of the full supply of the whole demand. They are, there- 
 fore, natural and necessary. 
 
 On the other, hand, the advocates of freedom of trade 
 proceed entirely on the assumption that foreigners have 
 the capital, labor, and skill to niake a surplus of manu- 
 factured commodities which will supply our demand, and 
 that there is a foreign market adequate to take the surplus 
 of all our products made " under freedom," and that we 
 can exchange one surplus for the other, and thus Imy the 
 satisfaction of our remaining desires. Neither of these 
 assumptions is true. This is a question of history and fact, 
 and not of a priori hypothesis. If the following pages 
 show some repetition — even to tediousness — on this point, 
 it is because it crops out from whatever direction the sub- 
 ject is explored, and it is unavoidable. If the main line 
 
PREFACE. XV 
 
 of the argument is well chosen, I have no fears but that 
 writers on economy will appear who can use a more rigor- 
 ous logic and wield more facile pens. They will make the 
 necessary generalizations in the debate, and blaze the de- 
 sirable " short cut " through the discussion. I have reached 
 very positive convictious of my own, in the progress of my 
 study, upon the scientific validity of defensive duties in 
 their operation on industry in the United States. 
 
 I am persuaded that a people such as ours, acting under 
 physical conditions such as ours, were driven by the very 
 nature of the case to the course of development which we 
 took. At the same time I am not unmindful of the dan- 
 ger in economic discussion alluded to by Mr. Mill, " the 
 danger of overlooking something." If I have incurred 
 the danger, sharp criticism wiU detect and point it out. I 
 am sure that neither the writer nor any of his fellow-citi- 
 zens can have any interest in this great debate except to 
 get at the right and truth of the matter. 
 
 What we are, the census and the national landscape show 
 — ^what might have been, under free foreign trade, has never 
 been made to appear. Until the economist of free trade 
 makes some demonstration in this line, he must rest under 
 the condemnation which Dr. Johnson has thus expressed : 
 " He who will determine against that which he knows, be- 
 cause there may be something which he knows not, he that 
 can set hypothetical possibility against acknowledged cer- 
 tainty, is not to be admitted among reasonable beings." 
 
 It is evident enough from numerous extracts, intended 
 to be duly credited, that I have borrowed freely from the 
 writings of many authors ; but I should faU to pay a posi- 
 tive and distinct debt, if I omitted acknowledgment of my 
 obligations to the late George Basil Dixwell, of Boston. 
 
 H. M. H. 
 
 Wilkes-Barkb, Pa., December, 1885. 
 
TABLE OF OOI^TENTS. 
 
 CHAPTER I. 
 
 PAGF! 
 
 Pbeliminaet — Some Definitious 1 
 
 The question of protection and free trade still awaits a practical 
 settlement — A question partly of science and partly of art — The un- 
 satisfactory state of the science of political economy — Many ques- 
 tions still unsettled — Colonel Torrens — ^Prof. Perry's disappoint- 
 ment — Definitions of the science of political economy — Sir James 
 Steuart — Adam Smith — J. B. Say — Mr. McCulloch — M. Sismondi — 
 M. Storch — Prof. Senior — Mr. Mill — Prof. Roscher — M. Bastiat — 
 Henry C. Carey — ^Prof. Francis A. Walker — Prof. Sidgwick — Prof. 
 Bowen — Prof. Perry — Prof. Cairnos — M. de Laveleye. 
 
 CHAPTER n. 
 SoiENOE OF Political Eooxomt — The Meohanism of Pbodtio- 
 
 TIOJT 13 
 
 The method of the development of the science — The instruments 
 of production, labor, capital, land — Supply and demand, competi- 
 tion — Labor, its definitions— Capital, its definitions — Rent, its defini- 
 tions — ^The division of labor, theory of free trade based on it — Its 
 limitations — The distinction between utility and value — Societary 
 association — Credit — Money the instrument of association — Mal- 
 thus's theory of population — The wages-fund theory. 
 
 CHAPTER III. 
 
 The Motive-Powek of Peoduotion — The Eoonomio Man . 84 
 
 Mr. Mill's abstraction— Prof. Senior's four propositions— Prof. 
 
 Sidgwick's view— Satisfaction of desires the real pursuit— Prof. 
 
 Perry- Henry C. Carey— Prof. "Walker— M. Bastiat— Which the 
 
XVIU 
 
 TABLE OF CONTENTS. 
 
 cheapest and which the dearest market— Prof. Perry's inadequate 
 premises— He omits consumption, a vital consideration— Prof. Jev- 
 ons— The real man— Walter Bagehot- Prof. Leslie— Mr. Ruskin. 
 
 CHAPTER IV. 
 Who is bottnd bt the Soienob— Its Jurisdiction ovee the 
 
 Legislatoe ^^ 
 
 Mr. HcCuUoch — Prof. Senior — Mr. Mill — Prof. Jerons- Walter 
 Bagehot— Prof. Leslie— Frederic Harrison — Dr. John K. Ingram- 
 Stephen Colwell— Prof. Kickards— Prof. Sumner— Destructive criti- 
 cism on the science in its present state — Deductive science power- 
 less without observation and experience — No laws of political econo- 
 my of univer.sal application — The opinion of Napoleon— M. Thiers 
 — Thomas Carlyle — Table of contents of Adam Smith's " Wealth ot 
 Nations." 
 
 CHAPTER V. 
 
 Laissez faiee — Not a Soientifio Dogma. . . . .88 
 
 Adam Smith's doctrine of natural liberty — The basis of his theory 
 of free trade — He reduces political economy to a theory of egoism — 
 Prof. Cairnes's criticism on him — Origin of laissez /aire — M. Col- 
 bert's achievements — M. Wolowski on the role of authority — Prof. 
 Perry's concession — M. Eastiat, mere liberty powerless — Laissez 
 /aire a fiction of ancient philosophy — Prof. Cairnes says- it is a pre- 
 tentious sophistry — Rejected by Prof. Jevons and Prof. Walker — 
 Individual and national interests are not identical, demonstration by 
 John Rae — Mr. Mill's concession to protection — Protest by Prof. 
 Bonamy Price and Prof. Thorold-Rogers — Mr. Mill reaffirms — 
 Judge Phillips — Zaissezfaire discredited as a scientific dogma. 
 
 CHAPTER VI. 
 
 The Real QuESTioif — Not one of Taxation — Involves the 
 
 Economic Effects of Resteiction 112 
 
 Misstatement of the issue by Profs. Perry and Sumner — Distinc- 
 tion between taxation and the regulation of commerce — The four 
 legitimate issues as raised by Prof. Sumner — What his abstract 
 system overlooks — Prof. Perry's exclusions — ^Analysis of foreign 
 trade — Prof. Perry's six questions and their answers — ^Prof. Perry's 
 impregnable position — Its weakness. 
 
TABLE OF CONTENTS. xix 
 
 CHAPTER VII. 
 
 PAGB 
 The AlTERNATITES OFFEKED — WhAT TVE BtTT AND WHAT WE 
 
 Sell 131 
 
 Two sets of alternatives offered by the free-trader — The first set 
 necessarily rejected — The second set the nation undertook to accept 
 — The assumptions on which they were based turned out to be 
 ■wrong — First, that there is a market abroad for the surplus of pro- 
 ductions in the most advantageous industries — Disproved by Benja- 
 min Franklin, Alexander Hamilton, James Madison, John C. Cal- 
 houn, Andrew Jackson, Daniel Webster — ^Failure of Prof. Perry's 
 equation of international demand — Unprofitable industries — What 
 we sell and what we buy — The balances of trade on the exports to 
 and imports from the other nations. 
 
 CHAPTER VIII. 
 Adam Smith — Some Pacts is oue History . . . .165 
 The second assumption of the free-trader — That the exchange- 
 able value of our exports would not be reduced, and that the ex- 
 changeable value of our imports would not be increased — The prob- 
 lem submitted to Adam Smith — Discussion of it on the principles 
 of the " Wealth of Nations " — The satisfaction of the desires of all 
 the people by exchanges in i» foreign market impossible, for two 
 reasons : the foreign market does not contain the surplus wo wish 
 to buy, nor will it take the surplus we wish to sell — We are thrown 
 back on the domestic manufacture — The facts in our early history 
 — Growth of domestic industries during the Napoleonic wars — The 
 English blockade, the Berlin Decree, Orders in Council, the Milan 
 Decree, all operated as restrictions — Jefferson Davis on the com- 
 pensating effects of restriction in the Confederacy — Bfifect of 
 restrictions from 1S01 to 1816 on the cotton, woolen, and iron in- 
 dustries — ^Prof. Taussig's concession to the economic effect of re- 
 strictions. 
 
 CHAPTER IX. 
 The EcosroMio Question — The Soibntifio Questioit . .189 
 The two ideals of the end we desire to reach — The problem as 
 proposed by Prof. Jevons realizes all the satisfactions which our 
 labor and capital can accomplish— Reached by restrictions — The 
 problem as proposed by Prof. Sumner, the maximum of material 
 good for a given effort — Will realize the satisfaction of the desires 
 
XX TABLE OP CONTENTS. 
 
 PAGE 
 
 of only some of us — The exertions of all of us can not realize in the 
 foreign market the satisfaction of the desires of all of us — Supply- 
 ing the demand of the foreign market will not call into activity all 
 our resources and all our energies — Some exchanges in the foreign 
 market advantageous — All exchanges not advantageous — Compet- 
 ing industries — The fatal results of overproduction of food and raw 
 materials — The impossibility of purchasing twenty-six hundred 
 million dollars' worth of imports with seven hundred million dol- 
 lars' worth of exports — We fail in the satisfaction of our desires 
 — The railroad trip between New York, Philadelphia, and Trenton. 
 
 CHAPTER X. 
 The Political Question — Tue Populae Qitestiok . . 213 
 The supposition that we were the only nation on the planet— In 
 what respect the introduction of the elements of other nations 
 should affect us — The distinction between an organism as a whole 
 and the units composing it— What is called the liberty of the unit 
 is necessarily absorbed to a greater or less extent by that of the 
 whole — Protection in the United States arose out of the facts of 
 
 our early history— Some of these facts set forth in detail The 
 
 relations between agriculture, manufactures, and commerce The 
 
 aggregate of the desires of the people of the United States— Their 
 satisfactions can not be purchased in a foreign market Satisfac- 
 tions must be made at home — The price of them is the cost of liv- 
 ing, and not taxation. 
 
 CHAPTER XL 
 Schedule "A" — Peoduction tindee Eeeedom . . . 240 
 Mr. Springer's schedule of incidental taxation — Intended to show 
 the taxation which protection imposes on consumers— Hon. Frank 
 Hurd's assumption— The industrial organization out of which the 
 farmer, the laborer, and the professor get their compensation— It 
 must come from the exchange of services between them— Exports 
 must pay for the imports— Free-traders victims of the fallacy of 
 division— Why the atomistic view of society fails— The individual 
 peddler— The Minnesota farmer— Prof. Sumner's iron problem— 
 We must fall back on the domestic production— That must be put 
 beyond the reach of contingency— Why destroyed industries cannot 
 spring up again— Capital and labor not reservoirs of pure force, to 
 be turned on and off at pleasure— America as a manufacturing com- 
 
TABLE OF CONTENTS. xxi 
 
 PAGE 
 
 petitor — The law of indifference — The conditions on which free 
 trade ia possible — Prof. Cairnes and Mr. Mill's accounts of its opera- 
 tions on us — Mr. Carey's account of the necessary sequence of adopt- 
 ing it. 
 
 CHAPTER XII. 
 
 Cost of Production — A Paeadox 277 
 
 Attempt of free-traders to solve the question on consideration 
 of cost of production — Our high wages a detriment to competition 
 — David A. Wells — Sir Thomas Brassey — Prof. Cairnes — Prof. 
 Cairnes's paradox,* that a high rate of wages means a low cost of 
 production — What it proves — Lands us back into the group of agri- 
 cultural industries — Prof. Perry's inventory of our resources — Why 
 we have failed to enter into their possession under free trade — The 
 "^something else " we can do if we abandon the protected industries 
 — English free-traders invite us to go into the general business of 
 civilization for the benefit of the whole family of mankind — Our 
 present mission rather to make commodities cheap and abundant 
 for ourselves. 
 
 CHAPTER Xni. 
 
 A Case m Point — The Atjstbalian Episode .... 302 
 Gold in Australia and California — The cases of these countries 
 illustrate how advantageous industries and cost of production oper- 
 ate in international commerce — The advantage of the industry de- 
 pends on the command which its product has over the markets of 
 the world — Food and gold — The relative efficiency of food and gold 
 in making foreign exchanges — The decline in the productiveness of 
 her mines resulted in the social, political, and pecuniary progress 
 of Australia — Industrial growth not measured by extent of external 
 trade — ^In the United States, what are called the advantageous in- 
 dustries, food and raw materials, never procured in foreign markets 
 the other commodities we needed — A dernier ressort to domestic 
 manufacture under protection. 
 
 CHAPTER XIV. 
 Competition in a Foreign Market compels us to export cue 
 
 Gratuities 311 
 
 Our so-called advantages lie in our natural resources — Interna- 
 tional commerce sets competition in operation — It gives us pay only 
 for our onerous contribution to value — We export the gratuities for 
 
xxii TABLE OF CONTENTS. 
 
 FASE 
 
 nothing— Rigid demonstration of this proposition by M. Bastiat— 
 Cheap foreign labor not a gratuity to ua— Bankruptcy and fire- 
 damaged goods not a reliable source of supply— Our warfare ia 
 against nature and not against humanity elsewhere— The high-priced 
 human instrument of production— Free trade enables Prof. Bonamy 
 Price and Prof. Thorold-Kogers to call our Western prairie lands 
 English farms— Mr. Carey's maxim, whoever ia compelled to seek 
 a market must pay the coat of getting to it. 
 
 CHAPTER XV. 
 
 Genebal Theoet of Wages- High Kate of Wages is the 
 United States 324 
 
 There is no general formula which can settle the exchange rela- 
 tions of capital, labor, and commodities — Supply and demand no 
 solution — Commodities and laborers not produced upon the same 
 motiTe — High wages here not based on exchange value of agricult- 
 ural products — The theories of Profs. Perry, Sumner, and Walker 
 examined — Competition of the farm with the shop — Independent 
 proof that the protective tariff does not permit one citizen to col- 
 lect taxes of another — High rate of wages in the United States 
 based on the energetic character of people using highly productive 
 instruments in field, forest, seas, and mines — Engaged principally 
 in making commodities to be consumed by the laborer himaelf — 
 The case as put by George Basil Dixwell and Prof. Sumner. 
 
 CHAPTER XVI. 
 
 Why Industrial Entities should correspond with Political 
 
 Entities 361 
 
 The question only applicable to a group of freely trading nations — 
 No such group on the earth as yet — To form such a group would lead 
 to a redistribution of the capital and labor of the nations forming it 
 — The group as a whole might gain, any member of it may lose — 
 The cases in Germany and France — Free trading in France, Holland, 
 Belgium, and Austria under Napoleon — The ea«e of the thirty-eight 
 States of the Union — The industrial entity not determined by eco- 
 nomic motives — The reasons for maintaining the political entity are 
 social and political — The economic results flow from them and are 
 subsidiary — The conditions on which universal free trade can be 
 realized. 
 
TABLE OF CONTENTS. ^xiii 
 
 CHAPTER XVII. 
 
 PAGE 
 
 A Fallaot which Feee-Teaders put in the Mouths of Pro- 
 tectionists — Cheating Industby 378 
 
 The professors ask, Can taxes make capital out of nothin" ? Ke- 
 
 Btrictions do not create productive energy — They permit a different 
 distribution of existing energy — They awaken slumbering energies 
 — The English Navigation Act — Adam Smith calls it " that great pro- 
 hibitive and protective law, the wisest of all English commercial 
 regulations " — What it did for English supremacy in trade — The fal- 
 lacy of the syllogism of Mr. Mill — A question of fact, answered by 
 Mr. Dixwell. 
 
 OHAPTEK XVIII. 
 
 Industeial Eesults achieved — Some Peaotioal Maxims op 
 
 Taeiff Eefoem 391 
 
 The true grounds of our argument — How our landscape would 
 have looked under free trade — The assault by American capital and 
 labor on nature — Its grand results in increasing utilities and dimin- 
 ishing values — Leisure not possible to men of our race — Cheapened 
 American products — Our contribution to the world's civilization — 
 lias raised the morale of labor everywhere — The free-trader's pro- 
 posals to export food, raw materials, and manufactured goods — 
 An impossible proposal : it leaves nothing for other nations to do for 
 us — Exports and imports no criterion of real growth — We are about 
 to assert our supremacy on the ocean — Mr. Gladstone's Godspeed 
 to us — Tariff reform, removing protective duties according to sci- 
 ence — Horizontal reductions — The distinction between duties for 
 revenue and protection — What consumers have a right to — The in- 
 cidence of customs duties deduced from experience — The practical 
 maxim for the future. 
 
PROTECTION VS. FREE TRADE. 
 
 CHAPTEE I. 
 
 PKELIMINAET — SOME DEFINTTIONS. 
 
 It is a hundred years since Adam Smith published the 
 " Wealth of Nations." After a century of theoretical dis- 
 cussion, the question of " free trade " and " protection " still 
 awaits a practical settlement. Scholars have written es- 
 says, professors have written books, and statesmen have 
 filled volumes of debates, without producing any settled 
 reasons for their convictions on the subject in the minds of 
 the majority of the people in any country. To-day it is an 
 absorbing topic in America, and administrations and poli- 
 cies will be determined by the decision of the voters of the 
 United States upon economic consequences involved in it. 
 One great school of political economy conceive that they 
 have established a series of propositions compelling belief 
 in the doctrine of free trade, to which every intelligent 
 mind must assent — asserting with more vigor than courtesy 
 that, if a man has not yet made up his mind on this subject, 
 it is because " he has no mind to make up." By virtue of 
 much iteration they have persuaded themselves, and seem 
 to have induced a wide-spread conviction in the public 
 mind, that somewhere and somehow in the science of Po- 
 litical Economy are imbedded principles which establish 
 2 
 
2 PROTECTION VS. FREE TRADE. 
 
 this theory ; that there are definite data in that science from 
 which their conclusions inevitably flow ; that there are cer- 
 tain scientific postulates from which can be unalterably de- 
 duced the economic policy of free trade. They assert that 
 this science " belongs to no nation and is of no country." 
 If such be the case— if the theory is a universal one and 
 true ; if science terminates in the theory — that should be 
 the end of discussion. If the theory be true, the practice 
 of it in accordance will be right. If it be demonstrable 
 that free trade leads to the greatest economic gains for the 
 people of the United States, then the statesman of the 
 United States must practice in the art of political economy 
 that which the philosopher teaches in the science of polit- 
 ical economy. If there be any irrepealable laws of human 
 nature, operating in the domain of this science, of uni- 
 versal application — appropriate to all people, at all times 
 and under all circumstances — then we ought to know what 
 they are and submit to this constitution of things. If there 
 be no such general laws, we ought to know that. In that 
 event we are remanded to the study of the facts in our 
 situation as a nation, and shall be at liberty to adopt that 
 policy which a fair rational judgment upon our own case 
 shall dictate. The mere political economist is in the 
 habit of laying down the conclusions of his science — ^its 
 theoretical deductions — and then, when brought face to 
 face with a practical question upon which action must be 
 taken, he abdicates in favor of the "statesman." The 
 modern economist has found it necessary to work out his 
 problem as if wealth were an end in itself, leaving states- 
 men to take up his results and place them in their due 
 relation to the wider purposes and aims of society. He 
 dehberately forgets or suppresses the fact that society has 
 other purposes and aims. He is uncertain whether his ab- 
 stractions will find any corresponding reality in men and 
 
PEELIMINAEY— SOME DEFINITIONS. 3 
 
 things. As an expert, lie carries on all his processes in the 
 assumption that he is operating in a vacuum, but as a lay- 
 man he finds that the medium — ^human society — with 
 which he is dealing is not a vacuum, but, on the contrary, 
 is filled with resistance and obstructions, and his science 
 avails nothing for conduct. 
 
 The pretensions of this school of economists whose 
 logical outcome is free trade are entitled to examination. 
 Most writers in England since the days of Adam Smith, 
 and many in the TJnited States, have insisted that the 
 result of sound discussion in political economy leads to the 
 doctrine of freedom of trade between all nations ; and that 
 irrespective of the fact that all nations do not adopt it. 
 Inasmuch as all sentiment, all considerations of patriotism, 
 of charity, of religion, of domestic ties, of honor, are by 
 the very definition of political economy excluded from the 
 field of the science by this school of economists, they must 
 mean that by a system of free trade the wealth of any 
 particular nation will be in the largest way promoted ; that 
 the necessaries, conveniences, and luxuries of its inhabit- 
 ants wiU be supplied with less cost of labor indirectly, by 
 means of foreign trade, than directly by the process of 
 production. Neither the economist nor the statesman can 
 be engaged in any more vital inquiry than whether this is 
 indeed true. This inquiry is to be pursued, we are told, 
 in the formal treatises on political economy. In that sci- 
 ence, it is insisted, is a body of reasoned truth upon which 
 we may take our stand ; in it is a coherent system of doc- 
 trine which leads us to actual verities accessible' to all men 
 of average comprehension, equally available to the pro- 
 fessor and the merchant, the farmer and the manufacturer, 
 the student and the statesman. Surely, if there be such a 
 system, the millions of quick, acute, and trained minds 
 engaged in the wonderful industrial and commercial enter- 
 
4 PROTECTION rS. FREE TRADE. 
 
 prises of our own times must come to some agreement 
 touching first principles, and the inevitable consequences 
 flowing from them ; the student in his closet, and the busi- 
 ness-man at his desk, ought to agree as to the truth, if there 
 is ascertainable truth in the case. Probably it must be 
 admitted that the majority of men in the various pursuits, 
 even the most intelligent, have had neither the time nor 
 opportunity to become familiar with the formulated propo- 
 sitions of the professional writers on political economy. 
 That the science has never had very much practical effect 
 in the conduct of men need not be adverted to ; nor, in- 
 deed, that most men have been suspicious of the science. 
 Nor has the dislike of the science, as a safe guide in affairs, 
 ever been less intense than to-day. One has only to read 
 the able and earnest essays of the best writers in England, 
 the Continent, and the United States, to be persuaded of 
 the doubt, the unrest, and the distrust pervading the most 
 thoughtful minds as to the present condition and future 
 standing of the science. As now taught, the dissatisfaction 
 with its premises and its conclusions is wide-spread and in- 
 tense. This dissatisfaction is confined to no school, and is 
 equally felt by and expressed by all— free-trader as well 
 as protectionist. 
 
 We propose to make an analysis of the teachings of the 
 science of political economy, as touching the debate be- 
 tween "free trade" and "protection." If there be any 
 "inmost nature" in the subject, we propose, under the 
 guidance of the economists, to explore it. We propose 
 briefly to inquire what this science is about, where its 
 teachings begin, and where they end. A careful and an 
 intelligent student ought to have no real difficulty in test- 
 ing the validity of the definitions and the methods em- 
 ployed ; and a sincere and a candid student should not hesi- 
 tate to yield his intellectual assent to what is truth. That 
 
PEELIMrNARY— SOME DEFINITIONS. 5 
 
 we may do the science and its professors no injustice, we 
 must begin with them at the beginning, we must state all 
 their premises, examine all their processes, and accept 
 legitimate conclusions. That we may not be the victims 
 of mere sophistry and rhetoric, we must watch them closely. 
 If we see them floundering in the quagmire of the assump- 
 tions and deductions into which they have plunged, it is 
 not necessary that we should leave solid ground. To gar- 
 ner the really few grains of truth which they have thrashed 
 out, it will not be necessary to encumber ourselves with 
 their bushels of chafE. The results, when reached, should 
 be impersonal, and should be the triumph of the right, of 
 clear and absolute knowledge. Prof. ChfEe Leshe says, in 
 one of his essays : " The scientific spirit is not a triumphant 
 and boastful one, fired with a sort of intellectual chauvin- 
 ism, seeking polemical distinction and a path to promotion 
 in the field of party war. A cavalry- oflicer of the period 
 of the Crimean War, when that branch of the army was 
 distinguished by the glory of a mustache, used to say that 
 no man could conceive the pitch to which human conceit 
 could soar, unless he had served in a light-dragoon regiment. 
 He was, however, mistaken. There was a being yet more 
 elate with a sense of superiority over his fellow-creatures 
 in the economist who had Bastiat at his finger-ends, and 
 who looked on political economy as a weapon by which he 
 could discomfit political adversaries, and on free trade as a 
 personal triumph, though he had as much claim to renown 
 for it as a passenger in a Cunard steamer to the fame of 
 Columbus." Prof. Bonamy Price, in his " Chapters on 
 Practical Economy," does condescend to reargue the ques- 
 tion, but he commiserates the dullness which resists his 
 demonstration, " conspicuous and complete," and adds, 
 " one is tempted to feel something of that mortification 
 which a mathematician would experience if he was com- 
 
6 PEOTECTIOHr VS. FKEE TRADE. 
 
 pelled to demonstrate anew the principles of the multipli- 
 cation-table." Prof. Cairnes, so lately as 1874, in " Some 
 Leading Principles of Political Economy newly Expounded," 
 laments the necessity of restating axioms : " Nevertheless 
 I am unwilling to leave the subject of these chapters with- 
 out some fuller consideration than has yet been given to it 
 of the great controversy not yet, unfortunately, extinct, of 
 free trade vs. protection. I have said, ' not yet extinct ' ; 
 perhaps I should rather have said even now active and 
 glowing with something of its pristine fervor ; for we have 
 only to turn our eyes to France or to the United States, 
 not to speak of our own colonies, to see with what vigor, 
 and, I regret to say, with what success, the venerable soph- 
 ism still maintains itself, alike in the public press and in 
 national legislation." 
 
 Nor can we withhold a measure of sympathy with our 
 own Prof. Perry. In the edition of his " Political Econo- 
 my," 1873, with true prophetic fervor he had said : " This 
 doctrine, clearly an outgrowth of the mercantile system, is 
 now something more than two hundred years old, and is 
 everywhere in its decrepitude. An incurable wound was 
 inflicted on it by the publication of Adam Smith's ' Wealth 
 of Nations,' in 1776; the centennial of that event and of 
 American independence will probably witness very little 
 practical vitality in it anywhere in the world ; it has died 
 out utterly in Great Britain, where it once had a vigorous 
 life ; it colors scarcely at all the revenue systems of the 
 German and Austrian Empires ; it still lingers feebly in 
 EuBsia; it has had a recent temporary revivification in 
 France ; and, though steadily and rapidly declining in the 
 United States, it has been strong enough here to control 
 the national legislation of the past decade." 
 
 In 1883, with somewhat baffled expectation, the lan- 
 guage is : " The taint, however, of its birth and breeding 
 
PRELIMINARY— SOME DEFINITIONS. fj 
 
 rests on it like a curse ; even if let alone, it would now 
 have been in its decrepitude owing to the poisons in its 
 blood ; but an incurable wound was inflicted on it in 1776 
 by one Adam Smith, hastening it toward its burial ; the 
 centennial of that event and of American independence 
 found it a lingering energy of evil, especially in the United 
 States " (the professor might have added, under the ma- 
 lign and crude empiricism of such statesmen as Bismarck 
 and Thiers, also in Germany and France ; and, as if in. the 
 very irony of science, in Canada and Victoria) ; " and politi- 
 cal economy, denouncing it as the enemy of mankind, hopes 
 soon to throw upon its loathsome carcass the last shovels- 
 ful of cleansing earth." 
 
 Unfortunately for the political economists, protection 
 is no " carcass." It is still a live subject for vivisection, 
 and the "cleansing earth" seems rather to withhold its 
 offices for those who are now wielding the scalpel and the 
 dissecting-knife over it. It will be evident, indeed, that 
 there are still many "unsettled questions in pohtical 
 economy," as there were when John Stuart Mill wrote his 
 elaborate essay tmder that title. In his "Essay on the 
 Production of Wealth," Colonel Torrens, more than sixty 
 years ago, said : " With respect to political economy, the 
 period of controversy is passing away ; and that of una- 
 nimity is rapidly approaching. Twenty years hence there 
 will scarcely exist a doubt respecting any of its funda- 
 mental principles." At the end of the twenty years Prof. 
 Senior pointed out the want of deflniteness and certainty of 
 meaning in the terms "value," "wealth," "labor," "capi- 
 tal," " rent," " wages," and " profits." These are the prin- 
 cipal terms in the science of political economy. " When," 
 he says, " we read the most eminent of the recent writers 
 on the subject, we find them chiefly engaged in controversy. 
 Instead of being able to use the works of his fellow-labor- 
 
8 PKOTECTIOX VS. FREE TRADE. 
 
 ers, every economist begins by demolition and erects a new 
 edifice, resting perhaps in a great measure on the same 
 foundation, but differing from all tbat have preceded it in 
 form and arrangement." 
 
 Mr. Mill has said of Adam Smith's " Wealth of Na- 
 tions " that " it is in many parts obsolete and in aU imper- 
 fect " ; and Stephen Colwell, a competent witness, testifies 
 that the successors and disciples of Adam Smith " have not 
 hesitated to cut and carve, and apply the caustic until there 
 is scarcely an important passage in the whole work (' Wealth 
 of IS^ations ') which some one of his friends has not detached 
 from his system as wrong or branded as absurd." The fate 
 of some of these words has been " settled " by the late econ- 
 omists. Prof. Perry, of Williams College, abolishes the 
 word " wealth " outright, and Prof. Jevons does the same 
 by "value." Of Colonel Torrens's "xmlucky prophecy," 
 so eminent a writer as Prof. Cairnes, as lately as the year 
 1874, says, " So far from the period of controversy having 
 passed, it seems hardly yet to have begun — controversy, I 
 mean, not merely respecting propositions of secondary im- 
 portance, or the practical application of scientific doctrines, 
 but controversy ves^eciimg fundamental propositions, which 
 lie at the root of its reasoning, and which were regarded as 
 settled when Colonel Torrens wrote." 
 
 As all this testimony comes from well-known teachers 
 of the " orthodox " English economy, it will serve to put 
 us on our guard as we go with them hastily through the 
 science, its definitions and development. We have not the 
 space to pause and indicate the want of unanimity in defi- 
 nitions and ambiguity and confusion in their application, 
 except so far as they bear on the controversy in hand. 
 
 Adam Smith (1776) gives no definition of his science. 
 His work is entitled "An Inquiry into the Nature and 
 Causes of the Wealth of Nations." " Political economy," 
 
PKELIMIN-AEY— SOME DEFINITIONS. 9 
 
 he says, "proposes two distinct objects : first, to provide a 
 plentiful revenue or subsistence for the people, or, more 
 properly, to enable them to provide such a revenue or sub- 
 sistence for themselves ; and, secondly, to supply the state 
 or commonwealth with a revenue sufficient for the public 
 service. It proposes to enrich both the people and the 
 sovereign." 
 
 Sir James Steuart (1767) : " The principal object of the 
 science is to secure a certain fund of subsistence for aU the 
 inhabitants, to obviate any circumstance which may render 
 it precarious to provide anything necessary for supplying 
 the wants of the society, and to employ the inhabitants 
 (supposing them to be freemen) in such manner as natu- 
 rally to create reciprocal relations and dependencies he- 
 tween them, so as to make their several interests lead them 
 to supply one anotlier with their reciprocal wants. . . . 
 Political economy in each country must necessarily he 
 different." This proposition has been attacked as hetero- 
 dox, but it will be seen that the very latest writers of the 
 orthodox school have been compelled to accept it. 
 
 M. Say : " Pohtical economy is the economy of society ; 
 a science combining the results of our observations on the 
 nature and functions of the different parts of the social 
 body." 
 
 Mr. McCuUoch : " The science of the laws which regu- 
 late the production, accumulation, distribution, and con- 
 sumption of those articles or products that are necessarily 
 useful or agreeable to man and possess exchangeable value" ; 
 and that " its object is to point out the means by which 
 the industry of man may be rendered most productive of 
 wealth, to ascertain the circumstances most favorable to its 
 accumulation, the proportions in which it is divided, and 
 the mode in which it may be most advantageously con- 
 simaed." 
 
10 PEOTECTION VS. FREE TEADE. 
 
 M. Sismondi : " The physical welfare of man, so far as 
 it can be the work of government, is the object of political 
 economy," 
 
 M. Storch: "Pohtical economy is the science of the 
 natural laws which determine the prosperity of nations, 
 that is to say, their wealth and their civihzation." 
 
 Prof. Senior: "That science which treats of the na- 
 ture, the production, and the distribution of wealth." 
 
 Mr. MiU : " Writers on pohtical economy profess to 
 teach or to investigate the nature of wealth, and the laws 
 of its production and distribution, including, directly or 
 remotely, the operation of all the causes by which the con- 
 dition of mankind or of any society of human beings iu 
 respect to this universal object of desire is made prosper- 
 ous or the reverse." 
 
 Prof. Eoscher : " By the science of national or political 
 economy we understand the science which has to do with 
 the laws of the development of the economy of a nation. 
 ... It inquires how the various wants of the people of a 
 country, especially those of food, clothing, fuel, shelter, 
 etc., may be satisfied ; how the satisfaction of these wants 
 influences the aggregate national hfe, and how in time 
 they are influenced by the national life." 
 
 M. Bastiat : " Every effort, capable of satisfying, on 
 condition of a return, the wants of a person other than the 
 man who makes the effort, and consequently the wants and 
 satisfactions relative to this species of effort, constitute the 
 domain of political economy. . . . Political economy is the 
 theory of exchange." 
 
 Henry 0. Caxey : " The science of the laws which gov- 
 ern man in his efforts to secure for himself the highest in- 
 dividuality and the greatest power of his association with 
 his fellow-men." 
 
 Prof. Francis A. "Walker : " Political economy or eco- 
 
PEELIIIINAEY— SOME DEFINITIONS. H 
 
 nomics is the name of that body of Imowledge which re- 
 lates to wealth. Political economy has to do with no 
 other subject whatever than wealth. Especially should the 
 student of economics take care not to allow any purely 
 political, ethical, or social considerations to influence him 
 in his investigations. All that he has as an economist to 
 do, is to find out how wealth is produced, exchanged, dis- 
 tributed, and consumed. 
 
 " It will remain for the social philosopher, the moralist, 
 or the statesman to decide how far the pursuit of wealth, 
 according to the laws discovered by the economist, should 
 be subordinated to other, let us say higher, considerations. 
 ... It can not be too strongly insisted on that the econo- 
 mist as such has nothing to do with the questions — what 
 men had better do — how nations should be governed — or 
 what regulations should be made for their mutual inter- 
 course. His business is simply to trace economic effects to 
 their causes, leaving it to the philosopher of every-day life, 
 to the morahst, or the statesman, to teach how men and 
 nations should act in view of the economical principles so 
 established. The political economist, for example, has no 
 more call to preach free trade, as the policy of nations, than 
 a physiologist to advocate monogamy as a legal institution." 
 
 Prof. Sidgwick : " PoUtical economy, in England at 
 least, is now almost universally imderstood to be a study or 
 inquiry concerned with the production, distribution, and 
 exchange of wealth." 
 
 Prof. Bowen : " On what principles do men readily 
 exchange these articles " (the aggregate of things which we 
 call wealth) " for each other ; and what motives, what gen- 
 eral laws, regulate their production, distribution, and con- 
 sumption ? Political economy undertakes to answer this 
 question, and is therefore properly considered one of the 
 moral sciences." 
 
12 PROTECTION VS. FREE TRADE. 
 
 Prof. Perry classes economics as a moral science with 
 metaphysics and ethics. " Is there a single class of facts, 
 easily conceived of and defined as such, . . . with which 
 alone political economy has to do? We answer : Yes. 
 Sales are a very definite thing. They are never confounded 
 with gifts, and they are never confounded with thefts. . . . 
 Political economy is the science of sales or exchanges. 
 Anything whatsoever that is salable, or can be made so, 
 comes within its view, and, scientifically, it cares nothing 
 whatever for anything else." 
 
 Prof. Caimes : " The science which traces the phenom- 
 ena of the production and distribution of wealth up to their 
 causes in the principles of human nature and the laws 
 and events, physical, political, and social, of the external 
 world." 
 
 With this diversity in premises, it is manifest that there 
 is a wide margin for diversity in the conclusions reached 
 by the professors of the science. 
 
 The most manageable definition, and the one from 
 which advance may most easily be made into the region of 
 actual experience, is that of M. de Laveleye. It is the one 
 upon which the discussion which follows is based : 
 
 " Political economy may therefore be defined as the 
 science which determines what laws men ought to adopt 
 in order that they may, with the least possiMe exertion, 
 procure the greatest abundance of things useful for the 
 satisfaction of their wants, may distribute them justly and 
 consume them rationally." 
 
CHAPTEE II. 
 
 THE SCIENCE OF POLITICAL ECONOMY THE MECHANISM OF 
 
 PEODUCTION. 
 
 Having thus made his definitions and set the hmits to 
 the " field of the science," let us see briefly how the pohti- 
 cal economist proceeds to develop his subject. The method 
 will be famihar to every student and high-school pupil. 
 He attempts an analysis of the social structure. By close 
 and accurate observations he undertakes to ascertain what 
 is going on in the organism about him. He takes account 
 of the activities in operation and endeavors to trace the 
 details of these operations. The motive power he finds in 
 human nature. It is the " satisfaction of human wants," 
 " with the least possible effort." It is not alone the crav- 
 ings of htmger and thirst, the effects of heat and cold, of 
 drought and damp. The satisfaction of every lower want 
 in the scale creates a desire of a higher character. No 
 hmit is thus set to the labors of humanity. As the satis- 
 faction of our desires can not be had except on the con. 
 dition of being consumers, purchasers, each one is, in the 
 main, under the necessity of producing that which he ex- 
 changes. " Every man who puts forth an effort to satisfy 
 the desire of another, with the expectation of a return, is 
 a producer." To the extent to which he du-ectly satisfies 
 his own wants by his own labor, he is not in the contem- 
 plation of the political economists. The man or the nation 
 which can satisfy its own wants by its own labor, neither 
 
14 PROTECTION VS. FREE TRADE. 
 
 needs foreign exchanges nor the aid of any science of 
 foreign exchanges. " When a man shaves his own face, 
 our science has nothing to say — when the barber shaves 
 him for a fee, it has a good deal to say." 
 
 The instruments of production are labor, capital, and 
 land, or natural agents. " The produce of the earth — all 
 that is derived from its surface by the united application 
 of labor, machinery, and capital — is divided among three 
 classes of the community : the proprietor of the land, the 
 owner of the stock, or capital necessary for its cultivation, 
 and the laborer, by whose industry it is cultivated. To 
 determine the laws which regulate this distribution is the 
 principal problem in political economy." This is Mr. 
 Kicardo's formula. These laws operate independently of 
 human interference, and, by consequence, he did not con- 
 sider wealth in connection with human welfare. 
 
 The share of the proprietor of the land, or other natural 
 agent, is called rent ; the share of the owner of the stock, 
 or capital, is called profit ; the share of the laborer is called 
 wages. Whatever may be the nature of the finished prod- 
 uct, whether of an agricultural or a manufacturing process, 
 the problem of the science is to ascertain the share which 
 goes to each of the agents concerned in its production. 
 Keally preliminary to the actual process which issues in the 
 product is an inquiry involving data lying still deeper in 
 human nature, to wit, the impulse under which men engage 
 at all in societary co-operation. This leads to the science 
 of society or sociology. Passing that for the present, we 
 endeavor to ascertain the laws which determine the dis- 
 tributive share of each in the joint result. 
 
 It may as well be confessed, at the outset, that no laws 
 can be laid down which give us the slightest assurance that 
 true sequence of facts and their relation has been ascer- 
 tained. Competition has been supposed to be the optimis- 
 
TEE SCIENCE OF POLITICAL ECONOMY. 15 
 
 tic (or pessimistic) Jack-of-all-trades which brings about the 
 equilibrium of the contesting claimants. Competition be- 
 tween the owners of capital lowers interest and profits; 
 between landlords it lowers rent ; between laborers it low- 
 ers wages.i In all these cases, the value of the services 
 offered are said to depend on " supply and demand," or 
 the price of commodities is said to depend on cost of pro- 
 duction, or the cost of reproduction. The cost of produc- 
 tion is said to consist of " wages and profits," or the ex- 
 pectation of profits. Sometimes it is said the price varies 
 with the demand, and again, that the demand varies with 
 the price. Or, again, the supply is said to determine the 
 price, and still again, the price is said to create or deter- 
 mine the supply. In all this ceaseless round of human 
 activities, it seems to be agreed that no law has been dis- 
 covered which awards the results of labor on the maxim, 
 either " to each according to his wants " — " to each accord- 
 ing to his work " — or " to each according to his sacrifice." 
 It can not be doubted that, if the science of political econ- 
 omy could discover any laws which would lead to a just 
 scheme of distribution, they would be recognized and en- 
 forced. 
 
 "It is only exertion which demands for itself some- 
 thing in exchange that is, technically, labor. ... So far as 
 exertion, physical or mental, is put forth for amusement, 
 physical or mental, it has nothing to do with pohtical econ- 
 omy." 
 
 " Labor," says Adam Smith, " was the first price, the 
 original purchase-money paid for all things, and it consti- 
 tutes the ultimate and real standard by which their value 
 
 ■ Herein is seen the underlying fallacy of much of the agitation and dis- 
 cussion which assumes that "capital" and "labor" are in competition. 
 They are not. The competition is that of capital with capital, and labor 
 with labor. 
 
16 PROTECTION VS. FREE TRADE. 
 
 can be estimated and compa,red." The natural price of 
 labor, according to Kicardo, is " that price whicli is neces- 
 sary to enable the laborers, one with another, to subsist and 
 perpetuate their race without increase or diminution." 
 
 The text- writers usually divide it into common, skilled, 
 and professional labor. Following Adam Smith, they lay 
 it down that the rate of wages will be determiaed, in their 
 action on the supply of labor, by the agreeableness or dis- 
 agreeableness of the employment ; the easiness and cheap- 
 ness, or the difficulty and expense, of learning the different 
 employments ; the constancy or inconstancy of employ- 
 ment ; the amount of trust involved ; the probability of 
 success ; custom, prejudice, and fashion ; legal restrictions 
 and voluntary associations (under this head is discussed the 
 operation of guilds and trades-unions) ; and the mobility 
 of laborers, or the lack of it. The last consideration has an 
 important economic bearing on the question of interna- 
 tional trade, and we shall have occasion to recur to it. 
 
 Many recent economists have recognized a distinct class 
 of "laborers," whom, for the want of a proper EngHsh 
 word, they call entrepreneurs (undertakers). These are the 
 organizers of our great industries, and their compensation 
 is referred to the head of " profits." They receive what is 
 called the " wages of management." The modem indus- 
 trial organization is, indeed, based upon the high executive 
 skill of this class of men. 
 
 "Capital" has had almost as many definitions as there 
 have been writers on the subject, and does not appear as 
 yet to have any generally received meaning. The dis- 
 tinction between " capital " and " money" is all-important, 
 and must be borne constantly in mind. 
 
 Mr. Carey defines it as "the instrument by means of 
 which man obtains mastery over Nature," and includes the 
 mental powers of man himself as well as his physical pow- 
 
THE SCIENCE OF POLITICAL ECONOMY. i^ 
 
 ers. Macleod calls capital "any economic quantity used 
 for the purpose of profit." Prof. Senior defines it as " an 
 article of wealth, the result of human exertion, employed 
 in the production and distribution of wealth." 
 
 Adam Smith ; " That part of a man's stock which he 
 expects to afford him revenue is called his capital." 
 
 Eicardo : " Capital is that part of the wealth of a coun- 
 try which is employed in production, and consists of food, 
 clothing, tools, raw materials, machinery, etc., necessary to 
 give effect to labor." 
 
 J. S. Mill : " The distinction between capital and not- 
 capital does not he in the kind of commodities, but in the 
 mind of the capitalist — in his will to employ them for one 
 purpose rather than another ; and all property, however ill 
 adapted itself for the use of labor, is a part of capital so 
 soon as it, or the value to be received from it, is set apart 
 for productive reinvestment. The sum of all the values so 
 destined by their respective possessors composes the capital 
 of the country." 
 
 Prof. Sidgwick does not define capital, but he adverts 
 to the fact that a different signification is given to the term 
 capital by the man of business and the economist. The 
 former understands by it " wealth employed so as to yield 
 a profit," whether this profit be gained by increasing the 
 whole stock of wealth in the country, or by getting posses- 
 sion of the wealth of others, in exchange for services. The 
 latter understands it as " wealth employed in production." 
 This distinction will be useful. 
 
 Prof. Perry: "Anything valuable outside of man him- 
 self which becomes a means in further production." This 
 definition excludes physical and mental powers, skill, hon- 
 esty, etc. The reward for these is wages. But, while not 
 capital, these are agencies in production, quite as indispen- 
 sable as conditions. "Capital is some product, always a 
 
18 PROTECTION VS. FREE TRADE. 
 
 commodity or a claim, reserved for the sake of an increase 
 to present values througli its employment productively, 
 which increase is called profits." 
 
 Prof. Jevons : " Capital, as I regard it, consists merely 
 in the aggregate of those commodities which are required 
 for sustaining laborers of any kind or class engaged in 
 work." A stock of food is the main element of capital. 
 The current means of sustenance constitute capital in its 
 free or unassisted form. " The function of capital is to 
 enable the laborer to await the results of his labor." 
 
 "A claim" is "a right to demand in the future." 
 Prof. Perry says this is capital — a position much contro- 
 verted. " Credit " represents the outcome of those claims, 
 and we all know how enormously they have been extended 
 in modem times. " Credit not only convenes exchanges 
 but also creates them ; it brings something new into the 
 world of traffic, a new class of things bought and sold, 
 values that would not otherwise have existed at all. It en- 
 larges the field of political economy, and makes a new 
 grand division of time pay tribute to the world of sales. 
 The past is represented in commodities, the present in 
 personal services, and the future in credits. . . . The chief 
 gain for individuals and for the whole community in 
 the use of proper credits ... is found in the fact that a 
 new capital is thereby created, a new purchasing power, 
 something in the world of values additional to what ex- 
 isted before." 
 
 Are intellectual and moral powers capital ? Prof. Se- 
 nior has said, " It is not on the accidents of soil or climate, 
 or on the existing accumulation of the material instru- 
 ments of production, but on the quantity and the diffusion 
 of this immaterial capital" (knowledge, skill, education), 
 " that the wealth of a country depends." If, as we shall 
 have occasion to see, political economy undertakes to ex- 
 
THE SCIENCE OF POLITICiL ECONOMY. I9 
 
 elude these considerations from its economic view, so mucli 
 the worse for the science. 
 
 Economists, then, divide capital into "fixed" capital 
 and " circulating " capital — into " consumers' " capital and 
 " producers' " capital. " Circulating capital is all new mate- 
 rials — all wages paid out in view of ultimate profit — com- 
 pleted products on hand for sale — all products bought and 
 held for the sake of resale. Fixed capital will be found 
 under one or other of the following heads : all tools and 
 machinery — all buildings used for production purposes — 
 all permanent improvements on land — all investments in 
 aid of locomotion, such as railroads, canals, ships, and 
 everything subsidiary to them— all products loaned or 
 rented or retained for that purpose — and the national 
 money as a whole." (Prof. Perry.) 
 
 Capital is the result of saving. It results from the act 
 of a person who either abstains from the unproductive use 
 of what he can command, or prefers the production of 
 remote to that of immediate results. 
 
 Prof. Senior very philosophically substituted the word 
 "abstinence" for "profit." It expresses the act or con- 
 duct of which profit is the reward, and which bears the 
 same relation to profit that labor does to wages. " By 
 the word abstinence we wish to express that agent, distinct 
 from labor and the agency of nature, the concurrence of 
 which is necessary to the existence of capital, and which 
 stands in the same relation to profit as labor does to wages." 
 
 Capital may be indefinitely increased by using the re- 
 sults of saving, or the products of labor and the other in- 
 struments of production, for the purpose of further pro- 
 duction. 
 
 " Productive consumption is that use of a commodity 
 which occasions an ulterior product. Unproductive con- 
 sumption is, of course, that use which occasions no ulterior 
 
20 PROTECTION VS. FEEE TRADE. 
 
 product. The characteristic of unproductive consumption 
 is, that it adds to the enjoyment of no one but the con- 
 sumer himself. Its only eflEect upon the rest of the com- 
 munity is to diminish pro tanto the mass of commodities 
 applicable to their use." 
 
 The remuneration to the proprietor of land is called 
 rent. Land, in this connection, includes mines, rivers, and 
 ports — ^indeed, any appropriated natural agents, limited in 
 extent or number. The definitions of rent given below 
 will show the different theories upon which it is supposed 
 rent accrues. 
 
 Kicardo : " Rent is that portion of the produce of the 
 earth which is paid to the landlord for the use of the origi- 
 nal and indestructible powers of the soil." This view of 
 rent has been adopted by Prof. Senior, John Stuart Mill, 
 and the great body of English economists. 
 
 Prof. Perry defines rent (edition of 1883) as follows ; 
 "The rent of leased lands is the measure of the service 
 which the owner of the land thereby renders to the actual 
 cultivator of it," (having added in the edition of 18T3) 
 ' and does not differ essentially in its return from the rents 
 of buildings in cities or from the interest of money." The 
 philosophy of Henry C. Carey and Frederic Bastiat, whom 
 Perry follows, led them to this conception of the nature of 
 rent, because they held that in all schemes of production 
 the utilities of nature were gratuitous. Prof. Perry says, 
 after Carey and Bastiat, that there are -no " original and 
 indestructible powers of the soil, and, if there were, they 
 are God's gifts, and no one is authorized to take pay for 
 their use. Land derives its value from the onerous con- 
 tributions of man." "We shall have a necessity further on 
 to look into this matter. A correct understanding of the 
 nature of rent is a fundamental one in social science. Of 
 Ricardo's " Theory of Pent," including " the law of di- 
 
THE SCIENCE OF POLITICAL ECONOMY. 21 
 
 minislimg production from land," Mr. Mill haa said : " This 
 general law of agricultural industry is the most important 
 proposition in political economy. Were the law different, 
 nearly all the phenomena of the production and distribu- 
 tion of wealth would be other than they are." ' 
 
 Under the head of land, the economist usually treats of 
 the tenure under which lands are held, the laws of descent, 
 etc. 
 
 Where the proprietor and the cultivator are the same 
 person, he is the recipient of both rent and profit in virtue 
 of the double relation he bears to a natural agent of pro- 
 duction. 
 
 Writers on economics generally hold that the proceeds 
 of a given product are distributed in the following order : 
 First, rent ; second, interest ; third, profits ; fourth, wages. 
 
 The conditions of successful production are : Associar 
 tion, the coming together of men of various desires, various 
 capacities, and various employments ; division of labor, in 
 which connection international commerce has been desig- 
 nated as maldng "territorial division of labor" possible; 
 and invention, by which, to a greater and greater extent, 
 we are enabled to employ the gratuitous forces of nature 
 by means of mechanical and chemical discoveries. 
 
 We may as well pause here long enough to indicate 
 that the entire theory of free trade is based on the notion 
 of " division of labor." In short, it is this : " The only 
 reason why men ever exchange services at all is on the 
 ground of relative superiority at different points. The 
 tailor makes the blacksmith's coat and the blacksmith shoes 
 
 ■ " Rent is the surplus of the crop above the cost of cultivation od the 
 least productive lands contributing to supply the market. Admitting the 
 private ownership of land, that surplus, necessarily, so far as economic forces 
 are concerned, is left in the hands of the landlord. There, so far as eco- 
 nomic forces are concerned, it must remain." — Prof. Francis A. Walker. 
 
22 PROTECTION VS. FEEE TRADE. 
 
 the tailor's horses for no other reason in the world except 
 that each has a relative advantage of the other in his own 
 work, and therefore there is a mutual gain in their ex- 
 changing works." It is manifestly assumed in this regime 
 that the tailor has a market for all his products as a tailor, 
 and that he can expend all his time and skill in the pro- 
 duction of commodities in which he has this relative ad- 
 vantage, and that he has a market for these commodities. 
 
 And so of the blacksmith. If there is not a market 
 for all the commodities which he can produce as a hlach- 
 smith — the occupation in which he has the greatest rela- 
 tive advantages — ^he must embody his surplus time and 
 skill in the production of some other commodity or stand 
 idle. Thus much of individuals. 
 
 The same of nations. The diversity of relative advan- 
 tages at different points exhibited by different nations is 
 the basis of international exchanges. 
 
 " The various countries of the earth have received from 
 the hands of God a diversity of original gifts, in soil, nat- 
 ural productions, position, and opportunity. This diversity 
 exists for a good design" (note the subtle introduction of 
 theological predilection in this phrase), " and can never be 
 substantially reduced by man, even if there were, as there 
 is not, any good reason for desiring to reduce it. Besides 
 original diversity in these respects, there has been devel- 
 oped in the history of the inhabitants of these countries a 
 diversity of tastes, aptitudes, habits, strength, intelligence, 
 and skill to avail themselves of the forces of nature around 
 them. These differences are somewhat less inherent and 
 more flexible than the others, but they exist and always 
 have existed, and in a greater or less degree always will 
 exist, audit is in these diversities, original, traditional, and 
 acq^^ijed, that international commerce depends. . . . There 
 is no'ihutual gain in any series of exchanges, unless each 
 
THE SCIENCE OF POLITICAL ECONOMY. 23 
 
 party lias a superior power in producing that which is ren- 
 dered, compared with his power in producing that which is 
 received." (Prof. Perry.) 
 
 This is a correct exposition of the motive and conditions 
 of foreign trade. The free-trader assigns to the United 
 States the production of the things in which we have the 
 superiority over other nations ; and on these products we 
 accept our assignment in " the international division of la- 
 bor." But we accept this role on the further unalterable 
 alternative presented by Adam Smith in the " Wealth of 
 Nations " : 
 
 " The division of labor is limited ly the extent of the 
 market. Before any man, or any set of men, can, in com- 
 mon prudence, devote themselves to any particular employ- 
 ment, they must be assured that they can dispose of the 
 commodity which their exertions in the prosecution of that 
 employment will produce. In situations where there is 
 not a sufficient number of customers near at hand to con- 
 sume the manufactured article " (in our case, for " manu- 
 factured article," substitute "food and raw material "), "or 
 where it can not with advantage be transported to those at a 
 distance, the making of that article can never become the 
 exclusive employment of any man or set of men. Where, 
 therefore, there is not a sufficiently extensive marJcet, labor 
 can not he so much subdivided as it otherwise would, and 
 its productive powers are cramped for want of room in 
 which to exert themselves." 
 
 We venture to anticipate the discussion so much as to 
 predict that Prof. Perry's premises, Adam Smith's dic- 
 tumj the productive forces of the United States, and the 
 world's market, will, when put in conjunction, consti- 
 tute a quadrilateral within which free foreign trade in 
 America must perish of inanity. 
 
 The causes which determine the productiveness of labor 
 
24 PROTECTION rS. FREE TRADE. 
 
 are, first, the personal character of the laborer, his corporeal, 
 intelleetual, and moral qualities; secondly, the degree in 
 which he is assisted by natural agents ; thirdly, the degree 
 in which he is assisted by capital ; fourthly, the degree of 
 freedom with which he is allowed to direct his industry. 
 (Prof. Senior.) 
 
 Inasmuch as almost all commodities are produced, or 
 most efforts are put forth, for the purpose of being ex- 
 changed, we come to the conditions under which exchanges 
 are made : " Men have desires, are capable of making ef- 
 forts to meet those desires, and experience a satisfaction 
 when the desires are met. . . . Desires, efEorts, satisfac- 
 tions, constitute the one circle of political economy, and 
 value arises in every case from a comparison of two cor- 
 responding efforts. EfEorts are naturally irksome. Every- 
 body wishes to realize as large a satisfaction as possible 
 from a given effort. If, by making that effort for another, 
 a larger satisfaction will be realized than by expending it 
 directly for one's self, there is an immediate and pressing 
 motive to make the effort for another, and to reach the sat- 
 isfaction not directly, but indirectly, that is, by exchange." 
 (Perry.) The adoption of a system of exchanges makes the 
 possession of value of any kind equivalent to the possession 
 of the objects of personal desire. Value, then, is the me- 
 diator between exchanges. Perhaps the common sense of 
 mankind has had no practical dilBculty with this word, but 
 the mode in which the conception is generated has been 
 wrestled with by professional writers. Henry C. Carey 
 was the first one who worked it out by means of any wide 
 view of the nature of the social structure, and the action 
 and interaction of the powers of man and nature. In a 
 general way, it had been treated as growing out of labor — 
 as affected by the scarcity of the commodity in which it 
 was incorporated — by supply and demand, by utility, ca- 
 
X 
 
 THE SCIENCE OF POLITICAL ECONOMY. 25 
 
 pability of accumulation, eonservability, and so on. Mr. 
 Carey says : " Utility is the measure of man's power over 
 nature, value is tlie measure of nature's power over man. 
 The former grows, the latter declines, with the power of 
 combination among men." These definitions are exceed- 
 ingly abstract, but they logically contain the philosophy 
 which Mr. Carey promulgated. They are the first dis- 
 closure of a scheme which gives valuable things, wealth, 
 their tnie function in a human progressive society. They 
 are the basis of the optimistic view which he, and after 
 him Frederic Bastiat, takes of the final outcome of human 
 society. The latter's correlative propositions are : " In the 
 state of isolation, our wants exceed our powers ; in the so- 
 cial state, our powers exceed our wants." The result of 
 this exposition of the whole of social science is thus ex- 
 pressed : " The constant aj>proximation of all men toward a 
 level, which is always rising ; in other tQrms,imp7'ovement 
 and equalization / in a single word, HAEMOiirr." 
 
 The general notion is thus developed by Bastiat : " Let 
 us accustom ourselves to distinguish utility from value ; 
 without this there can be no economic science. I give 
 utterance to no paradox when I affirm that utility and 
 value, so far from being identical, are ideas opposed to 
 one another. Want, efforts, satisfaction: here we have 
 man regarded in an economic point of view. The relation 
 of utility is with want and satisfaction. The relation of 
 value is with efifort. Utility is the good, which puts an 
 end to the want by the satisfaction. Yalue is the evil, for 
 it springs from the obstacle which is interposed between 
 the want and the satisfaction. Bat for these obstacles there 
 would have been no effort either to make or to exchange. 
 Utility would be infinite, gratuitous, and common, without 
 condition, and the notion of value would never have en- 
 tered the world. In consequence of these obstacles, utility 
 3 
 
^ 
 
 PKOTECTION VS. FREE TRADE. 
 
 is gratuitous only on condition of ejEEorts exchanged, wMch, 
 when compared with each other, give rise to value. The 
 more these obstacles give way before the liberality of na- 
 ture and the progress of science, the more does utihty ap- 
 proximate to the state of being absolutely common and 
 gratuitous ; for the onerous conditions, and consequently the 
 value, diminish as the obstacles diminish. I shall esteem 
 myself fortunate if, by these dissertations, which may be 
 subtile, I succeed in establishing this encouraging truth, 
 the legitimaU jproperty of value, and this other truth, 
 equally consoling, th^ progressive community of utility." 
 These considerations certainly open a hopeful view of the 
 future supremacy of the human family over the forces of 
 nature. If the logic and rhetoric of Bastiat had stood him 
 in as good stead in the whole of his discussion, he need not 
 have separated from Mr. Carey on the question of " pro- 
 tection." 
 
 " The utility involved in every valuable service is de- 
 rived from two sources — the free contribution of nature 
 and the onerous contribution of man. If the service be 
 unique, if only one person or a few be in a position to ren- 
 der it, no useful principle can be laid down which shall 
 discriminate the two component parts of the utility ; but 
 in respect to the vast mass of services, of which a market 
 rate can be predicated, it is very clear that the competition 
 with each other of those who are ready to render them will 
 fix the current value at a point which shall just about com- 
 pensate for the onerous element involved. That portion 
 of the utility wliich is the free gift of nature vriU be very 
 nearly a common factor in that whole set of services. The 
 action of competition will eliminate this common factor, 
 and tend constantly to determine value on the iasis merely 
 of what m.an has done to impart utility to those services^ 
 (Prof. Perry.) 
 
THE SCIENCE OF POLITICAL ECONOMY. 27 
 
 Yalue is not in the material thing, it is no quality of 
 the commodity. But, inasmuch as services are mainly 
 incorporated in material things, it seems hkely that the 
 human family will continue to exchange their products 
 and services without much regard to the metaphysics of 
 the case. 
 
 Value, then, is " the relation of mutual exchange estab- 
 lished between two services by their exchange." 
 
 As men can not, as a general thing, exchange their 
 products directly with each other — as barter is impossible 
 in any extended commercial organization — the invention 
 of some medium of exchange was natural and necessary. 
 Money is that medium. It is the great economic agent to 
 bring the producer and consumer together. It is the great 
 instrument of association between men. Coin, token-coin, 
 convertible and inconvertible notes, legal tender and not- 
 legal tender, bankers' credits, checks, mercantile bills, ex- 
 chequer bills, and many other forms of credit, may be called 
 money. "While it is a purely human device and was adopted 
 for man's convenience, it has often seemed to master soci- 
 ety and thwart its purposes. In its essence and functions 
 it ought to be neither complicated nor mysterious. The 
 basis of gold and silver has been settled upon by the com- 
 mon consent of the nations, but there are yet outstanding 
 many unsettled questions : the possibility and advisability 
 of a bimetallic standard, the amount which the exchanges 
 of a nation require, the relation of paper money to coin, 
 and the real nature of the credit which paper currency 
 stands for, are sufficiently undetermined to render their 
 discussion, even, at times dangerous to the stability of trade 
 and finance. All of us are famiHar with the unaccountable 
 phenomena of commercial crises. Money may be abun- 
 dant, enterprises may invite to effort, labor may be stand- 
 ing waiting in its market, but a pall hangs over societary 
 
28 FEOTECTION VS. FREE TRADE. 
 
 activities. Credit has departed from men. Want of con- 
 fidence paralyzes all industrial movement. It is a time of 
 panic, and no science can predict the future. Indeed, sci- 
 ence can not account for the past. In such crises we hear 
 much of over-production, under-consumption, and under- 
 production. It is an idle jangle of words, and neither de- 
 scribes nor explains anything. 
 
 It would seem as if some phases of the money question 
 ought to be settled by this time, but controversies go on. 
 Inasmuch as "money. is the current and legal measure of 
 values," the material of which money itself is made must 
 be a commodity having value. The only real dollar known 
 to the commerce of the world is the coin dollar. This 
 proposition, however, is still in dispute. 
 
 But there is another Mnd of money, the paper dollar — 
 the promise-dollar. Inasmuch as it is the sign and not the 
 thing signified ; is " the representative of something and 
 not that something itself," the promise-dollar ought always 
 to be convertible into the real dollar. As a measure of 
 value or of exchange the paper dollar must be redeemable ; 
 redeemable in a real commodity — also a proposition still 
 disputed. 
 
 Money performs functions as a medium of exchange, a 
 measure of value, a standard of value, and a store of value. 
 
 "The whole question," says Henry 0. Carey, " and all 
 the philosophy of money is, however, settled by the simple 
 proposition, of universal truth, that in the natural course of 
 human affairs the prices of raw and finished commodities 
 tend to approximate, the former rising as the latter fall, 
 and the rapidity of the change increasing vdth every in- 
 crease in the supply of those metals which constitute the 
 standard with which prices need he compared. . . . Ap- 
 proximation in the prices of the raw material and the fin- 
 ished commodity is the one essential characteristic of civili- 
 
THE SCIENCE OF POLITICAL ECONOMY. £9 
 
 zation. . . . Money is the instrwment of association — the 
 cause of motion and power in a society." 
 
 As accounting for mnch of tlie want and misery in the 
 world the orthodox economist, in some form or other, 
 makes use of Dr. Malthus's " Theory of Popnlation." In 
 this way he undertakes to give the reasons why, in the case 
 of so many millions of the human race, " effort" is not re- 
 warded by " satisfaction." The Malthusian theory is this : 
 " According to the principle of population, the human race 
 has a tendency to increase faster than food. It has, there- 
 fore, a constant tendency to people a country fully up to 
 the limits of subsistence ; meaning by those hmits the low- 
 est quantity of food which will maintain a stationary popu- 
 lation." 
 
 Mr. McCulloch thinks that " the power of increase in 
 the human species must always in the long run prove an 
 overmatch for the increase in the means of subsistence." 
 IVIr. Mill's statement is that " the tendency of population 
 to increase in most places faster than capital is proved in- 
 contestably by the condition of the population in most 
 parts of the globe." This tendency to increase in popula- 
 tion can be only held in check by moral self-restraint or by 
 the scourges of famine, pestilence, and war. The doctrine 
 has been made to play a decisive part in some of the specu- 
 lations of famous writers. Prof. Perry dismisses it thus : 
 " Malthusianism, as it has been called, is really a topic of 
 physiology and not of political economy at all. Political 
 economy presupposes the existence of persons able and will- 
 ing to make exchanges before it begins its inquiries and 
 generalizations. How they come into existence, the rate of 
 their natural increase, and the relation of this increase to 
 food, however interesting as physiological questions, have 
 clearly nothing to do with our science." But in the mat- 
 ter of " exchanges," we shall find that the wages question. 
 
30 PROTECTION VS. FEEE TRADE. 
 
 as related to the demand and supply of labor, and the di&- 
 tinctron between" labor and the laborer, have something to 
 do with our science. 
 
 What is called the wages-fund theory has been made an 
 important part in the process of production and distribu- 
 tion. Adam Smith had laid down, as quite fundamental, 
 this proposition : " The general industry - of the society 
 never can exceed what the capital of the society can em- 
 ploy. As the number of workmen that can be kept in em- 
 ployment by any particular person must bear a certain pro- 
 portion to his capital, so the number of those that can be 
 continually employed by all the members of a great society 
 must bear a certain proportion to the whole capital of that 
 society, and can never exceed that portion." In Smith's 
 discussion, this is one of the pillars of his free-trade sys- 
 tem. We shall see later on the essential vice of this state- 
 ment as a statement of fact. It is not true that industry is 
 limited by capital, and, as a matter of fact, there has never 
 been any limitation on the employment of labor by reason 
 of lack of capital. It is one mode of formulating the 
 wages-fund theory. 
 
 Mr. Mill states that theory in these words : " There is 
 supposed to be at any instant a sum of wealth which is un- 
 conditionally devoted to the payment of wages. This sum 
 is not regarded as unalterable, for it is augmented by 
 saving and increasing with the progress of wealth ; but it 
 is reasoned upon as at any given moment a predetermined 
 amount. More than that amount it is assumed that the 
 wages-receiving class can not possibly divide among them ; 
 that amount, and no less, they can not but obtain. So that, 
 the sum to be divided being fixed, the wages of each de- 
 pend solely on the divisor, the number of participants." 
 In other words, the quotient, wages, would be increased in 
 the ratio in which the divisor, laborers, were decreased. 
 
THE SCIENCE OF POLITICAL ECONOMY. 31 
 
 Now, it is still a disputed question wlietlier wages are paid 
 out of capital at all ; whether the laborer does not advance 
 his labor to the capitalist. Under the attack of Mr. Thorn- 
 ton, Mill himseM abandoned the wages-fund theory. Prof. 
 Walker and Mr. Longe both repudiate it. Prof. Cairnes, 
 even after Mill's defection, returns to its defense. Prof. 
 Perry holds to a form of it, somewhat modified. Some of 
 them seem to thinlc that in some way or other the doctrine 
 of free trade could be best maintained on the assumption 
 of the truth of the theory. 
 
 Prof. Jevons thus disposes of this question : " There is 
 another inversion of the problem of economics which is 
 generally made in works upon the subject. Although 
 labor is the starting-point in production, and the interests 
 of the laborer the very subject of the science, yet econo- 
 mists do not progress far before they suddenly turn around 
 and treat labor as a commodity which is bought up by capi- 
 talists. Labor becomes itseK the object of the laws of 
 supply and demand, instead of those laws acting in the 
 distribution of the products of labor. Economists have 
 invented, too, a very simple theory to determine the rate 
 at which capital can buy up labor. The average rate of 
 wages, they say, is found by dividing the whole amount of 
 capital appropriated to the payment of wages by the num- 
 ber of the laborers paid ; and they wish us to believe that 
 this settles the question. But a little consideration shows 
 that this proposition is simply a truism. The average rate 
 of wages must be equal to what is appropriated to the pur- 
 pose, divided by the number who share it. The whole 
 question will consist in determining how much is appro- 
 priated for the purpose ; for it certainly need not be the 
 whole existing amount of circulating capital. Mill dis- 
 tinctly says that because industry is limited by capital we 
 are not to infer that it always reaches that limit ; and, as a 
 
32 PEOTECTIOX VS. FREE TEADE. 
 
 matter of fact, we often observe that there is abundance 
 of capital to be had at low rates of interest, while there 
 are also large numbers of artisans starving for want of 
 employment. The wages-fund theory is, therefore, illusory 
 as a real solution of the problem." 
 
 " Another part of the current doctrines of economics 
 determines the rate of proiit of capitalists in a very sim- 
 ple manner. The whole produce of industry must be di- 
 vided into the portions paid to rent, taxes, profits, and 
 wages. . . . Eliminating rent and taxes as exceptional, we 
 thus arrive at the simple equation — 
 
 Produce = profit -(- wages. 
 A plain result also is drawn from the formula ; for we are 
 told that if wages rise, profits must fall, and viae versa. 
 But such a doctrine is radically fallacious : it involves the 
 attempt to determine two unknown quantities from one 
 equation. I grant that, if the produce be a fixed amoant, 
 then, if wages rise profits must fall, and vice versa. Some- 
 thing might perhaps be made of this doctrine if Eicardo's 
 theory of a natural rate of wages — ^that which is just suf- 
 ficient to support the laborer — ^held true. But I altogether 
 question the existence of any such rate." 
 
 " The view which I accept concerning the rate of wages 
 is not more diflicult to comprehend than the current one. 
 It is that the wages of a working-man are ultimately coin- 
 cident with what he produces, after the deduction of rent, 
 taxes, and the iaterest of capital. I think that, in the 
 equation — 
 
 . Produce = profit -\- wages, 
 
 the quantity of produce is essentially variable." Prof. 
 "Walker agrees to this, and thinks from the total produce 
 is fii'st deducted rent, then interest, then profits, and that 
 " labor is the residual claimant to the product of industry." 
 We have now the clew as to the amount of capital 
 
THE SCIENCE OF POLITICAL ECONOMY. 33 
 
 which will be appropriated to the payment of wages in 
 any trade : " The amount of capital will depend upon the 
 amount of anticipated profits, and the competition to ob- 
 tain proper workmen will strongly tend to secure to the 
 latter all their legitimate share ia the ultimate produce." 
 
 " The fact is that labor once spent has no influence on 
 the future value of any article ; it is gone and lost forever. 
 In commerce, by-gones are forever by-gones, and we are 
 always starting clear at each moment, judging the values 
 of things with a view to future utility. Industry is essen- 
 tially prospective, not retrospective, and seldom does the 
 result of any undertaking exactly coincide with the first 
 intention of its promoters." Mr. Carey's theorem was 
 that " value depends on the cost of reproduction." 
 
 "We now have a sketch of the mechanism of the indus- 
 trial organism. We see how the economic man tends to 
 behave. Unfortunately for the scientific value of the con- 
 clusions to be drawn, we have little more than tendencies, 
 and all along there are occasions for " allowances," " cor- 
 rections," " friction," and " disturbing elements." 
 
CHAPTER III. 
 
 THE MOTIVE TO PEODUCTION THE ECONOMIC MAH. 
 
 "We, following the economist, turn then to the motive 
 power of this mechanism. We are to explore' the mental 
 characteristics of the man who is to put it all in motion. 
 We turn from the external world to mental phenomena — 
 the behavior of a being having desires, intellectual and 
 moral capabilities, and will. From this point forward the 
 data of investigation are psychical. They are in the field 
 of moral science, and not in the region of things — external 
 objects. The method is a metaphysical one. The validity 
 of our results depends on deductions — conclusions reached 
 by an a priori process. The consequences will be as might 
 be expected. We shall find no realities in the world to 
 correspond with the abstraction from which we start out. 
 The underlying motive has been described by different 
 writers from different points of view. Adam Smith, it 
 may readily be conceded, attempted the first systematical 
 explanation of the phenomena of an industrial and com- 
 mercial society. Most writers in England since his day 
 have endeavored to unfold more accurately his ideas. Of 
 these writers, one of his most learned and distinguished 
 disciples has approvingly said: "They have not hesitated 
 to cut and carve, and apply the caustic tmtil there is 
 scarcely an important passage in the whole work which 
 some one of his friends has not detached from his system 
 as wrong, or branded as absurd." In his theory of wealth. 
 
THE MOTrVK TO PRODUCTION. 35 
 
 man is considered as actuated solely by Selfislmess ; in 
 his theory of morals, lie is considered as actuated by Sym- 
 pathy. Among the premises of his work are these : 
 " Men are prompted to expend by the desire of present 
 enjoyment^a passion only momentary and occasional. 
 They are prompted to save by the desire of bettering their 
 condition — a passion which comes with them from the 
 womb, and never leaves them till they go to the grave. . . . 
 The principle exciting to frugality, the unifoiTQ, con- 
 stant, and uninterrupted efEort of every man to better his 
 condition, produces both public and national as well as pri- 
 vate opulence, and is frequently more than sufficiently 
 powerful to counteract the extravagance of government 
 and the greatest errors of administration. . . . Alone and 
 without any assistance it is capable, not only of carrying 
 on the society to wealth and prosperity, but of surmounting 
 a himdred impertinent obstructions with which the folly of 
 human laws too often encumber its operations." In these 
 passages we come upon the doctrine of laissez faire, 
 which it has been attempted to erect into a scientific prin- 
 ciple, on the assumption that the individual knows his 
 own interests in the sense in which they are identical with 
 the interests of society. This principle and this assump- 
 tion will engage our attention further on. "We return to 
 our motive powers. M. Kossi groups them in this wise : 
 " Our power over things by means of labor ; our inclina- 
 tion to saving if a sufficient interest stimulates us ; our in- 
 clinations to unite our exertions for a common purpose ; 
 our instincts of property, and of exchange or trade. These 
 are the facts of every time and of every place ; these are 
 the general facts of political economy." This is a much 
 more satisfactory generalization. It puts more flesh and 
 blood upon the skeleton, which most economists start with 
 as their " economic man." 
 
36 PROTECTION VS. FEEE TRADE. 
 
 Mr. Mill, in Ms essay on " Unsettled Questions in Politi- 
 cal Economy," has once for aU determined, for tlie English 
 school, the method of the science, and defined the economic 
 man with which it deals. The revolt against his abstract 
 science and its a^yriori method is now well-nigh universal. 
 He says : 
 
 " What is now commonly understood by the term ' po- 
 litical economy ' is not the science of speculative polities, 
 but a branch of that science. It does not treat of the whole 
 of man's nature as modified by the social state, nor the whole 
 conduct of man in society; It is concerned with him solely 
 as a being who desires to possess wealth, and who is capable 
 of judging of the comparative efficacy of means for obtain- 
 ing that end. It predicts only such of the phenomena of the 
 social state as take place in consequence of the pursuit of 
 wealth. It makes entire abstraction of every other human 
 passion or motive, except those which may be regarded as 
 perpetually antagonizing principles to the desire of wealth, 
 namely, aversion to labor and desire of the present enjoy- 
 ment of costly indulgences. These it takes, to a certain ex- 
 tent, into its calculations, because these do not merely, like 
 others and occasionally, conflict with the pursuit of wealth, 
 but accompany it always as a drag or impediment, and are 
 therefore inseparably mixed up in the consideration of it. 
 Political economy considers mankind as occupied solely in 
 acquiring and consuming wealth. Under the influence of 
 this desire, it shows mankind accumulating wealth, and em- 
 ploying that wealth in the production of other wealth. Sanc- 
 tioning, by mutual agreement, the institution of property ; 
 establishing laws to prevent individuals from encroaching upon 
 the property of others by force or fraud ; adopting various 
 contrivances for increasing the productiveness of this labor ; 
 setting the division of produce by agreement, under the in- 
 fluence of competition (competition itself being governed by 
 certain laws, which laws are therefore the regulators of the 
 
THE MOTIVE TO PEODTJCTIOK 37 
 
 division of produce) ; and employing certain expedients (as 
 money, credit, etc.) to facilitate the distribution. . . . The 
 science then proceeds to investigate the laws which govern 
 these several operations, under the supposition that man is a 
 being who is determined, by the necessity of his nature, to pre- 
 fer a greater portion of wealth to a smaller in all cases, with- 
 out any other exception than that constituted by the two coun- 
 ter-motives already specified. Not that any political econo- 
 mist was ever so absurd as to suppose that mankind are really 
 thus constituted, but because this is the mode in which science 
 must necessarily proceed. . . . The manner in which it ne- 
 cessarily proceeds is that of treating the main and acknowl- 
 edged end as if it was the sole end, which, of all hypotheses 
 equally simple, is nearest the truth. ... In this way a 
 nearer approximation is obtained than would otherwise be 
 practicable to the real order of human affairs in those de- 
 partments. This approximation is, then, to be corrected by 
 making proper allowance for the effects of any impulses of a 
 different description. . . . The conclusions of political econo- 
 my, consequently, are only true, as the common phrase is, in 
 the abstract. . . . All that is requisite is that the political 
 economist be on his guard not to ascribe to conclusions 
 which are grounded upon an hypothesis a different kind of 
 certainty from that which really belongs to them. . . . That 
 which is true in the abstract is always true in the concrete, 
 with proper allowances. When a certain cause really exists, 
 and, if left to itself, would infallibly produce a certain effect, 
 that same effect, modified by all the other concurrent causes, 
 will correctly correspond to the result really produced." 
 
 This is the " orthodox " statement of the case. We 
 shall find that when the " allowances " and " modifications " 
 are properly made, we have passed into entirely different 
 premises. Even though the premises were true and the 
 reasoning correct, the conclusion is inadequate and utterly 
 useless. "A bone fairly enough represents the sort of 
 
38 PROTECTION VS. FREE TRADE. 
 
 wealth coveted by a dog, who has a comparatively simple 
 cerebral system, and few other objects. Yet you can not 
 predict the conduct even of a dog from his love of bones, 
 or not one would be left in the butchers' shops. The dog 
 has a regard for his master and a fear of the police, and he 
 has other pursuits." 
 
 According to Prof. Senior, the general facts on which 
 the science of political economy rests are comprised in these 
 four general propositions : 
 
 " 1. That every man desires to obtain additional wealth 
 with as little sacrifice as possible." 
 
 This is a matter of consciousness. It is the motor which 
 instigates human activity. It takes effect subject to the 
 conditions imposed by these facts : 
 
 " 2. That the population of the world, or, in other 
 words, the number of persons inhabiting it, is limited only 
 by moral or physical evil, or by fear of a deficiency of those 
 articles of wealth which the habits of the individuals of 
 each class of its inhabitants lead them to require. 
 
 " 3. That the powers of labor and of other instruments 
 which produce wealth may be indefinitely increased by 
 using their products as the means of further production. 
 
 "4. That, agricultural skill remaining the same, addi- 
 tional labor employed on the land, within a given district, 
 produces in general a less proportionate return ; or, in 
 other words, that though, with every increase of the labor 
 bestowed, the aggregate return is increased, the increase 
 of the return is not in proportion to the increase of the 
 labor." 
 
 These facts are matters of observation. 
 
 The second is " the Malthusian law of population." 
 
 The third is made available by the " effective desire of 
 accumulation " — ^present saving with the purpose of future 
 enjoyment. 
 
THE MOTIVE TO PKODUOTION. 39 
 
 The fourth is " the law of diminishing returns." 
 
 Prof. Senior goes on, and says of the desire for distinc- 
 tion, that it is " a feeling which, if we consider its universal- 
 ity and its constancy, that it afEects all men and at all times, 
 that it comes with us from the cradle and never leaves us un- 
 til we go into the grave, may be pronounced to be the most 
 powerful of human passions." He thus subordinates wealth 
 to the desire for distinction. He adds, as if conscious of 
 an undue limitation of the motive force behind human be- 
 ings, under all conditions and in all states of progress: 
 " the nature and urgency of each individual's wants are as 
 various as the differences in individual character. Some 
 may wish for power, others for distinction, and others for 
 leisure ; some require bodily and others mental amusement ; 
 some are anxious to produce important advantage to the 
 public ; and there are few, perhaps there are none, who, if 
 it could be done by a wish, would not benefit their acquaint- 
 ances and friends. Money seems to be the only object for 
 which the desire is universal, and it is so because money is 
 abstract wealth. Its possessor may satisfy at wiU his am- 
 bition, or vanity, or indolence, his public spirit or his pri- 
 vate benevolence." 
 
 He might have added, further, that "the desire of 
 wealth" itself is only a generalized form of an indefinite 
 number of more particidar impulses. He continues : 
 
 "The proposition in question" (the desire to obtain 
 additional wealth with as little sacrifice as possible), " though 
 we are not aware that any one has thought that it required 
 to be formally stated, is assumed in almost every process 
 of economical reasoning. It is the corner-stone of the doc- 
 trine of wages and profits, and, generally speaking, of 
 exchange. In short, it is in political economy what grav- 
 itation is in physics, or the dictum de omni et nulla in 
 logic : the ultimate fact, beyond which reasoning can not 
 
40 PEOTECTION VS. FREE TRADE. 
 
 go, and of whicli almost every other proposition is merely 
 an illustration." 
 
 Bastiat surrounds the subject with Ms usual rhetorical 
 success : " Political economy regards man only in one as- 
 pect, and our first care must be to study man in that point 
 of view. This is the reason why we can not avoid going 
 back to the primary phenomena of human sensibibihty and 
 activity. . . . The general idea of sensibihty springs from 
 other ideas which are more precise : pain, want, desire, 
 taste, appetite, on one side, and, on the other, pleasure, en- 
 joyment, competence. Between these, his extremes, a mid- 
 dle term is interposed, and from the general idea of activity 
 spring the more precise ideas of pain, effort, fatigue, labor, 
 production. In analyzing sensibility and activity we en- 
 counter a word common to both — the word pain. . . . This 
 advises us that here below we have only a choice of evils. 
 In the aggregate of all these phenomena, aU is personal, as 
 well the sensation which precedes the effort as the satisfac- 
 tion which follows it. 
 
 " We can not doubt, then, that personal interest is the 
 great main-spring of human nature." 
 
 Mr. Henry Sidgwick, speaking of the fundamental as- 
 sumption which economists make, says : " The first and 
 most fundamental is that all persons engaged in industry 
 will, in selling or lending goods, or contracting to render 
 services, endeavor, cceteris paribus, to get as much wealth 
 as they can in return for the commodity they offer. This 
 is often more briefly expressed by saying that pohtical 
 economy assumes the universality and unlimitedness of the 
 desire for wealth. Against this assumption it has been 
 urged that men do not, for the most part, desire wealth in 
 general, but this or that particular kind of wealth ; in fact, 
 that 'the desire of wealth is an abstraction compounding a 
 great variety of different and heterogeneous motives which 
 
THE MOTIVE TO PEODUCTIOK 41 
 
 have been mistaken for a single homogeneous force.', . . 
 At the same time, it is equally true that there are other 
 things obtainable by labor besides wealth, which mankind 
 generally if not universally desire, such as power and repu- 
 tation ; and it is further undeniable that men are largely 
 induced to render services of various kinds by family affec- 
 tion, friendship, compassion, national and local patriotism, 
 and other kinds of esprit de corps and other motives. The 
 amount of unpaid work that is done from such motives, in 
 modem civilized society, forms a substantial part of the 
 whole, and political economists are perhaps fairly charge- 
 able with an omission in making no express reference to 
 such work — with the exception of the mutual services ren- 
 dered by husbands and wives and by parents and children." 
 Prof. Perry does make "express reference" to these 
 motives and the exclianges growing out of them. He 
 sweeps them completely out of the field of the science of 
 political economy. Having found the word " wealth " a 
 veritable "slough of despond," he dropped it as both a 
 useless and a confusing term. After the maimer of Bas- 
 tiat, he deals with our "desires" and their "satisfactions." 
 " The desires of men are not only various in kind and in- 
 definite in degree, but also tend to increase in variety and 
 extent by the progress of knowledge and freedom. To the 
 gratification of almost all these desires, however, there are 
 obstacles interposed, some of which are physical and some 
 moral; and these obstacles are so great, in aU directions, 
 that the powers of the individual man are utterly incompe- 
 tent to surmount them. They mock at his weakness and 
 throw him back upon his destitution. Without association 
 with his fellow-men there is no creature so helpless, so un- 
 able to reach his true end, as is man ; and therefore it is 
 that the impulse to association is one of the strongest im- 
 pulses of our nature. Men come together, as it were, hy 
 
42 PKOTECTION VS. FREE TRADE. 
 
 instinct, into society. And associating together in a socie- 
 ty, it is very soon discovered, not only that there are vari- 
 ous desires in the different members of the community 
 which are now readily met by co-operation and mutual 
 exchange, but also that there are very difEerent powers in 
 the different individuals in relation to those obstacles which 
 are to be surmounted." As a circumlocution for getting, 
 not " wealth " but " satisfaction of desires," at the least 
 possible sacrifice, he quotes approvingly, as the unyielding 
 iron law of our nature, under which we are impelled, the 
 words of President John Bascom: "Between one dollar 
 and two dollars a man has no choice, he must take the 
 greater ; between one day and two days of labor, he must 
 take the less ; between the present and the future, he must 
 take the present. This is not a sphere of caprice, nor 
 scarcely even of liberty ; the actions themselves present no 
 alternative." 
 
 Henry C. Carey seized upon the " impulse to associa- 
 tion " (which Prof. Perry denominates as one of the strong- 
 est impulses of our nature) as the strongest impulse of our 
 nature. The whole scheme of human "exchanges" grew 
 out of this " association," and not the " association " out of 
 the " exchanges." Mr. Carey undertook to show that the 
 United States, one of the " societies," one of the " commu- 
 nities " to which Prof. Perry alludes — the nation^was suf- 
 ficiently large in the extent of its temtory, the variety of 
 its soil and its climate, in the mountains to be pierced, in 
 its rivers to be bridged, in its forests to be leveled, in its 
 fields to be made fertile, in its mines to be opened, in its 
 useful products to come into existence, in the scope of the 
 moral and intellectual talents of its population, in its ca- 
 pacity for the minutest division of employments and its 
 skill in mechanism, and in the vast variety of the desires, 
 satisfactions, and aspirations which its people could and 
 
THE MOTIVE TO PRODUCTION. 43 
 
 must provide for and gratify, to afford the very highest 
 illustration of the power of association, and in its highest 
 degree, which had been yet seen on the earth.' They sep- 
 arated on a question of fact, and not on a dogma of science. 
 At the point where they separated, neither of them was 
 within the limits of the field of political economy, as de- 
 fined by the English school and Prof. Perry. 
 
 Prof. Francis A. Walker, after quoting John Stuart 
 Mill's description of his " abstract " man, goes on and adds : 
 
 " We have here all the elements of the economic man. 
 He is taken as a being perfectly capable of jiidging of the 
 comparative efficacy of means to the end of wealth. That 
 is, he will never fail, wherever he may be, or wherever he 
 naay live, whether capitahst or laborer, rich or poor, 
 taught or untaught, to know exactly what course will 
 secure his highest economic interest, that is, bring him the 
 largest amount of wealth." 
 
 Of course, we know that this is not true, at all, to the 
 facts, in the conduct of the actual man. 
 
 " Moreover, that end of wealth he never fails to desire 
 with a steady, uniform, constant passion. Of every other 
 human passion or motive, political economy makes entire 
 abstraction ; love of country, love of honor, love of friends, 
 love of learning, love of art, pity, honor, shame, religion, 
 charity, will never, so far as political economy cares to take 
 account, withstand in the slightest degree, or for the shortest 
 time, the effort of the economic man to amass wealth. . . . 
 There are, however, two human passions and motives, of 
 which political economy takes account as perpetually an- 
 tagonizing principles to the desire of wealth, namely, aver- 
 sion to labor and desire of the present enjoyment of costly 
 indulgence ; that is, indolence and gluttony." 
 
 ' The census of 1880 has given the most complete proof of causes and 
 their effects. 
 
44 PROTECTION VS. FREE TRADE. 
 
 Frederic Bastiat starts out with the proposition, "The 
 subject of political economy is man." He at once proceeds 
 to divest his science of human interest by eviscerating it 
 after this fashion : " But it does not embrace the whole 
 range of human affairs. The science of morals has appro- 
 priated all that comes within the attractive regions of sym- 
 pathy—the religious sentiments, paternal and maternal 
 kindness, filial piety, love, friendship, patriotism, charity, 
 pohteness. To political economy is only left the cold 
 domain of personal interest. Dispute its right to exist as 
 a science, but don't force it to counterfeit what it is not 
 and can not be." 
 
 Of this economic man Mr. Carey had said : " Modern 
 pohtical economy has made for itself a being which it' 
 denominated man, from whose composition it excluded all 
 those parts of the ordinary man that are common to him 
 and the angels, retaining carefully all those common to 
 him and the beast of the forest. It has been forced to ex- 
 clude from its definition of wealth all that pertains to the 
 feehngs, the affections, and the intellect. It sees nothing 
 but material things." 
 
 His own definition of " wealth " is " the power to com- 
 mand the ever-gratuitous force of nature." 
 
 This definition is the logical basis of the system of 
 Carey, Bastiat, and Perry — though the latter sometimes 
 calls wealth property. It contains the germs of a really 
 philosophical system of social science, but out of this sys- 
 tem Prof. Perry has cut a thin shce — so much only as is 
 included in the operation of " a sale " or " an exchange." 
 In the last edition of his " Political Economy," issued in 
 1 883, he seems to have reached what he deems solid ground. 
 He seems to have found satisfactory answers to the ques- 
 tions which he says he has been for thirty years, " and in- 
 creasingly as the years went by," asking himself : " What 
 
THE MOTIVE TO PRODUCTION. 45 
 
 is political economy about ? Within what precise field do 
 its inquiries lie ? Is it possible clearly and simply to cir- 
 cimascribe that field ? " 
 
 In the process of answering these questions he has 
 developed his view of political economy, as he defines it, 
 with great clearness and simplicity. Adopting the lan- 
 guage he applies to one of his predecessors, he shows him- 
 self to be "original, over-confident, sometimes careless, 
 controversial, exasperating, almost belligerent, and always 
 indefatigable." While we can not help admiring his dia- 
 lectic push, there are many wide and impassable gaps be- 
 tween his premises and his conclusions. We shall therefore 
 look carefully and somewhat in detail into them. We have 
 already given his definition. Political economy is the 
 science of sales or exchanges. " Anything whatsoever that 
 is salable or can be made so comes within its view, and 
 scientifically it cares nothing whatever for anything else. 
 . . . Before anything is sold, or is being ready to sell, it 
 cares not what other science employs itself on that thing ; 
 after the thing is sold, economy loses its interest in it, and 
 other sciences may take it up, if they choose. Salableness 
 is the one quality that constitutes the class of things with 
 which the science is conversant, and it claims complete 
 jurisdiction over all tilings just as far forth as they have 
 this quality, and no further." 
 
 The exclusions thus made at the threshold he thinks 
 entitle him to make this criticism : " They show that the 
 leaders of the second school" (including, as he classifies 
 them, Adam Smith, Eicardo, Senior, and Mill) " are incon- 
 sistent with themselves in their general conceptions of the 
 subject-matter of the science. They begin nowhere. They 
 have no steady class of facts to deal with. They have, in- 
 deed, demonstrated many important truths, and they have 
 done excellent practical service for mankind, but in the 
 
46- PROTECTION VS. TREE TRADE. 
 
 entirety of their scientific work we can take but little satis- 
 faction. It is on account of this comparative failure in 
 their scientific outset that the second school have declined 
 in influence and are now likely to be superseded." "With 
 his own " outset " he thinks a true and lasting science may 
 be obtained, " provided only the next right steps be taken" 
 also. "Where do the school of Prof. Perry begin ? What is 
 their "scientific outset"? What is their "next step"? 
 They simply throw overboard, at once, the word " wealth " 
 as incapable of any definition for scientific use. The mo- 
 tive power of the elder economists — the desire of every 
 man to obtain additional wealth with as little sacrifice as 
 possible — is moved further back, is sunk in the wider gen- 
 eralization, "satisfaction of desires." We shall see what 
 success attends this legitimate change of base. It renders 
 the science more human, but introduces many elements 
 besides economic gains. 
 
 Again : " There is one word that marks and circum- 
 scribes the field of ethics, and that is ought. There is one 
 word that marks and circumscribes the field of economics, 
 and that word is value. ... It favors honesty and morahty, 
 indeed, because they facilitate exchanges. It puts the seal 
 of the market upon all of the virtues. It condemns slavery, 
 not so much because it is ethically wrong, as because it is 
 economically ruinous. . . . But let us here add once for 
 all the grand truth that political economy does not cover 
 the entire relations ietween employer and employed, and 
 between buyers and sellers generally; it covers perfectly 
 their economical relations, the relations between buyers 
 and sellers as such ; but morality and rehgion have addi- 
 tional, but not incompatible, words to utter when this 
 science becomes silent ; mutual forbearance and concession, 
 mutual affection and helpfulness, are duties enforced by 
 higher considerations than those of gain." True, indeed. 
 
THE MOTIVE TO PEODUCTION. 47 
 
 the whole scheme of societarj co-operation is based on 
 these additional sanctions. 
 
 The professor is here at least good enough to give us a 
 human reality and not a mere economist's " abstraction " to 
 deal with ; and yet he falls into the old rut of dealing with 
 only a part of the real man. "We had good reason to hope 
 that this many-sided man, with desires and passions and 
 moral nature and a will, would, under their operation, put 
 himself, as a whole, into an "exchange" as he would into any 
 other act, that he would not operate in sections, so to speak, 
 but would and must act as an integer. But we are first to 
 find a part of him in the old, hopeless, impracticable pursuit 
 of "wealth" : "In thus circumscribing the field of politi- 
 cal economy and yielding ground that has been sometimes 
 claimed as falling within it, we all the more assert complete , 
 jurisdiction over the territory as thus defined. No other 
 possible science can have anything to do with the gaining 
 of property by means of exchanging. Theft is out of the 
 question here ; so are gifts. It makes no difference what a 
 man's motives may be in buying and selling ; it makes no 
 difference what his ultimate purposes may be as to the re- 
 sults of his buying and selling, ths iuying and selling must 
 proceed in accordance with the principles of this science." 
 
 Inasmuch as " buying and selHng " had been going on 
 for some centuries before this science had been worked 
 out, one might have thought that, logically and chronologi- 
 cally, it might more properly have been asserted that the 
 " principles of the science " must proceed in accordance 
 with the " buying and selling." 
 
 Again : " Saint and sinner must plow with the same 
 heifer. The laws of value are absolutely universal. One 
 man may get rich for the sake of making a display, and an- 
 other man may get rich for the sake of doing good ; but the 
 getting rich is one and the same process forever. As John 
 
48 PROTECTION VS. FREE TRADE. 
 
 Bascom well says : ' Whichever one of a thousand motives 
 engages man in the pursuit of wealth, once in that pursuit, 
 these all conform to one method and acknowledge one law.' 
 . . . Whatever others have done, therefore, or may here- 
 after undertake to do, we propose solely to investigate the 
 motives and the conditions that govern men in their ex- 
 changes." But it had just been said by our author that 
 " it makes no difference what a man's motives may be ia 
 buying and selling." 
 
 We are remanded, then, to " the conditions " that gov- 
 ern men in their exchanges. We prefer to restore the dis- 
 carded terms. The motive is to procure the " satisfaction" 
 of some " desire." The condition under which we prefer 
 to make it is, at the least " expenditure of effort," or, to 
 take the terminology of the second school, " to get addi- 
 tional ' wealth ' at the least possible sacrifice." Translated 
 into the language of commercial life it means, " Buy in the 
 cheapest and sell in the dearest market " ; and in case he 
 repeats the operation often enough a man will be getting 
 rich. But what determines the vital fact, which is the 
 cheapest and which the dearest market ? Is there any mar- 
 ket in the world, except the home market, in which fifty 
 million Americans can supply their wants iy exchange ? 
 Can the " satisfaction " of all their " desires " be had in 
 any condition except that of direct production ? For an- 
 swers to these questions we shall ransack treatises and es- 
 says in vain. The answers lie, obviously, in facts which 
 are open before us on the pages of American experience.. 
 
 Now, as political economy is a moral science and has 
 its base in our mental characteristics, we would seem to 
 have exhausted it in ascertaining the attitude of the miud 
 as influenced by various passions, desires, hopes, fears, and 
 the like. The " satisfaction " of " desires," " the desire 
 for additional wealth," is the mental affection. Of that 
 
THE MOTIVE TO PEODUOTION. 49 
 
 we are conscious ; that we know by the act of introspection. 
 The " least effort," the least possible sacrifice, is an exter- 
 nal fact. The measure of resistance to us can only be 
 reached by experience. Which is the " cheapest market " 
 and which is the " dearest market " is an external fact to 
 be ascertained by experiment, as is the fact whether we can 
 supply our wants by a resort to that market. The data for 
 the settlement of these questions are not to be found in the 
 science ; they depend on external material conditions which 
 change every day and every hour. We can follow the 
 changes which take place in our own desires and the things 
 which satisfy those desires, but the means of satisfaction lie 
 outside of ourselves, and which is the " cheapest " and which 
 is the " dearest " means of reaching them can only be found 
 out upon actual trial. Political economy tells us how we 
 shall act when we come to it, but does not know how we 
 shall come to it. It is silent before the great class of satis- 
 factions which we seek, when strength of desire is overruhng 
 all considerations of cost in exchange value ; and when even 
 the world's market does not need and will not take enough 
 of the commodities we oflEer in exchange to enable us to iuy 
 what we need. It happens that, in the divine ordering of 
 the nations, the people of America can maJce what they need. 
 But we return to the platform which Prof. Perry has 
 laid down for himself to stand on : " When a man shaves 
 his own face, our science has nothing to say ; when the 
 barber shaves him for a fee, it has a good deal to say. . . . 
 Efforts of all kinds that find their purpose and end in an 
 exchange are production ; efforts put forth for amusement, 
 for self-improvement, for benevolence, for personal or 
 family gratification, are not production. Political economy 
 has to do with processes only as those are related to sales, 
 and it makes no difference what kind of processes they are 
 if they have that design and issue." 
 
50 PEOTECTION VS. FREE TKACE. 
 
 The system, then, takes cognizance only of individuals 
 and of no motive except personal gain. It excludes all 
 altruistic motives, and at a blow cuts out parental, patri- 
 otic, charitable, and religious considerations. It can have 
 nothing to do with art, or beauty, or ethics. It dissects 
 out of the corpus of human life a body of experience 
 which, out of relation to its antecedents and consequents, 
 is without significance. It takes out of the conduct of sen- 
 tient beings, having thoughts, affections, and will, exactly 
 the portion in which, by and in itself, resides neither intel- 
 lectual nor moral value. We have found a definite field of 
 the science, but is it worth exploring ? "We have found 
 the limits of political economy, but we can not stir hand 
 or foot without passing them. In this little kingdom, we 
 no sooner leave " John o'Groat's " than we are at " Land's 
 End." We chafe against the bounds set to our iaquiries, 
 but in vain. There is no germinal idea in the premises 
 we have imposed on ourselves. While they are true in 
 point of fact, they are bald, barren truisms. The premises 
 are true, the reasoning correct, but the conclusions are use- 
 less. They are unrelated propositions, have no fructifying 
 contents, and are incapable by themselves of leading to one 
 additional inference. In the words of Prof. Leslie, a pro- 
 testing disciple of the English school : " Yet without the 
 family, and the altruistic as well as the self-regarding mo- 
 tives that maintain it " (and the same may be said of the 
 sentiment of nationality), "the work of the world would 
 come to almost a stand-still ; saving for the remote future, 
 would cease ; there would be no durable wealth ; men 
 would not seek to leave anything behind them ; the houses 
 of the wealthiest, if there were any houses at all, would be 
 built to last only for their own time." 
 
 In this scheme, the climax of life only comes at the 
 point where something is being made ready to sell — the 
 
THE MOTIVE TO PRODUCTION. 51 
 
 crisis of affairs lies in the " swap." The laboring-man who 
 has, with some success, fought his way through the dread- 
 ful competition of life, sits down with his wife to brood 
 over the destiny of the son who has been born to them. 
 In a large way, he has learned to appreciate the value of 
 some equipment besides a pair of hands with which the lad 
 may be made ready for his battle. Out of the depths of 
 their parental affections they conclude upon a hberal edu- 
 cation for the son, and prepare for the strain upon their 
 narrow resources. Among institutions of eqnal faciUties 
 to give educational "services" for this laboring-man's 
 money, it is quite certain he will choose the one requiring 
 "the least sacrifice" on his part; he "will buy in the 
 cheapest market." But what is essentially the human ele- 
 ment in this determination of parental instincts? The 
 overmastering love of that father and mother I or the mere 
 higgling for the price of tuition? 
 
 A distinguished commander of the Army of the Poto- 
 mac dies in the city of his birth. Prompted by an effect^ 
 ive union of many honorable motives — love of country, 
 pride, comradeship, homage to patriotic worth — the sur- 
 vivors of the marches and battles and victories in which 
 they participated under the dead general feel impelled to 
 erect a commemorative statue, and as an appeal to coming 
 generations. It may or may not be that in the selection of 
 artists and contractors to execute their purpose they will 
 consult "market values.". Does the center of forces im- 
 pelling them lie in the earnest and honorable impulses of 
 humanity which suggested the enterprise, or in the contract 
 stipulating for the " purchase-money " ? 
 
 The officials of a great and populous town resolve upon 
 appropriate public buildings. Instead of stopping at mere 
 " utility," they resolve upon a structure which shall be a 
 worthy symbol of the enterprise and civilization of their 
 
52 PROTECTION VS. FREE TRADE. 
 
 day. They summon architects who may be able to embody 
 their purposes in symmetrical and artistic lines. Their 
 applauding fellow-citizens co-operate, and at last emerge the 
 " plans and specifications " of the structure which for them 
 and their children promises to be aa educational force— 
 " a thing of beauty and a joy forever." In the final analy- 
 sis, would the social value of the transaction reside in 
 the refined and trained impulses of the community, or 
 would its whole virtue be concentrated in the advertise- 
 ment for " sealed proposals," and the whole enterprise cul- 
 minate in the " awarding of the contract " to " the lowest 
 bidder"? 
 
 Within the memory of most of us, three millions of 
 men in the United States, with no reference to exchange 
 values, took their lives in their hands to wage a war with 
 their own countrymen and kinsmen. They went to render 
 " services " in sufferings, pain, and death under a " strip of 
 painted canvas " — the flag of their country, and the symbol 
 of its majesty. These services they conceived involved 
 whatever of chivalry, patriotism, and morality was appro- 
 priate to them as citizens of a definite nation. The ex- 
 changeable value of their services was thirteen dollars per 
 month. To obtain these thirteen dollars they left com- 
 fortable homes, lucrative employments, and enterprises of 
 great worth and moment. Will it be said that this was not 
 an economic act, and that political economy takes it out of 
 its purview ? But a science which deals with these men 
 must deal with them as wholes. If economic considera- 
 tions disappear so readily out of their conduct, it is hardly 
 worth while to attempt any scientific theory of the mere, 
 phalanges which political economy amputates from such a 
 body — to deal with the body without the soul. The eco- 
 nomic harmonies can only be evolved when we ennoble seH- 
 iaterest as the spring of industry with the tones of domes- 
 
THE MOTIVE TO PRODUCTION. 53 
 
 tic affection, public spirit, the sense of duty, inherent 
 energy, intellectual tastes, and moral judgments. 
 
 A science which sees nothing of economic forces in this 
 series of human, every-day transactions, can possess little 
 human interest. To abstract out of these only the idea of 
 " exchangeable value " is to have a residuum unworthy of 
 further analysis. So much for the motives to production 
 which the science leaves out of the pale of economics. 
 
 " But," say the professors, " after the thing is sold, 
 economy loses its interest in it." As, in its language, 
 " consumption is purchase," the science takes no account of 
 Consumption — ^takes no account of what becomes of things 
 — what disposition is made of " wealth " after it is pur- 
 chased. 
 
 "We know not of any laws of the consumption of 
 wealth, as the subject of a distinct science ; they can be no 
 other than the laws of human enjoyment." But does not 
 the science obviously rest on the laws of human enjoyment ? 
 Mr. Mill had said that there was no " science of con- 
 sumption " ; Prof. Perry, considers consumption as not 
 being in view of political economy. Prof. Jevons, on the 
 contrary, says, "The whole theory of economy depends 
 upon a correct theory of consumption." In this propo- 
 sition Mr. Sidgwick mainly concurs. "Writers who hold to 
 the stricter definition of political economy as the science of 
 exchanges have a very good reason for excluding the topic 
 of consumption. Consumption, when dealt with as a social 
 fact, leads out of economy to sociology ; and if any word 
 can enrage a modem free-trade economist it is the word 
 "social science," or "sociology," unless we except the 
 word "national" in this connection. Pohtical economists 
 have a right to define their science, but then they are 
 bound by their own definitions, and other people have a 
 right to insist on their staying within the limits they them- 
 
5i PROTECTION VS. FEEE TRADE. 
 
 selves have prescribed. Prof. Walker lias presented some 
 urgent reasons why economy dees not stop at production 
 and the " exchange." 
 
 " It is in the use made of the existing body of wealth 
 that the wealth of the next generation is determined. It 
 matters far less for the future greatness of a nation what 
 is the sum of its wealth to-day, whether large or small, 
 than what are the habits of its people in the daily con- 
 sumption of that wealth ; to what use those means are de- 
 voted,, whether to ends which inspire social ambition, which 
 restrict population within limits consistent with a high 
 jper capita production, which increase the efficiency of the 
 laborer and supply instrumentalities for rendering his 
 labor still more productive, or to ends which allow the in- 
 crease of population in the degree that of itself involves 
 poverty, squalor, and disease, which debauch the laborer 
 morally and physically, striking at both his power and 
 disposition to work hard and continuously, and which 
 waste, in idle or vicious indulgences, the wealth which 
 should go to increase capital. 
 
 " To trace to their effects upon production the forces 
 which are set in motion by the uses made of wealth, to 
 show how certain forms of consumption clear the mind, 
 strengthen the hand, and elevate the aims of the individual 
 economic agent while promoting that social order and 
 mutual confidence which are favorable conditions for the 
 complete development and harmonious action of the in- 
 dustrial system ; how other forms of consumption debase 
 and debauch man as an economic agent and introduce dis- 
 order and waste — here is the opportunity for some great 
 moral philosopher to write the most important chapter ' in 
 political economy, now, alas ! almost a blank." 
 
 ' Thi3 chapter has been written ; it is " The Economics of Consumption," 
 by Robert Scott Moffat. 
 
THE MOTIVE TO PRODUCTION. 55 
 
 Mr. Walter Bagehot has something to say on this head : 
 " Just as this science takes an abstract and one-sided view 
 ■ of man, who is one of its subjects, so it also takes an ab- 
 stract and one-sided view of wealth, which is its other sub- 
 ject. "Wealth is infinitely various ; as the wants of human 
 nature are almost innumerable, so the kinds of wealth are 
 various. Why man wants so many things is a great sub- 
 ject, fit for inquiry ; which of them it would be wise for 
 men to want more of, and which of them it would be wise 
 to want less of — are also great subjects equally fit. But 
 with these subjects political economy does not deal at all. 
 It leaves the first to the metaphysician, who has to explain, 
 if he can, the origin and order of human wants, and the 
 second to the morahst, who is to decide, to the best of his 
 ability, which of these tastes are to be encouraged and 
 when, which to be discouraged and when. The only pecul- 
 iarity of wealth with which the economist is concerned is 
 its differentia specijiea — that which makes it wealth. . . . 
 He regards a pot of beer and a picture, a book of religion 
 and a pack of cards, as all equally wealth, and therefore, 
 for his purpose, equally worthy of regard." 
 
 Prof. Leslie restores the relation of the parts of the 
 science in correspondence with the relation between actual 
 human attributes : " The love of gin is the love of one 
 kind of wealth which too often competes in the mind of a 
 poor man with the love of a decent dwelling. . . . One 
 of the most important economic inquiries relates to the 
 changes which take place in the direction of the chief 
 wants of mankind and the species of wealth which they 
 call into existence. The main object of industry and ac- 
 cumulation on the part of the French nation is landed 
 property ; the chief impulse deterniining the national econ- 
 omy is the desire of it ; in England the desire is absent 
 among the nation at large, and the one which totally takes 
 
56 PBOTECTION VS. FREE TRADE. 
 
 its place with no small number of EngHslimen is the love 
 of beer. Happily in England there is a still more general 
 object of desire in the house, and the house owes its struct- 
 ure, perhaps its very existence, to the institution of the 
 family. . . . The formula of demand and supply is still 
 supposed by some economists ■ to explain everything fuUy, 
 but both demand and supply have in every case a long 
 history. ... It is a misrepresentation of the Mercantile 
 System [to say] that its adherents considered nothing but 
 money as wealth ; still they did attach undue importance 
 to it, and the consequence of the excessive estimation in 
 which they held it demonstrates the absurdity of basing 
 either the economic prosperity of nations or economic sci- 
 ence on the abstraction, which is the corner-stone of both, 
 in the deductive system." 
 
 And then Mr. Bagehot comes in again and brings us 
 around to the point where we started : "Of course this 
 reasoning implies that the boundaries of this sort of pohti- 
 cal economy are arbitrary, and might be fixed here or there. 
 But this is abeady done when it is said that political econo- 
 my is an abstract science. All abstractions are arbitrary ; 
 they are more or less convenient fictions made by the mind 
 for its own purposes. An abstract idea means a concrete 
 fact or set of facts minus something thrown away. The 
 fact or set of facts were made by nature, but how much 
 you will throw aside of these and how much you will keep 
 for consideration you settle for yourself. There may be 
 any number of political economies, according as the subject 
 is divided off in one way or another." 
 
 Imagine this mode of dealing with such sciences as 
 geometry, chemistry, botany, dynamics, physiology, statics, 
 etc. ! Under this conception of a science its professors 
 and teachers have about the advantages which the invent- 
 ors of chess-problems have in chess. The chances are 
 
THE MOTIVE TO PKODUCTIOK 5Y 
 
 that they will, in the main, be able to solve their own 
 problems. 
 
 But in actual life we do not invent our own problems. 
 They are made ready to hand for us, and Nature makes no 
 " allowances " for our mistakes in their solution. Take up 
 any systematic treatise on economy, and the " suppositions " 
 are made upon which the author is to proceed. The " an- 
 swer " wiU correspond to no actual state of facts, and will 
 be reached after divers "but according to the original 
 hypothesis," "allowances for disturbing causes," "other 
 things being equal," and the like dove-tailed devices. It 
 is true that " the desire of wealth " and " the aversion to 
 labor" are facts of man's nature. While they are antago- 
 nistic principles, they are not ultimate principles, and they 
 are mingled, in operation, with a multitude of other prin- 
 ciples. Any inference drawn from the operation of these 
 two alone must, as Prof. Caimes says, " land us in conclu- 
 sions which have no resemblance to existing realities." Or, 
 recurring to Mr. Euskin's case of the professor of gymnas- 
 tics who began his instructions by the assumption that the 
 " human body was constituted of muscles and flesh, with- 
 out any bones." Having, " under this supposition," ascer- 
 tained what exercises his " abstract " man could perform, 
 he introduced the skeleton as a " disturbing element." His 
 theory was open to the single objection, at least, that it was 
 "deficient in application." This is not one whit more gro- 
 tesque and unphilosophical than the economists' treatment 
 of man in dealing with his moral structure. They have 
 endeavored to give to their " rude generalizations " the au- 
 thority of " laws." 
 
 What are the conditions which direct the- energies and 
 determine the actual occupations and pursuits of mankind 
 in different ages and countries ? This is the main prob- 
 lem. In its application to the United States, it is the prob- 
 
63 PROTECTION VS. FEEE TRADE. 
 
 lem for the. American statesman and the American voter 
 to determine. How far, then, does the science of political 
 economy enable lis to separate the elements of the. case ? 
 What binding force can its scientists assert over the con- 
 duct of the governing power ? 
 
 No perfection of mechanism in a steam-engine would 
 be of any avail unless connected with a nest of boilers. 
 Provision must be made for " letting on " steam, as well as 
 a pipe prepared for the " exhaust." The machine can not 
 run by force of steam confined in a closed circuit. So with 
 the energies of a people. The greater their productive 
 force, the more " efforts " they make, the greater wiU be 
 their creation of commodities — the "satisfactions" they 
 will experience. " Satisfactions " are the motive to " ef- 
 fort." " Desires " of one kind and another are the motive 
 force, and grow out of the inherited traits and historical 
 traditions of the particular people. They may have the in- 
 herent power and the physical conditions to satisfy them 
 by a direct effort of production, at a less cost of labor and 
 sacrifice -than by the-indirect process of exchange. Some 
 of their desires they can manifestly procure at less cost of 
 labor and sacrifice by exchanges abroad. So many as we 
 can thus procure it is our manifest advantage to procure ; 
 if we can procure all of them in this way, very good. It 
 may very well be that some exchanges abroad are advan- 
 tageous, and so it is ; it may very well be that all ex- 
 changes made abroad would not be advantageous, but, on 
 the contrary, would be impossible — and so it is. It de- 
 pends upon the particular facts of our situation as a nation : 
 how much we want ; how many and of what kind are our 
 desires ; what we have got to pay for them with, and how 
 much foreigners want of what we have to offer in exchange. 
 It is manifest that it is a special problem, depending on a 
 special collocation of facts. So far as our surplus will be 
 
THE MOTIVE TO PRODUCTION. 59 
 
 salable in foreign markets, we are interested in the foreign 
 trade ; so far as our wants are too numerous to be supplied 
 by the things we can buy and pay for abroad, we must 
 supply them at home. Provision must then be made for 
 supplying them by home industry. The only condition by 
 which the last alternative can be realized is by saving more 
 or less of the domestic market by restrictions on the import 
 of foreign commodities. One form of this is a protective 
 tarifiE. 
 
 It is our interest to buy all we can with our cotton, to- 
 bacco, wheat, and beef. The limit of our purchases toH 
 depend, not on our desires, or our capacity to produce at 
 home, but on the demand for these products in the foreign 
 markets. No treatise on poKtical economy will ever tell 
 us how much and what to desire ; how much agricultural 
 produce we can raise, or how much the foreign markets 
 will take, or its price. In the main, we must depend on 
 our own direct efforts, as the facts of our history have 
 demonstrated. 
 
CHAPTER lY. 
 
 WHO IS BOUND BY THE SCIENCE — SOME DISTINCTIVE OETTI- 
 
 CISM. 
 
 After this disagreement upon fundamental proposi- 
 tions, we sliall not, perhaps, be amazed at the general dis- 
 claimer on the part of its most eminent teachers of the 
 jurisdiction of the science over the legislator. 
 
 This disclaimer on the part of some of its professors 
 grows out of their consciousness of its unreal and artificial 
 nature ; on the part of others of its professors, it does not 
 grow out of modesty. 
 
 Mr. McCuUoch says that " the economist who confines 
 himself to mere enunciation of general principles or ab- 
 stract truths may as well address himself to the pump at 
 Oldgate as to the British pubKc. If he wish to be any- 
 thing better than a declaimer, or to confer any real advan- 
 tage upon any class of his countrymen, he must leave gen- 
 eral reasoning and show the extent of the injury entailed 
 upon the community by the neglect of his principles." 
 
 Nassau William Senior, the eminent Professor of Pohti- 
 cal Economy in the University of Oxford, who wrote since 
 the date of the free-trade agitation in England, with great 
 emphasis indicates the agencies of government to which 
 the conclusions of so hj'pothetical a science do not extend. 
 He says : 
 
 " These inquiries involve, as their general premises, the 
 consideration of the whole theory of morals, of govern- 
 
WHO IS BOUND BY THE SCIENCE. Ql 
 
 ment, and of civil and criminal legislation ; and, for their 
 particular premises, a knowledge of all the facts which 
 affect the social condition of every community whose con- 
 duct the economist proposes to influence. . . . The ques- 
 tions to what extent and under what circumstances the 
 possession of wealth is on the whole beneficial or injurious 
 to its possessor, or to the society of which he is a member ? 
 "What distribution of wealth is most desirable in each dif- 
 ferent state of society ? And what are the means by which 
 any given country can facilitate such a distribution ? All 
 these are questions of great iaterest and diflSculty, but no 
 more form part of the science of pohtical economy, in the 
 sense in which we use that term, than navigation forms 
 part of the science of astronomy. The principles supplied 
 by political economy are indeed necessary elements in their 
 solution, but they are not the only or even the most im- 
 portant elements. The writer who pursues such investiga- 
 tion is in fact engaged on the great science of legislation ; 
 a science which requires a knowledge of the general princi- 
 ples supplied by political economy, but differs from it essen- 
 tially in its subject, its premises, and its conclusions. The 
 subject of legislation is not wealth, but human welfare. Its 
 premises are drawn from an infinite variety of phenomena 
 supported by evidence of every degree of strength, and 
 authorizing conclusions deserving every degree of assent, 
 from perfect confidence to bare suspicion. And its ex- 
 pounder is enabled, and even required, not merely to state 
 general facts, but to urge the adoption or rejection of act- 
 ual measures or trains of action. . . . His (the economist's) 
 premises consist of a very few general propositions, the re- 
 sult of observation or consciousness, and scarcely requiring 
 proof, or even formal statements which almost every man, 
 as soon as he hears them, admits as familiar to his thoughts, 
 or at least as included in his previous knowledge ; and his 
 
62 PKOTECTION VS. FREE TRADE. 
 
 inferences are nearly as general and, if lie has reasoned cor- 
 rectly, as certain as his premises. . . . The confounding the 
 science of political economy with the sciences and arts to 
 which it is subsei-vient, has reduced economists sometimes 
 to undertake inquiries too vague to lead to any practical 
 results, and sometimes to pursue the legitimate objects of 
 the science by means unfit for their attainment. To their 
 extended view of the objects of political economy is to be 
 attributed the undue importance which many economists 
 have ascribed to the collection of facts, and their neglect of 
 the far more important process of reasoning accurately from 
 the facts before them ; . . . but the facts in which the gen- 
 eral principles of the science rest, may be stated in a very 
 few sentences, and, indeed, in a very few words. But that 
 the reasoning from these facts, the drawing from them 
 correct conclusions, is a matter of great difficulty, may be 
 inferred from the imperfect state in which the science is 
 now found after it has been so long and so intently 
 studied." 
 
 Many millions of men in America have been waiting 
 years for a demonstration " in a very few sentences, and, 
 indeed, in a very few words," or, indeed, in many words and 
 many sentences, of the economic propriety of the applica- 
 tion of principles of free trade to these United States. 
 
 "We 'proceed to state at considerable length the attitude 
 of John Stuart MiU toward the practical value of the 
 conclusions of the science : 
 
 " In the definition which we have attempted to frame 
 of the science of political economy, we have characterized 
 it as essentially aii abstract science, and its method as the 
 method a priori. Such undoubtedly is its character as it 
 has been understood and taught by its most distinguished 
 teachers. It reasons, and, as we contend, must necessarily 
 reason, from assumptions, not from facts. It is built upon 
 
WnO IS BOUND BY THE SCIENCE. (53 
 
 hypotlieses strictly analogous to those which, under the 
 name of definitions, are the foundation of the other ab- 
 stract sciences. Geometry presupposes an arbitrary defi- 
 nition of a line — ' that which has length but not breadth.' 
 Just in the same manner does political economy presuppose 
 an arbitrary definition of man, as a being who invariably 
 does that by which he may obtain the greatest amount of 
 the necessaries, conveniences, and luxuries of life with the 
 smallest quantity of labor and physical self-denial with 
 which they can be obtained in the existing state of knowl- 
 edge." Lamenting the want of opportunity to make, in the 
 science, an experimentum crucis, he proceeds : 
 
 "How, for example, can we obtain a crucial experi- 
 ment on the effect of a restrictive commercial poKcy upon 
 national wealth ? We must find two nations alike in every 
 other respect, or, at least, possessed in a degree exactly 
 equal of everything which conduces to national opulence, 
 and adopting exactly the same policy in all their other 
 affairs, but differing in this only, that one of them adopts 
 a system of commercial restriction and the other adopts 
 free trade. Doubtless this would be the most conclusive 
 evidence of all if we could get it. But let any one con- 
 sider how infinitely numerous and various are the circum- 
 stances which either directly or indirectly do or may 
 influence the amount of the national wealth, and then ask 
 himself what are the probabilities that in the longest revolu- 
 tion of ages two nations wiU be found which agree and can 
 be shown to agree in all those circumstances, except one." 
 
 Noting, then, that the actual facts do not happen as the 
 theory provided that they should, he goes on : 
 
 " The discrepancy between our anticipations and the 
 actual fact is often the only circumstance which would 
 have drawn our attention to some important disturbing 
 cause which we had overlooked." 
 
64 PROTECTION VS. FKEE TRADE. 
 
 It is to be noted that this confessional passage contains 
 the germ of all the reasons for the discrepancies in the 
 science. 
 
 " Ifay, it often discloses to us errors in thought, still 
 more serious than the omission of what can with any pro- 
 priety be termed a disturbing cause. It often reveals to 
 us that the basis itself of the whole argument is insufficient ; 
 that the data from which we had reasoned comprise only 
 a part, and not always the most important part, of the 
 circumstances by which the result is determined. Such 
 oversights are committed by very good reasoners, and even 
 by a still rarer class, that of good observers." 
 
 How, then, are we to still this " jumping Jack " ? 
 "Why, go back to the a posteriori road, which we should 
 have taken in the first place, and sift and scrutinize the 
 facts : 
 
 " "Without this, he " (the Professor of Political Econ- 
 omy) " may be an excellent professor of abstract science ; 
 for a person may be of great use who points out correctly 
 what eifects will follow from certain combinations of pos- 
 sible circumstances in whatever tract of the extensive 
 region of hypothetical cases those combinations may be 
 found. He stands in the same relation to the legislator as 
 the mere geographer to the practical navigator ; tellmg Mm 
 the latitude and longitude of all sorts of places, hut not 
 how to find whereabout he himself is sailing. If, how- 
 ever, he does no more than this, he must rest contented to 
 take no share in practical politics, to have no opinion, or to 
 hold it with extreme modesty, on the application which 
 should be made of his doctrines to existing circumstances. 
 
 " JS'o one who attempts to lay down propositions for the 
 guidance of mankind, however perfect his scientific acquire- 
 ments, can dispense with a practical knowledge of the actual 
 modes in which the affairs of the world are carried on, ajid 
 
WHO IS BOUND BY THE SCIENCE. 65 
 
 an extensive personal experience of the actual ideas, feel- 
 ings, and intellectual and moral tendencies of his own 
 country and of his own age. The true practical statesman 
 is he who combines this experience with a profound knowl- 
 edge of abstract political philosophy. Either acquirement 
 without the other, leaves him lame and impotent, if he is 
 sensible of the deficiency / renders him obstinate and pre- 
 sumptuous, if, as is mo7'e probable, he is unconscious of it." 
 
 Contrasting the student in his closet and the man of 
 business in the outward world : 
 
 " The one despises all comprehensive views, the other 
 neglects details. . The one draws his notion of the universe 
 from the few objects with which his course of life has 
 happened to render him familiar; the other, having got 
 demonstration on his side, and forgetting that it is only a 
 demonstration nisi — a proof at all times liable to be set 
 aside by the addition of a single new fact to the hypothe- 
 sis — denies, instead of examining and sifting, the allega- 
 tions which are opposed to him." 
 
 The reconciliation vsdll be found in him " who can make 
 the anticipations of the philosopher guide the observation 
 of the practical man, and the specific experience of the 
 practical man warn the philosopher when something is to 
 be added to his theory." 
 
 In the preface to his treatise, " Theory of Political 
 Economy," Prof. Jevons takes occasion to say : " The con- - 
 elusion to which I am ever more clearly coming is, that the 
 only hope of attaining a true system of economics is to fling 
 aside, once and forever, the mazy and preposterous assump- 
 tion of the Kicardian school. Our Enghsh economists have 
 been living in a fool's paradise. . . . When at length a 
 true system of economies comes to be established, it will be 
 seen that that able but wrong-headed man, David Kicardo, 
 shunted the car of economic science on to a wrong line, a 
 
66 PKOTECTION VS. FREE TKADE. 
 
 line, however, on which it was further urged to confusion 
 by his equally able and wrong-headed admirer, John Stuart 
 Mill. ... It will be a work of labor to pick up the frag- 
 ments of a shattered science and to start anew ; but it is a 
 work from which they must not shrink who wish to see 
 any advance of economic science." And his last word is 
 a protest against " the noxious influence of authority." 
 
 " There is ever a tendency of the most hurtful Idnd to 
 allow opinions to crystaUize into creed. Especially does 
 this tendency manifest itself when some eminent author, 
 enjoying power of clear and comprehensive exposition, be- 
 comes recognized as an authority. His works may, perhaps, 
 be the best which are extant upon the subject in question ; 
 they may contain more truth with less error than we can 
 meet elsewhere. But to err is human, and the best works 
 should ever be open to criticism. If, instead of welcoming 
 inquiry and criticism, the admirers of a great author accept 
 his writings as authoritative, both in their excellences and 
 in their defects, the most serious injury is done to truth. 
 In matters of philosophy and science, authority has ever 
 been the great opponent of truth. A despotic calm is usu- 
 ally the triumph of error. In the republic of the sciences, 
 sedition and even anarchy are beneficial in the long run to 
 the greatest happiness of the greatest number. . . . Show 
 us the undoubted, infallible criterion of absolute truth, and 
 we will hold it as a sacred, inviolable thing ; but, in the 
 absence of that infallible criterion, we have all an equal 
 right to grope about in our search of it, and nobody and 
 no school nor clique must be allowed to set up a standard 
 of orthodoxy which shall bar the freedom of scientific 
 inquiry. 
 
 " I have added these words because I think there is 
 some fear of the too great influence of authoritative writers 
 ia political economy. I protest against deference for any 
 
"WHO IS BOUND BY THE SCIENCE. (57 
 
 man, whether John Stuart Mill or Adam Smith or Aris- 
 totle, being allowed to check inquiry. Our science has 
 become too much a stagnant one, in which opinions rather 
 than experience and reason are appealed to." 
 
 This is the testimony of Englishmen who have actually 
 built up what is called and taught as the official science of 
 political economy. Manyinore names, expounders of the 
 same system, might be added, with the same general reser- 
 vation which they make to the practical untrustworthiness 
 of the science. They have had misgiving as to its value in 
 affairs, but, in a half-hearted, reluctant sort of way, have 
 seemed to think that, while it was an artifice, it might still 
 pass as a scientific one. 
 
 The name of Mr. "Walter Bagehot will be recognized as 
 that of a man eminent among recent students in various 
 departments of economy and politics, as well as a man of 
 great business aptitude. He is also well known as an ortho- 
 dox believer in the Manchester school of poKtical economy 
 — at least as applied to England at this date. He quarrels 
 with its " postulates " and its " preliminaries,", but on the 
 whole he holds its conclusions applicable, iut apjpl'icahle 
 only to the existing cominercial facts in England. After 
 commenting on the circumstances, often noted, that those 
 who are conversant with its abstractions are usually with- 
 out true contact with its facts, and that those who are in 
 contact with its facts have usually httle sympathy with 
 and little cognizance of its abstractions, he gives the rea- 
 sons why he thinks the science is held in so low an esti- 
 mate : 
 
 "Dealing with matters of business, it assumes that 
 man is actuated only by motives of business. It assumes 
 that every man who makes anything makes it for money, 
 that he always makes that which brings him in most at 
 least cost, and that he will make it in the way that will 
 
68 PROTECTION VS. FREE TRADE. 
 
 produce most and spend least. It assumes that any man 
 who buys, buys with his whole heart, and that he who sells, 
 sells with his whole heart, each wanting to gain aU possible 
 advantage. Of course, we know that this is not so, that 
 men are not hke this, but we assume it for simphcity's sake 
 as an hypothesis." He further comments : 
 
 " Eirst. It has often been put forward, not as a theory 
 of the principal causes affecting wealth in certaia societies, 
 but as a theory of the priucipal, sometimes even of aU, the 
 causes affecting wealth in every society. And this has oc- 
 casioned many and strong doubts about it. . . . No doubt 
 almost every one — every one of importance — has admitted 
 that there is a friction in society which counteracts the 
 effect of the causes treated of. . . . Now, / hold these 
 causes are only the main ones in a single hind of society — 
 a society of grown-up, comj)etitive commerce, such as we 
 have in England i that it is only in such societies that the 
 other and counteracting forces can be set together under 
 the minor head of 'friction,' but that ia other societies 
 there are other causes, in some cases one, and in some an- 
 other are the most effective ones, and that the greatest con- 
 fusion arises if you try to fit on uneconomical societies the 
 theories only true of, and only proved as to, economical 
 ones. We need not that the authority of pohtical economy 
 should be impugned, but that it should be minimized. 
 
 " Secondly. I think, in consequence of this defect of 
 conception, economists have been far more abstract, and in 
 consequence much more dry, than they need have been. If 
 they had distinctly set before themselves that they were 
 dealing only in causes of wealth in a single set of societies, 
 they might have effectively pointed their doctrines with 
 facts from their societies. But so long as the vision of 
 uni/oersal theory vaguely floated before them, they shrank 
 from particular illustrations. 
 
WHO IS BOUND BY THE SCIENCE. (39 
 
 " Thirdly. It is also in consequence, as I imagine, of 
 this defective conception of the science, that English econ- 
 omists have not been as fertile as they should have been in 
 verifying it. They have been too content to remain in the 
 'abstract' and to shrink from concrete notions, because 
 they could not but feel that many of the most obvious phe- 
 nomena of many nations did not look much like tKeir ah- 
 stractions. ... If you try to give a universal reason why 
 nations are poor and why nations are rich, you will not be 
 able to arrive at any useful answer. Some wiU be poor 
 because they are cooped up on poor soil ; some because 
 they have a religion which disinclines them to make money ; 
 some because they have ancient rules, which helped them 
 to make a beginning but now retard them ; some because 
 they have never been able to make a beginning, and many 
 other causes might be given. The pi'ohlejn taken up in 
 that form is indeterminate ; why nations are rich or poor 
 depends on the whole intrinsic nature and all the outward 
 circumstances of such nations. There is no simpler for- 
 mula to be discovered, and a science which attempted to 
 find one would of necessity have to deal with the whole of 
 physical science ; it would be an account of all men and 
 all the earth." 
 
 This is something in "quite a different vein from the 
 high-sounding proclamation of Mr. Lowe (Lord Sherbrooke) 
 so often quoted as ending all controversy : " Political 
 economy belongs to no nation ; it is of no country. It is 
 the science of the rules for the production, the accumula- 
 tion, the distribution, and the consumption of wealth. It 
 will assert itself whether you wish it or not. It is founded 
 on the attributes of the human mind, and no power can 
 change it." 
 
 It would be unjust and absurd to pretend that in all 
 these years the economists have not accumulated a large 
 
70 PSOTECTION VS. FKEE TRADE. 
 
 body of related facts, gathered from observations on the 
 conduct of man in the social state. The physical order in 
 which we produce exchangeable commodities, and the men- 
 tal habits which so "order, have been thrown into a certain 
 kind of correlation. Certain tendencies have been detected, 
 telling the average of human conduct. It is these tenden- 
 cies which have been mistaken for " laws." The generah- 
 zations about the difEerent forces which stimulate us to ac- 
 tion have in certain aspects more or less truth in them. 
 But the fundamental and fatal error in the English school 
 has been to identify a single one of these forces as the re- 
 sultant of them all. However useful and meritoijous they 
 may have been as first attempts to untangle the causes and 
 sequence of economic phenomena, they have been barren 
 of results, and still remain useless terms in "the solemn 
 humbug of economic orthodoxy." 
 
 As might have been expected after a curious inquiry 
 through many decades into the reasons for the totally in- 
 consequential character of the science, the reasons them- 
 selves, at last, have passed into the alembic of final anal- 
 ysis. It is not too much to say that, at last, the science has 
 been subjected to a destructive criticism. This it has re- 
 ceived at the hands of Prof. Cliff e Leslie, Mr. Frederic 
 Harrison, and Dr. John K. Ingram — not that these learned 
 and skillful essayists have been the only ones to put the 
 dissecting-knife into the body of this science, but it is to 
 them we shall principally refer in reviewing this autopsy. 
 
 M. Comte, in the course of the long and friendly corre- 
 spondence which took place between John Stuart Mill and 
 himself, first pointed out the utterly inadequate nature of 
 the groundwork of the science of political economy as 
 such, and as Mr. Mill had expounded it. The latter was 
 compelled to summon all the resources of his dialectic 
 skill in reply. 
 
WnO IS BOUND BY THE SCIKNCE. Yl 
 
 In M. Comte's conception of the whole line of inquiries 
 involved in the investigation of the social organism, society 
 should be contemplated in the totality of its elements. No 
 investigation should or could be undertaken into any por- 
 tion of these elements, except in constant connection with 
 parallel investigations, carried on contemporaneously into 
 all coexisting portions of the complex whole. The facts 
 of wealth are, in the form in which they are presented to 
 us, so inextricably woven with facts of a different order — 
 with facts of the intellectual, moral, and political order — 
 that the determination of them is possible only when con- 
 sidered in connection with associated facts. All isolated 
 study is doomed to failure, and consequently a science of 
 pohtical economy is impossible. The method of dealing 
 with the organic world and the inorganic world must be 
 different — the former must be dealt with as an ensemble. 
 
 On this Frederic flarrison makes this comment : ^^ Every 
 organism is an ensemhle. The organic means something 
 which has a complex function over and above any of its 
 elements. The study of the organism is the study of this 
 function. Chemists may and must study the gastric juices, 
 but generations of chemists could not explain the physio- 
 logical process of digestion. Just so, a pure economist, 
 studying the facts of wealth apart, gives only a sort of 
 chemical explanation of the social nutrition. The really 
 organic theory of this function of the social system he is 
 precluded from touching by the very terms of his science. 
 . . . There is no such thing in nature as a purely indus- 
 trial human being, nor, indeed, any purely industrial act. 
 The laws of the industrial nature are incapable of being 
 stated, except with or in terms of the character as a wholeP 
 
 Stephen Colwell, the writer of the preliminary essay in 
 the American edition of Frederick List's " System of Na- 
 tional Economy," makes his criticism to the like effect : 
 
72 PROTECTION VS. FREE TRADE. 
 
 " The absurdity of divorcing wealth from its indispens- 
 able union with human interests, and from its dependence 
 upon considerations and motives higher than wealth, is in 
 no respect more striking than in the attempt to separate 
 it from national polity and politics. Whether this serious 
 mistake arose from the exigencies of logic or from neglect- 
 ing the distinction between science and art, it was equally 
 fatal to clear perceptions. The assumption that the whole 
 range of interests and subjects usually embraced in politi- 
 cal economy, that is, all that relates to industry, to trade, 
 and social amelioration, should be withdrawn from the do- 
 main of politics and from the discretion of legislators and 
 statesmen, and be committed to political economists, was 
 80 bold, if not so presunaptuous, that it could not have 
 been made except by men laboring under some great de- 
 lusion ; and when we reflect upon the unsettled state of 
 the science, by the Hght of which political economists in 
 then* closets were to decide upon the well-being of millions 
 upon millions of people, and upon the fate of nations, we 
 can not but wonder that such an idea was ever entertained 
 for a moment by men of intelligence. . . . There is a cer- 
 tain order of minds which, abhorring details and feeling 
 unable to grapple with them, gladly take refuge in rules 
 and generalities, and to this must belong those who imagine 
 that the science of political economy is entitled to take 
 precedence of political wisdom and experience." 
 
 In a somewhat similar strain, Prof. Eickards, who suc- 
 ceeded Prof. Senior at the University of Oxford, discloses 
 the opinion of a man who knew something of human 
 affairs : " It is well known that Napoleon Bonaparte, who 
 possessed one of the most powerful understandings of 
 modem times, entertained a rooted antipathy to pohtical 
 economy. It was a saying of his that ' if an empire were 
 made of adamant, the economists could grind it to powder.' 
 
WHO IS BOUND BY THE SCIENCE. 73 
 
 He looked upon the lucubrations of economical writers as 
 he looked upon one of the ready-made political constitu- 
 tions of Abbe Sieyes — as an artificial creation of specula- 
 tive brains. He regarded them as a collection of technical 
 rules and dogmas, devised by ingenious theorists and men 
 of the closet, setting up to instruct the rulers of mankind 
 how to conduct the commercial and financial affairs of their 
 governments." 
 
 In 1876 appeared Prof. Cliffe Leslie's interesting article 
 " On the Philosophical Method of Political Economy." It 
 came from a source which compelled respect and atten- 
 tion. We can, at most, indicate the points at which he 
 aimed his criticism. His aim was to show that the a priori 
 and deductive method failed to throw any light on the 
 nature of wealth, its differences in kinds and constituents, 
 and that the causes which affected the economic condition 
 of different nations at different times must le sought in 
 the entire state of society ; that the amount of wealth de- 
 pended on the conditions determining the direction and 
 means of supply ; that the distribution of wealth was not 
 the result of exchange alone, but also of moral, religious, 
 and family ideas and sentiments, and the whole history of 
 a nation : 
 
 " The bane of political economy has been the haste of 
 its students to possess themselves of a complete and sym- 
 metrical system solving all problems before it with mathe- 
 matical certainty and exactness. The very attempt shows 
 an entire misconception of the nature of those problems, 
 and of the means available for their solution. . . . The 
 truth is, that the whole economy of every nation, as re- 
 gards the occupation and pursuits of both sexes, the nature, 
 amount, distribution, and consumption of wealth, is the re- 
 sult of a long evolution, in which there is both continuity 
 and change, and of which the economic side is only a 
 
74 PROTECTION VS. FREE TRADE. 
 
 particular aspect or phase. And the laws of which it is 
 the result must be soiight in history, and the general laws 
 of society and social evolution. 
 
 " The succession of the hunting, pastoral, agricultural, 
 and commercial states is commonly referred to as an eco- 
 nomic development, but it is, in fact, a social evolution, the 
 eeonomioal side of which is indissolubly connected with 
 its moral, intellectual, and poUtieal sides} To each of 
 these successive states there is a corresponding moral and 
 intellectual condition, with a corresponding polity. With 
 the changes from savage hunting-life to that of the nomad 
 tribe, thence to -fixed habitations and the cultivation of the 
 soil, and thence to the rise of trade and towns, there are 
 changes in feelings, desires, morals, thought, and knowl- 
 edge, in domestic and civil relations, and in institutions 
 
 ' Prof. Sumner, while disclaiming the old abstract premises, in terms, still 
 travels in the old abandoned a priori rut : " We have to understand that an 
 eco7iomic investigation may be carried on just as independently as a chemical 
 or physical or biolo^cal investigation. The economist does not need to be 
 on the lookout all the time to correct his results by reference to some outside 
 considerations, or to the dogmas of jejune and rickety systems of meta- 
 physical speculation. On the contrary, he should regard the introduction of 
 extraneous elements, no matter under what high-sounding names of moral, 
 political, and social, as sure signs of impending confusion and fallacy." 
 (" Princeton Review," March, 1882.) 
 
 We leave the Professor to settle that with Leslie, Ingram, and Bagehot. 
 His form of economic investigation might be adequate to effect the imme- 
 diate exchange of commodities existing on a given day. It woald not ac- 
 count for the existing stock, nor could it furnish a clew to the nature or 
 amount for to-morrow's supply, nor where to-morrow's supply was to come 
 from. A given kind of moral, political, and social man must, at last, be a 
 definite kind of economic man, in correspondence with himself. His wants 
 are peculiar to his traits, and the preparation to meet them must grow out of 
 his environment. You can not expect a human being, with one sort of apti- 
 tudes, to go off and live in a part of the world and in pursuits which do not 
 engage those aptitudes. He will make the arena of his struggle such that it 
 will engage his best efforts, physical, mental, and moral. Then the eocnomie 
 results will take care of themselves. 
 
WHO IS BOUND BY THE SCIENCE. 75 
 
 and customs, which show themselves in the economic struct- 
 ure of the community, and the nature, amount, and dis- 
 tribution of wealth. . . . A priori political economy has 
 sought to deduce the laws which govern the directions of 
 human energies, the division of employment, the modes of 
 production, and the nature, amount, and distribution of 
 wealth, from an assumption respectrug the cause of con- 
 duct prompted by individual interest ; but the conclusion 
 which the study of society makes every day more irresisti- 
 ble is that the germ from which the existing economy of 
 every nation has been evolved is not the individual, still 
 less the mere personification of an abstraction, but the primi- 
 tive community — a community one in Mood, property, 
 thought, moral responsibility, and manner of life, and that 
 individual interest itself, and the desi/res, aims, and pur- 
 suits of every man and woman in the nation, have been 
 molded by and received their direction and form from 
 the history of that community. 
 
 " Both the desires of which wealth of different Mnds 
 is the object, and those which compete with them, are in 
 every nation the results of its historical career and state of 
 civilization. What are called economic forces are not only 
 connected, but identical with forces which are also m,oral 
 and intellectual. . . . Recent apologists for the a priori 
 and abstract method of economic reasoning feel themselves 
 constrained to confine its application to the most advanced 
 stage of commercial society ; they seem even prepared to 
 concede its inapplicabilHy to every country save England, 
 and to confine it to the latest development of English econ- 
 omy. . . . They thus abandon at once the claim formerly 
 made on behalf of political economy to the character of a 
 universal science founded on invariable laws of nature. . . . 
 It is, in fact, as inapplicable to the most advanced stage of 
 commerce as to that primitive state of nature from which 
 
76 PEOTECTION VS. FREE TRADE. 
 
 Eicardo deduced it, by a process wMch deserves a high 
 place in the history of fallacies ; and which was not pres- 
 ent to Mill's mind when arguing that ' no political econo- 
 mists pretend that the laws of wages, profits, values, prices, 
 and the like, set down in their treatises, would be strictly 
 true, or many of them true at all, in the savage state. . . . 
 Every successive stage — the hunting, the pastoral, the agri- 
 cultural, the commercial stages, for example — ^has an econ- 
 omy which is indissolubly connected with the physical, 
 intellectual, moral, and civil development; and the eco- 
 nomical development of English society at this day is the 
 outcome of the entire movement which has evolved the 
 political constitution, the structure of the family, the forms 
 of religion, the learned professions, the arts and sciences, 
 the state of agriculture, manufactures, and commerce. The 
 philosophical method of political economy must be one 
 which expounds this evolution." Such an exposition would 
 be the science of sociology. 
 
 Then came the address of John K. Ingram, LL. D., on 
 " The Present Position and Prospects of Political Econ- 
 omy," read in 1878 before the British Association for the 
 Advancement of Science. It assailed with great skill and 
 vigor the current political economy on four grounds : 
 
 First. The attempt to isolate the study of the facts of 
 wealth from that of other social phenomena. 
 
 Secondly. The metaphysical or viciously abstract char- 
 acter of many of the conceptions of the economists. 
 
 Thirdly. The abusive preponderance of deduction in 
 their processes of research ; and 
 
 Fourthly. The too abstract way in which their conclu- 
 sions are conceived and enunciated. 
 
 It will be impossible to indicate the acute and searching 
 analysis to which he subjected orthodox economy by any de- 
 tached extracts. His general conclusions were that the re- 
 
WHO IS BOUND BY THE SCIENCE. 77 
 
 suits arrived at by the dominant school need not be thrown 
 away as valueless ; that they shed important partial lights on 
 hiunan affairs, and afforded salutary partial guidance to pub- 
 He action. The task incumbent on sociologists in. general 
 was to incorporate the truths already elicited into a more 
 satisfactory body of doctrine, in which they will be brought 
 into relation with the general theory of social existence, 
 and to utilize such materials as their predecessors had accu- , 
 mulated. The current economy was provisional and pre- 
 paratory, and was not entitled to acceptance if regarded as 
 a final systematization of the industrial laws of society : " In 
 human affairs it is in general impossible to solve special 
 questions correctly without just conceptions of ensem- 
 hle — all particular problems of government, of education, 
 of social action, whatever kind connect themselves with 
 the largest ideas concerning the fundamental constitu- 
 tion of society, its spontaneous tendencies, and its moral 
 ideals." 
 
 This address was received with suUen respect. Mr. 
 Lowe came to the rescue. He was more especially con- 
 cerned to defend Adam Smith, who, he conceived, had 
 been attacked in the strictures on the deductionists. But, 
 in truth, Adam Smith had never pretended to deduce the 
 science from the assumption of the " desire of wealth and 
 aversion to labor." This had been the attempt of his suc- 
 cessors. Because the "Wealth of Nations" was mainly 
 the result of observation and classification and not of de- 
 ductive reasoning, it had been indicated by Dr. Ingram as 
 a proper basis for a real science of sociology. 
 
 "A science is not created by adducing arguments to 
 show that it is possible," says Mr. Lowe. " The ' "Wealth 
 of Nations ' does not owe its success to .a peculiar method 
 of treatment, but to the peculiar nature of the subject of 
 which it treats. . . . All that political economy pretends 
 
Y8 PKOTECTION Va. FREE TRADE. 
 
 to is that when and in proportion as these things " (labor, 
 wages, rent, commerce, taxes) "come into existence, the 
 principles which apply to them come into existence also, 
 and that, though as society becomes more complicated these 
 things become complicated too, they do not change their 
 nature, but retain the qualities with which they were origi- 
 nally imbued. There is a point where the doctrine of 
 laisses faire ceases to be applicable, as in the case of chil- 
 dren. ... As to the future of political economy, I do not 
 profess to be very sanguine that many new or striking dis- 
 coveries are in reserve for it. If I have stated correctly 
 the cause of its success, any attempt to widen its field will 
 only deprive it of that basis of certainty which it derives 
 from the practical uniformity of the feelings and wishes 
 of mankind in regard to wealth. The future is all for 
 the sociologists, and I am inclined to think it will remain 
 so." 
 
 After speaking of its brilliant and lasting successes as 
 compared with other moral sciences, he adds: "To the 
 labors of these men, whose methods are so erroneous, we 
 owe, among other things, the repeal of hundreds of galling 
 taxes on almost all the comforts of life and on the food of 
 the people — the repeal of the corn and navigation laws, 
 etc. Those are some of the achievements of the past, and 
 I may be excused if I prefer them to the shadowy and un- 
 realized anticipations of the future." To which Prof. 
 Leslie replies that these achievements which Mr. Lowe ar- 
 rogates were not triumphs " for his own economic method. 
 Those he refers to were achieved by the opposite method 
 of reasoning from observation and experience." ' 
 
 ' " But it is obTious that, while free trade was being introduced into Eng- 
 land, many other causes of prosperity were also coming into action — the 
 progress of invention, the construction of railways, the profuse consumption 
 of coal, the extension of the colonies, etc., etc. Although, then, the beneficent 
 
WHO IS BOUND BY THE SCIENCE. 79 
 
 So, tten, the free-trade legislation of England has not 
 grown out of the body of doctrine which constitutes the 
 modern English political economy. Prof. Leshe says dis- 
 tinctly that the most arduous problem respecting the sepa- 
 ration of occupations, namely, " What are the causes gov- 
 erning its actual course, determining the direction of the 
 national energies, the employments of difEerent classes and 
 of both sexes in difEerent ages and countries ? " has never 
 even occurred to the deductive school. 
 
 The economic structure of any given community, the 
 direction taken by national energies, the occupation of the 
 difEerent classes and of both sexes, the constituents and the 
 partition of movable and immovable property, the pro- 
 gressive, stationary, or retrogressive condition in respect 
 to productive power, and the quantity and qnahty of the 
 necessaries, comforts, and luxuries of life, are insoluble by 
 the science of political economy. Why? Because these 
 are " the results not of special economic forces, but of all 
 the social forces, poHtical, moral, and intellectual as well 
 as industrial." The inquiry, then, is a national one. We 
 have escaped the weak, purposeless conclusions suggested 
 by cosmopolitanism. Every distinct community, society, 
 state, nation, every political entity, is to be discussed 
 as an i/ndustrial entity. It is impossible to conceive of 
 the terms of an industrial economic problem except under 
 the condition of nationality. The only ■M?^^ue?■s(^?, princi- 
 ples of political economy assumed or established are as 
 applicable to men in a savage state as in the civilized state. 
 "Exchange" goes on in one exactly as the other — the 
 eternal laws of value are as true in Patagonia as in France. 
 
 results of free trade are great and unquestionable, they could hardly be found 
 to exist a posteriori." — Jetons, " Theory of Political Economy," p. 20. Prof. 
 JoTons omits the great factor — the discovery of gold in Australia and Cali- 
 fornia. 
 
80 PEOTECTION VS. FREE TEADE. 
 
 The difference between civilization and barbarism lies in 
 the desires to be satisfied, the things to be exchanged, and 
 their mode of production. These depend on moral, intel- 
 lectual, and political considerations as well as economic. 
 If, then, they are to be ascertained, we must part com- 
 pletely with the old friends with whom we started out, 
 from Prof. Senior to Prof. Perry. "The science of ex- 
 changes" is of no help to us in the business of nation- 
 maMng. 
 
 Mr. Mill has pointed out the fallacy of treating political 
 economy as the " science of exchanges." That definition 
 " omits the most important condition determining the pro- 
 duction of wealth, and OTerlooks the truth that human in- 
 stitutions, laws of property and succession, are necessarily 
 chief agencies in determining its distribution." If the 
 science of English political economy has not served to 
 guide English statesmen in the affairs of England, it will 
 not serve to guide American statesmen in the conduct of 
 the affairs of America. If English statesmen at last fall 
 back on " observation and experience " of English facts in 
 the conduct of English industry and commerce, American 
 statesmen will be compelled to fall back on " observation 
 and experience " iu the conduct of American industry and 
 commerce. As between free trade and protection, we have 
 not seen as yet in this hasty review what course " observa^ 
 tion and experience" will commend to us. There is an 
 end, however, to the conceit and dogmatism which asserts 
 that there are any irrepealable " laws " of political economy 
 of universal application, a science which " belongs to' no 
 nation, is of no country," which must dominate our pol- 
 icy. We certainly have reached no standing-room in any 
 science which reverses the judgment which Prof. Senior 
 puts in the mouth of Napoleon, viz. : " That he believed 
 free trade between independent states to be like gambling 
 
WHO IS BOUND BY THE SCIEXCE. gl 
 
 between individuals, and therefore mischievous to the one 
 or the other ; mischievous, in fact, to the one which, in 
 the ultimate settling of accounts, had to pay a balance in 
 money." 
 
 We have found nothing which justly enables Prof. 
 Perry to say of Daniel "Webster and his speech on the 
 tariff in 1828, " He then and afterward brought forward 
 in defense of protection arguments which political economy 
 pronounces unsound " : 
 
 Nothing which convicts M. Thiers of false economics 
 when, in answer to the question, " Why do you give these 
 boimties to the French sugar-refineries ? " ho replied, " I 
 wish the tall chimneys to smoke " : 
 
 ]!>fothing to disarm the criticism which Mr. Bagehot 
 says foreigners make to English free-traders : " Your Eng- 
 lish traders are strong and rich ; of course, you wish to un- 
 dersell om- traders, who are weak and poor. You have in- 
 vented this political economy to enrich yourselves and ruin 
 us ; we will see that you do not do so." 
 
 We have seen that not a few of the " respectable pro- 
 fessors of the dismal science " have been reached by the 
 words of Mr. Carlyle : 
 
 " For many sins I have read much in those inimitable 
 volumes of yours ; really, I should think, some barrowsf ul 
 in my time — and, in these last forty years of theory and 
 practice, have pretty well seized what of Divine message 
 you were sent with to me. Perhaps as small a message, 
 give me leave to say, as ever there was such a noise made 
 about before. Professors of the dismal science, I perceive 
 that the length of your tether is now pretty well run, and 
 that I must request you to talk a little lower in future." 
 
 The topics and the order of their exposition adopted by 
 Adam Smith have been followed by almost all subsequent 
 writers. This wUl appear from the table of contents of 
 
82 PROTECTION rS. FEEE TRADE. 
 
 the " "Wealth of Nations," ^ which is given below. It will 
 be noted that the larger portion of his work is merely de- 
 scriptive of what happens in the course of the business of 
 men, and the order in which external things follow each 
 
 ■ "The Wealth of Nations"— its table of contents: 
 BOOK I. 
 
 Of the causes of improvement in the productive power of labor, and of the 
 order according to which its produce is naturally distributed among the dif- 
 ferent ranks of the people. 
 Chapter 1. Of the division of labor. 
 
 (As domestic exchanges grow out of the divisions of callings, trades, and 
 pursuits in which men render services to each other, so foreign commerce has 
 its origin in a kind of " international division of labor " in which the differ- 
 ent nations enter upon the production of the commodities in which respect- 
 ively they have some absolute or relative advantage over each other.) 
 Chap. 2. Of the principles which give occasion to the division of labor. 
 Chap. 3. Division of labor is limited by the extent of the market. 
 Chap. i. Of the origin and use of money. 
 Chap. 5. Of the real and nominal price of commodities, or of their price in 
 
 labor and their price in money. 
 Chap. 6. Of the component parts of the price of commodities. 
 Chap. 1. Of the natural price and market price of commodities. 
 Chap. 8. Of the wages of labor. 
 Chap. 9. Of the profits of stock. (Capital.) 
 Chap. 10. Of wages and profits in the different employments of labor and 
 
 stock. 
 Chap. 11. Of rent of laud. 
 
 BOOK II. 
 
 Chap. 1. Of the divisions of stock. 
 
 Chap. 2. Of money as a particular branch of the general stock of the so- 
 ciety. 
 
 Chap. S. Of the accumulation of capital — or of productive and unproductive 
 labor. 
 
 Chap. 4. Of stock lent at interest. 
 
 Chap. 6. Of the different employments of capital. 
 , BOOK III. 
 
 Chap. 1. Natural progress of opulence. 
 
 (This chapter is mainly historical. It goes into the discouragement of 
 
 agriculture in Europe after the fall of the Roman Empire, the rise and prog- 
 
WHO IS BOUND BT THE SCIENCE. 83 
 
 other. It is tile work of a close observer, simply. When 
 he comes to his deductions from human nature — from the 
 universality and intensity of the desire of each man to 
 promote his pecuniary interest — he assumes as a fact what 
 even his most loyal disciples have advanced as an assump- 
 tion only. As has been observed, " Adam Smith thought 
 there was a Scotchman inside every man." 
 
 Adam Smith attacked with great vigor the colonial 
 system of England. While England, for commercial and 
 dynastic reasons, was girdhng the earth with her colonial 
 
 res3 of cities and towns, and how the commerce of the towns contributed to 
 the improTemeut of the country.) 
 
 BOOK IV. 
 Chap. 1. Of the principles of the commercial or mercantile system. 
 
 (The doctrine erroneously imputed to the mercantile school was that 
 money was the only wealth, and that the gains in foreign trade would be 
 largest when the exports most greatly exceeded the imports, and when the 
 balance was paid in money, gold or silver. Adam Smith's doctrine was that 
 wealth consisted chiefly in consumable commodities — in what he calls " the 
 necessaries, conveniences, and luxuries of life," and not solely in money. 
 Trade-balances may turn against a nation — to pay them, the nation may be 
 drained of specie ; whether it leads to panic, commercial crises, destruction 
 of industries, depends on a variety of co-operating causes. This is not the 
 place to go into this. In the long run the imports and exports of a nation 
 must balance. " Products in market are a market for products " ; " if a na- 
 tion will not buy of foreigners, it can not sell to them " ; " if foreigners will 
 not buy of a nation, it can not buy of them," are different sides of the same 
 truth. The mercantile system is no part of the protectionist's political 
 economy.) 
 Chap. 2. Of restraints upon the importation from foreign countries of such 
 
 goods as can be produced at home. 
 Chap. 3. Of the extraordinary restraints upon the importation of goods of 
 almost all kinds from those countries with which the balance is sup- 
 posed to be disadvantageous. 
 Chap. 4. Of drawbacks. 
 Chap. 6. Of bounties. 
 Chap. 6. Of treaties of commerce. 
 Chap. 7. Of colonies. 
 
84: PROTECTION VS. FREE TRADE. 
 
 acquisitions, Adam Smith contemplated them from the 
 commercial stand-point alone. He saw that the effort was 
 to provide in the colonies a market for English manufact- 
 ures, and to make them sources of supply for food and raw 
 materials. This was the purpose of the restrictions which 
 England everywhere imposed upon the colonies, by positive 
 enactments and trade regulations. These American colo- 
 nies were brought under the dominion of British rule not 
 less by parliamentary bonds growing out of political sover- 
 eignty than by economic fetters growing out of mercantile 
 theories. The Navigation Act, passed in the middle of the 
 seventeenth century, made everything on the land and on 
 the seas tributary to the mother-countiy. At last the 
 American Kevolution came — evolved from a long series of 
 events possessing political and economic significance. 
 
 " American independence, like the great rivers of the 
 country, had many sources, but the head-spring, which 
 colored all the stream, was the Navigation Act," says Mr. 
 Bancroft. It is doubtful if Adam Smith had any concep- 
 tion of the marvelous development of industries which this 
 century has seen, and that England would become the 
 workshop of the world, and must be compelled to buy the 
 food which supported her workmen. Indeed, he says : " to 
 expect that the freedom of trade should ever be entirely 
 restored in Great Britain is as absurd as to expect that an 
 . Oceania or Utopia should now be established ia it," and 
 that " her master manufacturers would set themselves against 
 every law which is likely to increase the number of rivals 
 in the home market." But the day came when, under the 
 facts of English history, it seemed sound political economy 
 for those same English " master manufacturers " to invoke 
 the help of free-trade pohcies. It turned out, apparently, 
 that the theory of free trade, put into practice, would work 
 for British manufacturers and America^ food-raisers, in the 
 
WHO IS BOUND BY THE SCIENCE. §5 
 
 nineteenth century, tlie precise economical results which 
 commercial restrictions and parliamentary statutes had 
 worked between the mother-country and her colonies in 
 the eighteenth century. The political rebellion and the 
 economic rebellion had their origin at the same source. 
 The remedy for the double mischief lies, still, in poHtical 
 and industrial freedom — unrestricted freedom of produc- 
 tion between the fifty millions of the citizens of the new 
 republic. Free trade with England restricts our industries 
 and our domestic exchanges in the same sense, and with the 
 same economic results, which the false application of the 
 Mercantile Theory did. The unrestricted workings of free 
 trade with England operated upon us in the same manner, 
 and to the full measure of subjugation which accompanied 
 the omnipotence of the parliamentary decree. 
 
 In the foregoing view of the " Wealth of Nations," we 
 are fairly in possession of the field of the science of political 
 economy. It is aside from any useful purpose to go on and 
 indicate any one of the " ninety-odd blunders and fallacies " 
 which have been attributed to that work. They do not 
 touch our controversy ; they only go to the vahdity of the 
 claims which the science may set up to be a science. 
 
 On two points of some relevancy I venture to adopt the 
 criticism of Mr. Bagehot : 
 
 " Biit, when we pass from the refutation of ancient 
 errors (especially the error that wealth consists solely in 
 money, or, in gold and silver) to the establishment of co- 
 herent truth, we shall not be equally satisfied. Students 
 are, indeed, still sometimes told that they will find such a 
 truth in Adam Smith ; but those who had nothing else to 
 read, and who wanted to read accurately, did not find it so. 
 "What, in fact, a student will find in Adam Smith, is a rough 
 outhne of sensible thoughts, not always consistent with 
 themselves, and rarely stated with much precision, often 
 
86 PKOTECTION VS. FREE TRADE. 
 
 very near the truth, though seldom precisely hitting it ; a 
 great mental effort in its day, though often deficient in the 
 consecutiveness required by careful learners, and, except 
 for the purpose of exciting an interest in the subject, alto- 
 gether superseded and surpassed now." 
 
 Adam Smith made a serious attempt to demonstrate 
 that " the capital employed in agriculture not only puts 
 into motion a greater quantity of productive labor than any 
 equal capital employed in manufactures, but in proportion, 
 too, to the quantity of productive labor which it employs, 
 it adds a much greater value to the annual produce of the 
 land and labor of the country, to the real wealth and rev- 
 enue of its inhabitants." 
 
 Mr. Bagehot's comment is : "In fact, probably few pas- 
 sages in so eminent a writer on the subject for which he 
 is eminent, contain so much curious falsehood. If nature 
 does nothing in manufactures, in what is it that it does 
 anything? Mamifactures are but applications of natural 
 forces, just as agriculture is another application, and the 
 reasoning assumes that the natural causes which produce 
 dear things are more beneficial to mankind than those 
 which produce cheap things, though, had Adam Smith 
 seen that he waa making such an assumption, he would 
 have been the first to reject it." 
 
 A successful attempt to refute Adam Smith's doctrine 
 was made by Alexander Hamilton in his celebrated " Ee- 
 port on the Treasury in 1T91." 
 
 Of Adam Smith's exposition of the causes which give 
 exchangeable value to commodities — ^the central inquiry in 
 the whole science — Mr. Bagehot says : " Although, there- 
 fore, Adam Smith had the merit of teaching the world 
 that the exchangeable value of commodities is propor- 
 tioned to the cost of their production, his analysis of that 
 cost was so very defective as to throw that part of pohtical 
 
WHO IS BOUND BY THE SCIENCE. 37 
 
 economy into great confusion for many years, and as quite 
 to prevent his teaching being used as an authority upon it 
 now." 
 
 These extracts are made at some length, for the reason 
 that the general public is probably not aware of the force 
 and destructiveness with which the science has been analyzed 
 and criticised. The political economy of the future will 
 possess an entire change of spirit. As Prof. Ely, of Johns 
 Hopkins University, says (" The Past and the Present of 
 Political Economy ") : " It (the younger political economy) 
 does not aclniowledge laissez-faire as an excuse for doing 
 nothing while the people starve, nor allow the all-sufficiency 
 of competition as a plea for grinding the poor. It denotes 
 a return to the grand principle of common sense and 
 Christian precept. Love, generosity, nobility of character, 
 self-sacrifice, and all that is best and truest in our nature, 
 have their place in economic hfe." 
 
CHAPTEE Y. 
 
 LAISSEZ FAIEE — NOT A SCIENTIFIC DOGMA. 
 
 We have, in this synoptical view of society in its efforts 
 to satisfy its various desires, seen how it goes about the 
 various processes of production, viewed its instruments of 
 production, the considerations of utihty, of value, which 
 put them in operation, and the functions of money, credit, 
 and so on, to facilitate their exchange. 
 
 Some of these exchanges terminate in the procuring of 
 commodities to be used in further production, and the ac- 
 cumulation of these constitutes capital, the result of parsi- 
 mony, saving, the effectual desire of accumulation — a con- 
 templation of the future rather than the present; other 
 exchanges terminate in the gratification of the passions in 
 profligacy, in luxury, in charity, in objects of fashion and 
 distinction, but which do not result in economic gains, that 
 is, " wealth." We have seen the process by which individ- 
 uals may acquire wealth. This they may obviously be able 
 to do either by the creation of new objects having exchange- 
 able value, or by the acquisition, from other people, by ex- 
 change — by a sufiicient number of opportunities to " buy 
 cheap and sell dear," or by the socially unprofitable indus- 
 try of speculation. A nation, a people as such, never has 
 and never can get rich by the latter method alone. Trad- 
 ers may get rich while the nation as a whole is growing 
 poorer. 
 
 A nation must acquire wealth by the increase of its 
 
LAISSEZ FAIRE— NOT A SCIENTIFIC DOGMA. 89 
 
 " stock," by making new things, or by bringing into its 
 boundaries new things, possessing exchangeable value. 
 
 Adam Smith has said, " The annual revenue of every 
 society is always precisely equal to the exchangeable value 
 of the whole annual product of the country, or rather, is 
 precisely the same thing as that exchangeable value." 
 
 We have as yet been put in possession of no tests by 
 which we may ascertain when "the annual revenue of the 
 society " is at its greatest. The real problem is, then, to 
 ascertain how the industry of a nation may be made to 
 yield the greatest annual product. The economic man we 
 have been contemplating so far was an individual with a 
 salable thing in his hands, running about the planet to 
 find a purchaser, a unit doing the best he can to promote 
 his own interests, as he understands them. 
 
 We now find him a member of a society in which his 
 liberty to do as he pleases is restrained by considerations 
 of what is called the general welfare of that society. He 
 can not escape the limitations whicb his citizenship in a 
 definite nation puts upon him, if he would, and there can 
 be no intelligent apprehension of his industrial relations to 
 the world, except as a member of that society. We come 
 then, at last, upon ground which contains the problem in 
 hand. From this time forward we shall be in debatable 
 territory. Some of the contentions before us will gi'ow 
 out of doctrine and some out of facts. We may as well, 
 then, begin at the beginning. The entire premises of free 
 trade were laid by Adam Smith. They will be found in 
 these extracts from Book IV, "Wealth of Nations" : 
 
 "But the principle which prompts us to save is the 
 desire of bettering our condition ; a desire which, though 
 generally calm and dispassionate, comes with us from the 
 womb, and never leaves us imtil we go into the grave. In 
 the whole interval which separates these two moments, 
 
90 PROTECTION VS. FEEE TRADE. 
 
 there is scarce perhaps a single instant in which any man 
 is so perfectly and completely satisfied with his situation as 
 to be without any wish of alteration or improvement of 
 any kind. , . . 
 
 "The natural effort of every individual to better his 
 own condition, when suffered to exert itself with freedom 
 and security, is so powerful a principle, that it is, alone 
 and without any assistance, not only capable of carrying 
 on the society to wealth and prosperity, but of surmount- 
 ing a hundred impertinent obstructions with which the 
 folly of human laws too often encumbers its operations ; 
 though the effect of these obstructions is always, more or 
 less, either to encroach upon its freedom or to diminish its 
 security. . . . 
 
 " Every system which endeavors, either by extraordinary 
 encouragements to draw toward a particular species of in- 
 dustry a greater share of the capital of the society than 
 what would naturally go to it, or by extraordinary re- 
 straiats to force from a particular species of industry some 
 share of the capital, which would otherwise be employed in 
 it, is in reality subversive of the great purpose which it 
 means to promote. It retards instead of accelerating the 
 progress of society toward wealth and greatness, and di- 
 minishes instead of increasing the real value of the annual 
 produce of its land and labor. . . . 
 
 " All systems, either of preference or restraint, being 
 completely taken away, the obvious and simple system of 
 natural liberty estabhshes itself of its own accord. Every 
 man, as long as he does not violate the laws of justice, is 
 left perfectly free to pursue his own interest in his own 
 way, and to bring both his industry and capital into com- 
 petition with those of any other man or order of men. 
 The sovereign is completely discharged from a duty in at- 
 tempting to perform which he must always be exposed to 
 
LAISSEZ FAIRE— NOT A SCIENTIFIC DOGMA. 91 
 
 immmerable delusions, and for the proper performance of 
 which no human wisdom or ■ knowledge could ever be suffi- 
 cient : the duty of superintending the industry of private 
 people, and of directing it toward the employments most 
 suitable to the interests of society." 
 
 It is not certain that in this last paragraph Adam Smith 
 meant more than that, within the limits of a given nation, 
 industry and trade should be free. In paragraph after 
 paragraph in the book he insists on the supreme importance 
 of the domestic commerce, the home market, and to an 
 extent which has met with dissent from many of his more 
 intensely free-trade followers. "When he wrote, England 
 was filled with monopoHes holding special and valuable 
 privileges, and the home trade was under many systems of 
 preference and restraint imposed by royal Hcense. In a 
 country ia which absolute free domestic trade prevailed, in 
 which the industry and capital of each is in perfectly free 
 competition with that of all, as in the United States, his 
 criticisms would be disarmed of their force. 
 
 But, taking the widest application his words are capa- 
 ble of, we proceed to an analysis of his propositions. They 
 are two : 
 
 The first is, that men are purely egoistic, are capable of 
 perfectly perceiving their separate interests, and are not 
 hindered by feelings of any other kind from their pursuit. 
 
 The second is, that every man, in pursuing his own ad- 
 vantage, at the same time furthers the good of all. 
 
 Together they constitute the doctrine, which is the 
 " last word " the science of political economy has to utter, 
 laissez faire, " letting things alone," out of which the prac- 
 tice of free trade, it is insisted, flows with scientific rigor. 
 
 His economic force is " the natural effort of every indi- 
 vidual to better his condition." As the individual achieves 
 wealth, the society will be carried to opulence and pros- 
 
92 PROTECTION VS. FREE TRADE. 
 
 perity. The effort to ^'better his condition" is at last 
 generalized under the name of "wealthy" as much so as 
 that of the Epicurean under the name of pleasure. Philo- 
 sophically, this is materialism, and reduces political econo- 
 my to a theory of egoism. 
 
 To get at it, we are invited to a short excursion into 
 metaphysics, which we must accept. "We are told the solu- 
 tion lies in a psychological pool, and we must plunge in. 
 In essence, we are stiU dealing with an abstraction. It 
 greatly simplifies the problem if we conceive of man as 
 purely selfish. But we delude ourselves if we proceed on 
 this assumption as the principle of human intercourse. 
 This is to confound the " rules of the market " with " the 
 rules of hf e " — with the elementary laws of human nature. 
 The simplification is carried too far. 
 
 It is safe to say that society could not exist a single day 
 with this one-sided force alone in operation. 
 
 The same Adam Smith who wrote the " "Wealth of Na- 
 tions " also wrote a " Theory of Morals." In this treatise 
 Sympathy was assumed as the basis of moral sentiments. 
 Neither selfishness nor sympathy form a scientific basis for 
 conduct. " In the race for wealth, and honors, and prefer- 
 ments, he may run as hard as he can and strain every nerve 
 and every muscle in order to outstrip all his competitors, but 
 if he should jostle or throw down any of them, the indulgence 
 of the spectators is entirely at an end," says Adam Smith. 
 
 Justice, then, is a constituent in conduct, and con- 
 science, even if it be only the sense of " tribal approval or 
 disapproval." It takes effect as an ingredient in the " con- 
 dition" which we desire "to better." The family is a 
 relation in which egoism is largely substituted by altruism. 
 In a less degree, the nation is an instance, for we suppose 
 there is such a sentiment as patriotism. The sense of 
 community is an effective and ever-present force, economic 
 
LAISSEZ FAIRE— NOT A SCIENTIFIC DOGMA. 93 
 
 force, whicLi we can not rid ourselves of. Whatever may 
 be the antithesis between governmental interests, dynastic 
 interests, and free private interests, here at least there is a 
 measurable merging of the egoistic principle into the prin- 
 ciple of community, which is the government. The sense 
 of the predominance of common views weakens the force 
 of motives terminating in self. When men are relieved 
 from the burden of procuring the necessaries of life, the 
 various ambitions which play so large a part in life, the 
 consciousness of efficient co-operation with one's fellow- 
 men is a dominant pleasure and a powerful motive. It 
 ■will, on reflection, appear evident enough that neither 
 political economy, nor any other science having to do with 
 social facts, ever can exist if self-interest were the only 
 spring of human action. From self through the family, 
 the nation, to humanity in general, there is an extension 
 of altmistic feelings, weakened in degree only, not differ- 
 ent in kind. This is our human nature. 
 
 Mr. Mill, in a passage in his " Autobiography," gives 
 us this as his ideal of the social life which we are likely to 
 attain : " While we repudiate, witli the greatest energy, 
 that tyranny of society over the individual which most so- 
 cialistic systems are supposed to involve, we yet look for- 
 ward to a time when society will no longer be divided into 
 the idle and the industrious ; when the rule that they who 
 do not work shall not eat vrill be applied, not to paupers 
 only, but impartially to all ; when the division of the prod- 
 uce of labor, instead of depending, as in so great a degree 
 it now does, on the accident of birth, will be made by con- 
 cert on an acknowledged principle of justice ; and when it 
 will no longer either be, or be thought to be, impossible 
 for human beings to exert themselves strenuously in pro- 
 curing benefits which are not to be exclusively their own, 
 but to le shared with the society thsy helong to." 
 
94: PROTECTION VS. FEEE TRADE. 
 
 The precise and abstract rules of political economy 
 meagerly embrace tbe ruling laws of nature, everlastingly 
 and invariably guiding the machinery of human toils and 
 struggles. We have not only sympathy and the sense of 
 community, as illustrated in the family and in the State, 
 mitigating the selfish pursuit. We have further, the an- 
 tagonistic forces of indolence and habit, the struggle be- 
 tween the desire of immediate enjoyment and the desire of 
 accumulation. AU these motives this egoistic political 
 economy adds to and subtracts from, as if they were in a 
 state of mechanical mixture, and were capable of separation 
 in action. Human motives can not thus be added and 
 subtracted. By their co-operation in the individual they 
 become different from what they are in themselves. They 
 constitute one new composite entirety. No dynamometer 
 can measure out the force contributed by each to the gen- 
 eral resultant. There is not one side of a man which is 
 employed in seMsh barter and another in unselfish benevo- 
 lence. Men are not built in compartments, in one of which 
 egoism is supreme, and in another sympathy, in another 
 justice. The whole composite nature of the man acts. 
 Oxygen and hydrogen constitute water, but water is a new 
 and different compound. Its behavior, as water, in no way 
 conforms to the behavior of the oxygen and hydrogen, as 
 such. So far as conduct is concerned, it in no way aids us 
 to know that water is composed of the two gases, and no 
 amount of knowledge or speculation as to the conduct of 
 oxygen and the conduct of hydrogen, separately, furnish 
 the slightest clew to the conduct of water. 
 
 Prof. Perry says that political economy does not " cover 
 the entire relations of buyers and sellers, but only the rela- 
 tions of buyers and sellers as sxioh ; morality and religion 
 have additional but not incompatible words to utter when 
 tliis science heoomes silent^ There are no " buyers and 
 
LAISSEZ FAIRE— NOT A SCIENTIHO DOGMA. 95 
 
 sellers as such." The words which, morality and religion 
 utter to them are not additional, they are synchronous. 
 The resultants of our social life are the product of all the 
 capabilities of the composite man, buyer, seller, father, 
 citizen, lazy, industrious, hopeful, honest, poor, imjust, 
 prudent, or reckless. It is an orchestra whose balanced 
 melodies are not the consecutive notes of instruments alter- 
 nately played upon, but the joint contemporaneous and in- 
 stantaneous concord of the whole. The sensuous effect of 
 the orchestral harmony is irresolvable into the contribution 
 of each performer. It is a chorus in which there are no 
 solos. If the buyer and seller " as such " are operating 
 under the axioms of pure selfishness, there can be no guar- 
 antee that the transaction will not result in a theft and not 
 a sale. The sole pursuit of the economic gain which ego- 
 ism provokes, may provoke justice to reward it with the 
 penitentiary. If the motives inspiring us, which we ordi- 
 narily call moral motives, were dropped out of the lives of 
 any of us, the daily record of conduct would be a blank. 
 Any such purely atomistic conception of society is worthless 
 for this or any other science. Moral motives not only do 
 not drop out, but they can not be made to drop out. If they 
 could drop out, the race would cease to be human. The 
 economists first empty their economic man of all the apti- 
 tudes and attributes which they conceive, for the sake of 
 simplicity, are not involved in the " buyer and seller as 
 such," and, having ascertained how they think such a sup- 
 posititious creation would comport itself, they conclude that 
 the actual human being will bring his acts into conformity 
 with their theoretic laws. 
 
 Prof. Caimes, in criticising Bastiat's economic philoso- 
 phy, it seems to me, removed the foundation of the whole 
 science as developed by Adam Smith and his successors : 
 " It is much as if a chemist were to propound, as a solution 
 
96 PROTECTION VS. FREE TRADE. 
 
 of the proWem of the composition of bodies, that matter is 
 compounded of elementary atoms, omitting to classify the 
 various forms of matter according to their elementary con- 
 stitution, or to say in what proportion in each class the ele- 
 ments combine. Such a generalization is no generalization 
 in the scientific sense of the term: it is a compounding of 
 a crowd of unanalyzed phenomena under an ambiguous 
 word." Still less of scientific value would the solution 
 have, if the forms of matter were incapable of classification, 
 or if it was impossible to discover, or say, in what propor- 
 tion the elements in hand did combine. 
 
 The synthesis of moral and mental forces in the actual 
 human being is insoluble, and all fancied analyses must be 
 remanded to the hmbo of speculation in which the human 
 family have indulged, with little profit and no conclusions, 
 since the days of Plato. At the same time, while they 
 have been baffled by the speculation, they have gone on 
 and made great communities and systems in which politics, 
 commerce, war, religion, morals, and love have been min- 
 gled with the desire of wealth in ever- varying proportions 
 and energy. We have evidently not identified the central 
 agent in the " desire of ■wealth." ^ 
 
 * " Another consideration occurs in this connection. It is impossible to 
 separate the individual from his surroundings in state and society. In the 
 strictest sense of the term and from a purely scientific standpoint, we do not 
 live for ourselves alone but for one another as well as for ourselves. We 
 are inextricably and organically bound up in state and society. What we 
 call self-interest is as a rule not interest for one individual. It is a desire 
 for the welfare perhaps of two, three, or four united in a family, perhaps of 
 a circle of friends or relatives, perhaps of a town, city, or state. How many 
 men toil for the effo alone ? Assuredly very few. What we call egoism is 
 usually only relative. We mean the circle is too narrow. Of course all 
 this does not deny the existence of such a thing as downright egoism or self- 
 ishness, any more than it denies the fact of the existence of robbery, false- 
 hood, and murder. 
 
 " All this proves that it is not individual self-interest, certainly not indi- 
 
LAISSEZ FAIRE— NOT A SCIENTIFIC DOGMA. 97 
 
 In the second place, we tlien come to the real premise 
 of the doctrine of laisses faire, that " every man in pur- 
 suing his own advantage at the same time furthers the 
 good of all." 
 
 Now, this is not laid down as a practical rule which in 
 the greater number of instances it will be safer to follow. 
 It is set up as a scientific principle to be universally ap- 
 plied to every social or industrial organization. The bind- 
 ing implication is that, taking human beings as they are, 
 in the actual state of moral and intellectual development 
 they have reached ; taking account f m-ther of the physical 
 conditions with which they are surrounded in the world ; 
 lastly, -accepting the institution of private property as un- 
 derstood and maintained in niost modem states, the prompt- 
 ings of self-interest will lead individuals, in all that range 
 of their conduct which has to do with their well-being, 
 spontaneously to follow that course which is most for their 
 own good and for the good of all. That is, " first, that 
 the interests of human beings are fundamentally the same ; 
 that what is most for my interest is also most for the inter- 
 est of other people ; and, secondly, that individuals know 
 their interests in the sense in which they are corocident 
 with the interests of others, and that, in the absence of 
 coercion, they will, in this sense, follow them." 
 
 When Colbert, the great finance minister of Louis XIV, 
 asked the merchant Legendre as to the best means of pro- 
 tecting French commerce, the answer was, " Laissez faire, 
 laisses passerP Colbert reorganized French industry by 
 protective measures, by making manufacturers and com- 
 
 vidual selfishness, but social considerations, which are ijie first and foremost 
 factor in economic life in modern times. It is a social consideration which 
 induces the English capitalist to prefer ' eight or ten per cent profit with 
 English society to the quadruple returns of California or Australia.' " — Prof. 
 Ely. 
 
 6 
 
98 PROTECTION VS. FREE TRADE. 
 
 merce free, for the first time, within the limits of the 
 French Emjpire. He broke down the cordon of custom- 
 houses and regulations and restrictions which hampered 
 French industry within the hnes of French territory. He 
 first gave their industry national form and national ex- 
 tent. His achievements have justly attracted the praise 
 and approval of historians and economists. Quesnay, the 
 head of the French economists, the Physiocrates, exalted 
 the words of Legendre into an absolute scientific axiom. 
 M. "Wolowski, who wrote the Preliminary Essay to Eos- 
 cher's " Pohtical Economy," says of it : 
 
 " There is need of institutions to complete the exercise 
 of the independence acquired by labor, and of laws to 
 regulate that exercise. The laissez faire and laissez 
 passer of economists is in no way like the absolute for- 
 mula, which some have denounced and others sought to 
 utilize, as relieving authority of all care and all interven- 
 tion. 
 
 " To understand this maxim aright we must go back to 
 the oppressive regime of ancient society. Quesnay's for- 
 mula was, first of all, a protest against the restraints which 
 hampered the free development of labor. But it did not 
 tend to abrogate the ofiice of legislator, nor to deprive so- 
 ciety or the individual of the support of the public power 
 which watches over the fulfillment of our destiny. 
 
 " It may have seemed convenient to find in the gravity 
 of a politico-economical principle an excuse for the sweets 
 of legislative and administrative far niente, but it is gen- 
 erally conceded that the role of authority has grown rather 
 than diminished under the regime of the liberty of labor. 
 The task is in our day a hard one, both for individuals and 
 nations, for liberty dispenses its favors only to the mascu- 
 line virtues of a laborious and an enHghtened people. 
 
 " The mission of authority is not to constrain but to 
 
LAISSEZ FAIRE— NOT A SCIENTIFIC DOGMA. 99 
 
 counsel ; not to command, but to help acGomplisK • not to 
 absorb individual activity, but to develop it." 
 
 Prof. Perry says : " Each man's right of freedom is 
 limited, of course, by every other man's right of freedom, 
 which he is not at liberty to infringe ; and also, in certain 
 respects, by what is called the general good, of which the 
 judge must be the government under which he lives." 
 
 How far, then, is the laissez-faire axiom of itself likely 
 to result in the good of the whole, or to afEect the effort of 
 the individual for his own good \ 
 
 Individuals may be relied upon to pursue their own 
 interests according to their knowledge, experience, and 
 capacity ; how far, necessarily and as a fact in practice, wiU 
 their interests be coiucident with that of others and of 
 the whole? 
 
 " Human interests are harmonious," exclaims Bastiat ; 
 "let them alone, and, under the supreme law of competi- 
 tion, we shall have the equalization of individuals on a 
 higher plane of conciKation." He no more than we could 
 shut his eyes to the ugly facts of industrial ills about him ; 
 we no more than he can suggest the remedy. But it is 
 not to be found in laissez faire. Speaking of those 
 who live by wages, he can not help saying : " The situa- 
 tion of men of this class is essentially precarious. As 
 they receive their wages from day to day, they hve from 
 hand to mouth. In the discussion which, under a free 
 regime, precedes every bargain, they can not wait : they 
 must find work for to-morrow on any terms under pain of 
 death. The result is that wages tend to fall to the lowest 
 rate which is compatible with bare subsistence, and in this 
 state of things the occurrence of the least excess of com- 
 petition among the laborers is a veritable calamity. To 
 deny the sufferings and wretchedness of that class of men, 
 who bear so material a part in the business of production, 
 
100 PROTECTION VS. FREE TRADE. 
 
 ■would be to shut our eyes to the light of day. It is, in 
 fact, this deplorable condition of a great number of our 
 brethren which forms the subject of what has been justly 
 called the social problem ; for, although other classes of 
 society are visited also with disquietudes, suffering, sudden 
 changes of fortune, commercial crises, and economic con- 
 vulsions, it may nevertheless be said with truth that liberty 
 would be accepted as a solution of the problem, did mere 
 liberty not ajypear powerless to cure , that rankling sore 
 which we denominate pauperism." 
 
 Here, then, our rule breaks down, even though in the 
 presence of our ignorance and powerlessness we know no 
 other solution. "Letting alone" does not work harmoni- 
 ous or just results, and political economy does not and can 
 not accept it as one of its scientific " laws." ^ 
 
 Where the "law" could be reversed with reasonable 
 success, it has been. All laws for common schools, all 
 poor-laws, all factory legislation fixing the hours of labor 
 and the ages of children who may be employed as laborers, 
 all legislation directed to the " truck system," are instances 
 of governmental interference with the freedom of contract. 
 The " Irish Land Bill " is a very signal instance of legisla- 
 tive invasion of what, in all Anglo-Saxon history, have 
 been considered " vested rights." We shall see, later on, 
 
 ' " If all that Bastiat and his confi-firea write only held in real life, the 
 solution of the Social Problem would indeed be an easy task. Business men 
 know, however, that the share of the produce of labor and capital received 
 by labor diminishes by so much the profits of capital, and that, eateris pari- 
 bus, the larger the proportion of profits received by capital, the smaller the 
 proportion received by labor. That there is an entire harmony of interests 
 between the different classes of society, is at complete variance with the 
 teachings of modern science, and ' is at best a dream of human happiness as 
 it presents itself to a millionaire.' It is possible to reconcile the different 
 classes of society only by a higher moral development. The element of self- 
 sacrifice must yet play a more important role in business transactions, or 
 peace and good-will can never reign on earth." — Peof. Ely, ut supra. 
 
LAISSEZ FAIRE— NOT A SCIENTIFIC DOGMA. IQl 
 
 how considerations of tlie general welfare have justified 
 this course of administratiye action. More especially in 
 England, parhamentary interference has been denounced 
 as contrary to the sound conclusions of political economy. 
 
 Adam Smith did not attempt to philosophize over the 
 process by which the unrestrained pursuit of his own good 
 by the individual led, imconsciously to that individual, to 
 the general welfare. He generalized from a few very in- 
 adequate particular instances. He boldly went into the 
 domains of theology in order to help out his pohtical econ- 
 omy. " Each member of the community is led in this, as 
 in many other instances, by an invisible hand to promote 
 an end that was no part of his intention." 
 
 In contrast to this view of Adam Smith, let us see 
 what our American Prof. Francis A. Walker says : " Politi- 
 cal economy owes nothing to natural theology. The econ- 
 omist is under no obligation to any assumptions derived 
 from that source. He has, indeed, no more right to start 
 with the theory of an order of nature which is purely benefi- 
 cent, than he would have to start with the opposite theory 
 of an order of nature wholly maleficent. As an economist, 
 he has no mission to ' vindicate the ways of God to man.' 
 He is to investigate the laws of wealth ; that duty he will 
 best discharge by reasoning, as justly as his mental powers 
 enable him to do, from economic premises which have been 
 established by adequate induction, and from such only." 
 
 But the fact seems to be that there is no such coinci- 
 dence between the interest of the individual and the so- 
 ciety. 
 
 Prof. Caimes has not hesitated to say that he holds it, 
 as usually understood, to be a pretentious sophistry, desti- 
 tute of foundation in nature and fact, and rapidly becoming 
 an obstruction and nuisance in public affairs : 
 
 " ISTow I beg you to mark the strange assumptions that 
 
102 PROTECTION VS. FREE TRADE. 
 
 underlie this reasoning. Human interests are naturally 
 harmonious, therefore we have only to leave people free, 
 and. social harmony must result : as if it was an obvious 
 thing that people Imew their interests in the sense in which 
 they coincide with the interests of others, and that, know- 
 ing them, they must follow them ; as if there were no such 
 things in the world as passion, prejudice, custom, esprit de 
 corps, class interests, to draw people aside from the pursuit 
 of their interests in the largest and highest sense. Here 
 is a fatal flaw on the very threshold of Bastiat's argument, 
 and it is a flaw which no follower of Bastiat has repaired, 
 which, for my part, I believe to be irreparable. Nothing 
 is easier to show than that people follow their interests. 
 But, between this and following their interest, in the sense 
 in which it is coincident with that of other people, a chasm 
 yawns. This chasm, in the argument of the laissez-faire 
 sch6ol, has never been bridged. The advocates of the doc- 
 trine shut their eyes and leap over it." 
 
 Prof. Jevons rejects the doctrine : " It is fatal to at- 
 tempt to uphold, in regard to social legislation, any theory 
 of eternal fixed principles or abstract rights. The whole 
 matter becomes a complex calculus of good and evil. AH 
 is a question of probability and degree. I venture to main- 
 tain that we shall do better in the end if we throw off the 
 incubus of metaphysical ideas and expressions. "We must 
 resolve all those supposed principles and rights into the 
 facts and probabilities which they are found to involve 
 when we inquire into their real meaning. 
 
 " The right of a man to dispose freely of his labor, 
 means the recognition by the legislature that, in the ma- 
 jority of cases, a man is the best judge of his own interests 
 in disposing of his labor. In a number of cases specified 
 in the statute-book, the legislature recognizes an opposite 
 state of things. 
 
LAISSEZ FAIEE— NOT A SCIENTIFIC DOGMA. 103 
 
 " The principle of the freedom of trade stands on the 
 same footing ; it is a probability of advantage which, how- 
 ever, must be set aside in case of a greater probability of 
 evil." 
 
 Prof. Francis A. "Walker thinks that tlie free-trade 
 economists have taken " an unjustiliably lofty attitude on 
 this subject ; practically refusing to argue the question at 
 all, as one of national expediency, contenting themselves 
 with occupying the high ground of laissez faire. 
 
 " Now, the doctrine of laissez faire, although estab- 
 lished by the English economists to their own satisfaction, 
 as containing a principle of universal application, and thus 
 deemed by them a conclusive answer to all arguments 
 specially directed to justify restrictions upon international 
 trade, has never been accepted in the fullness of signifi- 
 cance given to it by them throughout any wide constitu- 
 ency, not even by any large proportion of the educated 
 classes — not even generally by publicists, or statesmen, or 
 men.of affairs." ^ 
 
 ' " The truth is, the stern necessities of political life compelled statesmen 
 to violate it in England itself, even when proclaiming it with their lips. This 
 was first done apologetically, and each interference was regarded by the 
 ' school ' as an exception to the rule ; but it finally began to look as if it were 
 all exception and no rule. Interference was found necessary in every time of 
 distress, as during our late civil war, when Government borrowed money for 
 public works to give employment to the Lancashire operatives, at the time 
 of the cotton famine. Every reform in the social and economic institutions 
 of Great Britain has been accomplished only by the direct, active interference 
 of Government in economic affairs. When Gladstone began his work of con- 
 ciliating Ireland in 1869, he found it expedient to grant loans of public money 
 to occupiers who wished to improve their holdings, and to proprietors to re- 
 claim waste lands or to make roads and erect buildings, enabling them there- 
 by to employ labor. In 1880 the Government of Ireland again decided to 
 alleviate the sufferings of the Irish by making an advance of £260,000 out 
 of the surplus of the Church funds, for public works of various kinds, in 
 order to provide employment for those needing it. The recent Irish acts 
 interfering between tenant and landlord in the matter of rent, and offering 
 
104: PROTECTION VS. FREE TRADE. 
 
 The wttole series of parliamentary acts regulating fac- 
 tory administration, first passed more than haM a century 
 since, have been based on principles of restriction. By 
 means of governmental interference hours of labor have 
 been limited, night-work in certain cases forbidden, the 
 employment of children has been prohibited, holidays have 
 been prescribed, and sanitary inspection by officials has 
 been provided for. In his " Eeign of Law," the Duke of 
 Argyll remarks that "during the present century two 
 great discoveries have been made in the science of govern- 
 ment : the one is the immense advantage of abolishing re- 
 strictions upon " (English) " trade ; the other is, the absolute 
 necessity of imposing restrictions upon labor." ' Yet tliis 
 whole system of legislation was resisted by the economists 
 as opposed to their eternal fixed principles, or abstract 
 rights. 
 
 " They asserted," says Prof. Walker, " the entire com- 
 petence of the laboring classes to protect their own inter- 
 ests ; they repeated their maxims, laissez faire, laissez 
 alter, just as confidently as they do when ' protective ' duties 
 
 the assistance of the state to tenants in arrears, violate all the principles of 
 laissez-faire economists, and are nevertheless applauded by the wisest and 
 best men of all lands. Laisses faire was tried in the early part of this cent- 
 ury in English factories, with results ruinous to the morality of women and 
 destructive of the health of children. Robert Owen, himself a large and suc- 
 cessful manufacturer, declared that he had seen American slavery, and, 
 though he considered it bad and unwise, he regarded the white slavery in the 
 manufactories of England as far worse." — Peof. Ely, ut sttpra. 
 
 " Prof. Van Buren Denslow adds : " The Duke of Argyll forgets that the 
 discoveries in government are four, not two. The other two were the dis- 
 coveries made by mothers — first, that their daughters ought all to be able to 
 swim ; secondly, that they should on no account go near the water. The 
 latter is exactly on a par with the notion that it can be an economic doctrine 
 that the worker, in trading in his work, or in that which his work pro- 
 duces, shall not be free ; but that the trader, in trading in the product of 
 another's work, shall be free." 
 
LAISSEZ FAIEE— NOT A SCIENTIFIC DOGMA. 105 
 
 are iproposed ; they put themselves on record in the most 
 formal manner against all measures of restriction upon fac- 
 tory and workshop lahor ; they cast their lot with the 
 opposition to this class of legislation, and staked the repu- 
 tation and influence of political economy upon their being 
 right in this matter. But it did not turn out so. Al- 
 though in the first instance, that of the act of 1842, Sir 
 Robert Peel, the elder, had been so solicitous not to violate 
 the principle of the self-sufficiency of labor that he made 
 the bill apply only to apprentices, the wards of the state, 
 the political rightfulness. and the economical expediency of 
 regulating the contract for labor so grew upon the public 
 mind of England that act after act extended the supervision 
 of the state over factory aud workshop, until the policy of 
 restriction had vindicated itself to the complete satisfaction 
 of the working classes, even in the main of the master class 
 themselves, and of the statesmen of the kingdom and pub- 
 licists almost without exception." ' 
 
 Then social, political, and economic reasons united in 
 justifying interference with the freedom of contract ; and 
 we have the dread alternative of Prof. Perry, that " there 
 can be no science of exchanges if economical reasons can 
 be given for restricting exchanges." 
 
 ' " In our own country it is curious to note how the advocates of laisscz 
 /aire abandon position after position. First, tenements are exempted from 
 what is considered the general law, because experience has shown that 
 'nothing short of compulsion will purify our tenement districts.' Then it is 
 discovered that the ordinary laws of supply and demand are not preserving 
 our forests ; consequently, that individual and general interests do not har- 
 monize. The inadequate action of competition in regulating and controlling 
 great corporations gives another excuse for governmental interference. 
 ' Comers ' in necessaries of life call for a further abandonment of the laissez- 
 faire dogma, as does also the success attendant on the establishment of gov- 
 ernment fisheries. The list might be extended almost ad libitum, and every 
 day adds to it. Thus has laissez faire, one of the strongholds of past politi- 
 cal economy, been deSuitely abandoned." — Pkof. Ely, et supra. 
 
106 PROTECTION VS. FREE TRADE. 
 
 It is agreed that the "obvious and simple system of 
 natural liberty " is an offshoot of the ancient fiction of a 
 code of nature, and "a natural order of things" is a form 
 given to that fiction in modern times, by theology on one 
 hand, and a revolt against the tyranny of the folly and in- 
 equality of such human codes as the world had known on 
 the other. 
 
 A criticism directed against the oppressions, political 
 and industrial, of mediaeval times, could have no application 
 to the United States, in any stage of its career, since it was 
 an organized government. Adam Smith's "Wealth of 
 Nations " must be read in connection with his " Theory of 
 Moral Sentiments." " Abstraction would never have played 
 so great a part in Adam Smith's philosophy, would never 
 have resulted in such sweeping generalization respecting 
 the beneficent and equitable economy resulting from the 
 play of the natural inclinations and individual interests of 
 men, had not the classical conceptions of nature's har- 
 monious code become blended with the theological concep- 
 tion of that great benevolent and all-wise Being, who 
 directs all movements of nature, and who is determined to 
 maintain in it at all times the greatest possible quantity of 
 happiness. It is incontrovertible that historical investiga- 
 tion convicts the nature hypothesis of reproducing a mere 
 fiction of ancient philosophy." (Prof. Leslie.) 
 
 The "principle of hberty" as a practical guide, and 
 laisses faire as a philosophical maxim, fall to the ground. 
 
 In his " Statement of some JS'ew Principles on the Sub- 
 ject of Pohtical Economy," published in Boston in 1834, 
 John Kae undertook to demonstrate that, in the nature of 
 things and as a fact, " individual and national interests are 
 not identical." The demonstration is complete. Indeed, 
 the whole book is a capital example of calm, dispassionate 
 exposition, and of clear, logical argument. Mr. Mill, whose 
 
LAISSEZ FAIEE— NOT A SCIENTIFIC DOGMA. IQT 
 
 own writings show, ttrougli and througli, familiarity with 
 John Eae, says, " In no other book known to me is so 
 much light thrown, both from principles and history, 
 on the causes which determine the accumulation of capi- 
 tal." 
 
 The difference in the causes which give rise to indi- 
 vidual and to national wealth are clearly pointed out. His 
 argument is conducted upon underlying principles. I quote 
 one of his illustrations : 
 
 " Let any one, in any country, in Great Britain for in- 
 stance, trace backward for fifteen or twenty years the mu- 
 tations that have occurred in the fortunes of the persons 
 with whom he is acquainted, and he will find that there 
 are few whose circumstances are not very much changed 
 from what they were. Good conduct, good fortune, and 
 frugality have made many rich who were then poor ; im- 
 prudence, misfortune, prodigality have made many poor 
 who were then rich. But, while that man has been adding 
 house to house, and farm to farm, and this has been giving 
 up one portion of property after another, till he finds all 
 he once possessed in the hands of another, the whole mass 
 of ihouses, lands, and wealth has undergone but little alter- 
 ation : the national capital itself remains, comparatively, 
 but little changed. It is not by the acquiring wealth pre- 
 viously in the possession of others, that nations em'ich 
 themselves. But a very small part of the capital of any 
 community can, I suspect, be accounted for by tracing its 
 passage from any other community. Instead of one nation 
 growing rich and another poor, we rather see many neigh- 
 boring nations advancing at the same pace toward pros- 
 perity and affluence, or declining equally to misery and 
 want. As individuals seem generally to grow rich by 
 grasping a larger and larger portion of the wealth already 
 in existence, nations do so by the production of wealth 
 
108 PKOTECTION VS. FREE TEADB. 
 
 that did not previously exist. The two processes differ in 
 tliis, that one is an acquisition, the other a creation." 
 
 He was no believer in " administrative nihilism." " The 
 community adds to its wealth by creating wealth, and if 
 we understand, by the legislator, the power acting for the 
 community, it seems not absurd or unreasonable that he 
 should direct part of the energies of the community toward 
 the furtherance of this power of invention." (" Invention 
 is the only power on earth that can be said to ' create,' " 
 he says.) " In the following cases it would seem, at least, 
 not improbable that the power of the legislator so directed 
 might be beneficial : 
 
 " I. In promoting the progress of science. 
 
 " II. In promoting the progress of art — 1. By encour- 
 aging the discovery of new arts. 2;- By encouraging the 
 discovery of improvements in the arts already practiced in 
 the country. 3. By encouraging the discovery of methods ■ 
 of adapting arts already practiced in other countries to the 
 particular circumstances of the territory and community 
 for which he legislates. 
 
 " But a case of the circumstance of a country being so 
 peculiarly favorable to the practice of a foreign art that, in 
 the very first essays it makes in it, it can successfully com- 
 pete with another, where that art has been long established, 
 is assuredly rare ; and, if any such case occur, we may be 
 satisfied that the manufacture might, with much advantage, 
 have ieen previously introduced. The only difference be- 
 tween us " (Adam Smith and himself) " is, that the doctrines 
 he advocates teach us to wait till the miscalculations of 
 some unfortunate projector confer on us a public benefit. 
 I hold that it would be more just and judicious that the 
 necessary first cost of the scheme should be borne by the 
 whole community ; more just, as thus the burden necessary 
 to be borne to procure a common benefit will be divided 
 
LAI3SEZ FAIRE— NOT A SCIENTIFIC DOGMA. 109 
 
 among all, instead of being sustained by one ; more judi- 
 cious, as tbe society will not have to wait for the attainment 
 of a desirable object, on so doubtful a chance as the folly 
 of projectors." 
 
 These extracts naturally lead up to, and probably sug- 
 gested, the concessions made by Mr. Mill himself in favor 
 of protection, a concession which Prof. Thorold Rogers, 
 Prof. Price, Prof. Cairnes, Prof. Sumner, all agree "is 
 perpetually quoted and is perpetually mischievous, . . . 
 ought never to have been made," but which logically in- 
 volves all that has ever been urged by protectionists in the 
 United States. Mr. Mill had admitted the reasonableness 
 of granting patent-rights and copyrights, and then guard- 
 edly proceeds : 
 
 " The only case in which, on mere principles of po- 
 htical economy, protective duties can be defensible, is 
 when they are imposed temporarily (especially in a young 
 and rising nation), in hopes of naturalizing a foreign in- 
 dustry, in itself perfectly suitable to the circumstances of 
 the country. J'he superiority of one country over CTiotJier 
 in a branch of production often arises only from having 
 begun it sooner. There may be no inherent advantage on 
 one part, or disadvantage on the other, but only a present 
 superiority of acquired skill and experience. A country 
 which has this skill and experience yet to acquire may, in 
 other respects, be better adapted to the production than 
 those which were earlier in the field ; and, besides, it is a 
 just remark that nothing has a greater tendency to promote 
 improvements in any branch of production than its trial 
 under a new set of conditions. But it can not be expected 
 that individuals should, at their own risk, or rather to their 
 certain loss, introduce a new manufacture, and bear the 
 burden of carryiag it on until the producers have been 
 educated up to the level of those with whom the processes 
 
110 PROTECTION VS. FREE TRADE. 
 
 are traditional. A pi'otective duty, continued for a reason- 
 able time., will sometimes he the least inconvenient mode 
 in which a nation can tax itself for the support of such an 
 experiment^ ^ 
 
 All that the protectionists in the United States ask of 
 the doctrine of laissez faire is " let alone," as between the 
 fifty millions of us who have our hands on all the levers of 
 
 ' This passage in Mr. Mill, which seems on its face to embody so much 
 plain common sense, has been roughly attacked. Prof. Bbnamy Price places 
 an alarming estimate on the mischief it has wrought. He says (" Practical 
 Political Economy," p. 315): "No name of high celebrity is put forward so 
 incessantly as the shield of their doctrine, by the advocates of protection, as 
 that of Mr. Mill, and so great is the support which it gives to a policy so pro- 
 foundly injurious to the happiness of mankind " (isn't this a rather euphemistic 
 exaggeration for the Only thing the professor can mean, the prosperity of the 
 present generation of English manufacturers ?), " that it may almost be ques- 
 tioned whether Mr. Mill has not done more harm to the welfare of the human 
 race by the countenance he has given, though limited, to protection, than he 
 lias done good by all his otjier writings on political economy." 
 
 Prof. Thorold Rogers re-enforces Prof. Price : 
 
 " Few statements made by any writer have, I am persuaded, been more 
 extensively though unintentionally mischievous than this admission of Mr. 
 Mill. The passage has been quoted over and over again in the United States 
 and in the British colonies as a justification of the financial system which 
 these communities have adopted. The circumstances in which they are situ- 
 ated exactly square with the hypothesis of Mr. Mill. The coimtries are young 
 and rising — industries, as yet nascent, are thoroughly suitable to the natural 
 capacity of the region and of the people, the latter being of the same stock 
 with the mother-country, whose manufactures they prohibit and discourage. 
 There is no reason, apparently, except that of priority in the market, ivhy the 
 industry of the old coimtry should not be transplanted to the new. Hence, I 
 repeat, Mr. Mill's concession is perpetually quoted, and is perpetually mis- 
 chievous." 
 
 " Mr. George W. Smalley (of the ' New York Tribune ') asked Mr. Mill, 
 during his later years, ' whether he still adhered to this statement ? ' ' Cer- 
 tainly,' was his answer. ' I have never affirmed anything to the contrary. I 
 do not presume to say that the United States may not find protection expe- 
 dient in their present state of development. I do not even say that, if I was 
 in America, I should not be a protectionist.' " — Peop. Thompson, " Political 
 Economy," p. 250. 
 
LAISSEZ FAIRE— NOT A SCIENTIFIC DOGMA. m 
 
 industry possible to any psople — "hands oS," as to the rest 
 of the industrial world. Government can arrange these 
 conditions for us, and conserye in the completest manner 
 " the obvious and simple system of natural liberty " — our 
 own natural liberty — to have access to our own resources. 
 
 Judge Phillips says, wisely : " Legislators can not stand 
 neutral, as mere lookers-on at a drama, in the catastrophe 
 in which they have no hand. They are the appointed re- 
 sponsible actors and agents, and the result, whether success 
 or ruin, is of their achievement. 
 
 " The false pretense of free trade not to act, is, in fact, 
 positively and directly, in the most efficient manner possi- 
 ble, taking sides with the foreign competitor. The pre- 
 tense that the Government is to be neutral in this contest 
 is as preposterous as to pretend that it is to be neutral in 
 the case of hostilities with any foreign country." 
 
 James Madison easily formulated out of the facts of our 
 history this conclusion : " To allow trade to regulate itself 
 is not, however, to be admitted as a maxim universally 
 sound ; our own experience has taught us that it is, in cer- 
 tain cases, the same thing as allowing one nation to regulate 
 it for another." 
 
 As a rule of individual or national conduct we may, 
 then, dismiss laissez /aire, not only as a pretentious sophis- 
 try, but as a very pretentious humbug. 
 
CHAPTEE YI. 
 
 AN ANAITSIS OF FOEEIGjST TEADE ^THE EEAL QUESTION AT 
 
 ' ISSUE. 
 
 We have now come into sight of the problem of politi- 
 cal economy. It is, namely, to investigate the nature, the 
 causes, the amount, and the distribution of wealth in human 
 society, and the laws of coexistence and sequence discover- 
 able in this class of social phenomena. The solution offered 
 by current orthodox deductive economists, and the one to 
 which we have been giving attention somewhat in detail, 
 may be briefly but accurately summed up as follows : 
 
 " The nature of wealth is explained by defining it as 
 comprising all things which are objects of human desires 
 limited in supply and valuable in exchange. Of the causes 
 governing its amount and distribution the chief exposition 
 is that the desire of wealth naturally leads, where secmity 
 and liberty exists, to labor — accumulation of capital, appro- 
 priation of land and its resulting rent, division of labor, or 
 separation of employments — commerce, and the use of 
 money. Whence a continual increase in the total stock of 
 wealth and its distribution in wages, profit, and rgnt, fol- 
 lowed by the prices of products in proportion to the labor, 
 sacrifice, amount of capital, and quantity and quality of 
 land contributed by each individual to production. Inas- 
 much as human fecundity tends to augment population in 
 a geometrical ratio, while the productiveness of the soil is 
 limited, the proportion of rent to wages and profit tends to 
 
AN ANALYSIS OF FOREIGN TRADE. II3 
 
 increase in the progress of society." This is the entire 
 framework upon which diflEerent authors ptit the flesh and 
 muscles to suit themselves. 
 
 The question we are about to investigate is not one of 
 taxation. We may as well get this clearly fixed in our 
 minds. " Taxation is no part of the science, and there can 
 be no true science of taxation. Nature has given no whis- 
 per that we can hear abont any taxes," says Prof. Perry ; 
 and Prof. Sumner holds that " there are no scientific laws 
 of taxation, because there are no natural laws of taxation. 
 Nature has not provided for taxation as she has for produc- 
 tion, exchange, distribution, and consumption. Taxation 
 is part of the co-operation of society for its own defense 
 against the evil and destructive forces within itself." ' 
 
 The question involves, first and last, the economic effects 
 of restriction. Pestriction is an effort of a nation to pro- 
 vide against destructive forces from without. It assumes 
 the existence within that nation of productive forces which 
 are natural and proper to its people, and it undertakes to 
 use them. In our own case, it undertakes to make it an 
 inducement to the people of other lands to come here and 
 enter into the joint possession of them, and to set no domes- 
 tic limit to the forms of industry within reach. Our ac- 
 tivities are to be measured by our capacities and numbers, 
 and are not to be restricted to the supply of the demand 
 of other nations, based on exchange values. 
 
 It may be that this proposal will run foul of some 
 economic doctrines which would provide a comparatively 
 
 ' Even though it were a question of raising surplus money for public pur- 
 poses — ^taxation — it might be good economy. Prof. Senior gives a clew to the 
 secret of meeting enormous indebtedness and consequent taxation : " A coun- 
 try which has been forced into raising a lai-ge public revenue, suffers far 
 more from the indirect than from the direct effect of taxation — suffers more 
 by being prevented from producing, than from being obliged to pay." The 
 progress in the payment of our own war-debt is in point. 
 
114: PROTECTION VS. FREE TRADE. 
 
 sparse population on a ricL. soil with the means of a com- 
 fortable, lazy existence through exchanges made in products 
 ■which cost us little labor, little effort and sacrifice. A re- 
 stricted number of human beings might live here with en- 
 tire scientific precision, and in close and strict subordina- 
 tion to the technical rules of an abstract system, but they 
 must forego their mission, not alone of creating new values 
 — " wealth " — but also of nation-making and of historical 
 standing. The orthodox scorn and despise the sentiment 
 of nationality in these discussions ; but if the satisfaction of 
 desires be the true end of human effort, the insatiable aspi- 
 rations of the men of America for a true citizenship and a 
 national individuality will be found no less potent and u-re- 
 pressible impulses than the desire for wealth. "Wealth is 
 only one of the objects the successful pursuit of which has 
 created the fullness and perfeetness of Kfe here. It has 
 not been an object of distinct pursuit, it came along as one 
 of the many ends in which our efforts culminated — work- 
 ing out, as a whole, the general welfare. 
 
 And, then. Profs. Perry and Sumner ^ distort the whole 
 discussion of the protective system,, effectuated by restric- 
 tions upon foreign exchanges, as though it were a question 
 of taxation. This is done deliberately to cover the confu- 
 sion and fallacy which that mode of treatment enables 
 them to import into the debate. One mode of reaching 
 protective results is by imposing import duties upon for- 
 eign manufactures. In this case, it is not the revenue, 
 the proceeds of that particular form of taxation which we 
 are after, but the restriction of the market pro tanto to a 
 
 ' I name these two very distinguished professors because they are able, 
 alert, and have made the only scientific contribution to American free trade. 
 They are controTersialists, and have not always, under their fervor of con- 
 viction and impatience with dissent, preserved the amenities of debate. If 
 they are met in the same spirit, it is not intended as disrespect to them. 
 
AN ANALYSIS OF FOREIGN TRADE. II5 
 
 home-producer. The economical effects could be reached 
 as effectively by prohibitory legislation as by tariffs for rev- 
 enue which result incidentally in protection. The whole - 
 contention between the protectionist and the free-trader 
 may be carried on without the shghtest recurrence to the 
 word " taxation," either in fact or idea. Having made the 
 protectionist say that taxation has some creative power, 
 Prof. Sumner rudely challenges him to the proof thus : 
 " The rest is all phrases intended to occupy attention while 
 the thimble-rigging is going on. If this is not so, let some 
 protectionist analyze the operation of his system and show 
 by reference to undisputed economic principles where and 
 how it exerts any effect on production to increase it." If 
 the protective tax, as the professor insists on calling it, 
 should prove the means of removing the obstacle to the 
 best distribution of the population and natural employment 
 of their efficiency, the epithet "thimble-rigger" might be 
 unpleasantly applicable elsewhere. 
 
 If the distinction between taxation and the regulation 
 of commerce has never been kno'wn to these gentlemen, it 
 is time they took a glance at the ante-Revolutionary de- 
 bates both in the British Parliament and Colonial Assem- 
 blies. The speeches of Lord Chatham and Edmund Burke 
 in defense of the colonies contain long arguments based on 
 the distinction. Indeed, the Kevolution did not have its 
 origin in any denial of the parliamentary right to impose 
 hmitations for "the regulation of commerce," but it arose 
 distinctly out of the effort to tax the colonies directly for 
 the purpose of raising revenue. The legal power of Par- 
 liament " to regulate commerce " was not disputed by the 
 colonists, but they protested against its economic effects on 
 them. The power to levy taxes was instantly resented, im- 
 less accompanied with the right of representation. The 
 legal power in Congress " to regulate commerce " includes 
 
116 PROTECTION VS. FREE TRADE. 
 
 the power to hij protective duties, and, if economic reasons 
 justify it, prohibitory duties. Any device is authorized 
 which promotes " the general welfare." The Constitutional 
 grant is, " to regulate commerce." 
 
 Prof. Perry breaks out into very intemperate words in 
 this connection. He confuses means with ends : " We have 
 seen abundantly already what protection in the false sense 
 is, as complicated and comprehensive taxes, and it is a piece 
 of pure and plausible deceit to apply a word so diffused 
 with wholesome association to a thing so penetrated with 
 loathsome selfishness. Government, which is nothing hut 
 a committee of citizens to attend irnpartially to certain 
 great needs of the whole, is thereby prostituted to the end 
 of the possible enrichment of the few at the cost of the 
 certain impoverishment of the most." "We may as well 
 carry along with us the professor's definition of govern- 
 ment. 
 
 It is one of the unaccountable things that a layman is 
 expected to draw cahn and lucid conclusions from the 
 furious and lurid rhetoric with which the professors of 
 political economy always go about it to lay down their 
 premises in this department of their science. In his ad- 
 dress before the Tariff Commission, Prof. Sumner starts 
 off in this wise : 
 
 " Who is the beneficent genie now, who works all the 
 magic of the protectionist's system ? It is a tax. If taxes 
 are only rightly adjusted, says the protectionist, they make 
 wages high and low, and prices high and low, all at the 
 same time. When one hears this kind of nonsense, one is 
 forced to believe that the sum of superstition in the world 
 is a constant quantity. Superstition is a defective sense 
 of causation. . . . The protectionist legislator lays a tax, 
 and goes home secure in the faith that wages will be high, 
 prices low, and prosperity stable, as if there were a fixed. 
 
AN ANALYSIS OF FOREIGN TRADE. HY 
 
 direct, and inevitable law of nature connecting taxes with 
 social welfare, and nothing else. . . . This superstition is 
 more wild than fetichism or astrology." 
 
 It is a perfectly legitimate demand, which the parties to 
 this discussion have a right to make on each other, that 
 there shoidd be some common understanding of the terms 
 involved, some adequate analysis of the facts with which 
 they deal, and some adequate conception of the principles 
 of political economy, or the practical maxims of business, 
 and of the proper application of the one to the other. 
 
 Mr. David A. Wells, more temperate, but still inac- 
 curate, defines the protective system as one which maintains 
 " that a state or nation can most surely and rapidly attain 
 a high degree of superior prosperity by protecting or shield- 
 ing its domestic industries from the competitive sale or 
 exchange with the products of all similar foreign industries ; 
 the same to be effected either by direct legislative pro- 
 hibition of foreign commerce, or by the imposition of such 
 discriminating taxes (duties) on imports as shall, through 
 a subsequent enhancement of prices, interfere to a greater 
 or less extent with their introduction, free exchange, and 
 consumption. An explanation of either of the terms ' free 
 trade' or 'protection' involves, therefore, a presentation 
 of the arguments based on theory or experience which may 
 be adduced in support of the respective economic systems 
 of which they are the expression." 
 
 But our aggressive friend Prof. Perry will not admit 
 the possibility of either theory or experience in the case of 
 protection : " This explains a peculiar and long-noticed fact, 
 namely, the protectionist talkers and writers rarely or never 
 use radical analysis. They rarely or never begin at the 
 beginning, take simple cases and follow them on, try to 
 show why and how high taxes on certain things promote 
 the public prosperity, and thus connect cause with efEect 
 
118 PROTECTION F>Sr. FREE TRADE. 
 
 and premise with conclusion. On tlie contrary, they talk 
 endlessly about protection, ascribe to it marvelous efficacy, 
 often refer to it as if it were a leading factor in the devel- 
 opment of industry, without ever once taking it to pieces 
 before our eyes and showing us that it is adapted in its 
 very nature to bring about the results ascribed to it. The 
 truth is, an honest analysis is fatal to it, and so recourse is 
 had to smooth words and deceptive phrases and ornamental 
 epithets, non-suggestive even of the real nature of the 
 thing." 
 
 We shall try to take it to pieces and venture on the 
 analysis suggested. 
 
 In a very incisive paper, " The Argument against Pro- 
 tective Taxes " (" Princeton Keview," March, 1881), Prof. 
 Sumner concedes two possible positions which the protec- 
 tionist may assume. Whenever Prof. Sumner undertakes 
 to state his adversary's premises, it must be noticed that his 
 attitude is not a judicial one. Yery grave allowances must 
 be made both for over-statements and under-statements of 
 his opponent's position, and very thorough filtration must 
 be made of the prejudgments and unfair and untrue per- 
 version which he thrusts to the fore as his adversary's 
 premises and conclusions. Making allowances for rhetor- 
 ical sophistries, we may come to a kind of an understand- 
 ing of the doctrines which a protectionist may be thought 
 capable of entertaining from these paragraphs, taken from 
 the paper referred to. The itahcs indicate points at which 
 some adjustment of words to things are to be made. '-'Mis- 
 chievous thing," " isolation," " antagonism of nations," are 
 the professor's glosses on alleged doctrines which nobody 
 holds : 
 
 " 1. He may boldly declare that there is a science of 
 wealth based on restrictions ; that he can discover the.prin- 
 ciples of it and reduce them to a theory ; that trade be- 
 
AN ANALYSIS OF FOREIGN TRADE. HQ 
 
 tween countries is a mischievous thing, at least if it runs 
 on parallels of latitude ; that isolation and antagonism of 
 nations is the law of nature upon which wealth and civili- 
 zation depend ; that there is therefore no universal soienoe 
 of wealth, but only a national science of wealth, and that 
 this science is, in its final analysis, only a generalization 
 from certain empirical maxims of economic poHcy. 
 
 "2. The other ground which the protectionist may 
 take is that protection does not increase wealth, but is, for 
 some reason or other, expedient." 
 
 Prof. Perry says, frankly and once for all, that " there 
 can be no science of exchanges " (i. e., no such science as 
 political economy) " if any economical reasons can be given 
 for restricting exchanges." 
 
 Now, the protectionist and the free-trader are dealing 
 with the same economic forces. "What these are v/e under- 
 took to summarize at the opening of this chapter. If they 
 start from the same premises, there must be some fallacy 
 in reasoning or mistake in fact somewhere, for their con- 
 clusions are radically at opposites. The free-trader thinks 
 protection is a fatal economic and political blunder. What- 
 ever estimate we may make of our progress in accumulat- 
 ing wealth in the United States, we are, he thinks, infi- 
 nitely worse ofE than we should have been under free trade. 
 It is quite difficult to imagine what the idea of a free-trader 
 is as to the goal we might have reached. And it may be a 
 question of the ideals from which we start and of the ends 
 to be attained. The end he contemplates, perhaps, is not to 
 be viewed from the national stand-point, but from a cosmo- 
 politan. But surely, if the protectionist and free-trader 
 start together, and do not arrive together, the cross-roads 
 where they separated ought to be discoverable. Let us 
 start, then, with the two distinguished American profess- 
 ors whom we have had occasion to quote so often. Prof. 
 
120 PROTECTION VS. FREE TRADE. 
 
 Sumner, in his " Princeton Keview " essay, affects to state 
 the issue, " free from all sentimental and pedantic rubbish." 
 As is his custom, he asks his piipil to look at his landscape 
 through glasses which he has colored in advance, and he 
 always faces him in his own direction before he starts him. 
 At least, he is a master of the art of so putting a problem 
 that his solution is disclosed in the very form of its state- 
 ment. Here are his four questions, and we shall try to 
 answer them, although each question is already enceinte 
 with the answer he has carefully prearranged. They logic- 
 ally contain the whole argument against Defensive Duties. 
 The italics are not his : 
 
 " The economic question about the tariff is. Does it en- 
 able the population of the coimtry to command greater 
 - material good for a given effort ? 
 
 " The political question about protection is, Does the 
 statute enacted by the legislature alter the distribution of 
 property so that one man enjoys another manSs earnings f 
 Has the state a law in operation which enables one citizen 
 to collect taxes of another ? 
 
 "The scientific question about protection is, Does it 
 lessen the ratio of effort and sacrifice to comfort and enjoy- 
 ment ? 
 
 " The popular question about protection is, Does it 
 prevent me from supporting myself and my family by 
 Tny labor as weU as I could do it if there were no protect- 
 ive taxes ? " 
 
 These questions raise legitimate issues, which will be 
 discussed, infra. Chapters IX and X. 
 
 These inquiries are made by a scholar thoroughly 
 trained in a science, and one who, year after year, has 
 guided bright and inquisitive minds over the whole field, 
 and who, it may be assumed, see and understand all the 
 contents of that field. Such a one mu^t be assumed to be 
 
AN ANALYSIS OF FOREIGN TRADE. 121 
 
 able to apply tlie abstract and general propositions which 
 belong in his science to the concrete facts of a specific prob- 
 lem. The conclusion he reaches ought to be true in some 
 sense ; if not to the actual facts of the case in hand, it pos- 
 sibly might have been true in some supposititious case — it 
 might be made to correspond with certain ideal presupposi- 
 tions. Of course, there would have been some sort of definite 
 industrial organization here under free trade. It becomes 
 the professor to let us know, in detail, what it would have 
 been. It is certain that the commercial and industrial 
 ruins which the United States now present to a sympathiz- 
 ing world are not nearly so wide-spread as the theory of 
 Prof. Sumner says they ought to be. The dilapidation is 
 not total, and he is compelled to admit that we have " ac- 
 cumulated capital faster in the United States than in any 
 country in the world." The economic history of the coun- 
 try under the highly protective tarifE of 1861 has been a 
 standing wonder to the free-traders of England and 
 America. It yields readily to adequate analysis. Its phe- 
 nomena are explicable under very obvious principles. Pro- 
 tection worked the results intended, and the why, Hes not 
 very deep. 
 
 Mr. Mill says : " If a political economist, for instance, 
 finds himself puzzled by any recent or commercial phe- 
 nomenon ; if there is any mystery to him in the late or 
 present state of the productive industry of the country 
 which his knowledge of principles does not enable him to 
 unriddle, he may be sure that something is wanting to ren- 
 der his system a safe guide in existing circumstances. 
 Either some of the facts which influence the situation of 
 the country and the course of events are not known to 
 him, or, knowing them, he knows not what ought to be 
 their effects. In the latter case, his system is im,perfect, 
 
 even as an abstract system. It does not enable him to 
 
 7 
 
122 PEOTECTION rS. FREE TRADE. 
 
 trace correctly all the consequences even of assumed prem- 
 ises. . . . Against false premises and unsound reasoning, 
 a good mental discipline may secure us, but against the 
 danger of overlooking something, neither strength of un- 
 derstanding nor intellectual cultivation can be more than a 
 very imperfect protection." 
 
 In the nature of the case Prof. Sumner must see very 
 definitely the course of economic development which would 
 have taken place under free trade. Any of us — all of us 
 — can figure it out with reasonable completeness. It con- 
 templates the arrival on the shores of America of a limited 
 number of men acting solely under economic impulses. 
 Tied by economic considerations to European commercial 
 centers, extending by concentric Hnes of growth exactly 
 in accordance with the stimulus furnished at those centers, 
 it contemplates the arrival on these shores of no more men 
 and women than may supply the demand for the raw ma- 
 terials which their old home market would take up. That 
 is what the English statesmanship which founded these 
 colonies avowedly proclaimed and intended. Indeed, these 
 emigrants would, it must be supposed, always consider that 
 old center of trade as their ultimate political center, nor 
 would they deem themselves, in thus surrendering to 
 merely commercial considerations, as the nucleus of a new 
 center of activity— of a nation. The theory overlooks the 
 arrival on these shores of the multitude fleeing from the 
 workshops of Europe and the religious and political op- 
 pressions which had compelled them to expatriate them- 
 selves, and the vast occupation of the new opportunities 
 here afforded, and which would produce, when referred to 
 old industrial centers, an unsyrametrical industrial growth. 
 With the full play of both sets of agencies, politioal and 
 industrial, in operation, we are in the presence of an en- 
 tirely new problem. The evolution of industries and of 
 
AK ANALYSIS OF FOREIGN TRADE. 123 
 
 population, if made here in strict correlation to European 
 development, would have presented a case for the applica- 
 tion of, or rather would have illustrated, some of the well- 
 known principles of the science of political economy. It 
 assumes that we are built upon the precise kind of previ- 
 sion with which the founders of great industries endeavor 
 to adjust supply to demand. The community growing up 
 under these limitations would have been demonstrably in- 
 ferior in acquisition, in energy, in civilization, and in 
 wealth. 
 
 Things have not, however, turned out in the United 
 States as English statesmen and the free-traders predicted. 
 We are indubitably prosperous — which they, of course, 
 deny. They have failed in correct predictions of economic 
 events, because the realization of the result has been con- 
 tingent on the action of contemporaneous agencies not in- 
 cluded in their economic premises. Their prevision is an 
 attempt to forecast, not events, but tendencies, and these 
 tendencies have been counteracted by others, of which the 
 free-trader is deteimined to take no account. When re- 
 proached that they can not even explain the present, they 
 reply, " Oh, now, you are outside your science ! " 
 
 Our early history negatived their presuppositions. Prof. 
 Sumner has said, with great emphasis and with entire ac- 
 curacy, that " what we are is the result of our inherited 
 traits and traditions and of our physical surroundings." 
 Herein he fairly jumps the inclosure within which the defi- 
 nitions of the science confine him, and yet he betrays his 
 contempt at the effort to mix up economic and " sociologi- 
 cal" considerations. Unfortunately for him, the Creator 
 of the human family so mixed the ingredients in human 
 nature. 
 
 The economic phenomena of America are incapable of 
 being interpreted upon any principle of exchange. It was 
 
124 PROTECTION VS. FREE TRADE. 
 
 a case in wMch. the productive forces of men and material 
 conditions — " inherited traits and traditions and physi- 
 cal surroundings " — ^being such as they were, must, when 
 brought into mutual action and reaction, eventuate as they 
 did, and in which economic, moral, and political motives 
 conspired to force us to the line of development which we 
 took. In our human nature there were other desires just 
 as natural as " trading." It can be shown that sound eco- 
 nomic considerations alone not only justified but compelled 
 oiu* policy, and vindicate our career. Before proceeding 
 to answer the four qiiestions asked by Prof. Sumner, let us 
 see what we mean by " trade," " commerce," " exchanges," 
 foreign or domestic, free or restricted. 
 
 We shall find no more " exasperating, almost belliger- 
 ent " controversialist than Prof. Perry. Taking up his 
 " Political Economy " at the chapter on " Foreign Trade," 
 let us go through a simple supposed case with him — the 
 trade between England and France in cotton and silks. 
 
 " The first question is. When vsdU it be mutually profit- 
 able for England to send cottons to France to buy silks 
 with, and France to send silks to England to buy cottons 
 with % The answer is easy : The trade will be mutually 
 profitable when efforts bestowed in France upon silks will 
 procure, through exchange with England, more of cottons 
 than the same amount of efforts bestowed in France upon 
 cottons will produce of cottons directly ; and then, when 
 efforts bestowed upon cottons in England will procure more 
 of silks, through exchange with France, than the same 
 amount of efforts bestowed in England upon silks will 
 produce of silks directly. So long as there is a difference 
 of relative efficiency in the production of the two commodi- 
 ties in the two countries, so long, setting cost of carriage 
 aside, may there be a profitable exchange of the two. To 
 make such an exchange profitable to both parties, it is not 
 
AX AifALYSIS OF FOREIGN TRADE. 125 
 
 at all needful that the cottons exchanged for the silks shall 
 have cost the Enghsh as many days' labor as the silks have 
 cost the French ; or that the silks shall cost the French as 
 much as the cottons cost the English. It is not a question 
 of the absolute cost of either commodity to the parties pro- 
 ducing it " (it does not appear whether the Professor means 
 cost — measured by " labor and abstinence," or by " vs^ages 
 and profits," a distinction of great importance, because, in 
 one case, cost may be equalized by competition, in the 
 other, not) ; " but a question of the relative cost of that 
 produced in either country, compared with what would 
 be the cost of the other commodity were it to be pro- 
 duced in that country. A demand in each country for 
 the product of the other is, of course, presupposed in the 
 illustration^ 
 
 This proposition, stuck in parenthetically, is vital, and 
 must be borne ia mind. The whole trade in each country 
 is founded on a demand ia the other for the surplus of the 
 product in which it has the greater relative efficiency. 
 With no foreign market, it is compelled to sell a surplus 
 product in the home market at a reduced average effi- 
 ciency. It will then, by home production, get all its sup- 
 plies at the cheapest rate possible to a country so situated. 
 If it had, what it has not, an adequate foreign market, 
 it would preserve its highest efficiency by exchanging in 
 that market. An overpopulation in a country, resulting 
 in overproduction, would be an economic blunder: and 
 overpopulation in the United States is really the point 
 at which the free foreign trader ought to direct his eco- 
 nomic criticisms. Having such an overpopulation, it 
 is the business of an American economist to furnish the 
 " services " which they may render each other, or witness 
 their exodus. 
 
 Prof. Perry goes on : 
 
126 PEOTECTION VS. PKEE TRADE. 
 
 " In effect, tlie Frenehmen ask, Can we get more and 
 better cottons by working in silks and then trading tbem 
 off for English cottons, than we can get by the same efforts 
 in working on cottons at home? The Englishmen ask. 
 Can we get more and better sUks by working in cottons 
 and then trading with France for silks, than we can get by 
 trying to make silks at home ? " 
 
 Yes, if all the silks wanted in one countiy just pay for 
 aU the cottons wanted in the other, and they acted solely 
 on present economic motives : if England quits making 
 silks and France quits making cottons. 
 
 " The second question is, How does the diversity of 
 relative advantage practically work in foreign trade ? 
 
 " In the majority of cases, doubtless, foreign trade takes 
 place in articles, in the production of one of which each of 
 the respective countries has an absolute advantage OYev the 
 other, but an every way advantageous trade maybe carried on 
 in articles in the production of both of which one nation shall 
 have an absolute superiority over the other, provided only 
 that this superiority be relatively diverse in the two articles." 
 
 This is a rare case in international trade. The case of 
 Barbadoes and the United States is in point. The inhabit- 
 ants of Barbadoes, favored by their tropical climate and fer- 
 tile soil, can raise provisions cheaper than we can in the 
 United States. And yet Barbadoes buys nearly all of her 
 provisions from this country. Why? Because, though 
 Barbadoes has the advantage over us ia the ability to raise 
 provisions cheaply, she has a still greater advantage over us 
 in her power to produce sugar and molasses. These she ex- 
 changes with us for flour. If there were no foreign market 
 for her sugar and molasses, Barbadoes would be compelled 
 to raise her own flour, or go without it. It may be as well 
 to bear this in mind : that she could buy no more flour 
 than her sugar and molasses would pay for. 
 
AN ANALYSIS OF FOREIGN TRADE. ±27 
 
 " The third question is, "WTiat are tlie extreme limits of 
 the value of cottons and silks in the case supposed, and 
 when will a third nation be able to undersell either in the 
 ports of the other ? " 
 
 The answer to this raises no question germain to our 
 discussion. 
 
 " The fourth question is, How does the varying play of 
 the international demand affect the value of articles in for- 
 eign trade ? 
 
 "The answer is, If the demand for French silks in 
 England Jws< answers to the demand for English cottons 
 in France, so that the sUhs offered by France just jpay for 
 the cottons offered by England, then, cost of carriage aside, 
 the gains of the trade will be equally divided between the 
 two nations. . . . This case of equalization, though pos- 
 sible, is rarely hkely to occur in practice. In any terms of 
 exchange iirst offered, there is likely to be a stronger de- 
 mand in one country for the product of that. This will 
 lead to a change of value and a new division of profits. 
 The product for which the demand is less will find its mar- 
 ket sluggish, and, in order to tempt fm-ther and brisker ex- 
 changes, will be compelled to offer more favorable condi- 
 tions. He who enters a market in quest of what is more 
 in demand, with a service in return which is less in de- 
 mand, will ha/ve to lower his terms or not trade." Prof. 
 Bowen states the same principle in these words : " Which- 
 ever nation is under the strongest temptation or necessity 
 to buy from others — whichever needs to buy rrhore value 
 than it can sell — that nation labors under a disadvantage in 
 the traffic, and must offer its own commodities at the low- 
 est possible price." 
 
 " It follows from these principles," continues Prof. 
 Perry, " that what a nation purchases by its exports, it pur- 
 chases by its most efficient labor, and consequently at the 
 
128 PROTECTION VS. FREE TRADE. 
 
 cheapest possible rate to itself. Only tliose things, for the 
 procuring of which a nation possesses decided advantages 
 relatively to other nations and relatively to its own advan- 
 tages in producing directly what is received in return, are 
 ever exported, and hence the return cargoes, no matter 
 what they have cost their original producers, are purchased 
 by this nation as cheaply as if they had been produced by 
 its own most advantageous labor. This is a wholly im- 
 pregnable position, and the advocates of restricting foreign 
 trade are challenged to try their hand a little at its de- 
 fenses." 
 
 This impregnable position lacks the only basis of fact 
 in America upon which it can possibly stand. The con- 
 sumption of goods in the United States — the product of 
 the competing or protected industries — is larger than we 
 have ever been enabled to buy in the world's market with 
 any or all of our exportations which the world's market 
 would buy of us : nor has the world's market ever con- 
 tained a sm-plus of the products of such industries sufficient 
 for our wants, even if we had the proper purchase-money. 
 Our wants have been such that to have supplied them 
 all abroad, we should have been compelled to buy more 
 value than we can sell. 
 
 " The sixth question is. Which party in foreign trade 
 pays the costs of carriage, or does each pay them in equal 
 proportion ? " 
 
 This question is confessedly insoluble by any econo- 
 mist. Our Professor's answer is : " That wiU depend on 
 the equation of international demand. Nothing in the na- 
 ture of things hinders that each party shall, in effect, pay 
 the freights of the other, or one even pay the freights of 
 loth:' 
 
 " These, then," concludes the Professor, " are the essen- 
 tial principles of foreign trade, . . . and in the light of 
 
AN ANALYSIS OF FOEEIGN TRADE. 129 
 
 their principles it is very clear that foreign trade is just as 
 legitimate as domestic trade ; that it rests on the same ulti- 
 mate principles in the constitution of man and in the proyi- 
 dential arrangements of nature ; . . . that to prohibit it or 
 restrict it, otherwise than in the interest of morals, health, 
 or revenue " (why not add, the general welfare ?), " must 
 find a justification, if at all, outside the pale of political 
 economy. That to say to any body of men who wish to ren- 
 der merely commercial services to foreigners, to receive 
 back similar sei-vices in return, that such services shall nei- 
 ther be rendered nor received, is not only to destroy a cer- 
 tain gain, but also to interfere with a natural and inalien- 
 able right." 
 
 This last proposition, if true, would end the discussion. 
 It is not, however, a proposition in political economy. It 
 is a theorem which must be established in the science of 
 law or morals or sociology. It never has been proved, and 
 we may pass it with the assumption that it never can be. 
 Prof. Walker cheerfully concedes that " the claim to free- 
 dom of trade as a ' natural right ' is not one of which the 
 economist can properly take account." 
 
 Of such attempts to treat an art like a science, " to found 
 theories of politics on what is called abstract rights," Prof. 
 Cairnes says : " They are a species of hybrid philosophy. . . . 
 The argument is involved at the outset in ?l petitio prin- 
 cipii. The question, "What is ? and the question, "What 
 ought to be ? are distinct questions. It may be that the an- 
 swers to them coincide: that tJiat which is is also that 
 which ought to he ; but then this is a thing to be proved, 
 not to be taken for granted." 
 
 To this analysis of foreign free trade ought to be added 
 an argument for free trade which the Professor emphasizes 
 throughout his treatise : "If a nation will not buy of for- 
 eigners, it can not sell to them. This is the universal and 
 
130 PROTECTION' VS. FREE TRADE. 
 
 fundamental objection to " protection," so called, that, if 
 legal barriers keep out a dollar's wortb of foreign goods 
 whicb want to come in, they thereby and necessarily keep 
 in a dollai-'s worth of domestic goods which want to go 
 outP 
 
 There are plenty of goods which we want, but for- 
 eigners do not have for sale all we want — they have some 
 only. There are plenty of domestic goods which want to 
 go out, and foreigners do not want them. Protective 
 tariffs do not stop the trade. Our purchasing power is not 
 of the right Mnd to take eflEect in the foreign market. Our 
 surplus is in the wrong kind of merchandise ; their surplus 
 is not large enough for our needs. We want the foreign 
 goods, but under the facts of our case we must go without 
 them, or, if we want them " bad enough," we must go to 
 the labor and cost of making them under American con- 
 ditions — which is not feasible or possible " under freedom." 
 If foreigners would stop competing with us in raising food 
 and cotton, and give us the market, we could do better, so 
 far as mere trade is concerned — ^but they don't stop and 
 they won't stop. If foreigners will not buy of us, we can 
 not buy of them. We can not buy of them for two rea- 
 sons : their market can not ofEer as much as we would buy ; 
 it will not take as much as we would sell. This state of 
 things drives us to competition. 
 
CHAPTEE VII. 
 
 THE ALTEENATIVES OFFERED US — WHAT WE BUY AND WHAT 
 
 WE SELL. 
 
 The decks axe now fairly cleared for action. The first 
 step is to determine the industry in which we have an ab- 
 solute superiority over other nations. 
 
 There is a general agreement among free-traders that 
 " they are all ' land ' industries." ' The whole stress of the 
 free-trade argument is that we ought to pursue these in- 
 dustries and supply our wants of other commodities by ex- 
 changes of them efEected through free foreign trade. For 
 all the purposes of the argument, the products of these in- 
 dustries are, up to this date in onr history, cotton, tobacco, 
 food (in the various exportable forms of wheat, com, meats, 
 cheese, butter, hops, etc.), and the precious metals — to 
 which, latterly, may be added, petroleum. 
 
 One of two sets of nnalterable assumptions must be 
 made in putting this scheme of " international division of 
 labor " into practical operation in the nation which we call 
 the United States. 
 
 I. One set is this : 
 1. That we shall in the United States raise so much food 
 
 ' The ground idea of them all is well expressed by Prof. CUfle Leslie : 
 " The best economy, of course, would have been for American capital to con- 
 fine itself to the fields in which it had superior productiveness, awaiting a rise 
 of wages and in the cost of coal-mining in England for competition in others." 
 ("Fortnightly Eeyiew," October, 1881.) 
 
132 PROTECTION VS. FREE TRADE. 
 
 and raw materials as tlie foreign naarkets will take, 
 and no more. 
 
 2. That our population sliall increase no faster than the 
 
 number of laborers iuvolved in that production shall 
 require. 
 
 3. That increase of capital shall keep pace with that order 
 
 of development. 
 
 4. That the total annual produce of the industry and capi- 
 
 tal of this country shall be kept down to these dimen- 
 sions. 
 The " industrial entity," the nation, so formed, is the 
 one upon which the science of free-trade economy has fixed 
 its ideal expectations. The rate of growth and ultimate 
 size reached under the conditions thus prescribed are those 
 which the science says oiight to have been. It contem- 
 plates us as coming all the way across the Atlantic to start 
 a food and raw-material factory, limited and adjusted to 
 foreign conditions. We were simply to be a truck-farm 
 for Europe. Now, whatever ougJit to have heen, and what- 
 ever might have teen, the wrong kind of men came to make 
 that a possible result. The early settlers here did not 
 found a penal colony. It was morally impossible that they 
 could have accepted this sort of conditions. ■ Under them 
 the case was settled adversely by the course of our actual 
 history, and the whys and wherefores are too numerous to 
 discuss. 
 
 II. The other set is this : 
 
 1. That there is a market abroad for the whole surplus of 
 
 these productions in our most advantageous indus- 
 tries. 
 
 2. That all our capital and labor could be employed in 
 
 their production. 
 
 3. That under these circumstances the exchangeable value 
 
 of our exports would not be reduced. 
 
THE ALTERNATIVES OFFERED US. I33 
 
 4. That the exchangeable value of our imports would not 
 
 be increased. 
 
 5. That our wants are such that we are not compelled to 
 
 buy more value than we can sell. 
 
 Of the alternatives offered, we undertook to accept the 
 second. We did not attempt to take our place in the 
 world's industry according to the exact rules of political 
 economy, because, in the first place, we did not come in 
 pursuance of mere commercial instincts ; in the second 
 place, we were not that kind of men ; and, in the third 
 place, too many of us came. We therefore rejected the 
 first alternative. 
 
 We did undertake to accept the second, because, while 
 we came to found homes and institutions, it seemed as 
 though, proceeding in accordance with these conditions, we 
 Tnight reach the expansion which our inherited traits would 
 work out of our physical surroundiags. We then saw no 
 reason why our industrial entity should correspond with 
 our pohtical entity. Upon making the experiment, we 
 soon found that they must correspond. Why this was so, 
 the free-trader will find out if he will read the history of 
 his country, or will consult any practical American farmer 
 now. And if he wishes to fortify his judgment by au- 
 thority, let him buy a copy of Adam Smith's " Wealth of 
 Nations " at the nearest second-hand bookstore. 
 
 I have said we undertook to organize our national in- 
 dustries on these assumptions : 
 
 1. That there is a market abroad for the whole sur- 
 plus of the productions in our most advantageous indus- 
 tries. 
 
 2. That all our capital and labor could be employed in 
 their production. 
 
 3. That, under these circumstances, the exchangeable 
 value of our exports would not be reduced. 
 
134 PROTECTION VS. FREE TRADE. 
 
 4. That the exchangeable value of our imports would 
 not be increased. 
 
 5. That our wants are such that we are not compelled 
 to buy more value than we can sell. 
 
 We failed in this attempt, because every one of these 
 assunvptions turned out to he wrong, as we now proceed 
 to show. 
 
 This is a proper place to lay down two or three gen- 
 eral principles in the science which no one is interested to 
 dispute. 
 
 Prices are in the main determined by supply and de- 
 mand. But the market for the special products of our 
 food-indxistries is limited by the number and capacity of 
 the stomachs depending on us for food. It is a well-under- 
 stood fact that, in civilized nations, more value is consumed 
 ia manufactured goods than in food. . In the United States 
 the tea, cofiee, sugar, and the like tropical fruits which we 
 consume must be brought from abroad, and they have hith- 
 erto been paid for in exports of raw material. 
 
 It is agreed that a nation pays for its imports vrith its 
 exports, and that in the long run the whole imports will 
 be equal to the whole exports ; unless it is when a nation 
 is borrowing, as the United States did on a great scale 
 during the war, and in the growth of its railroad enter- 
 prises ; or unless a nation is in the receipt of income for 
 foreign loans and investments, as is the case with Eng- 
 land at present. Her imports exceed her exports by a 
 hundred miUion pounds annually — an apparent unfavorable 
 balance, but it is really the income she receives from for- 
 eign investments and freight earnings in the carrying 
 trade. 
 
 But the imports and exports between any two nations 
 may or may not balance. What is meant by the " equation 
 of international demand " is that the imports and exports 
 
THE ALTERNATIVES OFFEKED US. 135 
 
 of each nation with all foreign countries nrnst in the long 
 run balance. The tea we buy of Cliina is paid for in cotton 
 we sell to England, or the coffee we buy from Brazil may 
 be paid for in tobacco sold to France. The balance in the 
 long account current with all foreign countries is paid in 
 money. The free-trader is fond of saying that protection 
 is " the loathsome offspring " (!) of the old mercantile theory 
 of political economy, according to which a nation thought 
 it made the greatest gains when it had the largest " bal- 
 ance of trade," payable in money, in its favor. When all 
 other arguments fail, he hurls this old boomerang. A pro- 
 tectionist has no more call to believe in the mercantile 
 theory than the free-trader. In fact, bullion plays a very 
 small part in foreign commerce. When large exportation 
 of that is required, trade stops. 
 
 Less than one half , of all the merchandise imported into 
 the United States is in manufactured goods ; and of these 
 very much the larger parts consist of silks and velvets, and 
 fine woolen goods and kid gloves, French wines and china, 
 which are articles of luxury. 
 
 However much we might be disposed in the United 
 States to look to other countries for our supplies of manu- 
 factured goods, we can only obtain them to the extent to 
 which other countries need our products. Our consump- 
 tion of such goods will, therefore, be not in proportion to 
 the power of domestic production and the wants of the 
 people here, but to the desire of other countries to have 
 our commodities. 
 
 So that we may invert Prof. Perry's key-stone, " If a 
 nation will not buy of foreigners, it can not sell to them," 
 and say, "If foreigners will not buy of ns, we can not huy 
 of them," and then his arch is liable to fall. But then it 
 will not fall far, and, besides, it was not much of an arch 
 anyway. 
 
136 PEOTECTION VS. FREE TRADE. 
 
 If we coniine ourselves to tlie production of our fertile 
 fields, to what extent will the markets of the world take 
 them ? This is the everlasting issue in the case, as raised 
 by the scientific free-trader, who insists on science. From 
 1789 to 1884 it has been unceasingly asked by statesmen, 
 by farmers, by laborers. I notice that the theoretical pro- 
 fessors never attempt an answer. Why do not the pupils 
 who sit under their teachings insist on a definite, specific 
 answer to it, and insist that there shall be no flinching? 
 For myself, I make no question that, with free trade, agri- 
 culture would, by this time, have been so unprofitable that 
 " mills and factories " would have come in naturally. We 
 would have been so poor that we could have competed, un- 
 der the regime of low wages, with Europe; rather, we 
 should neither have had anything to sell nor wanted to 
 buy anything. We should have backslidden out of the 
 contest. 
 
 It is before this question that the American people and 
 the American farmers have balked, and have refused to 
 trust in free trade. That instinct was correct, and can not 
 be overridden by anything but stern facts — theoretical dis- 
 quisition about what might have been or what ought to 
 have been, fail to convict their judgment. 
 
 I wish the professors would try their hand at this, as a 
 question of fact. 
 
 Alexander Hamilton, in his Treasury Eeport of 1Y91, 
 laid the basis for the protective system, and it was in the 
 presence of this unanswered question that the protective 
 policy was adopted. Washington, Franklin, Jefferson, 
 Madison, Monroe, and Jackson are all distinctly on record 
 as solicitous to find a vent for our sm-plus food-products. 
 Failing to see any adequate foreign market, they turned to 
 the much-derided home market. Distinguished professors 
 affect to believe that they have undone its economic effects 
 
THE ALTERNATIVES OFFERED US. 137 
 
 when they dismiss it, as one professor did in his address 
 before the recent tarijff commission, with the contemptuous, 
 " Oh, that is the famous truck-farm argument." Hamil- 
 ton's report will be referred to in other connections.' 
 
 It must be borne in mind that Hamilton, Franklin, 
 and their associates were gazing into the inmost nature of 
 the problem when its elements were simple and capable 
 of disentanglement, when there was no danger of falling 
 into an ambuscade of intricate figures or bad logic. They 
 knew what they wanted, and adopted the only plan open 
 to them to supply their wants. 
 
 Franklin, writing from London in 1771, says : 
 " If our Country People would well consider that all 
 they save in refusing to purchase foreign Gewgaws and in 
 making their own Apparel being apply'd to the Improve- 
 ment of their Plantations, would render those more profit- 
 able, and yielding a greater Produce, I should hope they 
 would persue resolutely in their present commendable In- 
 dustry and Frugality. And there is stiU a further Consid- 
 eration. The Colonies that produce Provision grow very 
 fast. But of the Countries that take ofE those Provisions, 
 some do not increase at all, as the European Nations ; and 
 others, as the West India Colonies, not in the same propor- 
 tion. So that, tho' the Demand at present may be suffi- 
 cient, it cannot long continue so. Every Manufacture 
 encouraged in our Country, makes part of a Market for 
 Provisions within ourselves, and saves so much Money to 
 
 • Hamilton's Treasury Report ia the great magazine of the scientific 
 weapons of the protectionist. No improvement has been made in the for- 
 mulation of his propositions ; but they hare been made luminous by the 
 facts of our history. No free-trader has erer leaped the ditches or scaled 
 the parapet of his impregnable fortress. His bastions command the entire 
 front. The professors hurled their little hand-grenade, " mercantile theory," 
 at him. But when he himself denounced it as " the vain project of selling 
 everything and buying nothing," that dynamite failed to explode. 
 
138 PROTECTION VS. FREE TRADE. 
 
 the Country as must otherwise be exported to pay for the 
 manufactures he supplies. Here in England it is well 
 known and understood that wherever a Manufacture is 
 established which employs a Number of Hands, it raises 
 the Value of Lands in the neighboring country all around 
 it, partly by the greater Demand near at hand for the 
 Produce of the Land ; and partly from the Plenty of 
 Money drawn by the manufactures of that Part of the 
 Country. It seems, therefore, that the Interest of all our 
 Farmers and Owners of Lands, to encourage our young 
 Manufactures in preference to foreign ones imported 
 among us from distant Countries." 
 
 Upon the market for surplus agricultural products 
 Hamilton says : 
 
 " But it is also a consequence of the policy which has 
 been noted that the foreign demand for the products of 
 agricultural countries is, in a great degree, rather casual 
 and occasional than certain or constant. To what extent 
 injurious interruptions of the demand for some of the sta- 
 ple commodities of the United States may have been ex- 
 perienced from that cause, must be referred to the judg- 
 ment of those who are engaged in carrying on the commerce 
 of the country ; but it may be safely affirmed that such 
 interruptions are at times very inconveniently felt, and 
 that cases not unfrequently occur in which markets are so 
 confined and restricted as to render the demand very un- 
 equal to the supply. 
 
 " Independently, likewise, of the artificial impediments 
 which are created by the pohcy in question, there are natu- 
 ral causes tending to render the external demand for the 
 surplus of agricultural nations a precarious reliance. The 
 differences of seasons, in the countries which are consum- 
 ers, make immense differences in the produce of their own 
 soils in different years, and consequently in the degrees of 
 
THE ALTERNATIVES OFFEKED US. I39 
 
 their necessity for foreign supply. Plentiful harvests 
 with them — especially if similar ones occur at the same 
 time in the countries which are furnishers — occasion, of 
 course, a glut in the nharhets of the latter} 
 
 ' " As to the creating, in some instances, a new, and securing in all a more 
 certain and steady demand for the surplus produce of the soil : 
 
 " This is among the most important of the circumstances which have been 
 indicated. It is a principal means by which the establishment of manufact- 
 ures contributes to an augmentation of the produce or revenue of a coun- 
 try, and has an immediate and direct relation to the prosperity of agriculture. 
 
 " It is evident that the exertions of the husbandman will be steady or 
 fluctuating, vigorous or feeble, in proportion to the steadiness or fluctuation, 
 adequateness or inadequateness of the markets on which he must depend for 
 the vent of the surplus which may be produced by his labor ; and that such 
 surplus, in the ordinary course of things, will be greater or less in the same 
 proportion. 
 
 " For the purpose of this vent a domestic market is greatly to bo pre- 
 ferred to a foreign one, because it is, in the nature of things, far more to be 
 relied upon. 
 
 " It is a primary object of the policy of nations to be able to supply 
 themselves with subsistence from their own soils ; and manufacturing na- 
 tions, as far as circumstances permit, endeavor to procure from the same 
 source the raw materials necessary for their own fabrics. This disposition, 
 urged by the spirit of monopoly, is sometimes even carried to an injudicious 
 extreme. It seems not always to be recollected that nations who have neither 
 mines nor manufactures can only obtain the manufactured articles of which 
 they stand in need by an exchange of the products of their soils, and that, 
 if those who can best furnish them with such articles are not willing to give 
 a due course to this exchange, they must of necessity make every possible 
 effort to manufacture for themselves ; the effect of which is that the manu- 
 facturing nations abridge the natural advantages of their situation through 
 an unwillingness to permit the agricultural countries to enjoy the advantages 
 of theirs, and sacrifice the interests of a mutually beneficial intercourse to 
 the vain project of selling everything and buying nothing." (We shall have 
 occasion, hereafter, to note the impossible feat which certain known reformers 
 in our day propose, to wit, to export both food, raw materials, and, manufact- 
 ured goods to the rest of the world. This starts the natural query, What, 
 then, is the rest of the world to do for us ?) . . . 
 
 " Considering how fast and how much the progress of new settlements 
 in the United States must increase the surplus produce of the soil, and 
 
140 PROTECTION VS. FREE TRADE. 
 
 James Madison (message, February, 1815) : 
 " But there is no subject that can enter with greater 
 force and merit into the deliberations of Congress than 
 
 weighing seriously ihe tendency of the system which prevails among most 
 of the commercial nations of Europe, whaterer dependence may be placed 
 on the force of natural circumstances to counteract the eilect of an artificial 
 policy, there appear strong reasons to regard the foreign demand for that 
 surplus as too uncertain a reliance, and to desire a substitute for it in an 
 extensive domestic market. 
 
 " To secure such a market, there is no other expedient than to promote 
 manufacturing establishments. Manufacturers, who constitute the most nu- 
 merous class, after the cultivators of land, are for that reason the principal 
 consumers of the surplus of their labor. 
 
 " This idea of an extensive domestic market for the surplus produce of 
 the soil is of the first consequence. It is of all things that which most 
 effectually conduces to a flourishing state of agriculture. If the effect of 
 manufactories should be to detach a portion of the hands, which would be 
 otherwise engaged in tillage, it might possibly cause a smaller quantity of 
 lands to be under cultivation ; but, by their tendency to produce a more cer- 
 tain demand for the surplus produce of the soil, they would, at the same 
 time, cause the lands which were in cultivation to be better improved and 
 more productive. And while, by their influence, the condition of each in- 
 dividual farmer would be ameliorated, the total mass of agricultural produc- 
 tion would probably be increased, for this must evidently depend as much, 
 if not more, upon the degree of improvement as upon the number of acres 
 under culture. 
 
 "It merits particular observation, that the multiplication of manufac- 
 tories not only furnishes a market for these articles which have been accus- 
 tomed to be produced in abundance in u, country, but it likewise creates a 
 demand for such as were cither unknown or produced in inconsiderable 
 quantities ; the bowels as well as the surface of the earth are ransacked for 
 articles which were before neglected, animals, plants, and minerals acquire 
 a utility and value, which were before unexplored. 
 
 "The foregoing considerations seem sufficient to establish as general 
 propositions that it is the interest of nations to diversify the industrious 
 pursuits of the individuals who compose them. That the establishment of 
 manufactures is calculated not only to increase the general stock of useful 
 and productive labor, but even to improve the state of agriculture in par- 
 ticular, certainly to advance the interests of those who are engas;ed in it. 
 There are other views that will be hereafter taken of the subject, which, it 
 is conceived, will serve to confirm these inferences." 
 
THE ALTERNATIVES OFFERED US. 141 
 
 a consideration of tlie means to preserve and promote the 
 manufactures which have sprung into existence, and at- 
 tained 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 guard- 
 ianship of Congress." 
 
 John C. Calhoun (speech, Tariff Act, 1816) : 
 " When our manufactures are grown to a certain pro- 
 portion, as they will under the fostering care of the Gov- 
 ernment, the farmer wiU find a ready market for his sur- 
 plus produce, and, what is of equal consequence, a certain 
 and cheap supply for all his wants. His prosperity will 
 diffuse itself to every class ia the community, and, instead 
 of the languor of industry and individual distress now 
 incident to a state of war and suspended commerce, the 
 wealth and vigor of the community will not be impaired." 
 Andrew Jackson (Coleman letter, 1824) : 
 " This tariff — I mean a judicious one — possesses more 
 fanciful than real danger. I will ask what is the real situa- 
 tion of the agriculturist ? Where has the American farmer 
 a market for his surplus product ? Except for cotton, he 
 has neither a foreign nor- home marhet. Does not this 
 prove, where there is no market, either at home or abroad, 
 that there is too much labor employed in agriculture, 
 and that the channels for labor should be multipHed? 
 Common sense points out the remedy." ^ 
 
 • In 1824 Andrew Jackson wrote to Dr. Coleman inter alia these words : 
 " This tariff — I mean a judicious one — possesses more fanciful than real 
 danger. I will ask, what is the real situation of the agriculturist ? Where 
 has the American farmer a market for his surplus product ? Except for 
 cotton, he has neither a foreign nor home market. Does not this clearly prove, 
 where there is no market either at home or abroad, that there is too much 
 labor employed in agriculture, and that the channels for labor should be 
 multiplied ? Common sense points out the remedy. Draw from agriculture 
 
14:2 PROTECTION VS. FREE TRADE. 
 
 Mr. Webster 1 (speecli on the Tariff Act, 1824) : 
 "Sir, that is the truest American policy which shall 
 most nsefully employ American capital and American 
 labor, and best sustain the whole population. With me it 
 
 the superabundant labor ; employ it in mechanism and manufactures, thereby 
 creating a home market for your breadstuffs, and distributing labor to the 
 most profitable account and benefits to the country. Take from agricultui-e 
 in the United States six hundred thousand men, women, and children, and you 
 will at once give a home market for more breadstuffs than all Europe now 
 furnish us a market for. In short, we have been too long subject to the 
 policy of British merchants. It is time that we shall become a little more 
 Americanized, and instead of feeding the paupers and laborers of England, 
 feed our own ; or else, in a short time, by continuing our present policy, we 
 shall be rendered paupers ourselves." 
 
 ' Mr. Webster saw the beneficent operation of the tariff of 1828 — ^the 
 " tariff of abominations " for which he voted — the disappearance of socie- 
 tary activity under the horizontal ad valorem tariff of 1832, and the refluent 
 wave of prosperity under the tariff of 1842. It was observation and analysis 
 of those phenomena which transferred Henry C. Carey from the atomistic 
 views of the free-traders, with whom he stood when ho wrote his unpublished 
 " The Harmony of Nature," in 1836, to an advocate of protection in 1844. 
 They had both outgrown the atomistic view of society as a mass of independ- 
 ent units, each taking care of himself in the markets of the world. What 
 men in society need is the wages of labor — returns for employment. If Mr. 
 Webster did not understand political economy in 1824, as is charged, he seems 
 to have come in sight of some of its doctrines in 1846. In his speech in the 
 Senate in that year he said : " To diversify employment is to increase employ- 
 ment, and to enhance wages, and, sir, take this great truth, place it on the 
 title-page of every book of political eoonpmy intended for the use of the 
 United States, put it in every ' Farmer's Almanac,' let it be the heading of 
 the column in every ' Mechanic's Magazine,' proclaim it everywhere and 
 make it a proverb that, ivhen there is work for the hands of men, thei-e will be 
 worTc for their teeth. When there is employment there will be bread. It is 
 a great blessing to the poor to have cheap food ; but greater than that, prior 
 to that, and of still higher value, is the blessing of being able to buy food by 
 honest and respectable employment. Employment feeds and clothes and in- 
 structs. Employment gives health, sobriety, and morals. Constant employ, 
 ment and well-paid labor produce, in a country like ours, general prosperity, 
 content, and cheerfulness. Our destiny is labor. What is the first great 
 cause of prosperity with such a people ? Snnply employment. Cheap food 
 
THE ALTERNATIVES OFFERED US. 143 
 
 is a fundamental axiom, it is interwoven with all my opin- 
 ions, that the great interests of the country are united and 
 inseparable, that agriculture, commerce, and manufactures 
 will prosper together or languish together." . . . While he 
 was opposed to total prohibition, to the attempt " to raise 
 up at home manufactures not suited to the climate, the 
 nature of the country, or the state of the population, there 
 were substantial distinctions to be made," and it was possi- 
 ble " to awaken a home competition in the production of 
 some articles. ... I think freedom of trade to be the gen- 
 eral principle, and restriction the exception, and it is for 
 every state, taking into view its own conditions, to judge 
 of the propriety in any case of making an exception. . .' . 
 
 " In the next place, there never was any reason to ex- 
 pect that the increase of our exports of agricultural prod- 
 ucts would keep pace with the increase of our population. 
 That would be against all experience." 
 
 It is sad to think how many economical blunders these 
 statesmen have worked into these short paragraphs. In 
 order to confer some exchange value on the farmer's prod- 
 ucts, and to have them consumed at home, in the interest 
 of the greatest annual product of American industry, and 
 to the end of securing the greatest annual income of the 
 American people — the highest aggregate of their gross 
 annual rent, wages, and profits — out of which each worker 
 gets his share, Washington, Hamilton, Jefferson, Madison, 
 Calhoun, Jackson, and Webster proposed, in the language 
 of the modem a priori college professors, " to take away 
 one man's earnings to give them to another," " to enable 
 one citizen to collect taxes of another," " to confer a favor 
 on one group of its population by an equivalent oppression 
 
 and cheap clothing are very desirable ; but they are not the first requisites. 
 The first requisite is that which enables men io huy food and clothing, cheap 
 or dear." 
 
144 PROTECTION VS. FREE TRADE. 
 
 exerted on another," " to produce forced monopolies and 
 distorted industrial relations," "to introduce that industrial 
 abomination, an industry that does not pay," " to create 
 parasite industries to live on the exuberant productions of 
 the natural industries " ; " pauper, of course, is one of those 
 silly and invidious terms which have been introduced into 
 this discussion, in the interest of falsehood and folly" ; and, 
 finally, they are "Anglophobists" ! And all this evolved 
 out of " common sense " ! All this trouble, in order " to 
 build up competing manufactures " ! exclaim the professors. 
 
 The demand of the outer world for the food and raw 
 materials of this country never has increased, and never 
 will increase, as fast as our population ; besides, we can ex- 
 port no part of our perishable products. At the moment 
 in 1885 when these lines are being written, there is no de- 
 mand in any European market for American flour, and its 
 exchange value in the home market is greater than that in 
 the foreign market, and this in the face of the fact that 
 nearly one quarter of our population has been diverted 
 from agricultural to mechanical pursuits ! If all American 
 labor and American capital had been devoted to our " most 
 advantageous industry," is there any rational doubt of the 
 destructive terms on which we should have supplied our 
 wants of foreign commodities by exchange ? ^ What does 
 the farmer think ? 
 
 Between 1784 and 1884, without attempting any his- 
 torical details, there have been years when, under a succes- 
 sion of bad harvests abroad, coinciding with good crops at 
 
 ' We are now, as indeed we always have been, in the dilemma above 
 quoted from Prof. Perry : " The product for which the demand is less will 
 find its market sluf;gish, and, in order to tempt further and brisker exchanges, 
 will be compelled to offer more favorable conditions. He who enters a 
 market in guest of what is more in demand, with a service in return which is 
 less in demand, will have to lower Im terms, or not trade.'''' 
 
THE ALTERNATIVES OFFERED US. 145 
 
 home, we have reaped enormous gains ; and there have been 
 years in which corn has been burned on the Western prairies 
 for fuel. A nation of fifty millions of people will scarcely 
 risk their economic welfare on chances so doubtful as these. 
 
 It follows from his principles, says Prof. Perry, " that 
 those men, who deem it needful that each nation should be 
 able to compete with other nations, are shallow thinkers. 
 "Why are they not consistent enough to apply their favorite 
 doctrine of ' competing ' to domestic exchanges also, and 
 demand that the clergyman shall have faciUties for ' com- 
 peting' with the lawyer, the tailor with the blacksmith, 
 the farmer with the manufacturer, the publisher with the 
 author ? Will people never learn that all exchanges, do- 
 mestic as well as foreign, depend on relative superiority at 
 different points, and that a nation which should try to make 
 its success in production equal at all points, would be as 
 fooKsh as an artisan trying to learn, and practice all trades 
 at once ? Suppose the nation to succeed, what then ? It 
 would supply its wants at a certain average efficiency of 
 effort ; whereas, by a thorough development of all its own 
 peculiar resources, it could command by exchange the 
 products of the world at a cost not exceeding that of its 
 own most productive and efficient exertions." 
 
 If the Professor had included all his qualifying doc- 
 trines and all the facts of our commerce, and had not in- 
 terjected irrelevant matter into these few lines, there would 
 be left no subject of dispute. The insurmountable fact, 
 which the Professor omits, is that the world's market has 
 never offered the chance to us to buy the manufactured 
 goods we consume, and that we are compelled to make a 
 portion of them, and for that portion we are necessarily in 
 " competition" with foreign labor and capital.^ He is dis- 
 
 ' In his water-level illustration used above, the Professor says that the 
 conditions of a trade equally profitable to both parties require " that the de- 
 
146 PKOTECTIOK VS. FREE TRADE. 
 
 cussing tlie rdle whieli the United States ought to play in 
 the "international division of labor." An artisan's effi- 
 ciency may well lie in a single direction, but a nation is 
 many-sided — the United States is well-nigh all-sided : it 
 has proved its capacity " to learn and practice all trades at 
 once." 
 
 He is endeavoring to ascertain what we ought to pro- 
 duce so that we may not conamit the absurdity of " com- 
 peting" with other nations. If there was not anything 
 that we could do to more advantage than any other nation, 
 that would be an indication, on his economic argument, 
 either that we ought not to have come here at all, or that 
 some of us ought to emigrate forthwith. But suppose we 
 have the same advantages as other nations ? If there was 
 no work for the clergj'-man, the lawyer, the tailor, or the 
 blacksmith, as such, then none of them ought to exist, as 
 such, exclusively, and probably they would not exist long. 
 But each man primarily pursues one of these callings for 
 the sake of making a living, and he expects to do this by 
 the exchange of services with others. So far forth as there 
 is no demand for his services in his special calling, so far 
 forth he must " try to learn and practice " some other call- 
 ing in connection with it — he must average his efforts. 
 "With a full opportunity to sell aU the products of his own 
 calHng, he will have to " compete " with nobody except 
 
 mand for French silks in England just answers to the demand for English 
 cottons in France, so that the silks offered by France just pay for the cottons 
 offered by England." Translated into the language of our American problem 
 that would be, " that the demand for American food and raw materials in 
 Europe and Great Britain just answers to the demand for foreign manufact- 
 ured goods in the United States, so that the food and raw materials offered 
 by the United States just pay for the manufactured goods offered by Europe 
 and Great Britain." The argument doesn't fit, and the illustration lacks 
 applicability. Europe and Great Britain have never yet taken enough of our 
 food and raw materials to pay for one tenth of our demand for manufactured 
 goods. (See Chapter X, infra) 
 
THE ALTERNATIVES OFFERED US. 147 
 
 those in the same industry. He will have no " competi- 
 tion" with his customers. If he can not live on his salary 
 as a clergyman, he may be compelled to eke out his liveli- 
 hood by " competing" at times with the schoolmaster. If 
 he is not " all-sided," he must come under the very first 
 limitation imposed by Adam Smith in his chapter on the 
 "Division of Labor," the most important chapter in his 
 " Wealth of Nations," " The division of labor is hmited 
 by the extent of the market." Smith cites the manufact- 
 ure of pins in illustration : In his day ten men, by divis- 
 ion of labor, could make 48,000 pins a day ; whereas, M'ith- 
 out it, they could only make 200. Suppose, now, the 
 artisans who supervise the process can make 48,000 pins, 
 and that there is only a demand for 24,000 pins a day. In 
 that case, the artisans must be idle half the time. Pro- 
 duction at that establishment would be most profitable only 
 when the market took an output of pins to the number of 
 48,000. An overproduction of pins would lead to loss 
 and waste unless they could he utilized as a first step in 
 the production of something else, for they would possess 
 no exchange value as pins. Now, Prof. Perry wants the 
 international division of labor so made among the different 
 nations of the earth that the United States shall enter upon 
 that industry upon which it can expend "its own most pro- 
 ductive and efficient industry." This is agriculture. As 
 in the case of the individual artisan, the people of the 
 United States are here, primarily, to earn their subsistence 
 and supply their various wants and not to produce exchange 
 values. As between themselves, the division of labor has 
 received its perfect development; as between the United 
 States and the other nations, we will exchange the surplus 
 of production in the most advantageous industry so far as 
 there is any market for it. 
 
 The most perfect machinery, and the most absolute 
 
148 PROTECTION rS. FREE TRADE. 
 
 superiority over other producers, would avail nothing to 
 tlie manufacturer if the market would not take his pins. 
 But if pins were a preliminary stage of some other salable 
 product for which there was a market, he would still hold 
 his advantage. He might then manufacture pins to any 
 extent. Convert them into the next form of commodity, 
 and the original superiority he possessed would accom- 
 pany the new industry. It might or might not ie less 
 profitable than pm-maJcing, which exactly supplied the 
 marTcet and occupied his whole capital and lahor, but it 
 would be more profitable for him than to remain idle, and 
 would add more to tlie gross annual product of the country 
 in which he lived than if he took the establishment to 
 some other land. The surplus food of America fulfills its 
 best purpose when it furnishes subsistence to the domestic 
 artisans who are producing the other commodities we use 
 — the surplus is only preparation for the next stage of our 
 industrial labors. Here we come again upon the triple 
 fallacy which the free-trader must employ — that all capital 
 and labor can be put upon the most advantageous industry 
 — that all men work all the time as hard as they can, and 
 that there is a foreign market for all the products of that 
 industry. 
 
 If the extent of the foreign market is not suflBcient to 
 take up the surplus, we must consume it in process of 
 farther manufactTire " on the premises," as in the case 
 of the pin-manufacturer. But when we come to see in 
 what form it shall be consumed, we find at once that 
 we are in " competition " with other nations. Unless we 
 waste our surplus, and waste our time and keep standing 
 idle the labor which produced the surplus, we must " com- 
 pete," and we can only successfully " compete " by re- 
 striction. We do not seek "competition"; it is forced 
 upon us. If our wants are to be supplied, it may be 
 
THE ALTERNATIVES OFFERED US. 149 
 
 compulsory upon us to satisfy them ourselyes at " a cer- 
 tain average efficiency of effort." Our division of labor 
 has been pushed too far ; we have accepted a line of in- 
 dustry — agricultural — which keeps us on half-time to avoid 
 overproduction. The alternative is to adopt other indus- 
 tries in connection with them, which may indeed reduce us 
 to some " average efficiency " only ; or, to dismiss our la- 
 borers, remit our capital, and redistribute them to other 
 national departments of the international division of labor. 
 The world's conmierce did not need us all to supply its de- 
 ficiencies at the point of our relative superiority. "We in 
 this political body-politic miscalculated our functions in 
 the cosmopolitan industrial body-politic ; our structure was 
 on too large a scale, and our functions cease. The result is 
 we have miscarried ; we are prematurely on hand. " Will 
 people never learn " that if the inhabitants of the United 
 States are here to supply certain exchange values to inter- 
 national trade, there are too many of us, and our "own 
 peculiar resources " are too prolific for current commercial 
 needs ? " "Will people never learn " that if the inhabitants 
 of the United States are here to earn the means of subsist- 
 ence by honest, honorable, cheerful work, all " our most 
 productive and efficient exertions" can not be put forth in 
 the presence of a foreign " competition " which drives us 
 out of the field ? So many of the products of the world as 
 we can not command from our own most productive forces, 
 we must be wilhng to procure by domestic exchanges 
 made at only " a certain average efficiency of effort." 
 
 But there is a still further limitation to the division of 
 labor — the nature of the employment. Of all the depart- 
 ments of industry, agriculture allows of the least division 
 of labor, and, at best, the labor is rude. Machinery has 
 been used with some efficiency, but no machinery can over- 
 come the loss of time, the delay of the seasons, which must 
 
150 PROTECTION VS. FREE TRADE. 
 
 attend the processes of planting, growing, and reaping. 
 The natural industries of this country are the ones in which 
 increased productions are made under increasingly higher 
 cost ; labor, expended on the soil, will reap rewards con- 
 stantly growing less. Exchange values may not decrease 
 from this cause, but the increased cost of production will 
 diminish the farmer's profit. Agriculture is subject to " the 
 law of diminishing returns." ^ 
 
 There were moral and economic reasons why Washing- 
 ton, and Hamilton, and Jefferson, and Madison, who stood 
 at the beginning of things, deemed it a betrayal of the in- 
 terests of their posterity to limit the productive energies 
 of the people to raw materials, and then to such quantities 
 only as the exigencies of foreign markets might take off 
 our hands. When the authors of our Constitution invited 
 immigration of laborers from all the world — opened their 
 ports to free trade in labor itself— they, by a happy con- 
 sistency, shut their ports to the products of foreign labor. 
 Why does not the free-trader inveigh against the first as 
 well as the last ? The one was the cause of the other, and 
 this illimitable supply of labor the primary cause of the 
 failure of his theories. 
 
 But the increase of population and of the power to 
 produce raw materials in excess of any foreign demand has 
 in an inconceivable degree outrun the ideas of these early 
 statesmen. There is, indeed, an immeasurable power in 
 America for these products, and there is an immeasurable 
 superiority at these points. But the absolute superiority in 
 these advantages disappears at the instant when excess of 
 
 ' Improved machinery, inventions, new modes of fertilization, may retard 
 the effect of the law. If the farmer cheapens food by raising more of it at 
 less cost of production, he is not the loser. But if food is cheapened by 
 reason of an unsalable surplus, he is a loser. Cheap food is as desirable 
 to a society as cheap anything else, but the cheapness ought to be the result 
 of more efficient processes, not of overproduction. 
 
THE ALTERNATIVES OFFERED US. 15^ 
 
 production terminates in loss of exchange value. Then the 
 product must be converted into some manufactured com- 
 modity. Alongside of these absolutely superior advan- 
 tages are others which, in comparison with these, may be 
 relatively less profitable. Compared with wheat, here and 
 now, under existing conditions, iron, cotton, woolen, glass, 
 and pottery may (or may not, for nobody can tell) be less 
 profitable, in view of exchanges abroad ; but in these enu- 
 merated manufactures, in what consists our inferiority rel- 
 atively to like products abroad ? First and last, it is in the 
 higher rate of wages paid laborers in them. Higher wages 
 mean greater comfort for the men and women who earn 
 them. After all the discords in our system are run through 
 the scale, they are located in wages. It is like the tuner of 
 the piano. Absolutely exact intervals and harmonious 
 chords are impossible over the whole key-board, so the 
 piano-tuner pushes the discords all together — accumulates 
 them all in what he calls " the wolf " — and locates them on 
 a single string. This gives us the key to the situation. If 
 the higher cost of production, reckoned in wages, is traced 
 to the laboring-man, and goes into the wages which pur- 
 chases his comforts and composes his welfare, we have 
 taken all discord out of the diapason — want of skill, or 
 capital, or efficiency, is no longer the source of the trouble. 
 We shall now see that the pursuits of other industries, 
 while less profitable (than food-raising under conditions 
 which may be conceived, but were never actual), are not 
 unprofitable; we shall see why, if they pay less, they may 
 stiU pay, and we shall see that, to the extent to which they 
 pay, they are clear gain ; and that if they were not carried 
 on here, the men and money employed on them could not 
 be employed at all in this country, and their presence here 
 would be an economic blunder. 
 
 To provide for diversification in the pursuits of a peo- 
 
152 PKOTECTION rS. FREE TRADE. 
 
 pie is not an abuse of power on tlie part of the Govern- 
 ment. Kather, we adopt the judgment of M. Chevalier, 
 an authority the free-trader will not care to challenge : 
 " On the contrary, it is the accomplishment of a positive 
 duty so to act at each epoch in the progress of a nation as 
 to favor the taking possession of all the branches of indus- 
 try whose acquisition is authorized by the nature ofthingsP 
 Protection does not propose to enter upon unnatural indus- 
 tries nor to repel the gratuities of nature ; but an industry 
 in America in which the only inferiority is in a higher 
 rate of wages is not for that reason either unnatural or un- 
 profitable : nor are the products of cheap foreign labor a 
 gratuity morally or economically. The true struggle of 
 humanity is against nature, and not against itseK ; it is not 
 the struggle of humanity in one part of the world against 
 humanity in another part. Nature is the obstacle to be 
 overcome, and not other men. " And here," in the language 
 of Prof. Caimes, " I must in the first place insist that cost 
 means sacrifice, and can not, without risk of hopelessly con- 
 fusing ideas, be identified with anything that is not sacri- 
 fice. It represents what man parts with in the struggle 
 between him and nature, which must be kept eternally dis- 
 tinct from the return made by nature on that payment. 
 This is the essential nature of cost, and the problem of cost 
 of production as bearing on the theory of value is to ascer- 
 tain how far and in what way the payment thus made by 
 man to nature in productive industry determines or other- 
 wise influences the exchange value of the products which 
 result. Given the productions of a man's industry, this 
 alone will not determine the amount of his remunera- 
 tion. In order to do this we must know, further, the pro- 
 portion in which what he produces will exchange for 
 what he wants — ^that is to say, for the articles of his con- 
 sumption." 
 
THE ALTERNATIVES OFFERED US. 153 
 
 Wlien we have once supplied the demands of the mar- 
 ket with the products of our most efficient industry, the 
 acceptance of the fruits of a day's labor expended abroad, 
 under natural conditions similar to ours, whether cheap or 
 dear, is the exclusion of the products of a day's labor ex- 
 pended here, cheap or dear. It is only a question whether 
 the laborer shall live in America or Europe. If he is to 
 live here, the industry which employs him must have pro- 
 tection if it is to survive. The free-trader is compelled to 
 conclude that he ought not to live here. 
 
 It is a fundamental assumption of the free-trader here 
 that the exchange value of raw produce would be kept at 
 present absolute rates if the whole productive energies of 
 the United States were employed on them. If there are 
 any facts to make good this assumption, it would justify 
 his doctrine, economically. But if his assumption is inde- 
 fensible, then the whole question of superior advantages 
 disappears and the advantages with it. Eaising raw mate- 
 rials is only the most profitable industry because there are 
 high returns of raw products for little labor ; but the re- 
 wards of the labor when exchanged depend on the market 
 price of the products. "What fair, decent claim is there, 
 then, for the clamorous assertions that this state of prices 
 would continue under free trade ? On the sole condition 
 that the relative price of agricultural products remains as it 
 is, has the free-trader any warrant to call them the most 
 advantageous industries. What scientific warrant is there, 
 then, to declare the protected industries unprofitable ? Con- 
 fessedly they are only less profitable relatively to an agri- 
 culture whose products could be sold in a market adjusted, 
 with ideal accuracy, to a prearranged demand. Conceiva- 
 bly, such a market might be arranged in the abstract; it 
 has never existed as a concrete fact. 
 
 There may be great returns in wheat and corn per acre 
 
154 PROTECTION VS. FREE TRADE. 
 
 in Iowa and Dakota, but whether tlie industry is relatively- 
 profitable depends on the market value of these products. 
 The free-trader always takes it for granted that there is a 
 normal, absolute, unvarying rate of agricultural profits 
 under freedom. This is the most profitable industry, and 
 all others are " unprofitable." Up to a certain point the 
 production of a certain amount of agricultural produce is 
 profitable. After that point is reached who can say what 
 is the most advantageous industry ? Is the ability to export 
 it the test ? Then we are to keep on exporting grain so 
 long as we compete successfully with them in the world's 
 market. Suppose the world-market is supplied without 
 us ; what then ? Why, then, having wasted our patrimony, 
 the freemen of America are forced to take up other em- 
 ployments and acquire the skill which will enable us to 
 organize and undergo the competition which the violated 
 laws of common sense and nature now at last thrust upon 
 us. Under defensive duties we are enabled to undergo it 
 now and set in motion our industrial machinery, once for 
 all. 
 
 The economists are unceasingly saying that there is a 
 gain in every exchange, or else the parties to it would not 
 trade. There is neither historical nor logical truth in this. 
 Life, unfortunately, is filled with the mistakes of men in 
 production and exchange, and the miseries which have 
 flowed from men not understanding their own true in- 
 terests. If the gain which a man reaps by exchanging his 
 estate for the means of vicious indulgences is summed up 
 in " the gratification of his desires," very good. The sci- 
 ence has jurisdiction over him. All satisfactions come 
 from the proceeds of industry. All the creations of in- 
 dustry are distributed in the forms of wages, rent, and 
 profits. There wiU be most to divide when the most is 
 produced. If all production can not go forward in the 
 
THE ALTERNATIVES OFFERED US. 155 
 
 most advantageous work, we take up the next most pro- 
 ductive. We not only proceed thus, but we are com- 
 pelled to proceed after this fashion. Such tirades as this 
 are an inexact description of the facts : Says Prof. Peny : 
 '' The original trade interfered with by protective taxes 
 is always profitable; otherwise it would not be carried 
 on, and only asks to be let alone to maintain itself as 
 profitable." The original trade of hauling merchandise 
 from Philadelphia to Pittsburg in Conestoga wagons was 
 natural and profitable. It was the best we could do in the 
 way of transportation. Eaih-oads came along, and it ceased 
 to maintain itself as profitable. Western grain was labori- 
 ously carted from Buffalo to New York. It was profitable, 
 otherwise the business would not have been carried on. 
 The Erie Canal cuts off, in whole or in part, this natii^ 
 ral industry, and, by resi/ricting carriage by horses and 
 wagons, compels the traffic to be carried on in canal-boats. 
 The original and natural industry of weaving by hand was 
 profitable ; it has been sadly interfered with by the power- 
 loom. Does Prof. Perry expect society to be petrified in 
 its present tracks ? ' 
 
 ' Prof. R, Ellis Thompson pertinently asks : " Is it ' natural ' that any na- 
 tion should keep its farms on one continent and its workshops on another ? 
 Is it ' natural ' that cotton, on its way from the grower to the weaver, should 
 go half-way round the globe and back ? Is it ' natural ' that a large part of 
 the race should be employed in carrying bulky articles — ^raw materials and 
 coarse goods — from some countries to others in the same climate and of 
 the same general capacity ? Is it ' natural ' that a country with millions of 
 tons of iron on the surface of her soil, and square miles of coal not far be- 
 low it, should send thousands of miles for railroad-iron ? " (" Social Sci- 
 ence.") 
 
 Frld^ric Bastiat recognizes the "unnatural" and artificial conditions 
 under which European exchanges have grown up. The United States have 
 no occasion to extend their exchanges into such a system. The effort it will 
 exact from us will exceed the effort which it saves. He says : " It is thus 
 we see important branches of industry established where they ought not to 
 
156 rROTECTION VS. FREE TEADE. 
 
 " There is a natural market for the things a nation has 
 to sell in the foreign things offered against them," ex- 
 claims the Professor. "Why do these people everlastingly 
 look to the foreign market ? The domestic market can be 
 made to ofEer the same commodities against our export- 
 ables. 
 
 "JS"ow, when this profitable interchange is going for- 
 ward, protection steps in and cuts off in part or in whole 
 this natural Tnarhet, and compels the home things to be 
 sold in a restricted and less profitable market, by putting 
 heavy taxes on the introduction of the things seeking these 
 home products in exchanges; . . . the advocates of pro- 
 tection do not claim that branches of business which woidd 
 otherwise be profitable and seK-supporting should be pro- 
 tected, but only the weak and less profitable kinds ; let it 
 be noted that the ' protected ' branches of manufacture are, 
 by supposition" (?) "and confession" (!), "unprofitable, 
 otherwise it would be idle to try to persuade the people to 
 be taxed to keep them along ; and so, to bolster up these, 
 protective taxes virtuaUy destroy other branches of indus- 
 try, which only ask that their natural market shall be let 
 alone, in order to maintain an independent and profitable 
 existence." ^ 
 
 bo. France makes sugar." (He did not anticipate, wlieu he wrote in 1850, 
 the triumph of protection which the sugar interests in France would illustrate 
 in 1884.) "England spins cotton brought from the plains of India. Centu- 
 ries of war, torrents of blood, the dissipation of vast treasures, hare brought 
 about these results, and the effort has been to substitute in Europe sickly 
 and precarious for sound and healthy enterprises, and to open the door to 
 commercial crises, to stoppages, to instability, and finally to pauperism." 
 
 This is the " clash of chaotic cupidities " amid which free trade invites 
 America to cast her fortunes. The central trouble with the world is that it 
 ssems to have grown up on the political and not on the economic movements 
 of the race. 
 
 • Prof. Sumner states a similar series of propositions with his usual crisp- 
 
THE ALTERNATIVES OFFERED US. 157 
 
 One can scarcely deal patiently with such a bundle of 
 assumptions and fallacies. This natural marhet is con- 
 fessedly limited, and is not natural to us. Profitable inter- 
 change can only go forward so long as our production is 
 kept within its limits— if we ingeniously hit the mark, very 
 well — but the overproduction sets us back to other indus- 
 tries ; and it has been the part of wisdom to provide these 
 other industries while we are rich enough to average our 
 efficiency. A farmer may begin operations by cultivating 
 his most fertile and profitable fields, but if his family in- 
 creased indefinitely, he would extend his cultivation over 
 more remote and possibly less productive domains. His 
 average results might be proportionately less for a given 
 expenditure of effort, but it is the best he can do, and his 
 absolute results are increased.^ If no children came to 
 
 ness and dogmatism. Like bis brother professor, he assumes the existence 
 of an illimitable foreign market for the products of the group of most advan- 
 tageous industries : " If an industry does not pay, it is an industrial abomina- 
 tion. It is wasting and destroying. The larger it is, the more mischief it 
 does. The protected manufacturer is forced to allege, when he asks for pro- 
 tection, that his business would not pay without it." (It would not " pay " 
 him, the manufacturer, without protection, that is certain. The real prac- 
 tical, common-sense question is. Will it pay the society of which he is a mem- 
 ber, in the long run, if, once for all, it organizes the new industry at a pres- 
 ent extra cost ?) "He proposes to waste capital. If he should waste his own 
 wealth, he would not go on long. He, therefore, asks the legislature to give 
 him power to lay taxes on his fellow-citizens, to collect from them the capital 
 which he intends to waste, and good wages for himself while he is carrying 
 on that business besides. This is what is called ' developing our industries,' 
 and the operation of the law is such that the waste and destruction can go 
 6n indefinitely. Either an industry can pay under freedom, in which case it 
 does not need protection, or else it would not pay under freedom, in which 
 case it is wasting the wealth of the nation as long as it goes on." 
 
 ' The Pennsylvania Railroad, with its main line and branches, is a com- 
 plicated organism. Its main line has a great earning capacity. Many of its 
 branches are run, possibly, at a loss as branches. The main line, operated 
 alone, shows the highest efficiency — is the most profitable industry. It can 
 only be worked, including its branches, at a certain average efficiency, or, if 
 
158 PROTECTION VS. FREE TRADE. 
 
 him, he could keep possession of his original field, and 
 maintain his original advantage. The people of the United 
 States have simply acted on his maxims. Immigrants 
 and natural increase of population have driven them to 
 occupy industries, possibly less profitable, but far from 
 unprofitable. They can only escape the unprofitable con- 
 sequences of overproduction, for a limited foreign market, 
 by forbidding immigration or driving labor to other coun- 
 tries. 
 
 The industries which pay "under freedom" have a 
 relative superiority so long as their products maintain their 
 present exchangeable value in the foreign market. Rigid- 
 ly maintained within the limits of that market, they pay. 
 Finding the labor and capital of the country in excess of 
 the requirements of such industries, the legislature, acting 
 for the whole people, provides that the people may engage 
 in the next most profitable industry. Unless employed, 
 the capital and labor must and ought to leave the country. 
 The " protected manufacturer" asks nothing of the people. 
 AU-of-us, the State, simply determine to enter upon all 
 these industries indispensable to our supply of needed 
 commodities. When organized they pay — possibly pay 
 less than agriculture under the ideal presuppositions which 
 have never been realized since the Government was organ- 
 ized. There is no waste and destruction, but the whole 
 outcome is pure gain. The product would not exist else, 
 
 you please, reduced rate of average earnings. And yet it is manifest that 
 tlie joint effect of the main line and branches is not a losing one, and is more 
 profitable — ^the earnings are absolutely larger — than if the main line alone 
 wore operated and the branches were idle. Yet, in a certain sense, the main 
 line is taxed by the branches. Treated as a whole, there is no tax in the 
 case — no " waste." 
 
 What the economists call the unprofitable industries in this country are 
 " the branches " which Nature herself has built for us, and which the human 
 nature with which God has endowed us, qualifies and urges us to operate. 
 
THE ALTERNATIVES OFFERED US. 15 9 
 
 for the men and tlie money could not be employed in 
 America on the most advantageous industry itself without 
 causing that industry to cease to "pay under freedom." 
 We come back again to the eternal fact of the incapacity 
 of the foreign market to absorb the commodities which 
 the international division of labor has assigned to our pro- 
 ductive energies. The nation has simply extended its 
 operations over fields which yield less average profits, but 
 the operation still pays. 
 
 We have so often come upon tliis dilemma of the free- 
 trader in finding a market abroad for all the products of 
 our most advantageous industries, that we may as well ex- 
 amine the case somewhat in detail. 
 
 For the fiscal year ending June 30, 1883, the total 
 exports from the United States were, in round numbers, 
 $804,000,000.1 
 
 ' Agriculture, 11 per cent of the whole , $619,269,449 
 
 Manufactures, 18-91 per cent of the whole 111,890,001 
 
 Mining industry and oils, 6'40 per cent of the whole.. 51,444,857 
 
 Forestry, 1-24 per cent of the whole 9,976,143 
 
 Fisheries, -78 per cent of the whole 6,276,375 
 
 All others, -67 per cent of the whole 5,366,807 
 
 Agricultural exports amounted to 77 per cent of our whole exports, or to 
 $619,269,449, made up as to its principal items as follows : 
 
 Cotton $247,328,721 
 
 Bread and breadstufEs 208,040,850 
 
 Provisions 107,388,287 
 
 Tobacco 22,095,229 
 
 Animals living 10,789,268 
 
 Total $595,642,355 
 
 or 96 per cent in these five items. 
 
 The exports of manufactured products were $111,890,001. 
 In detail they were made up of : 
 
 Manufactures of wood $26,793,708 
 
 Iron and steel 19,165,321 
 
 Cotton 12,951,145 
 
 Leather ''.923,662 
 
160 PROTECTION VS. FREE TRADE. 
 
 The imports were $723,180,914.1 
 
 The tables subjoined show the course of trade, and the 
 trade balances, between the United States and each of the 
 
 Turpentine $4,366,229 
 
 Agricultural implements 3,883,919 
 
 Drugs, chemicals 3,306,195 
 
 Sugar and molasses 3,266,581 
 
 Sewing-machines 3,061,639 
 
 These nine items constitute about 75 per cent o£ our exports of manu- 
 factures. The remaining items embrace a little of almost everything. 
 ' The main items were : 
 
 Sugar and molasses $99,326,393 
 
 Wool, raw and manufactured 55,224,283 
 
 Silk, raw and manufactured 50,807,616 
 
 Chemicals, etc 43,126,285 
 
 Coffee 42,050,513 
 
 Iron and steel 40,796,007 
 
 Cotton 37,654,221 
 
 Hides and skins 27,640,030 
 
 Tin 23,917,837 
 
 Flax 19,737,542 
 
 Fruits 19,313,041 
 
 Tea 17,302,849 
 
 India-rubber 15,844,302 
 
 Jite, etc 12,646,513 
 
 Breadstuffs 15,830,605 
 
 Wood , 14,857,578 
 
 Leather 13,104,415 
 
 Tobacco 11,771,596 
 
 Provisions 30,653,273 
 
 Earthen, stone, and china 8 620 527 
 
 Fancy goods, perfumery, etc 8,358 471 
 
 ^"'•^ 7,959,'759 
 
 Glassware , 7,762,643 
 
 Precious stones 7,692,385 
 
 Paper materials g g2g ghg 
 
 Hemp 5|ll8i508 
 
 The remainder of the list includes a great variety of things— books, pict- 
 ures, musical instruments, and the like— no one item of which amounts to 
 one half of one per cent of the total imports. 
 
THE ALTERNATIVES OFFERED US. 
 
 161 
 
 other countries, taken from the Bui-eau of Statistics for the 
 year ending June 30, 1883. Any other recent year would 
 show about the same state of trade : 
 
 Value of the Imposts of Merchandise from, and of the 
 ExpoETS of Merchandise to, those countries in our com- 
 merce with which the value of Exports exceeded the 
 value of Imports during the year ended June SO, 1883. 
 
 COUUTEIES. 
 
 Imports of 
 merchandise 
 
 into the 
 United States. 
 
 Exports of 
 domestic and 
 foreign merchan- 
 dise from the 
 United States. 
 
 Exports in 
 excess of im- 
 • ports. 
 
 9 
 10 
 11 
 12 
 13 
 
 14 
 15 
 16 
 17 
 
 19 
 
 20 
 21 
 22 
 23 
 24 
 
 Great Britain and Ireland . . . 
 
 Russia 
 
 Spain 
 
 Germany 
 
 Mexico 
 
 Netiiorlands 
 
 British possessions in Aus- 
 tralasia 
 
 Belgium 
 
 Portugal 
 
 Denmark 
 
 Chili 
 
 IIong-Kong 
 
 British North American pos- 
 sessions 
 
 United States of Colombia. . . 
 
 Sweden and Norway 
 
 Gibraltar 
 
 British possessions in Africa 
 and adjacent islands . . . 
 
 Azores, Madeira, and Cape 
 Verd Islands 
 
 Miquelon, Langley, and St. 
 Pierre Islands 
 
 Danish West Indies 
 
 Hayti 
 
 Liberia 
 
 French Guiana 
 
 Portuguese pospessions in Af- 
 rica and adjacent islands. . 
 
 Other countries, the exports 
 to which exceeded the im- 
 ports 
 
 Total.. 
 
 $188,622,619 
 
 2,599,995 
 
 7,794,345 
 
 57,S77,728 
 
 8,177,123 
 
 12,253,733 
 
 4,021,395 
 23,161,200 
 
 1,093,476 
 302,886 
 435,584 
 
 1,918,894 
 
 44,740,876 
 
 5,171,455 
 
 1,831,171 
 
 4,573 
 
 1,840,020 
 
 70,689 
 
 17,370 
 
 384,003 
 
 2,971,515 
 
 71,888 
 
 18,437 
 
 2,665 
 
 290,200 
 
 $365,173,846 
 
 1425,424,174 
 19,141,751 
 16,931,287 
 66,169,929 
 16,587,620 
 18,919,583 
 
 9,795,656 
 27,778,975 
 5,485,037 
 4,508,876 
 2,860,496 
 8,777,759 
 
 46,580,253 
 
 6,868,971 
 
 2,824,548 
 
 627,816 
 
 2,438,069 
 
 631,089 
 
 451,887 
 702,126 
 3,223,101 
 182,010 
 102,084 
 
 5,012 
 
 439,690 
 
 $682,457,799 
 
 $236,801,565 
 16,541,756 
 9,136,942 
 8,792,201 
 8,410,497 
 6,665,850 
 
 5,774,261 
 4,617,775 
 4,391,561 
 4,205,990 
 2,424,912 
 1,858,865 
 
 1,839,377 
 
 1,697,516 
 
 993,377 
 
 623,243 
 
 598,049 
 
 660,400 
 
 434,511 
 318,123 
 251,586 
 110,122 
 83,647 
 
 2,347 
 
 149,490 
 
 $317,283,953 
 
162 
 
 PEOTECTION VS. FREE TRADE. 
 
 Value of the Imports of Mekchandisb from, and of the 
 Exports of Merchandise to, those countries in our com- 
 merce with which the value of Imports exceeded the 
 value of Exports during the year ended June SO, 1888. 
 
 9 
 10 
 11 
 12 
 13 
 14 
 15 
 16 
 17 
 18 
 19 
 20 
 21 
 22 
 23 
 24 
 26 
 
 26 
 
 27 
 28 
 
 COUNTBIES. 
 
 Imports of 
 merchandise 
 
 into the 
 United States. 
 
 Cuba 
 
 i'rance 
 
 Brazil 
 
 British East Indies 
 
 Cliina , 
 
 Japan 
 
 Spanish possessions, other 
 than Cuba and Porto Rico, 
 
 Hawaiian Islands 
 
 British Guiana 
 
 Venezuela 
 
 Porto Rico 
 
 Central American states . . . . 
 
 Argentine Republic 
 
 Uruguay 
 
 Peru 
 
 Italy 
 
 Austria 
 
 Greece 
 
 French West Indies 
 
 Turkey 
 
 Dutch West Indies 
 
 Dutch East Indies 
 
 British West Indies 
 
 San Domingo 
 
 French possessions in Africa 
 and adjacent islands. . . . 
 
 Greenland, Iceland, and the 
 Faroe Islands 
 
 British Honduras 
 
 Dutch Guiana 
 
 All other countries, the im- 
 ports from which exceeded 
 the exports 
 
 Total., 
 
 $65,544,534 
 97,989,164 
 44,488,459 
 19,467,800 
 20,141,331 
 15,098,890 
 
 10,617,563 
 8,238,461 
 5,946,429 
 6,901,724 
 5,477,493 
 5,121,315 
 6,192,111 
 3,980,110 
 2,.')26,918 
 
 11,909,658 
 2,084,923 
 1,231,680 
 2,895,857 
 2,168,967 
 882,068 
 2,645,917 
 8,736,112 
 1,417,519 
 
 388,483 
 
 97,400 
 531,839 
 473,043 
 
 4,911,410 
 
 Exports of 
 
 domestic and 
 
 foreign merchan, 
 
 disc irom the 
 
 United States. 
 
 $15,103,703 
 58,682,223 
 9,252,094 
 2,185,804 
 4,080,322 
 8,376,434 
 
 324,474 
 3,776,066 
 2,035,156 
 2,403,705 
 2,164,708 
 2,003,467 
 3,543,196 
 1,452,818 
 
 493,894 
 
 10,313,658 
 
 1,779,904 
 
 91,017 
 
 1,813,655 
 
 1,369,703 
 
 589,612 
 2,407,131 
 8,502,163 
 1,201,874 
 
 257,898 
 
 $858,007,068 
 
 504,417 
 451,349 
 
 1,221,369 
 
 Imports in 
 excess of ex- 
 ports. 
 
 $50,440,831 
 39,306,941 
 35,236,366 
 17,281,996 
 16.061,009 
 11,722,466 
 
 10,293,089 
 
 4,462,396 
 
 3,911,273 
 
 3,498,019 
 
 3,312,785 
 
 3,117,848 
 
 2,648,915 
 
 2,527,292 
 
 2,033,024 
 
 1,596,100 
 
 1,205,019 
 
 1,140,663 
 
 1,082,302 
 
 799,264 
 
 292.446 
 
 238,786 
 
 233,959 
 
 215,648 
 
 130,686 
 
 97,400 
 
 27,422 
 21,694 
 
 3,690,041 
 
 $141,381,603 $216,625,465 
 
 It thus appears that of our exports, agriculture furnished 
 T7 per cent, manufactures 13-91 per cent, and mining and 
 mineral oils 640 per cent. 
 
THE ALTERNATIVES OFFERED US. 163 
 
 Of food-produets, we sent abroad values to the amount 
 of $325,000,000, less than 10 per cent of our products. 
 This was consumed in Great Britain and the people living 
 along the western water-front of Europe. England is com- 
 pelled to buy about one half of the food of her population 
 abroad, but America is by no means the only country in 
 the world which raises a surplus accessible to her. Prance 
 can feed herself, and Germany. The extension of railroads 
 through Europe into the food -raising areas of Poland, 
 Hungary, and Kussia, has brought down all prices in Mark 
 Lane. Asia has now fairly brought her agricultural prod- 
 ucts into competition with ours. 
 
 On inspection of the tables given above, we find that the 
 balance of trade against us in Cuba, Prance, Brazil, China, 
 Japan, Spanish possessions, and Venezuela, is nearly two 
 hundred millions. We sell no food to them. For our 
 sugar, French wines and articles of luxury and elegance, 
 tea, tropical fruits, raw hides, and a large list of commodi- 
 ties which we can not mention, we pay in cash or its repre- 
 sentative, and not in exports direct. The balance of trade 
 is in our favor in the cases of Great Britain, Kussia, Spain, 
 Germany, J^etherlands, Belgium, Portugal, and Denmark. 
 Prom them we get the bankers' bills of exchanges which 
 settle the adverse balance elsewhere. What is left we can 
 take out in manufactured goods from England, Germany, 
 and Prance. With England alone there is a balance of 
 trade in our favor of $236,000,000. But that does not 
 mean that we can ta^e pay in British goods. We sent 
 there $i25,000,000 worth of exports, and took from there 
 $188,000,000 in merchandise. The difference was sent 
 in bills of exchange for our account to pay our debts to 
 France, Cuba, Brazil, China, and Japan. We paid Eng- 
 land, Germany, and France, for manufactured goods made 
 of wool, silk, iron and steel, and cotton alone, $185,000,000. 
 
164 PEOTECTION VS. FREE TRADE. 
 
 These goods could have been made at home, and it is all 
 tha.t our surplus food, which the foreign market would take, 
 enabled ns to buj. We should then have been compelled 
 by free trade to have gone without all these commodities 
 which the protection tariff enabled the home industries to 
 produce here. Besides the $600,000,000 which the Ameri- 
 can farmer sold abroad, he sold more than $1,500,000,000 
 at home. We bought abroad, in round numbers, $723,000,- 
 000, for about half of which we paid in food and provis- 
 ions. Let us now see how exchange values on exports and 
 imports will be affected according to some principles we 
 find laid down in Adam Smith's " Wealth of Nations." 
 We come to the third and fourth propositions in the sec- 
 ond alternative set we are considering. 
 
CHAPTEE YIII. 
 
 ADAM SMITH— SOME FACTS niT OUE HISTOET. 
 
 AccoEDDSTGLY, let US invite the free-trader, supposing 
 him to be honest and fair-minded, to propose to Adam 
 Smith the foregoing data to determine the relative ex- 
 change values in a foreign market of raw produce in a 
 state of overproduction, and certain manufactured commodi- 
 ties in a state of underproduction. America, by under- 
 selling all other countries, has succeeded in getting rid 
 of $700,000,000 worth of her products, of which aboiit 
 haK were food and provisions. For this she got in ex- 
 change some $350,000,000 in articles of the uses, decencies, 
 elegancies, and luxuries of life becoming a highly civilized 
 society — tropical fruits and products unfitted to her climate 
 and the capacities of her labor; besides, she took in ex- 
 change some $350,000,000 of manufactured goods which 
 under existing conditions she does not undertake to pro- 
 duce. Her domestic manufactures produce some $8,000,- 
 000,000 of value from their industries annually, of which 
 probably $2,500,000,000 come from competing industries 
 which commenced to exist mainly by virtue of protective 
 laws, and industries related to and dependent on them. 
 They employ one quarter of the population of the land. 
 
 " It is proposed, Mr. Smith, that, inasmuch as at pres- 
 ent we get fair returns from labor in fertile fields, the sur- 
 plus produce of which has a home market for $1,500,000,- 
 000 worth annually, and a present foreign market for an 
 
166 PROTECTION VS. FREE TRADE. 
 
 additional $700,000,000, we all take to this most advan- 
 tageous industry and abandon the protected industries. 
 "We are all going into the industry which ' pays under free- 
 dom.' "We shall then want to buy in foreign markets the 
 $700,000,000 as now, and besides the $2,500,000,000 worth 
 of the products which our ' distorted industries ' now fur- 
 nish us ; besides, our surplus productions ia agriculture will 
 then be swelled by the whole amount which one fourth of 
 our population, released from protected industries, can add 
 to them. On the whole, we shall need to find a market 
 abroad for our surplus products to the amount of quite two 
 thousand five hundred million dollars. 
 
 " ' Why are we compelled to carry our bulky produce 
 nearly three thousand miles ? ' Because the workshops of 
 the world are there, and men work cheaper and their 
 wages are low. 
 
 " No ; there are no disadvantages against our labor ex- 
 cept the necessity of paying our workmen higher wages. 
 They are freemen, accustomed to comfort, educate their 
 children, and have a general purpose to get on in the world. 
 They are great producers, and are also great consumers. 
 There is a very energetic state of things, indeed, among 
 them. And these great wages come from- the commodities 
 they make. 
 
 " No ; there is no country in which the soil, climate, 
 and natural productions are more varied. No country has 
 any peculiar advantages over us — no country, at least, in- 
 habited by civilized man. No country exceeds us in the 
 amount of capital it possesses, nor in the skill and willing- 
 ness to work. Indeed, capital is so plentiful, and labor so 
 abundant, that a few years ago in a sudden emergency 
 more than three million men went into the industry of a 
 civil war. They invested more than six thousand millions 
 of dollars in the business. Both the men and the money 
 
ADAM SMITH— SOME FACTS IN OUK HISTOEY. 167 
 
 were promptly forthcoming. Of course, when you wrote 
 the ' Wealtli of Nations ' you seemed to think ' industry 
 was limited by capital.' In America what is wanted is not 
 capital, but a field of employment. The world has gained 
 in the last hundred years, and you have no idea how things 
 have gone on. 
 
 " Yes, I recall what you wrote : ' The natural advan- 
 tages which one countiy has over another in producing 
 particular commodities are sometimes so great that it is ac- 
 knowledged by all the world to be in vain to struggle with 
 them. By means of glasses, hot-beds, and hot walls, very 
 good grapes can be raised in Scotland, and very good wine, 
 too, can be made of them at about thirty times the ex- 
 pense for which at least equally good can be brought from 
 foreign countries. Would it be a reasonable law to pro- 
 hibit the importation of all foreign wines merely to encour- 
 age the making of claret and burgundy in Scotland ? ' 
 
 " But I could not honestly say that the protected indus- 
 tries in America answer at all to that description. They are 
 not * such employments.' The climate of Scotland is a per- 
 manent obstacle to grape-raising. I could not say that the 
 production of a ton of iron or a yard of cloth requires any 
 more capital and labor than it does in England. It costs 
 no more to overcome the obstacles which nature presents 
 in America than it does in Great Britain. Its increased 
 cost is principally in the wages of the laborer. The pro- 
 tectionist seems to hope that that disadvantage wiU be per- 
 manent. I recall that you have said that 'labor is the first 
 price — ^the original purchase-money paid for all things.' 
 
 " And so you now think that it is no economic disad- 
 vantage to the nation, as a whole, that its labor is better 
 paid ? That, if the industry is natural to a country, the 
 increase in wages costs the nation nothing? That, be- 
 
168 PROTECTION VS. MEE TRADE. 
 
 cause the laborer can afford increased consumption, and 
 does afford it, the consumer of Ms products gets it all back 
 again, and that in the final division all labor gets distrib- 
 uted into rent, wages, and profits, and imiversal activity is 
 the result? That industrial competition equalizes remu- 
 neration to sacrifice, and that the country is the richer by 
 the new thing produced? 
 
 " Ah ! then I see how, the natural facilities being the 
 same and the skill the same, it modifies what you wrote in 
 these words : ' Whether the advantages which one country 
 has over another be natural or acquired is in this respect of 
 no consequence. As long as the one country has those ad- 
 vantages and the other wants them, it will be always more 
 advantageous for the latter rather to buy of the former than 
 to make. It is- an acquired advantage only which one ar- 
 tificer has over his neighbor who exercises another trade, 
 and yet they both find it more advantageous to buy of one 
 another than to make what does not belong to their particu- 
 lar trades.' You mean, if the Americans are aU-sided and 
 have brought the division of labor to perfection, that the 
 acquired advantage stands on equally high and strong 
 grounds with natural advantage, and that it was worth 
 while to acquire the new advantage. I do now recollect 
 that John Kae showed the respects in which an individual 
 and a nation became opulent by means of entirely different 
 orders of procedure. I see clearly why your illustration 
 lacks application to a state of things you had never con- 
 ceived. There had been no parallel case in your experi- 
 ence. 
 
 "No; there is no scarcity of labor. There must be 
 nearly seven hundred thousand laboring-men added each 
 year to the population of the United States by natural in- 
 crease and immigration. Such a fact, which in its magni- 
 tude could not have been in your cognizance, completes 
 
ADAM SMITH— SOME FACTS IN OUR HISTORY. 169 
 
 the equipment of America in its land, its capital, and its 
 labor, the great trinity from which alone can come national 
 opulence. And yet, in your inductive reasoning, you had 
 betrayed your true insight into the divine efficacy of their 
 unity. ' Nations,' you said, ' can only advance in greatness 
 and prosperity as the numbers of their inhabitants increase. 
 "Whatever the natural fertility of the soil, however genial 
 the climate, and however well fitted the whole country 
 may be for the practice of every species of industry, yet if 
 it be deficient in population, these natural riches can never 
 be elaborated, and it must hold a poor and inconsiderable 
 rank in the scale of nations.' (Adam Smith here was 
 very near the outside limits of his science, and gave sure 
 sign of ' impending fallacy and confusion ' as he approached 
 the confines of social science, and hinted at moral consider- 
 ations.) ' A confined and comparatively barren territory, 
 filled with a numerous industrious population, exceeds the 
 most fertile and extensive country, scantily peopled. It is 
 the people that make the state — its real riches he in its in- 
 habitants.' " (Is it possible that Adam Smith is going to 
 solve an economic problem by introducing moral and polit- 
 ical elements ?) 
 
 Adam Smith, loquitur : " No, my free-trade friend, you 
 misconceive the philosophy of the ' Wealth of Nations.' I 
 have treated a nation as a society in possession of certain 
 instruments of production. They are engaged in procur- 
 ing for themselves the necessaries, conveniences, and amuse- 
 ments of life. It is true that, when I wrote, this flame of 
 industrial conquest had not lighted up the world and made 
 life a scene of industrial warfare. Men had not wrested 
 fire and steam and electricity to human uses. 
 
 " They were still tugging away with human muscles. 
 I had pointed many paragraphs of my book against the 
 vileness and injustice of the English colonial poKcy, and its 
 9 
 
170 PROTECTION VS. FREE TRADE. 
 
 evident purpose to enslave the industrial impulses of her 
 colonists. I said : ' To prohibit a great people, however, 
 from making all they can of every part of their produce, 
 or from employing their stock and industry in a way that 
 they judge most advantageous to themselves, is a manifest 
 violation of the most sacred rights of mankind.' I did 
 this because its effect was to suppress the industrial free- 
 dom of the colonies and to hold them in commercial slav- 
 ery to the ambitious designs of English statesmen and Eng- 
 lish manufacturers ; yet it seems that free foreign trade now 
 works precisely the same results. I taught that all systems, 
 either of preference or restraint, being taken completely 
 away, ' the obvious and simple system of natural liberty 
 estabhshes itself of its own accord.' And I discharged the 
 sovereign from ' the duty of superintending the industry 
 of private people, and of directing it toward the employ- 
 ments most suitable to the interests of society.' When I 
 wrote, the steam-engine was not perfected, and the spin- 
 ning-jenny and power-loom had not been invented. Iron 
 was brought to England from America. The two or three 
 millions of people who occupied America were strung along 
 the coast, and had scarcely got west of the Hudson, and 
 had not reached the Ohio and the lakes. Population was 
 sparse, and their few and simple wants were supplied by 
 household industries and a little commerce with England 
 and the West Indies. As things were then, they were 
 simply productive agents thrown to the periphery of the 
 industrial wheel by force of the central agencies at work in 
 England and Europe. They were subordinate members of 
 the industrial structure, and performed subordinate func- 
 tions. They had even then no market for their surplus. 
 Their agriculture of itself, at that time, produced them 
 poverty, not wealth ; rudeness, not comfort ; scarcity, not 
 plenty, as you now seem to understand these things. The 
 
ADAM SMITH— SOME FACTS IN OUR HISTOEY. 171 
 
 Revolution, wMch tliey began tlie same year my ' Wealth of 
 Nations ' was published, made them a new political center. 
 It was the genesis of a new nation. The aspirations of man- 
 kind were kindled afresh. There was a movement of all 
 people and all tongues to the shores of the Western empire. 
 Freedom was the word, and civil liberty and religious 
 emancipation were the watchwords. Men sought Columbia 
 for homes, the chances for plenty and freedom. They 
 went imder domestic, social, political, ethical, national mo- 
 tives, as well as a regard for economical results. Once set- 
 tled under their own roof -trees, they turned to the practical 
 affairs of life. More laborers went to America under the 
 impulses of the great uprising of humanity which urged 
 them than, under ' the obvious and simple system of natural 
 liberty,' could retain normal and profitable relations to 
 European commerce. They took to the most advantageous 
 industries, but after the war there were ruin, bankriiptcy, 
 and distress. From 1783 to 1Y89 they had the pohcy of 
 absolute free foreign trade. There was no sale for the 
 products of their industry in the foreign market. The in- 
 stinct of liberty had distributed these men in America in 
 a proportion out of any ratio which mere considerations of 
 economic prudence would have inspired. Too many had 
 come. Some must remain idle, return, or pursue other in- 
 dustries. I had never said, in the ' Wealth of Nations,' 
 that if a country had some natural and highly advantage- 
 ous industry, God had intended that no more people should 
 live and work ia that country than could work at that in- 
 dustry. I had never said that a man should learn a trade, 
 unless he could sell the products of his labor in that trade. 
 I had never said that, if men ilocked to a new country 
 under the stimulus of the highest motives possible to hu- 
 man beings, there were any economic doctrines which com- 
 peUed them to be idle and starve. I have said they could 
 
172 PKOTECTION VS. FEEE TEADE. 
 
 always produce for the home market, and in some score of 
 places in my book I have insisted on the superiority of 
 that market. For instance, ' "Whatever, then, tends to dimin- 
 ish in any country the number of artificers and manufact 
 urers, tends to diminish the home market — the most im- 
 portant of all markets for the nide produce of the land.' 
 More specifically I have said these words: 'Capital em- 
 ployed in purchasing in one part of a countiy in order to 
 sell in another part the produce of the industries of that 
 country, generally replaces, by such operation, two distinct 
 capitals that had both been employed in its agriculture or 
 manufactures, and thus enables them to continue that em- 
 ployment. The capital used in buying foreign goods for 
 domestic consumption, when the purchase is made by the 
 produce of domestic industry, replaces also two distinct 
 capitals, but one of them only supports domestic industry, 
 the other supports foreign industry, and, therefore, foreign 
 trade will give but one half the encouragement to the in- 
 dustry or productive labor of a country that domestic or 
 internal trade does.' 
 
 " My chapter, ' Of the JSTatural and Market Price of 
 Commodities,' teaches what the natural price would be 
 ■when the component parts of the cost are taken into ac- 
 count. There is no market price in a market where there 
 is no demand. M. Say has tried to prove that there can 
 be no general glut y but a glut in overproduction of par- 
 ticular commodities is within the familiar experience of 
 every observer. Agricultural products are steadily renewed 
 from year to year, and the amount of food each person 
 consumes is very definitely determined. The wants of a 
 hungry man are well known, and may be quantitatively 
 provided for. But there is no limit to many forms of 
 human wants, such as clothing, shelter, luxuries, indul- 
 gences, artistic longings— engendered by riches, fashion, 
 
ADAM SMITH-SOME FACTS IN OUR HISTORY. 173 
 
 caprice. The food a given market takes may be determi- 
 nately ascertained ; not so with manufactured commodities. 
 If the people in America overproduce food for the Hmited 
 markets which depend on them, they pay the same penalty, 
 in loss of market values, as if they overproduced gunpow- 
 der or iron — with the certainty that they have strong com- 
 petitors in all parts of the world. If my doctrine of natu- 
 ral freedom has full play within the limits of the thirty- 
 eight States of the "Western Eepublic, they have satisfied 
 all the conditions I have prescribed. 
 
 " If your industries are natural, and not overweighted 
 by the necessity of more labor — sacrifice, effort — for a given 
 product than in other nations ; if your pursuits are only 
 those authorized by the nature of things, they are legiti- 
 mate pursuits for an industrious, skillful people. When 
 there is no difference in natural and acquired advantages, 
 the price of labor — the wages of a day's work — is no de- 
 cisive test of the productiveness of labor. The abundance 
 of commodities is the test of that ; money-prices only con- 
 fuse the matter in your mind. You have as large a product 
 under a high rate of wages as under a low rate. If all yom* 
 people can not be employed in the industries which give 
 the highest returns, and unless you find a market which 
 will continue to take them on correspondingly high ex- 
 change values, you must take to other industries and con- 
 sent to certain average returns. It is, at last, the products 
 which you want, not their price. If you can not expend 
 your highest eiSciency and receive the highest returns, you 
 must consent to exert a certain average efficiency, and be 
 content with certain average returns. 
 
 " If Scotland could acquire the sunny skies and genial 
 climate of France, her hills would be covered with vines 
 instead of heather, and to acquire that advantage it would 
 be worth paying for, even if it took a great expenditure. 
 
174: PROTECTION VS. FEEE TRADE. 
 
 'A new channel migM be opened from tlie exhaustless 
 river of human power, springing from the mingled sources 
 of nature and art, so that a plenteous stream would flow in 
 the community, from which individuals drawing might 
 largely add to the general opulence. But some means 
 must be employed to open it up. There is an obstruction 
 in the way that must previously be overcome ;. a rock 
 blocking it up that must be removed. No individual will 
 open up the channel, because, were he to do so, he could 
 derive no more benefit from the labor than others who had 
 not labored. The whole society, or rather the legislator, 
 the power acting for the whole society, might do so, and 
 in similar cases has done so ; and, to judge of the measure 
 by the events consequent on it, with the happiest success.' 
 The Navigation Act was a famous instance. 
 
 "National and individual capital do not necessarily 
 increase in the same manner. At least my words in the 
 ' Wealth of Nations ' must be taken with the qualifications 
 wbich suggest themselves if you read carefully and closely 
 — if read hterally, they contain an ambiguity, I might say 
 a fallacy, which was not in my mind, but which the facts 
 in America, and the course of modem commerce, render 
 quite apparent. 
 
 " In a passage habitually quoted I said : 'It is the 
 maxim of every prudent master of a family never to at- 
 tempt to make at home what it will cost him more to make 
 than to buy. The tailor does not attempt to make his own 
 shoes, but buys them of the shoemaker. The shoemaker 
 does not attempt to make his own clothes, but employs a 
 tailor. The farmer attempts to make neither the one nor 
 the other, but employs those different artificers. All of 
 them find it for their interest to employ their whole indus- 
 try in a way in which they have some advantage over their 
 neighbor, and to purchase with a part of its produce, or. 
 
ABAM SMITH— SOME FACTS IN OUR HISTORY. 1^5 
 
 what is the same thing, with the price of a part of it, what- 
 ever else they have occasion for. What is prudence in the 
 conduct of every private family can scarcely be folly in 
 that of a great kingdom.' 
 
 " Now a tricky logician can make an unfair use of that 
 passage. You will observe that I had said that the differ- 
 ent artificers find it for their advantage to employ their 
 whole industry in the way in which they have some advan- 
 tage. It is obvious to any reasonable thinker that he could 
 only retain his advantage on the condition that he could 
 sell the whole of his surplus produce and get ' the price of 
 it.' If he remained idle one day or two days a week he 
 would lose his advantage, or, if he kept at work and made 
 more shoes, or clothes, or food than the others wanted, he 
 would be compelled to make such concessions in price as 
 would be fatal to his advantages. In the latter case, the sur- 
 plus for which there was no demand would bring no price, 
 and he would lose his labor and trouble. If he were idle 
 two days in a week as a shoemalcer, he could do something 
 else, and what he produced when he would otherwise have 
 been idle costs him nothing. So far as it has exchangeable 
 value it would be clear gain to him and to the society in 
 which he lived. 
 
 " I must remind you again in this connection of what I 
 said in my chapter of the ' Division of Labor ' : ' The di- 
 vision of labor is limited by the extent of the market. 
 Before any man or any set of men' (the people of the 
 United States, for instance) ' can in common prudence de- 
 vote themselves' to any particular employment ' (the raising 
 of raw produce, for instance), ' they must be assured that 
 they can dispose of the commodity which their exertions 
 in the prosecution of that employment will produce.' This 
 proposition is just as applicable to the international division 
 of labor and the world's commerce as it is to the division 
 
176 PEOTECTION VS. FKEE TRADE. 
 
 of labor in the villages. A nation takes the same rislcs in 
 imdertaking to hold its superiority in prices in the markets 
 of the world, even in an advantageous industry, as the tailor 
 or the blacksmith who produces more than he can sell. The 
 folly of ' a great kingdom ' which drives ahead without any 
 true perspective of the wants of the world's commerce is 
 just as egregious and inexcusable as that of the private 
 family which makes unsalable things for the town market. 
 .The nation and the family may make the commodity at a 
 small cost of labor, but it can not have the price of it on 
 the basis of superior efficiency. If they can consume it at 
 home and make it the means of further products for which 
 there is a market, they will recover their superiority. "What 
 happens in the case you put is this : international commerce 
 will operate as a substitute for competition, and free trade 
 reduces your efficiency and compels you to divide your ad- 
 vantages with foreign nations. Protection enables your 
 people as a whole — the nation — ^to retain them all. 
 
 " I thereupon answer your question, and say to you 
 that, if you undertake to sell $2,500,000,000 of products in 
 a market which requires only $700,000,000, you imdertake 
 an impossibility. If the trade were possible, you would 
 lose all your relative superiority, and would pay the cost of 
 transportation both ways — the whole expense of the car- 
 riage of your exports and of your imports will be paid by 
 the people of the United States. The whole cost of get- 
 ting to a market to which you are forced to go will be 
 borne by your people. But, more than all, you will starve 
 in the midst of your fertile fields. You can not dispose 
 of the commodities which your exertions have produced. 
 
 " The formula, not fuUy worked out by myself, which 
 Mr. Mill called ' The Equation of International Demand,' 
 is the law of your case. He answered it in these words : 
 ' The produce of a country exchanges for the produce of 
 
ADAM SMITH— SOME FACTS IN OUK HISTORY. 177 
 
 other countries at sucli values as are required, in order tliat 
 the whole of her exports may exactly pay for the whole of 
 her imports.' But, under the condition of the case you 
 put to me, a large portion of your exports go for necessi- 
 ties which you can not raise, the products of non-compet- 
 ing industries. The portion with which you might pur- 
 chase manufactured commodities such as you produce in 
 your competing industries, ' protected ' industries will fur- 
 nish only a small part of your aggregate demand. The 
 foreign market neither takes nor gives according to your 
 requirements. You must, therefore, malce them at home. 
 
 " Do it at once, and stop your illogical grumbling about 
 taxes and your senseless refinements of carrying on one in- 
 dustry at the cost of another. These are the only conditions 
 of ' freedom ' left open to you." 
 
 The entire consistency of what we have supposed Adam 
 Smith to have said can be maintained from the discussion 
 in his " Wealth of Nations." It is equally certain that, 
 in more than one passage, John Stuart Mill has taken the 
 same ground. It is very true that when the latter contem- 
 plates the world of trade from Manchester and looks upon 
 the necessity England is under to procure by exchanges 
 the very food which maintains her labor and the raw mate- 
 rials upon which they work, he wants unrestricted commerce 
 with countries which raise food and raw materials. If the 
 world were a single nation, and population was distributed 
 throughout solely on economic impiilses, things would 
 happen as theory presupposes. In point of fact, English 
 commercial agents are in every port in the world for 
 economic purposes. They are members of an industrial 
 and not a political entity. But they are there in the pur- 
 suit of fortune, and with no purpose of residence, citizen- 
 ship, and the founding of a home for themselves and their 
 children. A world built up on scientific economic con- 
 
178 PROTECTION VS. FEEE TRADE. 
 
 siderations would be very different from the existing one. 
 But it is divided into nations, and economic considerations 
 have had little, we might say no share in bringing it about. 
 If every extension of the habitable globe had reference to 
 the world's commerce, and every new enterprise to market 
 values in that commerce, political lines would be differ- 
 ent. It shows what a blunder has been made in the 
 Providential ordering of things, that the structure was not 
 put up according to the plans and specifications of David 
 Eicardo and New England college professors. If men 
 could be bom where they pleased, or if men could and 
 would go freely from one country to another when the 
 demand for the products of their industry in their na- 
 tive laud failed, or when the pursuit of an occupation in 
 which they had special aptitude is incapable of being car- 
 ried on — if men did not care where they lived and where 
 they died — we might assent to speculations as to what 
 would be. If, on the other hand, aU the motives of life, 
 except economic ones, keep him in his political home, the 
 capacity and opportunity of a man to work at all may de- 
 pend on governmental restraints on the products of foreign 
 labor, and the industrial entity must be conterminous with 
 the political entity. It is not a question of protecting the 
 weak against the strong, or the high-priced laborer against 
 the low-priced laborer. It is giving to the laborer of a 
 given country the market for the products of his labor. 
 It is to prevent the laborer himseK from being removed 
 from the country, and substituting therefor a trade in the 
 product of his labor. The argument does go equally well 
 either end first. Germany successfully keeps its lower- 
 priced labor in German industries on German soil by pro- 
 tecting her home market, and so does France. Otherwise 
 it might conceivably happen that there would be no occa- 
 sion for a German to live in Germany. If a man, in de- 
 
ADAM SMITH— SOME FACTS Df OUE EISTOEY. 1Y9 
 
 tennining in wliat country lie shall have a home, is without 
 sentiment, he may submit to the streams of economic in- 
 fluences and be thrown ashore at the first shoal he strikes. 
 Oppression or disaster may force a man to accept the 
 altematiTO of expatriation, as many millions have done, 
 but it would be an absurd inversion of the order of events 
 to say that they had done so in deference to the influences 
 of a scientific economy whose central seat was Manchester, 
 say. " Once convince a French peasant," says William 
 Dillon, " that he can get higher wages for his labor and 
 higher interest on his capital ia the Western States of 
 America than in France, and, according to the theory of 
 the economist, he may be relied on to go to America. 
 As a matter of fact, we all know that, in ninety-nine 
 cases out of a hundred, he may be relied on to stay at 
 home." 
 
 But the present national divisions of the world were 
 not brought about by economic impulses. Free trade, 
 alike in theory and in fact, determines in advance that we 
 shall in America pursue a limited group of industries. 
 The historical and existing fact is that we are not here 
 for industrial considerations solely. Being here, and classi- 
 fying ourselves, we find we are too numerous to supply all 
 our wants from abroad, and at the same time fulfill the 
 conditions of the equation of international demand. Our 
 wants, as Prof. Sumner says, originate ia our inherited 
 traits. We must equate our efforts one with another. 
 We have fertile fields adequate to the supply of all our 
 wants with self-help — the moment we go abroad with our 
 surplus we are as helpless as if that surplus was in nutmegs 
 or bananas, which nobody wanted to buy. The world does 
 not want so many of either, as a population (redundant in 
 this respect) which did not come here for the sole purpose 
 of raising nutmegs and bananas, can supply. It is as if 
 
180 PROTECTION VS. FREE TRADE. 
 
 there were too maay tailors or too many shoemakers in a 
 village : they must do something else or go elsewhere. 
 
 We have now tried our hand at Prof. Perry's " wholly 
 impregnable position," that " what a nation purchases by 
 its exports it purchases by its most efficient labor, and con- 
 sequently at the cheapest rate to itself." We have seen 
 how its theory is implicated with facts. "VVe have seen 
 how the " division of labor is limited by the market," and 
 that ovei-production for a given market breaks down ex- 
 change values in which alone resided superior efficiency in 
 production, and that when the point of efficiency was over- 
 worked we must either stand idle or fall back to a certain 
 average efficiency in production. What so much as, it can 
 buy abroad, it purchases by its most efficient labor : but 
 what it can buy in this way is not sufficient to supply its 
 wants. 
 
 It remains to glance very briefly at our own history, 
 and to deal, not with statistics, which satisfy nobody, but 
 with great underlying, pervading, distressing facts which 
 marred the happiness and prosperity of the people, and 
 impelled the fathers of the Union to some system of re- 
 straints on the importation of foreign goods, and the im- 
 position, as a consequence, of protective duties. They were 
 driven to it by the discovery that the five assumptions they 
 made, and which we have before referred to, were wrong 
 in fact. It was the inauguration of a settled reasoned na- 
 tional policy and economy. 
 
 Alexander Hamilton (in 1791) enumerates seventeen 
 branches of manufactures which had been successfully car- 
 ried on in the colonies — to wit, leather, iron, wood, flax 
 and hemp, bricks, liquors, paper, hats, refined sugars, oils, 
 copper and brass wares, tin-wares, carriages, tobacco, starch 
 and hair-powder, lampblack, and gunpowder. 
 
 It would be a mistake to confound the processes then 
 
ADAM SMITH— SOIIE FACTS IN OUR HISTOET. Igl 
 
 in vogue with the present organization of industry. Manu- 
 factures then were literally hajsto-made. The people were 
 mostly engaged in agriculture and commerce. Only such 
 blacksmiths, carpenters, masons, shoemakers, and other 
 artisans existed side by side with the farmers as were indis- 
 pensable. But many tools were then made by the black- 
 smiths, and many wares by the carpenter, which are now 
 made by machinery on a large scale. All weaving was 
 done on hand-looms. So mnch of these goods as could 
 be imported, were imported and paid for by agricultural 
 products. But these went mainly to the West Indies, 
 and from this trade was derived the means of payment of 
 the imports from other countries. Then, as now, only the 
 finer textile fabrics were imported. Cloths, linens, and 
 textile fabrics were mostly homespun. Ship-building, of 
 wood, and the carrying- trade, had been natural and profit- 
 able industries. The making of pig-iron was substantially 
 an agricultural industry, and could only be carried on where 
 wood was plenty, charcoal being the only fuel used.^ It 
 was converted into bars under the trip-hammer and slitting- 
 mill. The moderately protective duties provided for in 
 the first tariff act passed, under the present Constitution, 
 on July 4, 1T89, had steadied up the domestic manufact- 
 ures somewhat, and the country was passing the unhappy 
 free-trade crisis of 1783-89. 
 
 The Napoleonic wars produced exceptional and adven- 
 titious markets until 1808, when we became involved in 
 European complications. In aU these years we had almost 
 a monopoly of the supply to the belligerents of wheat, 
 com, and meat, the prices of which were high, and the 
 profits on the freight of which were large. In the mean 
 time England had adopted successfully the inventions of 
 
 ' See a very faithful and intelligent account of the iron industry in the 
 United States — " Iron in all Ages," James M. Swank, Philadelphia, 1885. 
 
182 PROTECTION VS. FREE TKADE. 
 
 Artwright and Ilargreaves in cotton manufacture, the 
 use of coke in the manufacture of iron, and Cort's in- 
 vention of puddling and rolhng iron. So long as the for- 
 eign market held out, we advantageously supplied our need 
 of these products, cheapened by machinery, by our exports. 
 The political and economic efEects of the wars of the 
 French Eevolution kept the question of protection in the 
 background, but its expediency was never questioned by 
 Hamilton, Jefferson, Madison, Monroe, and, indeed, Cal- 
 houn. How purely accidental and contingent our com- 
 mercial advantages were during the wars, and how depend- 
 ent upon wars, appears from a single fact. The Peace of 
 Amiens lasted two years, 1802-3. Our imports fell off 
 from $111,300,000 in 1801, to $76,300,000 in 1802, and 
 $64,700,000 in 1803 ; our exports, from $94,000,000 in 
 1801, to $72,000,000 in 1802, and $55,800,000 in 1803. 
 Flour was $10.45 per barrel in 1801, and fell to $6.75 in 
 1802-3. This was the effect of peace in Europe. Our 
 prosperity had been artificial. 
 
 No nation can count on continual prosperity based on 
 disasters to other nations. In 1806 England had estab- 
 lished a blockade of the Continent from Brest to the Elbe. 
 !N"apoleon followed with the Berlin Decree. Then came 
 the English Orders in Council, and again Napoleon's Milan 
 Decree. In due time came our embargo in 1807 — non- 
 intercourse in 1809, and war with England in 1812. What 
 happened ? According to Prof. Sumner : " Embargo, non- 
 intercourse, and war, lasting from 1807 to 1815, created a/n 
 artificial state .of things here, or, perhaps I should say, the 
 United States was drawn into the distortion and perver- 
 sion of industry and commerce which the great wars were 
 producing in Europe. Manufactories of various kinds 
 sprang up here to supply the wants of the peoplejwh.en. cut 
 off from the usual sources of supply by foreign exchange. 
 
ADAM SMITH— SOME FACTS IN OUR HISTORY. 183 
 
 They produced articles of inferior quality or design, gen- 
 erally speaking, but the jpeo-ple had to he satisfied with 
 them. They were sustained by the artificial difficulties in 
 foreign exchange, and by the diminisJied profits of other 
 industries which would have been more profitable here.'''' ' 
 
 The real truth is, our prosperity, between 1792 and 
 1807, had been artificial and factitious, created by foreign 
 wars, during which our commerce prospered so long as we 
 could maintain our attitude as neutrals. Peace abroad 
 brought us back to our normal condition, as seen in 1802-3. 
 
 According to Prof. Taussig : ^ " This series of restrictive 
 measures blocked the accustomed channels of exchange 
 and production, and gave an enormous stimulus to those 
 branches of industry whose products had before been im- 
 ported. Establishments for the manufacture of cotton 
 goods, woolen cloths, iron, glass, pottery, and other arti- 
 cles, sprang up with a mushroorn growthP 
 
 One is tempted to inquire how our fathers were, else, 
 to find the satisfaction of their desires ? Were they to sit 
 
 ' Speaking of the " distortion and perversion of industry " forced upon a 
 people by restrictions, here is what a very distinguished free-trader has offi- 
 cially said as the grounds for " returning thanks to God." The economic 
 effects of restriction, whether by war or tariffs, is the same, and the " com- 
 pensation " the same under either cause. In his annual message to the Con- 
 federate Congress, in 1863, Jefferson Davis discourses thus : 
 
 " The injuries resulting from the interruption of foreign commerce have 
 received compensation by the development of our own resources. . . . Cot- 
 ton and woolen fabrics, shoes and harness, wagons and gun-carriages, are 
 produced in daily-increasing quantities by the factories springing into exist- 
 ence. Our fields, no longer whitened by cotton that can not be exported, are 
 devoted to the production of cereals and the growth of stock, formerly pur- 
 chased with the proceeds of cotton. In the homes of our noble and devoted 
 women — without whose sublime sacrifioss our success would have been im- 
 possible — the noise of the loom and the spinning-wheel may be beard 
 throughout the land. With hearts swelling with gratitude, let us then join 
 in returning thanks to God." 
 
 ' Assistant Professor of Political Economy at Harvard College. 
 
184 PROTECTION VS. FEEE TKADB. 
 
 idly until a ukase from the professors at Harvard, Tale, 
 and Williams prescribed the time and conditions under 
 whicli they might proceed to supply the necessaries and 
 conveniences of life ? 
 
 " It is sufficient here to note that the restrictive legis- 
 lation of 1808-'15 was for the time being equivalent to 
 extreme protection. The consequent rise of a considerable 
 class of manufacturers, whose success depended largely on 
 the continuance of protection, formed the basis of a strong 
 movement for more decided limitation of foreign com- 
 petition." 
 
 Some concessions to this feeling came in the tariff act 
 of 1816. Cotton and woolen goods were to pay 25 per 
 cent until 1819.^ The act was defended with great force 
 by Mr. Calhoun. But there was no general movement 
 made in the direction of protection as such. If there 
 was any expectation that agriculture and commerce would 
 be again as profitable as they were previous to 1808, the 
 people were doomed to disappointment. They were to be 
 led up, by an experience not tmlike that of 1783-89, to a 
 strong public conviction in favor of protecting their in- 
 dustries, and the enactment of legislation to that end. 
 Prof. Taussig shall describe the order of events after the 
 close of the War of 1815 : "The harvests in Europe for 
 
 ' The minimum duties, which so excite the ire of free-traders, first ap- 
 pear in this act. The duty was 25 per cent on cotton cloths. The minimum 
 clause provided that it should not be less than six and a quarter cents per 
 yard ; that is, that the goods should be considered to have cost twenty-five 
 cents per yard. Cotton cloths were then worth twenty-five to thirty cents per 
 yard, and the minimum did not increase the duty. The price of -cotton fell 
 in 1819 to nineteen cents, in 1826 to thirteen cents, and in 1829 to eight and 
 a half cents per yard. The cheaper goods becaine, of course, the larger per 
 cent the tariff bears to the cost. The nearer we come to supplying the domes- 
 tic demand by the domestic production, the more it costs the consumer ! This 
 is a very cheap and superficial fallacy, as is seen in the case of cotton cloth. 
 
ADAM SMITH— SOME FACTS IN OUR HISTORY. 185 
 
 several seasons were bad, and caused a stronger demand 
 and higher price for the staple food -products. The de- 
 mand for cotton was large, and the price high. . . . The 
 prices of breadstuffs and prorisions, the staples of the 
 North, and of cotton and tobacco, the staples of the South, 
 were not only absolutely but relatively high, and encour- 
 aged continued large production of these articles. The 
 prices of most manufactured goods were comparatively 
 low. After the war, the imports of these from England 
 were very heavy. The long pent-up stream of English 
 merchandise may be said to have flooded the world at the 
 close of the Napoleonic wars. In this, as in other coun- 
 tries, imports were carried beyond the capacity for con- 
 sumption, and prices fell much below the normal rates. 
 The strain of this oversupply and fall of prices bore hard 
 on the domestic manufacturers, especially on those who 
 had begun and carried on operations during the restrictive 
 period ; and many of them were compelled to abandon 
 their works." ' 
 
 Why did not the people of the United States thrive 
 under this inundation of cheap English goods ? Prof. 
 Taussig tells us : " Prices began to fall rapidly and heavily, 
 and continued to fall through 1819. The prices cf the 
 agricultural staples of the North and South underwent the 
 greatest change, for the harvests in Europe were again 
 good in 1818, the English corn laws of 1816 went into 
 operation, and the demand for cotton fell off. . . . The 
 prices of manufactured goods had already decHned, in con- 
 
 • " In 1816 the English exported immense quantities of manufactured 
 goods to the Continent and to the United States. The results of these trans- 
 actions were disastrous. Our paper money here also exercised its influence 
 to encourage overtrading and over-importation. In 1817 the manufacturers 
 were in distress, cries were heard against the inundations of foreign goods, 
 against the drain of specie, and against the balance of trade." — Sumner, 
 "Protection in the United States." 
 
186 PEOTECTION VS. FREE TRADE. 
 
 sequence of the heavy importations in the years immedi- 
 ately following the war ; when, therefore, the heavy fall 
 took place in 1819 in the prices of food and of raw mate- 
 rials, in the profits of agriculture, in wages and in rents, 
 the general result was advantageous for the manufacturers. 
 ... It is easy to see that the whole process was nothing 
 more than the evolution of the new state of things which 
 was to take the place of that of the period before 1808. 
 Before that year manufactured goods, so far as they could 
 be obtained by importation, were imported cheaply and 
 easily by means of large exports and freight earnings. 
 These resources were now largely cut off. Exports de- 
 clined, and the imports in the end had to follow themP 
 
 Thus, the facts of our external commerce inverted the 
 economic arch upon which the theory of Prof. Perry and 
 his school is built. 
 
 For all ordinary cotton and woolen fabrics, the indus- 
 tries may be considered as fairly established in 1824r-'28. 
 Tariff rates upon them have not increased the cost to the 
 consumer. Iron, pig and bar, has encountered some special 
 difficulties in production.^ 
 
 ' So long as charcoal was the only fuel used in making iron, its manu- 
 facture would be confined to countries where wood was abundant, as Norway, 
 Sweden, Russia, and the American colonies. During much of the eighteenth 
 century England imported her crude iron. The use of coke in the blast-fur- 
 nace came in 1760, and Cort's processes of puddling and rolling in 1783. 
 This worked a revolution in the production of iron. Bar-iron, but no crude 
 iron, was imported into the United States before 1808, although manufactures 
 of iron, nails, spikes, anchors, etc., were imported. In 1816 Congress was 
 asked for the first time to extend protection to pig-iron, hammered bars, and 
 rolled bars. Pig-iron continued to be made of charcoal. The bituminous 
 coal-fields were too distant from the centers of population to render them 
 available for the supply of coke. The process of puddling was not intro- 
 duced here until 1830. The use of so refractory a fuel as anthracite coal, . 
 under a hot blast, was not introduced until 1838. This marked the turning- 
 point in iron-production in the United States. Improved and cheap pro- 
 
ADAM SMITH— SOME FACTS IN OUR HISTORY. 187 
 
 These industries bad all come into existence between 
 1808 and 1816, wLen embargoes and war had operated to 
 restriet foreign commerce as efEectnally as prohibitory du- 
 ties. What was true of the cotton industry was true of the 
 woolen and iron industries, and all the others. 
 
 Prof. Taussig's conclusions, and concessions to the pro- 
 tective principle in the case of cotton manufactures, are true 
 of all the others. "Before 1808 the difficulties in the way 
 of the introduction of this branch of industry were such 
 that it made httle progress. These difficulties were largely 
 artificial ; and though the obstacles arising from ignorance 
 of the new processes and from the absence of experienced 
 workmen were partly removed by the appearance of Sla- 
 ter,^ they were sufficient, when combined with the stimu- 
 lus which the condition of foreign trade gave to agricult- 
 ure and the carrying-trade, to prevent any appreciable 
 development. Had this period come to an end without 
 any accompanying political change — ^had there been no 
 embargo, no non-intercourse act, and no war with Eng- 
 land — the growth of the cotton manufacture, however cer- 
 tain to have taken place in the end, might have teen sub- 
 ject to much friction and loss. Conjecture as to what 
 might have been is dangerous, especially in economic his- 
 tory ; but it seems reasonable to suppose that, if the period 
 
 cesses in England, and the tariff of 1846, Ijept the industry in a backward 
 state until 1861. Since then the American production has reached five 
 million tons a year, and has a capacity to supply the domestic demand ; and 
 furnaces now make from one hundred to one hundred and fifty tons a day, 
 when the old charcoal-furnaces could scarcely make fifty tons a week. In 
 all essential respects, the industry was only fairly established in 1861. It 
 was then an infant ; it is now in robust maturity. It has cost us something, 
 but it was indispensable, and was worth the cost. It has now been incurred 
 " once for all." 
 
 ' An English artisan who came to America in 1789. There were only 
 four cotton-factories here in 1803. 
 
188 PROTECTION VS. FREE TRADE. 
 
 before 1808 had come to an end qnietly and without a 
 jar, the eager competition of well-established English man- 
 ufacturers, the lack of familiarity with the processes, 
 and the long-continued habit, especially in New England, 
 of almost exclusive attention to agriculture, commerce, and 
 the carrying-trade, might have rendered slow and difficult 
 the change, however inevitable it may have been, to greater 
 attention to manufactures. Under such circumstances 
 there might have been room for the legitimate application 
 of protection to the cotton manufacture as a young indus- 
 try. But this period, in fact, came to an end with a vio- 
 lent shock, which threw industry out of its accustomed 
 grooves, and caused that striking growth of the cotton 
 manufacture from 1808 to 1816 which has been described. 
 The transition caused much suffering / but it took place 
 sharply and quickly. The interruption of trade was 
 equivalent to a rude but vigorous application of protection, 
 which did its work thoroughly. . . . On the whole, al- 
 though the great impulse to the industry was given dining 
 the war, the duties on cottons in the tariff of 1816 may be 
 considered a judicious application of the principle of pro- 
 tection to young industries." (Prof. F. "W. Taussig, " Pro- 
 tection to Young Industries, as applied in the United 
 States," p. 36.) 
 
 It thus appears that the foundations of our industries 
 were not laid in any ambitious purpose " to compete " with 
 anybody, but a sincere, honest, and compulsory attempt to 
 realize the Satisfactions of life out of the conditions which 
 surrounded our fathers — to secure the only "wealth" ac- 
 cessible to them. 
 
CHAPTER IX. 
 
 A FtJETHEE ASTALTSIS " THE ECONOMIO QUESTION" " THE 
 
 SCIENTIFIC QUESTION." 
 
 There are two points of view from which this whole 
 discussion can take place ; there are two ends or consum- 
 mations which the observer may contemplate. The princi- 
 ples of the science wiU be equally applicable in the process 
 of passing from the point of view to the end contemplated. 
 The practical maxims of business, as I should prefer to call 
 them, will be the same in each case. The man who enters 
 upon a manufacturing enterprise proceeds, if he is success- 
 ful, upon these " principles of the science " or " practical 
 maxims of business," and there is no real dispute as to 
 what they are. The man who enters upon a mercantile 
 enterprise proceeds in like manner upon the " principles " 
 and " practical maxims " applicable to his case, and there 
 is no actual contention as to what they are. There is no 
 mystery connected with the conduct of either pursuit. In 
 point of fact, logically and chronologically, men had manu- 
 factured and exchanged with varying fortunes, centuries 
 before Adam Smith wrote and before the science of pohti- 
 cal economy had been thought of. The analysis of the 
 different steps of production, exchange, and consumption, 
 could only be useful and take on a scientific value so far as 
 it conformed to the outward facts. The science, if it is to 
 exist, must proceed in accordance with " the buying and 
 selling," and " the buying and selling " would not be con- 
 
190 PROTECTION VS. FKEE TRADE. 
 
 formed to the mold of the science. The operation of these 
 laws does not depend on their recognition by students — 
 or others. 
 
 The economist now comes upon a problem in his sci- 
 ence presented by the conditions of the States of the Union 
 on this continent a hundred years ago. He looks upon 
 their natural resources, fertile lands, navigable rivers, har- 
 bors, forests, coal, ores, clays, and sands. He takes account 
 of the mental and moral powers of the population, consid- 
 ered as instruments for the production of wealth. He 
 takes account of the necessaries, conveniences, and luxuries 
 of life, in which they are wont, by virtue of the civiliza- 
 tion they have reached, to indulge — ^the aggregate of the 
 "desires" for which they are willing to seek "satisfac- 
 tion " in the consumption of the wealth they have made 
 the exertions to create. 
 
 He contemplates that in a hundred years there may be 
 fifty millions of people, soon thereafter to be a hundred 
 millions, and that they will then have overrun, taken pos- 
 session of, and appropriated all the soil, or all the accessible 
 and valuable portions. 
 
 He widens his view and draws within his range the 
 conditions of the people of all the world, their industrial 
 organization, their population, their standard of living, 
 their capacities, and their instruments of production. He 
 finds a vast, complicated, and effective regime of industry 
 there. He contemplates the respects in which they pos- 
 sess superiority over the inhabitants of the United States. 
 He inquires into the forces of nature which have been 
 brought into the service of man. He estimates the advan- 
 tages which steam and machinery have conferred upon dif- 
 ferent races in their efforts to conquer nature to human 
 uses. He considers whether the people of the United 
 States have the skill, the energy, the impulses, and the 
 
A FURTHER ANALYSIS. 191 
 
 ability to extort the higliest utility from these natural 
 agents. He reckons the relative cost in labor and sacrifice 
 — the will-power and the muscle-power involved in the pro- 
 duction of any commodity, in this land and in foreign 
 lands. He finds there is no product of labor as such, which 
 can be produced by the inhabitants of any land in the same 
 latitude, at a less expenditure of human toil than in the 
 United States. He finds that in the United States we can 
 raise certain food and raw materials from the soil at a 
 much less expenditure of human labor than any other peo- 
 ple, and that for these products there is a limited market 
 in Europe. It further appears that the labor — ^the real sac- 
 rifice which a workman in Europe puts into a ton of iron 
 or a yard of cloth — is no less than is required for the like 
 ton or yard here ; but the laborer there is content to take 
 less wages and the capitalist less profits. He is willing to 
 put forth an effort for production for which he is satisfied 
 to take less remuneration in money or fewer commodities 
 in the way of food, clothing, and shelter for his wife and 
 children. He finds that the workman in the United States 
 is unwilling to accept industrial employment on these 
 terms. Kather than do that, he will prefer the comfort 
 and the feeling of safety for his wife and children which 
 he can find on the fertile lands which the Government of 
 the United States will give him for nothing — or, at least, 
 on terms which only repay the cost of surveying them for 
 the settler. As the owner of a farm, his wages are now 
 the whole product of his labor, swelled by the whole 
 amount of the gratuitous contribution of the original pow- 
 ers of the soil (or the space which his natural instrument 
 of production occupies) — the gift of this Government. It 
 is not as an agricultural laborer that he gets these returns, 
 for the hired labor on a farm is the lowest-priced labor in 
 the countiy. It is as a land-owner — as the proprietor of 
 
192 PROTECTION VS. FREE TRADE. 
 
 the natural instrument of production wMcli the State, for 
 reasons touching the public welfare, had freely presented 
 to him as a gift ; for I believe it is conceded that the pri- 
 vate title to soil is given to the owner as being simply the 
 most expedient device, as yet, for reaching the best cultiva- 
 tiou — producing to the society the greatest results. There 
 is no natural inherent right in the case. That the owner 
 pays value for it does not affect the question.^ 
 
 The economist now sees that aU the inhabitants, whose 
 efforts are thus supplemented by natural agencies of all 
 kinds, and who are in a situation economic to reap all the 
 fruits of their work, have been enabled to adopt a higher 
 standard of living, compared with a laborer abroad, and, by 
 consequence, all the other people here demand like returns 
 if they enter upon any of the other pursuits which are 
 natural to a people possessed of civilization and the means 
 of 'illustrating it, and which are necessary, if their various 
 desires are to be satisfied. It is evident that there is a vast 
 amount of comfort, content, and happiness possible to an 
 industrious and intelligent people, thus in possession of the 
 soil of Aalf a continent. The different classes of society 
 which the agriculturists are compelled to have in their 
 midst — their parsons, their school-teachers, their cobblers, 
 their clothes-menders, their cellar-diggers, and their fence- 
 
 ' " Private ownership of land is only division of labor. If it is true, in 
 any sense, that we all own the soil in common, the best use we can make 
 of our undivided interests is to vest them all gratuitously (just as we now 
 do) in any who will assume the function of directly treating the soil, while 
 the rest of us take other shares in the social organization. The reason is, 
 because in this way we all got more than we would if each owned some 
 land and used it directly. Supply and demand now determine the distribu- 
 tion of population between the direct use of land and other pursuits. . . . 
 In modern society the organization of labor is high. Some are land-owners 
 and agriculturists; some are transporters, bankers, merchants, teachers; 
 some advance the product of manufacture. It is a system of division of 
 functions." — SnMNER, " Social Classes." 
 
A rtTRTHER ANALYSIS. 193 
 
 makers — can only be had on tlie condition that " they are 
 admitted to a participation in the abundance enjoyed " not 
 alone " by the agricultural population," but by the owners 
 of the soil,, timber, water-power, sands, ores, etc., in the 
 soil. For the manufacture of their shoes, their clothes, 
 their carpets, their hats, their plows and chains, their cut- 
 lery, their glass, their sewing-thread, their salt, their borax, 
 and their quinine, etc., it seems there are people in Eng- 
 land and Germany willing to undertake them for less 
 wages, and consequently will furnish them for a less price. 
 The farmer finds that by sendiug his cotton, his wheat, and 
 tobacco to England and Germany, he can apparently, and 
 for the time being, really get more iron, or steel, or calico, 
 or woolen goods, or silks, or wines, or gloves, for any given 
 amount of his surplus, than his neighbors will consent to 
 supply the same commodities for. But he can only get 
 from abroad these commodities to the extent to which he 
 can pay for them by the surplus of his abundant crops. If 
 he does not already know it, he will speedily find out that, 
 in the long run, he can only get the commodities he needs, 
 the imports, by means of the food and cotton he has to sell, 
 the exports. If he can not sell abroad he can not buy 
 abroad. He will find he can not get his iron, and steel, 
 and calico, and woolen goods, and silks, and wines, and 
 gloves, with the proceeds of what he can sell. His con- 
 sumption of manufactured goods is so great that he can not 
 purchase them all abroad with the surplus of any salable 
 commodity which he produces. 
 
 Our economist here has most of the elements of the 
 problem which the American question presents. The peo- 
 ple here who created their government, freed from political 
 alliances with all the other governments, had an option to 
 begin an industrial system undisturbed by any entangling 
 alliances with existing industrial organizations. Oontem- 
 10 
 
194 PROTECTION VS. FKEE TRADE. 
 
 plating all political, all social, all ethical, all historical, all 
 sentimental, all national, and all ethnological considerations, 
 or looking at economic considerations alone, which of two 
 possible solutions of their problem should they adopt ? For 
 the present we shall assume the jural power to adopt either. 
 Divesting themselves of all impulses, except to create the 
 greatest amount of wealth, how should they apply their 
 industry to the materials in hand ? Or, taking the more 
 generalized form of the proposition, how should they ex- 
 pend their efforts to realize the greatest amount of satis- 
 factions ? 
 
 These two problems of economics may be stated thus : 
 
 1. In the words of Prof. Jevons : " Given a certain 
 population, with various needs and powers of production, 
 in possession of certain lanfls and other sources of mate- 
 rials : required the mode of employing their labor which 
 will maximize the utility of their produce^^ (" Theory of 
 Pohtical Economy," p. 289.) 
 
 2. As given by Prof. Sumner : " Throwing aside all 
 technicalities, the case is to jkid how, for a given exertion 
 and sacrifice, to get the Tnaximum of material good." 
 (" Princeton Eeview," March, 1881.) 
 
 Two distinct forms of possible achievement are open to 
 us, as we work under the first or the second formula — as 
 we direct the forces at our disposal — or " let things alone." 
 
 Under the first formula we shall pay httle or no atteii- 
 tiouv to industrial conditions abroad. We apply all the 
 powers, capabilities, and energies of all " the population " 
 to all " the lands and other sources of oiir materials." To 
 this end we might invite the people of all the world to 
 come and help us. ' In fact, we did invite them all (except 
 China), and, in fact, about ten millions did come. This 
 mode of opening up the opportunities for the full action 
 and interaction of our mental endowments and physical 
 
A FDETHER ANALYSIS. 195 
 
 conditions would set no limit to the productive creations 
 of our industry, except tlie limitations of labor (number of 
 laborers) and capital. If we were free from foreign inter- 
 ference — if, for example, we bad been the only country on 
 tbe planet — cwteris paribus, no absolute bounds could be 
 set to the increase of improved farms, houses, railroads, en- 
 gines, looms, tools, carriages, pianos, and the thousands of 
 objects which swell the inventory of national " needs " ; no 
 bounds except the desires of the people and the working- 
 power of their brains and muscles. Their production would 
 go on under the laws of perfect competition between labor 
 and capital, and under remuneration in exact correspond- 
 ence to labor and sacrifice. Our national inventory in 
 1885, in these items of wealth, reaches the enonnous sum 
 of $63,000,000,000.1 
 
 But we were not the only people on the planet. This 
 regime was impossible unless some plan of restriction was 
 devised — some exclusion from our market of some of the 
 commodities made abroad, either by the mental resolution 
 of the people, or their statute to that effect. These conse- 
 quences might be made to flow from the enactment of a 
 positively prohibitory statute as to foreign goods. They 
 might ensue from the indirect effects of foreign political 
 complications, as the " Berlin Decree," " Orders in Council," 
 and the " MUan Decree," during the period of the Napo- 
 leonic wars ; or they might result from a state of war in 
 which we were parties, as in 1812-16 ; or again, they can 
 be made to flow from a " protective tariff." 
 
 The distinct end thus proposed could be reached by re- 
 strictions imposed on the importation of foreign manufact- 
 ures. The domestic manufacture could thus he protected. 
 Under protection, the domestic manufacture could be es- 
 tablished, for, as we see, it has been established — nay, 
 
 > Mr. David A. Wells puts it at $64,000,000,000. 
 
196 PROTECTION VS. PKEE TRADE. 
 
 more, in consequence of, and not in spite of, defensive du- 
 ties. Nor need the question be complicated with consider- 
 ations of "reyenue." Protection is to be defended or 
 attacked on the merits or demerits of the industrial philos- 
 ophy underlying it, dissociated from revenue. In its es- 
 sence it is not a question of taxation at aE. All attempts 
 to deal with it from that point of view only obscure the 
 issue, and insistence on treating it as a question of taxation 
 -is intended for dishonesty or sophistry. I do not allege 
 that protection and revenue are exclusive of each other, for 
 I hold it demonstrable that thcy are not ; indeed, Prof. 
 Sidgwick, in his work, the last formal treatise issued from 
 orthodox Enghsh economy, has sufficiently proved that 
 taxes laid for revenue may be made to operate protectively 
 and conversely. But, as Prof. Sumner says, " the line be- 
 tween them is sharp and precise, and we can discuss the 
 wisdom of protection, entirely aside from the wisdom of 
 raising revenue from customs duties." I am willing to 
 accede to Prof. Perry's challenge : " If protection be good, 
 it is good ia and of itself; if it is bad, it has no business to 
 be begging to lean on something so respectable as revenue. 
 The burden of proof, at any rate, lies upon the man who 
 brings in a theory interrupting the play of natural laws. 
 Let him bring forward and prove his theory of restriction. 
 Let us hear the arguments and see the grounds that justify 
 the prohibition of an advantageous trade." The real ques- 
 tion is whether we can induce or stimulate the home indus- 
 tries, by the means of defensive duties, to a production of 
 commodities which will supply all the wants of our people 
 in the greatest ultimate abundance and cheapness. 
 
 JS^obody has made any proposal to prohibit " an advan- 
 tageous trade." We are trying to see if we can not do 
 better. We have been exploring the data of our own pe- 
 culiar case in its pecuKar facts to see if it would not be 
 
A FURTHER ANALYSIS. I97 
 
 more advantageous to supply our wants without any for- 
 eign trade. " Trade " is no very potent word to conjure 
 with. " The trader is a necessity, not a power." If we 
 can dispense with him, we have got rid of a serious source 
 of " taxation." The end proposed by protection is the sup- 
 ply of all our wants, so far as possible, by the use of our 
 own productive agencies. 
 
 Under Prof. Sumner's formula, we shall go about our 
 national economy from an entirely different direction. We 
 now take cognizance of what foreign nations have to sell, 
 and the terms on which we can buy. We notice the nature 
 of their wants and the extent to which we can supply them 
 on terms advantageous to ourselves. We shall soon see 
 that their requirements from us will be the gauge of our 
 commerce with them. They have not newly come into 
 the industrial world as we have. The adaptations of their 
 internal trades and exchanges have been already made with 
 substantial fixity. The adjustments of their foreign com- 
 merce have come to something like stability — their indus- 
 trial and commercial systems have been established. This, 
 at once, places us under the necessity of adjustments and 
 adaptations to already existing systems. They may be 
 natural to the original members of the system, because the 
 system is a development, a growth. To us, they are arti- 
 ficial, and we must fit ourselves in and piece them out here 
 and there. Long before we appeared, their industrial pro- 
 cession was formed. And now, on our arrival, we must 
 " fall ia " when and where we can squeeze out a place for 
 ourselves. With the procession as a whole we can not 
 keep up, except by staying at the rear. 
 
 Their competition is not effective against us in skill, 
 energy, brain-power, and muscle-power. They can not 
 work faster, or more persistently, or more effectively, but 
 they are willing to take less remuneration for their ex- 
 
198 PROTECTION rS. FEEE TRADE. 
 
 penditure of labor-power. It is a warfare in wMcli their 
 wealmess becomes strength, and we are driven off the, 
 field. 
 
 But there are fields in which we are their superiors. 
 There is one point at which competition can not drive ns 
 out. There are fields in which we have the aid of the 
 forces of nature. Agriculture, the raising of raw prod- 
 ucts, enables us to summon the original and indestructible 
 powers of the soil to our assistance. The superabundant 
 rewards of fertile acres added to the rewards of our own 
 labor, constitute an aggregate which enables us to re-enter 
 at one point of the international struggle. 
 
 In the struggle " a given exertion and sacrifice " at that 
 point will yield a product with an exchangeable value, if 
 not unduly overworked, which equalizes our condition. 
 That product then is the one to which the science of 
 modern English political economy requires ns to confine 
 our industrial energies. What of sldll and intelligent di- 
 rection that pursuit requires we are to devote to it. All 
 our industrial efforts are to be adjusted to the production 
 of the commodities in which alone we have the superiority 
 over the foreign producers. 
 
 So far as the foreign markets will take the product of 
 the most advantageous industry, so far we shall reap the 
 highest economic gain ; just filling the demands of that 
 market we shall be in economic equilibrium. In case we 
 cause an overproduction we shall lose our exchange power. 
 In case there is no market abroad, we shall lose the whole 
 value, and besides be compelled to do without the foreign 
 commodity, for which the only reliance we had was the 
 export of the product of this most advantageous industry. 
 
 For "a given exertion and sacrifice"- made in our 
 special field we produce, say, twenty bushels of wheat. 
 For a like exertion and sacrifice made in the production 
 
A rUETHEE ANALYSIS. I99 
 
 of iron we produce, say, one ton of iron. If the exchange 
 is made here at home, the ton of iron will require the 
 whole twenty bushels. If the exchange is made abroad, 
 we shall get the ton of iron for fifteen bushels of the wheat. 
 The latter transaction manifestly gives us " the maximum 
 of material good " for that particular " exertion and sacri- 
 fice." But there is a limit to the quantity of wheat which 
 the foreign market will take on any terms, and there is a 
 very distinct limit to what it will take from the United 
 States. That limit is the amount which it takes to feed 
 the people in other countries, diminished by the total food- 
 product of these other countries. It is fixed by the neces- 
 sities for food and the supplies of food in these same 
 foreign countries, and does not in any sense depend on the 
 amount of their products which we need. There is no 
 definite limit to the iron and other things which we need. 
 The case of the ton of iron and the fifteen bushels of wheat 
 is by itself very plain sailing. But suppose that in the pur- 
 chase of tea, coflee, and sugar, drugs, dye-stuffs, and chemi- 
 cals, which are now articles of necessity, and of French 
 wines and foreign fruits, which are articles of luxury, and 
 of silks and satins, and fine clothes, which are articles of 
 fashion, we had supplied the foreign demand for the prod- 
 ucts of our most advantageous industry : then how is the 
 ton of iron to be obtained ? Or if the iron is obtained, how 
 are the other things to be procured ? One at a time we 
 can supply our wants. But when the infinitude of our 
 desires is aggregated, what relation will our exportables, the 
 purchase-money, bear to the aggregate of importables, the 
 satisfaction which we must purchase abroad? We have 
 seen that they break hopelessly down. Can the given " ex- 
 ertions and sacrifices " of us aU be made in like manner 
 to. result in the maximum of material good to us all ? 
 
 But there is an outstanding reason to which we have not 
 
200 PROTECTION VS. FEEE TRADE. 
 
 yet adverted, which prevents the supply of the wants of all 
 of ns by the foreign exchange. This is the fact that there 
 is no market in the world which contains the full supplies 
 which our maximum of good involves. The world has not 
 as yet accumulated the capital, labor, and skill which are 
 adequate to produce the requisite surplus of manufactured 
 goods — ^goods made in the competing, " 'protected" indus- 
 tries — which are natural and necessary to us. No nation 
 or group of nations is rich enough to do this for us. We 
 must make the remainder, then, at home. The argument 
 in hand is only in reply to the logic which undertakes to 
 say what ought to be. 
 
 The " given exertion and sacrifice " will yield the prod- 
 uct here, but what creates the answering demand there? 
 What principle of the science of political economy corre- 
 lates the capacity to produce here, with the capacity to 
 consume there? Supply and demand ? Then the. supply 
 is to be kept down to the demand. We gauge our indus- 
 try to the foreign capacity to cbnsuine, which is confessedly 
 limited. Having filled that capacity, we either do nothing, 
 or, having reduced our mofet advantageous industry to nil, 
 we now take to other industries. That is, having over- 
 produced ourselves out of the foreign market, we are now 
 poor enough to undertake the hitherto " unprofitable " in- 
 dustries ; we are compelled to abandon an " advantageous 
 trade." 
 
 Bursting suddenly into the industrial world, and pro- 
 ducing, without reference to foreign markets, there could 
 in the nature of things be no assurance, not feven a chance, 
 that our production would fit the existing conditions of a 
 world's market. There could be no rational prevision of 
 the state of the world's market, and no rational adjustment 
 to its needs. Discarding exchangeable values, we should 
 have gone on producing illimitable supplies ; what might 
 
A FURTHER ANALYSIS. 201 
 
 have saved us, and wliat lias saved us, was the nature of 
 our production, and the fact that it furnished subsistence, 
 especially to men in our own country. If we had a trade 
 with some other planet — if Mars, for instance, had been 
 an available foreign market — we might have reached the 
 maximum of material good by exchanges. As it was, 
 we had no recourse, except either to consume it at home, in 
 the prosecution of allied industries, or stop making the " ex- 
 ertion and sacrifice " required in its production. 
 
 The second formula will do this for us : it will give us 
 the maximum of material good on two conditions, namely : 
 that we make the precise " exertion and sacrifice," and no 
 more, necessary to produce a surplus, which \h.e foreign 
 market will take ; and then that we continue only to need 
 and desire the number and amount of things which that 
 surplus will pay for. 
 
 Conformity to these conditions could only be realized 
 by legislative omniscience, which the protectionist never 
 ventured to invoke ; or the " guidance of an Invisible 
 hand," which even the theology of Adam Smith never 
 recognized as operative. The true problem is, then, not 
 " for a given exertion and sacrifice " to get the maximum 
 of " material good." It is rather to so occupy our " field of 
 employment " that we can expend upon it all the exertions 
 and all the sacrifices which we as a people are willing and 
 able to make ; to get the maximum for all which is possi- 
 ble, when all our abilities and all our energies are called 
 into play. 
 
 Unless one occupies the point of view from which he 
 can contemplate all the efforts which the whole fifty mill- 
 ions of us are capable of making, and all the good which 
 the whole fifty milHons of us are capable of enjoying, he 
 has no business either as the writer of text-books on econ- 
 omy, of essays in reviews, or as a statesman in Congress, to 
 
202 PROTECTION VS. FREE TRADE. 
 
 assume to be in intelligent possession of knowledge, or to 
 suggest intelligent legislation on this subject. Such em- 
 piricists might as well undertake to make provision for the 
 civic wants of the population of a great city, provide insti- 
 tutions affecting its sanitary, police, and fiscal systems, after 
 having simply explored one of its blind back alleys. Be- 
 cause some of the inhabitants got their water-supply from 
 the town-pump, they assume that all could ; or, because one 
 sewer relieved part of the waste, they conclude that it could 
 take it all out of the corporate limits. 
 
 Because we have some most advantageous industries, 
 which employ some of our energies and some of our skill, 
 it is decreed that we are not to occupy, with the energies 
 and skill unemployed, any less advantageous ones. Be- 
 cause we can make some exchanges advantageously abroad, 
 it is assumed we can make all our exchanges advantageous- 
 ly abroad. Our national growth and the fuUness of our 
 national life are to be adjusted by and adapted to the con- 
 ditions of the outer industrial world. We are asked to 
 regulate our conduct by the exigencies of exchangeable 
 values, and not by the exercise of all our productive forces. 
 These are to be employed, not with reference to their in- 
 herent and natural capacities, but are to be fitted to a Pro- 
 crustean bed, not made to our measure. Our vast powers 
 of production are to be idle, or to be subordinated to the 
 mere accidents of foreign exchange values — our stream of 
 creative agencies to be kept within the bounds of the for- 
 eign estuary into which it flows — our Ulimitable freedom 
 of scope and variety to be dwarfed into the measure of the 
 comfortless slavery, and consequent want of purchasing 
 and consuming power, of the toiler in other lands. "We 
 are to he cast in a mold the size and form of which are not 
 in correspondence with our internal forces, but which con- 
 form to the repressive power of an external rigid obstacle. 
 
A FURTHER ANALYSIS. 203 
 
 The advocate, then, of -anrestricted trade must contem- 
 plate the limitations which thus in the nature of his prob- 
 lem surround the growth of the nation : a certain number 
 of laborers onlj, and a certain amount of capital only, can 
 profitably enter into the special industries of the country. 
 We take up a limited field in the international division of 
 labor. That " division of labor is limited by the market." 
 There are no canons of the science of political economy by 
 which we can forecast, under this regime, the rate of our 
 progress and growth. What may be positively aflBrmed 
 by any man of average intelligence would be the sharp an- 
 tithesis between the outcome with " free trade " and " pro- 
 tection." One economist may, in entire good faith, prefer 
 the form of national life which would naturally flow from 
 agricultural pursuits — the comfort, contentment, and in- 
 telKgence of a people devoted to food-raising. They make 
 their few foreign exchanges without excitement. They 
 are out of the roar and waste of industrial machinery. They 
 are exempt from the sufEering and disaster of commercial 
 crises. But they have bought their ease and independence 
 at the cost of " wealth " and higher social hfe. The de- 
 cision must turn on the radically diEferent views of human 
 society which the observer takes. The free-trader says : 
 " A new country can not have the higher social develop- 
 ment until the population begins to grow dense. It is so 
 with us yet. We have not the literature or the science or 
 the fine arts of the old countries, but we have not their 
 poverty and misery. We must take our advantages and 
 disadvantages together." (Sumner, " Protection in the 
 United States," p. 26.) We are to accept, then, our assign- 
 ment to the rdle of food-raising for other nations. In the 
 long decades of the future we may have a population dense 
 enough to give us a higher social development. It is true 
 there is no case in all history in which such a state of 
 
204 PEOTECTION VS. PEEE TRADE. 
 
 tilings evef arose in a purely agricultural state, or out of an 
 agricultural state without " a lift." But in time the leveling 
 process will reduce our -profits to a point at which manu- 
 facturing will come in naturally. "We can not force them. 
 "We go on rudely competing with all the food-raisers of the 
 world — competing in a market which is limited and vari- 
 able. We shall have a uniform overproduction, and the 
 market will be a place where we can give away our goods 
 rather than a mart in which we can sell them. The Ikwa of- 
 trade and the principles of nature as expounded by Bastiat 
 and Perry compel us to share the " gratuities " of our soil 
 with the foreign nations with whom we trade, and to raze 
 the exchangeable value of our products to the point where 
 the American farmer only gets compensation for his own 
 labor — or his " onerous contribution " to their value. All 
 over the world the food-raisers are making all the crops 
 which are possible — a farm is an instrument of production 
 which the owner is not likely to abandon. In point of fact 
 there are only two or three nations on the whole earth 
 which do not raise their own food. In most countries 
 there is a surplus — an overproduction. Of course, ex- 
 change values disappear. At the same time the special 
 characteristics of the commodity in which the overproduc- 
 tion takes place disguise and hide the enormous economic 
 fallacy which urges such an overproduction. The food- 
 raiser can subsist on his food:— he can consume his own 
 product — he wiU not die of starvation. He can, at least, 
 " live and be comfortable." So far in the United States 
 the free-traders have been able to hide away competitors in 
 overcrowded industries on the soil. This device has been 
 open to them. Thus the surplus labor has been kept in 
 abeyance, and has offered no hindrance to the free applica- 
 tion of abstract theories. An ugly factor in the problem 
 was thus put out of sight, but not got rid of. The unem- 
 
A FURTHER ANALYSIS. 205 
 
 ployed laborer will soon reappear to us, and provision must 
 be made for bim. So special an overproduction in any 
 otber industry would be seen to be attended with fatal 
 commercial consequences. Sucb an overproduction, and 
 so continuous, in calico, or iron, or steel rails, or shoes, 
 would destroy their manufacturers. These must be sold — 
 these must be exchanged. The farmer can eat his over- 
 production some time or other. The glut is only incon- 
 venient, it is not fatal, industrially. But the manufacturer 
 can not eat his calico, nor the iron-man his steel rails. If 
 they could, we should see overproduction on a large scale. 
 Inasmuch as things are as they are, the mill-owner, the 
 furnace-man, and the anthracite- coal miner must now " shut 
 down." But the farmer never shuts down. There is 
 neither strike nor " lock-out " in his industry. The enor- 
 mous commercial gains which the farmer fails to reap — or, 
 rather, the enormous losses which accrue to him by reason 
 of his overproduction — are forever concealed by virtue of 
 the consumable nature of his product.' If they were sala- 
 ble, as well as consumable, the wretched waste which we 
 know annually takes place in American tillage would be 
 manifest, and could be avoided. Not only in remote and 
 inaccessible sections, but in regions which may be seen by 
 the traveler from the window of the railroad-car in which 
 he is riding, may be observed wretched evidence of the 
 lethargy and inertia which follow productive fields, careless 
 methods, and unsalable crops. Corn half gathered or in 
 -unopened cribs — stacks of unused hay and stalks — ill-fed 
 cattle trampling their fodder under feet — ^betray the nerve- 
 
 • In 1880 the crop of wheat, corn, oats, barley, rye, buckwheat, and po- 
 tatoes aggregated 2,885,853,071 bushels, and sold for $1,442,559,918. In 
 1881, what was called a short crop of the same products — to wit, 2,175,175,- 
 164— sold for $1,570,248,541. In other words, 710,677,007 less bushels sold 
 for $127,488,623 more. 
 
206 PROTECTION VS. FREE TRADE. 
 
 less, motiveless result of using a natural instrument of high 
 productive power, with capacity to keep a man from dying , 
 of mere starvation, but which besides possesses little wealth- 
 creating value. The waste of labor, energy, and capital 
 misdirected into these most advantageous industries, with 
 its reaction on the character of the people, has vastly ex- 
 ceeded all the losses incurred by protection in the efEort to 
 divert them into "unprofitable" furnaces, factories, and 
 mills. 
 
 We are seeking a solution of the question in its eco- 
 nomic aspects, and not in its political, moral, and educa- 
 tional aspects. I am not aware that it has ever beea con- 
 tended that the gross annual product of the industry of the 
 United States is not greater under the doctrine of our pro- 
 ductive forces than under the notion of exchangeable val- 
 ues — that we can not make more values at home than we can 
 buy abroad ; nor am I aware that any free-trader has ever 
 indicated what direction skill and labor were to take if we 
 abandoned the protected industries. They make vague 
 statements that people will find something to do. " As for 
 the scope for varied talents," says Prof. Sumner, answering 
 Alexander Hamilton's celebrated report of 1T91, " persons 
 go to the places which offer an arena for their talents. They 
 do not sit still and say, ' Let us make an arena here.' ... As 
 for the varied field for enterprise, the world opens that, and 
 our enterprises seek the place of advantage." 
 
 Precisely : such " persons " and such " enterprises " can 
 leave the country and seek employment and habitations 
 elsewhere. Thus easily the free-trader whistles one fourth 
 of our population and one haK of the value of the nation's 
 property down the wind. In this way he makes the facts 
 conform to his theory, and estabhshes the ideal of his re- 
 pubhc. The protectionist would sit still and say : " Let us 
 make an arena here. By rest/rictions, industries here will 
 
A FURTHER ANALYSIS. 207 
 
 diversify themselves under the operation of natural forces. 
 The development of society will be as regular and natural 
 as that of a plant. There will be no forcing, and the bud 
 vn\[ burst into a blossom at the proper moment. Keep the 
 foreign competition off our backs, and we shall at once en- 
 ter upon the domestic arena in all its dimensions without 
 loss of time, waste of capital, or dissipation or misdirection 
 of energy. It may stimulate us to greater exertions, and 
 we may work harder ; but we are capable of the exertions, 
 and are willing to work harder. "We reap the reward of our 
 untiring exertions." "We see that there is neither a waste 
 of one nor a miscarriage of the other. They will be em- 
 bodied in articles of material " wealth," and we shall make 
 and have exactly as many as we choose to have. Of this we 
 can have no assurance under the conditions of dependence 
 on foreign commerce and the exchangeable value of our 
 own commodities always determined in a market always 
 oversupphed. 
 
 Prof. Perry exclaims, " There can be no science of ex- 
 changes if an economic reason can be given for restricting 
 them." l!^^ot stopping to expose the ambiguity lurking in 
 his use of the word restriotion, it is manifest that we have, 
 from our two points of view, a choice between the foreign 
 exchange and the domestic exchange. "We can at our pleas- 
 ure have either, but can not have both at our option at the 
 same time — we can not have the one and then the other 
 by turns — ^we can not vibrate thus between stagnation and 
 activity — the forces of production can not thus be turned on 
 and off at pleasure. In manufactures, such as can only 
 exist under some form of excluding the foreign product, it 
 is, as we shall see, all or none. So far as we shut out the 
 product of foreign labor we are thrown back to the em- 
 ployment of domestic labor. This you may call " restrict- 
 ing exchanges," if you please — it is restricting some ex- 
 
208 PROTECTION VS. FEEE TRADE. 
 
 changes. But we have infinitely enlarged our domestic 
 ' exchanges. We have exercised our option, and now the 
 number of domestic exchanges has increased many fold. 
 If there is " a gain in every exchange," which is the pet 
 benignity of the science, the exchanges are multiplied, and 
 the gains are shared by our own people. We have pro- 
 voked a double production and a double consumption. 
 Where is the waste ? Where the loss ? Where the fric- 
 tion? The only extra cost to the nation for all and all 
 kinds of the products of its protected industries is the 
 added comfort, the increased food, better clothes, superior 
 shelter which its laborers have consimied and enjoyed — a 
 result made possible by their higher wages. The American 
 laborer is a higher-priced " tool." But the only true func- 
 tion of a government is to make such tools possible. We 
 scarcely dare use the words man and Ms welfare as terms 
 involved in discussing political economy, for fear of being 
 suspected of sociological speculations. If now we take 
 into the account the number of people in the United States 
 and the inventory of their wealth, it is obviously absolutely 
 and proportionally greater than free foreign trade would 
 have given us. If we substitute " satisfaction of desires " 
 for " wealth " as the true end of all our labor and absti- 
 nence, we shall the more readily agree to this.* The free- 
 trader is confronted with the palpable, undeniable, inex- 
 
 ' " Hence, either prosperity in a free-trade country or distress in a protec- 
 tionist country is fatal to protectionism, while distress in a free-trade country 
 or prosperity in a protectionist country proves nothing against free trade." 
 
 This flexible test of results I find in a little book, " Protectionism," issued 
 by Prof. Sumner since the text was in type. Of course, in that test, no ar- 
 gument from experience and observation possesses any validity. Prof. Sum- 
 ner risks the whole debate on the proposition, '• Free trade is only a mode of 
 liberty." Protection is " a social abuse, an economic blunder, and a political 
 evil." In dealing with it in " Protectionism," he says he has not troubled 
 himself " to keep or throw off scientific or professional dignity." His last 
 
A FUKTHEE ANALYSIS. 209 
 
 pugnable fact that the domestic production and exchange 
 have resulted in an inestimable increase of the products, 
 things, commodities, the property, the fixed and floating 
 capital of the nation, as well as the population of the na- 
 tion. In the nature of things, if all the men engaged in 
 rendering mutual " services " to each other live here, there 
 must be more products on this area than if half of them 
 lived three thousand miles away. The free-trader keeps up 
 his monotone that protection "does not increase wealth. 
 It is mathematically demonstrable that it lessens wealth." 
 He only means that some-of-us might have more comfort 
 with less work if the others had not entered into this arena 
 of the world's industry alongside of that some-of-us. He 
 probably assumes, and justly, that free trade would have 
 kept them away. 
 
 Under the second formula, then, a given exertion and 
 sacrifice, by some-of-us, may yield the maximum of ma- 
 terial good to some-of-us — the others not being in America. 
 But all the exertions of aU-of-us expended in view of for- 
 eign exchange may only yield the minimum of material 
 good. Our imports are Hmited by, and must be paid for, 
 by our exports. The moment we have supplied the foreign 
 demand, that moment we must quit wanting more foreign 
 things, quit having more population, and quit making 
 more agricultural products. The maximum of material 
 good will be derived only by that some-of-us who own the 
 soil, and the others-of-us have no call to live in the United 
 
 work shows no new ground occupied by him. I do not say that Prof. Sumner 
 is not right in this business ; I only say I am unable to see that he is right. 
 
 Believing he can safely stand on his abstract maxim, he deals with pro- 
 tectionism as " deserving only contempt and scorn, satire and ridicule." 
 
 If he is right, he can afford the air of the burn-your-bridges-behlnd-you 
 young man which, intentionally, is made to pervade " Protectionism." If he 
 is not right, his book is about the worst piece of professional insolence yet 
 put into print. 
 
210 PKOTiECTION VS. FEEE TRADE. 
 
 States, and no calling if we live there. If, after that, all 
 of us go on producing food, we can only procure the 
 "satisfaction" of our "desires" for manufactured goods 
 by producing them at home, and under the conditions of 
 protection. A farmer is just as capable of forming a cor- 
 rect -judgment on the purchasing power of his products^ 
 under these hmitations as any college professor. 
 
 More than that, we shall fail to get the commodities we 
 need, and which constitute our " material good." Of such 
 commodities — the product of the competing protected in- 
 dustries — the people of the United States consume annu- 
 ally about $3,000,000,000. We import' about $400,000,- 
 000 of hke commodities, and about $300,000,000 worth of 
 merchandise, which we can neither raise in this chmate nor 
 manufacture. If we went without the latter, we should 
 still (unless our nature was changed by rude labor) desire 
 $2,600,000,000 of goods made in protected industries. "We 
 can export only $700,000,000 in agricultural products. How 
 are we to get this $2,600,000,000 of "satisfaction" of "de- 
 sires " ? for this is what constitutes the maximum of material 
 good — our welfare. This is, at last, the use of " wealth." 
 
 Prof. Sumner's solution of the problem breaks down. 
 Tou can not luy $2,600,000,000 worth of imports with 
 $700,000,000 of exports. The foreign market does not 
 want its pay in our hind of merchandise — food and raw 
 materials. That market has other sources of supply, as we 
 have found out to our discomfiture. "We shall endeavor to 
 analyze this more in detail in the chapter entitled " Sched- 
 ule A." 
 
 The supplying of our " various needs " — the " various 
 needs" of all of us — is the object of all our industrial 
 efforts. The " maximum of material good " for " a given 
 exertion and sacrifice " is a description of a case in which 
 a few men, who had appropriated natural agents, might 
 
A FURTHER ANALYSIS.. 211 
 
 thrive best if they were allowed to maintain their advan- 
 tage as monopolists. 
 
 We are now in a position' to answer two of the ques- 
 tions propounded by Prof. Smnner. 
 
 " The economic question about the tarifE is, Does it 
 enable the population of the country to command greater 
 material good for a given effort ? " We answer distinctly, 
 that it enables all the population to command the greatest 
 material good j that is, to supply all their various wants 
 at the least possible effort. 
 
 " The scientific question about protection is, Does it 
 lessen the ratio of effort and sacrifice to comfort and enjoy- 
 ment?" We answer distinctly, that protection— that is, 
 the scheme of direct production — gives us the highett 
 comfort and greatest enjoyment with the least effort. In 
 other words, the ratio of effort to comfort and enjoyment 
 — to the "satisfaction" of our "desires" — is less under a 
 regime of the use of all our productive forces than iinder 
 the theory of exchange values. 
 
 It is not only the easiest, it is the only way to procure 
 satisfaction of our desires. When there is only one real 
 route to a given result, it is idle to discuss its relative, ad- 
 vantages, or disadvantages, with respect to purely imagi- 
 nary ones. When there is only one actual way to procure 
 a thing, it is a useless waste of time to discuss the " ratios " 
 of "effort" involved in exploring the impossible or the 
 speculative. 
 
 Two railroads run from New York — One to Philadel- 
 phia, the other half-way, to Trenton. The rates to each 
 place, we wiU suppose, are the lowest possible on each 
 route. The fare to Philadelphia is two dollars and a half, 
 the fare to Trenton is one dollar. To a man who desires 
 to make the entire trip, the only resource is the through 
 line. His maximum of material good for this effort is to 
 
212 PROTECTION VS. FREE TRADE. 
 
 get to Philadelpliia. To him it is notliiag that the fare to 
 Trenton is at a lower rate : the cost is not the determining 
 motive for him. 
 
 To a people who are desirous of consuming $2,600,000,- 
 000 worth of goods, information where they can get only 
 $700,000,000 worth of them, even at a less rate, is of no 
 particular use. In the case in hand, the $2,600,000,000 is 
 the maximum of good we desire to reach, and we find it 
 in the home market. 
 
 This is the terminus of the passage represented by the 
 through-trip ticket. As it is the only route that takes us 
 through, cost, again, is not the determining motive — espe- 
 cially as the whole trip is made at the least possible cost. 
 The satisfaction of the desire can only thus be obtained. 
 
CHAPTEE X. 
 
 A STILL FUKTHEE AITALTSIS " THE POLITICAL QUESTION" 
 
 "the POPTJLAit QUESTION." 
 
 "We have shown satisfactory reasons for believing that 
 the greatest annual product of the industry of the people 
 of the United States, as a whole, can be achieved under 
 the subjection of our own natural resources to the opera- 
 tion of our own productive forces. No feasible scheme of 
 entering upon all the industries natural to us has ever been 
 indicated, except by restrictions imposed upon the foreign 
 producer against his invading our domestic market with like 
 commodities. For shortness, we call this scheme protec- 
 tion. Does a protective tariff — ^imposts levied for the sake 
 of protection — ^bring about an unequal distribution of the 
 rewards of our industry ? As the total annual product of 
 the industry and services of us all is finally distributed in 
 wages, rent and interest to the owners of labor, land, and 
 capital, does a protective tariff result in an unjust and in- 
 equitable division of the recompense among these three 
 great factors of production ? Or, to adopt the questions 
 framed by Prof. Sumner, pregnant with his prejudgment, 
 the inquiries may be thus stated : 
 
 " The political question about protection is : Does the 
 statute enacted by the legislature alter the distribution ai 
 property so that one man enjoys another man's earnings f 
 Has the State a law in operation which enables one citizen 
 to collect taxes of another ? 
 
214 PROTECTION VS. FREE TRADE. 
 
 "The popular question about protection is, Does it 
 prevent me from supporting myself and my family by 
 my labor as well as I could if there were no protective 
 taxes f " 
 
 Of course, every free-trade professor, every free-trade 
 scribbler in the reviews, every free-trade speaker on the 
 stump, and every free-trade statesman from his seat in 
 Congress, triumphantly answers these questions affirma- 
 tively. He says "Yes," and complacently goes his way 
 as if he had got to the bottom of the problem. 
 
 Let us start with a supposition, which, in fact, is not 
 all a supposition. Let us assume that the 65,000,000 peo- 
 ple in the United States, and the lands and minerals of the 
 nation, were the only people and the only lands on the 
 earth. Let us suppose these people to have discovered 
 mutual wants to the aggregate of $10,000,000,000 annually, 
 which is the fact. Let us suppose that they think it worth 
 the while to go to the cost of supplying those wants by the 
 exchange of services in procuring food, clothing, shelter, 
 transportation, education, and religious appliances, indulg- 
 ence in amusements, luxuries, and vices, just as we do 
 think it worth while. Let us suppose that, having reached 
 a certain stage of civilization, we think it worth while to 
 tax ourselves with the physical and mental efforts neces- 
 sary to satisfy our desires, which is just the tax we now do 
 impose on ourselves. It is manifest that, under the opera- 
 tion of economic laws in this community, services would 
 be exchanged as nearly as possible in a human society 
 under the laws of demand and supply. Each laborer, each 
 land-owner, each capitalist, would receive his true and ex- 
 act proportion of the total annual product. So far as the 
 operation of economic laws, scientific laws, were concerned, 
 no "one man would enjoy another man's earnings," "no 
 one citizen could coUect taxes of auother." Skill, efficien- 
 
A STILL FURTHER ANALYSIS. 
 
 215 
 
 cj, industry, tlirift, intelligence, integrity, and persistence, 
 would be ia full exercise and receive just remuneration. 
 All would be natural, straightforward, and equitable. Mo- 
 nopoly could not exist ; a monopoly would be impossible 
 in any busiaess open to the competition of all the labor 
 and capital of 65,000,000 people. If anj'tliing is settled 
 in, around, or about the science of poKtical economy, and 
 is patent to observation, it is this, " that no industry can 
 for any length of time obtain a higher rate of profit than 
 that which is common in the community." And if mo- 
 nopolies did grow up, they would be domestic monopohes, 
 subject to the regulative control of our own legislation, 
 and not foreign monopolies against which we should be 
 without remedy. The power of capital to grow and ac- 
 cumulate inheres in its nature, and is not a question of 
 geography, or free trade, or protection.' So far as the sci- 
 ence of political economy is able to predict anything, it 
 would declare that in this community, so circumstanced,, 
 each member would take out of the annual products all 
 which his services entitled him to — subject to the contin- 
 gencies which crime and accident impose on any society of 
 human beings. 
 
 Let us now, after the manner of the a priori econo- 
 mists, introduce the "disturbing elements" of the other 
 
 ' Ordinarily accurate observation will show that the great fortunes made 
 in this country were not made by the organizers of the protected industries. 
 The average of the profits in iron, steel, the textile fabrics, and pottery, ia 
 the one usual in the country. Only when the patent laws gave a monopoly 
 of process have there been undue earnings — and these conditions operated 
 upon all patented processes, whether in protected or non-protected indus- 
 tries. 
 
 The great fortunes of the land have been made by sagacious capitalists, 
 who seized upon valuable railroad routes ; tooic the ownership of large hold- 
 ings of valuable mineral or timber lands ; discovered valuable mines of gold, 
 silver, or copper ; or, more than all, appropriated the earnings of other peo- 
 ple by speculation in the grain and stock markets. 
 
216 PROTECTION VS. FREE TRADE. 
 
 nations with their industrial systems. In what way should 
 we, for economic reasons, permit it to disturb our organiza- 
 tion of industries ? At what point would foreign nations, 
 or any of them, possess superior productive efficiency ? In 
 soil? ISTo. In skiU? No. In industry? No. In ma- 
 chinery? No. In any natural gratuity? No, except cer- 
 tain tropical fruits. In raw materials? No. In motive 
 power ? No. In " cost of production " reckoned in actual 
 effort and sacrifice ? No. In " cost of production " reck- 
 oned in labor and abstinence ? No. In what, then, will 
 their "superiority" consist? In "cost of production" 
 reckoned in the wages of labor and returns to capital. 
 With this " advantage " they can undersell us in our own 
 market, or compel us to produce under like rates of wages 
 of labor and profit on capital. The disturbance they create 
 destroys the just and natural equilibrium under which we 
 had been working. The American labor thus displaced 
 can find no " something else " to do here, and must stand 
 idle or go to other countries.* This we have abundantly 
 seen. We now apply protection. It restores the original, 
 natural status quo. Everybody gets every commodity he 
 needs as cheap as the richest natural resources, the best or- 
 ganized industry, and well-paid labor will permit. " Pro- 
 tective taxes," as they are called, introduce^ no inequality 
 and work no injustice which did not exist in the isolated 
 nation. The nation, as a whole, has become evolved into 
 
 ' " No industry will ever be given up, except in order to take up a better 
 one ; and if, under free trade, any of our industries should perish, it would 
 only be because the removal of restrictions enabled some other industry to 
 offer so much better rewards, that labor and capital would seek the latter. 
 It is plain that, if a man does not know of any better way to earn his living 
 than the one which he is in, he must remain in that, or move to some otlier 
 place." — ScMNER, " Protectionism." 
 
 Tes, it is very likely that free trade would drive the capital and labor 
 out of the country. 
 
A STILL FURTHER ANALYSIS. 217 
 
 a liiglily specialized organism, witli differentiated organs 
 and specialized functions. It costs more to be a vertebrate 
 than to be a jelly-fish. The nation mtist submit to the tax 
 — as the free-trader hkes to play on words — of having 
 higher and more numerous sensations at the cost of greater 
 expenditure of vital force. But the object of all produc- 
 tion is consumiption ; the end of all consumption is destruc- 
 tion. The motive of all effort is satisfaction of desires. 
 The possession of these sensations, and the ability to gratify 
 them, has been the object of its struggles, the test of its 
 civilization, and end of its existence. In the environment 
 in which it found itself, and with the capabihties locked 
 up in its being, the jelly-fish must perish as such or pass 
 into the perfected organism. The transformation doubt- 
 less cost something ; its energies were taxed in the opera- 
 tion. But it "pays" to be a vertebrate. 
 
 Now, to say that in the United States, grown into a 
 highly diversified organism, under the conditions of just 
 and symmetrical development, one part is maintained at 
 the expense of another ; that " one man enjoys," or can, 
 under any , known economic laws, " enjoy another man's 
 earnings," is a gross blunder which amounts to an absurd- 
 ity. The whole nation, socially, politically, and industri- 
 ally, is a growth. The society, as an organized unit, dis- 
 charges functions as a whole j and these are other than, 
 and in addition to, the functions discharged by its several 
 parts.^ The anatomist, by means of the dissecting-knife, or 
 
 ' Prof. Sumner is constrained to admit something like this : " It " (the 
 nation) " exists historically and traditionally, and as both it is handed down 
 to us. It is an organized human society, whoso limits are given historically, 
 and are maintained for convenience, because they allow play to certain local 
 interests, prejudices, traditions, habits, and customs. Whether it is formed 
 by accident and immemorial tradition, or by colonization and legislative act, 
 it develops an organic life. The society, as such, develops functions." 
 ("Protection in the United States," p. 10.) 
 11 
 
218 PKOTECTION VS. FREE TRADE. 
 
 by chemical analysis, treats separately the difiEerent organs 
 of the body, to see their mechanical structure, or to learn 
 by observation what operations they actually perform. We 
 thus speak of the gastric juices, the liver, the brains, the 
 heart. Separated from the body, the parts become mean- 
 ingless ; and, while they continue to bear the name, they 
 cease to be the thing they were when joined in the vital 
 processes of life, and health, and growth. We speak of 
 laborers, capitalists, landlords, producers, and consumers. 
 There are no such people detached from society. 
 
 In a proper environment, no one part of a true organ- 
 ism grows at the expense of another part. The liver can 
 not complain that it would have less work to do if the 
 stomach did not tax it, nor could the brain exclaim that its 
 efficiency is reduced by the necessity of sharing nutrition 
 and nerve-force with the stomach, nor the stomach rebel 
 and set up for itself, because it was compelled " to share 
 its abundance" with the heart and the vascular system. 
 All such attempted treatment of the separate parts of a 
 distinct organism is not only negatively useless, but is posi- 
 tively vicious, in suggesting error, and leads to conclusions 
 which must be undone and corrected. We fail to identify 
 the real organism we have in hand, and we undertake to 
 deal with the parts as if they were new wholes. 
 
 If the United, States, under the supposition we have 
 made, would have grown up into an orderly, symmetrical 
 system, with co-ordinated structure and balanced functions, 
 as must have been the case, then there is demonstrably 
 nothing in the foreign environment which must necessarily 
 have changed it. We have, by restrictions on foreign 
 trade, preserved our original and natural condition. We 
 are, at least, no worse ofE than if our territory constituted 
 the planet, and we had it all to ourselves. Under such a 
 form of growth, to talk about protection — under which we 
 
A STILL FURTHER ANALYSIS. 219 
 
 preserved this status — as altering the distribution of prop- 
 erty so that one man enjoys another man's earnings, or as 
 enabling one citizen to collect taxes of another, is a fallacy 
 of the same kind as the idiotic system of accounts in which 
 the brain should be charged with the earnings of the stom- 
 ach, or the nervous system be treated as collecting a "tax on 
 the digestive organs. Unquestionably protection, as against 
 free trade, altered the distribution and consumption of 
 property; that is, we produced and consumed different 
 kinds of commodities in a greater variety, and in different 
 proportions ; but that had no effect to transfer one man's 
 earnings to another. It did not repeal or suspend the great 
 overmastering law of competition. 
 
 Let us see about these first beginnings. The nation, if 
 industrially fitted to exist, must be self-supporting. In the 
 providence of God, populations have settled upon the dis- 
 tricts of the habitable earth where they could Hve. The 
 great migrations which have swept its surface from time 
 to time have come to stay and not turn their faces back- 
 ward. In some cases they have moved in a measured, or- 
 derly way, as the resources of field and forest and seas in- 
 vited ; in many instances, by great floods of conquest, as 
 of the Huns and Yandals into southern Europe. And last 
 came the European OTerflow into America — an overflow 
 great enough even to relieve the workshops of England 
 and Germany and give those who remained behind a new 
 chance in the race for life — an overflow inspired as much 
 by moral and political considerations as by motives ter- 
 minating in mere bread and butter. Food was a primary 
 want, but neither the natives nor these immigrants were 
 all stomach, as is the jelly-fish which lives on sea-water. 
 They not only had all the rudimentary organs of verte- 
 brates, they were fully developed mammals. The demands 
 of their stomachs were readily siipplied. How should they 
 
220 PROTECTION VS. FEEE TEADE. 
 
 go about to supply tlie demands of their hands, their eyes, 
 their hearts, and their souls — the aggregate of sensations 
 which constitute the pride of life — the real ends of exist- 
 ence ? With the mere cravings of hunger appeased, were 
 they now to sit down and estimate the relative profitable- 
 ness, dignity, and importance of the functions of the farm- 
 er, the blacksmith, the carpenter, the mason, and the 
 trader ? Was there any right of priority in the order in 
 which these classes were entitled to have their wants sup- 
 phed ? Any warrant for either class to say to the others : 
 " I supply my wants here at a certain rate of effort, and 
 can supply them at less effort if you will stay in Europe 
 and work for me on European terms and not set yourself 
 down here by my side. I am in possession of a fertile soil 
 which gives me a great advantage over a farmer in Europe. 
 If you accompany me and open your shop or your factory 
 alongside of me, my very advantage operates as a premium 
 against the pursuit of your calling, and unless I pay you 
 more than I ought to, you will abandon your craft and 
 pursue my industry. If you are here, you will want the 
 same wages, the same returns for your labor which I re- 
 ceive from my land. To me, your industry is an unprofit- 
 able one — it doesn't pay me to have you make things in 
 America which 1 can get done cheaper in Europe " ? This 
 is the line of argument which the free-trader puts into the 
 mouth of the owner of the soil. If there is any set of 
 theorems in morals or politics or pohtical economy by 
 which the owner of the soil can thus claim priority of 
 right, there is an end of the case. The implication is that 
 no handicraftsman or laborer, in any calling, which the 
 land-owner is not compelled to have alongside of him, has 
 any right, as an independent freeman, or as an individual 
 soul, to be admitted as a member of that society, or to par- 
 ticipate in the abundance of the fruits of the soil. And 
 
A STILL FUETHER ANALYSIS. 221 
 
 then he crowns' his absurdity by inviting him to " take to 
 the land " and assist him to increase that abundance to the 
 point of valuelessness. Because, as owner of the soil, he 
 has become the proprietor of all the most advantageous 
 instruments of production, he warns oflf all new-comers, 
 whether by birth or immigration, as trespassers. Their 
 continued residence with him compels him to share the 
 advantages of natural resources, whereas otherwise he might 
 appropriate them all. So long as the land remains open, 
 they aU turn in on the land industries. Food is plenty 
 enough, but they can not sell enough of it to foreign na- 
 tions, three thousand miles away, to buy, with its proceeds, 
 all the clothing and carpets and blankets and cutlery and 
 chains and axes and anchors which their abundance sug- 
 gests or their further conquest of the fields, forests, mines, 
 and seas constantly tempts them to make or buy. So 
 things happen exactly as they did in 1783-1789, and from 
 1789 to this hour. The purchasing powers of these " ad- 
 vantageous industries " failed — it was as if they were in 
 possession of no natural resources. This early discovery of 
 a want of vent for their raw materials was no ambitious con- 
 ceit or self-imposed delusion. The discovery was made at 
 the cost of a bitter and well-nigh fatal experience — so bitter 
 that it threatened to ingulf all the results of seven years' 
 war. England dumped cargo after cargo of just the goods 
 the people needed, and they were cheap. The crisis of 
 free-trade prosperity was reached, and we " were flooded 
 with cheap foreign goods." England did not want our 
 kind of " cheap products," and we were unable to flood 
 them in return, and the colonists paid the balance against 
 us, more than $20,000,000, in coin. Notwithstanding that 
 Adam Smith had just demonstrated the fallacy of the 
 "mercantile system," and that "wealth" did not consist 
 of silver and gold, but of "commodities," the country 
 
222 PROTECTION VS. FEEE TRADE. 
 
 was bankrupted. Sedition and rebellion rose against con- 
 stituted authority in all tbe colonies. Insolvency and dis- 
 tress pervaded all occupations and all communities. The 
 nation has never forgotten the crisis, and never ought to, as 
 it never will. It was a powerful motive which could drive 
 them from the natural, peaceful, profitable industry of 
 agriculture. And yet Prof. Perry has said of this epoch : 
 " No iU effects followed this general liberty to buy and sell 
 with foreigners." ^ 
 
 Aa " the proof " of this page is being read, there has been placed in my 
 hands Part I of a most admirable "Short TarifE History of the United 
 States," by Mr. David H. Mason, of Chicago. He has portrayed by the clear- 
 est historical data the causes and consequences of the hard times suffered by 
 the American people from 1783 to 1789. He has made good his claim "to 
 have dug down to the original protecting power through nearly a century of 
 eruptive overflow from the volcanic discussions of the tariff question, and to 
 have laid bare the distinct outlines of that buried and forgotten Herculaneum 
 of the Constitution, which was as familiar as their own door-stepa to the first 
 generation of American statesmen." We make two or three citations out of 
 the hundred with which Mr. Mason fortifies his conclusions. 
 
 From Marshall's " Life of Washington " : " On opening their ports, an im- 
 mense quantity of foreign merchandise was introduced into the country, and 
 they were tempted, bi/ the sudden cheapness of imported goods, and hy their 
 own wants, to purchase beyond their capacities for payment. Into this indis- 
 cretion they were in some measure beguiled by their own sanguine calcula- 
 tions on the value which a free trade would bestow on the produce of their 
 soil, and by a reliance on those evidences of the public debt which were in 
 the hands of most of them. So extravagantly, too, did many estimate the 
 temptation which equal liberty and vacant lauds would hold out to emigrants 
 from the Old World, as to entertain the opinion that Europe was about to 
 empty itself into America, and that the United States would derive from that 
 source such an increase of population as would enhance their lands to a price 
 heretofore not even conjectured." 
 
 From Bancroft's " History of the Formation of the Constitution," Appen- 
 dix : " There is no trade with any but the British, who alone give the credit 
 they want and draw off all the bullion they can collect. They see no prospect 
 of clothing themselves, unless they have the circuitous commerce they for- 
 merly enjoyed with Great Britain, which many think a vain expectation, now 
 that they are no part of the empire. The scarcity of money makes the prod- 
 
A STILL FURTHER AJTALTSIS. 223 
 
 Prof. Sumner (" Protection in the United States ") en- 
 deavors to shift the troubles to " currency errors." Doubt- 
 less, but as effect, not cause. He can not conceal the real 
 causes and effects. He says : " The States, however, still 
 
 uce of the country cheap, to the disappointment of the farmers and the dis- 
 couragement of husbandry. Thus the two classes of merchants and farmers, 
 that nearly divide all America, are discontented and distressed. Some great 
 change is approaching." (1785.) 
 
 From Hildreth's " History of the United States " : " The farmers no longer 
 found that market for their produce which the French, American, and British 
 armies had furnished. The large importation of foreign goods, subject to 
 little or no duty and sold at peace prices, was proving ruinous to all the do- 
 mestic manufactures and mechanical employments which the non-consump- 
 tion agreements and the war had created and fostered. Immediately after 
 the peace, the country had been flooded with imported goods, and debts had 
 been unwarily contracted for which there was no means to pay. The imports 
 from Great Britain in the years 1T84 and 1785 had amounted in value to 
 thirty millions of dollars, while the exports thither had not exceeded nine 
 millions. . . . The excessive importation of foreign goods had drained the 
 country of specie. The excessive importation of foreign goods, and the con- 
 sequent pressure upon domestic manufactures, had diminished a good deal 
 of the old prejudice against customs duties. A party had sprung up in favor 
 of raising a large part of the public revenue in that way. . . . This, however, 
 was opposed by the merchants as injurious to their interests. They came 
 forward as the champions of free trade, and insisted upon the old system of 
 direct taxation." 
 
 Minot, " History of the Insurrections in Massachusetts " : " Thus was the 
 usual means of remittance by articles of the growth of the country almost 
 annihilated, and little else than specie remained to answer the demands in- 
 curred by importations. The money, of course, was drawn off, and this being 
 inadequate to the purpose of discharging the whole amount of foreign con- 
 tracts, the residue was chiefly sunk by the bankruptcies of the importers." 
 
 Mr. Mason has produced the most abundant authority for his own digest 
 of the facts of this era, which is in the words following : " Such were through- 
 out the Confederation, and such have always been in other countries, the 
 results of free-trade principles in the culminating stages of their operation. 
 Step by step the movement of the country was constantly retrograde, pro- 
 ceeding through variously excessive importations to a pinching shrinkage of 
 home industry and of employment for domestic labor, then to an exhaustive 
 draining away of specie, until the people were almost entirely without a cir- 
 
224 PROTECTION VS. FREE TRADE. 
 
 had vast quantities of paper afloat. As soon as the war 
 ended, this specie was all exported and expended in the 
 purchase of goods long missed. The export of specie in 
 1783 was ten millions. . . . This explains why the Eng- 
 lish were so well satisfied with the revival of trade. . . . 
 During the war many iadustries had sprang up to supply 
 the wants of the people for manufactures formerly im- 
 ported. Whatever may have been the effect of peace to 
 destroy the war mushrooms, we find that there were in 
 1784: manufactures of iron, glass, paper, and cloth here. 
 . . . And propositions were made by competent capitahsts 
 for mining iron on a large scale in Pennsylvania, which 
 fell only on account of tlie turbulency of the inhoibitants 
 
 culating medium ; then to sore and exasperating distress for lack of money, 
 and to unendurable pressure in the relation of debtor and creditor, with 
 widely extended impoverishment; then to resentful discontent, weakened 
 respect for the law and its tribunals, decay of allegiance, loss of confidence 
 between man and man, and an unloosening of societary ties ; then to turbu- 
 lence, open antagonism to the constituted authorities, insurrectionary com- 
 motions, and an appeal to armies in search of unattained redress. Had there 
 been no free trade, there would have been no inundation of foreign goods ; 
 had there been no inundation of foreign goods, there would have been no 
 distress for lack of circulating medium ; had there been no such distress, 
 there would have been no impulse toward insubordination to the State. The 
 starting-point was free trade ; the outcome was rebellion and an imperious 
 necessity to resort for deliverance to the protective system. As this was the 
 closest approach to absolute free trade ever tried by this country, so there 
 was the largest harvest of calamities and dangers ever experienced by iha 
 American people. That awful crisis, at the outset of our career as an inde- 
 pendent nation, should be regarded as a monument erected by the sufferings 
 of our forefathers to warn posterity against the delusive and mischievous 
 plausibilities of the free-trade policy. Nor is it now less needful to ponder 
 those solemn teachings of our history, when Peter-the-Hermit doelrinaires, 
 emerging from their retirement amid theoretic book-lore, are organizing a 
 crusade to recover the desolate and accursed Jerusalem of unrestricted com- 
 merce. The sorrows drunk by our Revolutionary sires to the very dregs, 
 under that system, should be to all following generations what the red signal- 
 light is to a place of peril." 
 
A STILL FURTHER ANALYSIS. 225 
 
 and the insecurity of titles (!)... Meanwhile the Govern- 
 ment of the Confederation was falling to pieces, and was a 
 pity and a laughing-stock. . . . Misery was great through- 
 out the country, owing to paper money and debt, and the 
 losses of the war. The people were discontented and re- 
 bellious." (Why should they be ? They were " flooded 
 with cheap foreign goods." Why did they not flood back 
 foreign nations with their own abundance of cheap food 
 and raw materials ? The truth was, the whole societary 
 movement was arrested by the export of all their coin to 
 pay their debts contracted for foreign goods.) ..." The 
 question of import tax was, therefore, bound up with the 
 question of civil order, protection to manufactures, foreign 
 commercial relations, and the misery arising from bad cur- 
 rency at home. This led to the Congress of Annapolis in 
 1Y86, which was only a commercial convention, and which 
 found no better way to discharge the task it had under- 
 taken than to recommend Congress to call another con- 
 vention in the following year to revise the Articles of 
 Confederation, that is, to provide for a common revenue 
 system and for 'the regulation of commerce,' by giving 
 the General Government permanent power for those pur- 
 poses." 
 
 It is not too much to conclude that the present Consti- 
 tution grew out of the free-trade crisis under the Confed- 
 eration. This was then the work of men who were look- 
 ing upon the inmost nature of trade — at the very genesis 
 of our commerce. It is no longer the mere power " to col- 
 lect taxes," " to lay import duties " for revenue " only," or 
 "for public purposes exclusively," but the true vital or- 
 ganic act of " regulating commerce." 
 
 The agriculturist, who, as possessor of the soil, furnished 
 the exportables of those days, allowed the artisans who made 
 his houses and bams, and repaired his clothes and shoes, to 
 
226 PROTECTION VS. FREE TRADE. 
 
 remain alongside of him at a higli rate of wages, and ac- 
 cepted the reduced average retm-ns of their joint industry. 
 The farmer was compelled to submit to the tax of havmg 
 houses, and barns, and wells, and harness, and the like. 
 This was imposed on him by the nature of things— just as 
 he is compelled to submit to the tax of a short crop, or the 
 seed he sows — or the tax of a glut in the European market. 
 The farmer himself would not either in 1784 or 1884 have 
 thought of these results, in which the efficiency of his labor 
 was reduced by the necessary cost of living, as a tax, but 
 that is the way in which free-trade professors and stump- 
 speakers in Congress put it in later days. It is the modern 
 trick-word. His free-trade patronizer would persuade the 
 American farmer that any commodity made here, when it 
 might be made cheaper abroad, is made at his loss, and he 
 is taxed to enable our artisans " to engage in a losing busi- 
 
 ' Mr. Henry J. Philpot, representing the Iowa State Free-Trade League, 
 addressed the Tariff Commission. ("Report," vol. i, p. 110, etc.) The bu- 
 colic exegesis of this gentleman is one of the curiosities of economic litera- 
 ture. His whole address will be found entertaining, if not instructive — not 
 for his logic, which is neither better nor worse than that of his more skillful 
 coadjutors, the Professors — but for a certain exuberance of rhetoric under 
 which he conceals his argument. He claims the credit of forbearance that 
 certain classes of mechanics are allowed to live here and work without the 
 Md of protection — ^that they are permitted to earn wages in certain callings. 
 " I never knew a farmer who got his horse shod in England, or who had his 
 house built there, or had it plastered or glazed there, or had his cellar dug 
 there, or his cistern walled, or his well. I therefore consider that those 
 classes of occupations can not possibly be protected by the tariff ; that we 
 would still need the wells without the tariff, still be compelled to get them 
 dug as well as our cisterns and our cellars, and that we could not get it done 
 abroad." 
 
 So that, logically, the only reason for having houses built and cellars dug 
 and horses shod by American workmen is because the American food-raiser 
 is compelled to live under such a dispensation. These are taxes which he 
 does not see how to escape. They had to pay their neighbors to engage in 
 
A STILL FURTHER ANALYSIS. 227 
 
 The farmers, in common with their fellow-citizens, need 
 more than food and houses and cellars and cisterns. They 
 need a given amount of iron, and the yarious tools and im- 
 plements made of it, and cotton and woolen fabrics. These 
 can be produced at home, or else the glowing inventories 
 of our resources which free-traders always feel bound to 
 offer us are a fraud.^ 
 
 The yearly labor of the people working imder just and 
 tolerable conditions of competition will produce the yearly 
 
 a losing business to themselves — losing, because, if they could hare imported 
 houses and cisterns and collars made cheaper abroad, it looks as if they 
 would have been gainers. 
 
 Undoubtedly some kind of body politic might be built up under the au- 
 spices of the Iowa State Free-Trade League. Poland, Turkey, Ireland, Brazil 
 and Egypt are examples. Patagonians and Esquimaux come still nearer the 
 type in which the exertions to maintain life are freed from such taxes. They 
 are organisms with a single organ and a single function — the food-raiser — 
 and they are almost exempt from the taxes which the tailor, the shoemaker, 
 the school-teacher, the minister, and the doctor impose on men — they do not 
 need them. 
 
 ' Here is one from our bucolic friend of the Iowa State Free-Trade 
 League: "But I think the sublimest cheat on record is the man who tries 
 to cheat God Almighty out of the credit of making this a good country to 
 liye in, and who pretends that what God has done in the way of piling up 
 mountains of iron, silver, and gold, filling the bowels of the earth with salt, 
 copper, coal, and petroleum, and covering its ^surface for centuries with rich 
 vegetable mold, and watering it with mighty lakes and rivers, and planting 
 boundless forests — ^that all this would do the farmer and the working-man no 
 good unless they were taxed with a tax such as no other people ever submit- 
 ted to. I think brass ought to be placed on the free list." 
 
 Well, scarcely, while domestic supplies of this richness and purity hold 
 out. 
 
 Does the author of this declamation conceive that this iron and coal will 
 forge themselves into bars and rails and nails and machinery without the in- 
 tervention of the American laborer ? Or can he, while his constituents kick 
 their heels into the counter of some store at the Iowa Cross-roads, devise a 
 plan by which he can buy the bars and rails and nails and machinery in 
 England with the Iowa corn which is consumed as fuel in the very stove 
 which is warming them ? 
 
228 PKOTECTION VS. FREE TRADE. 
 
 supply of all oiir wants, including our need of iron and 
 textile fabrics, and add a thousand millions annually to 
 our capital. The total product will he distributed ne- 
 cessarily and equitably in rent, wages, and profits. The 
 farmer takes his share as land- owner and toiler; the work- 
 man takes his share as laborer for wages;, the professor 
 takes his share as the earner of his salary; the capitalist 
 takes his share for interest and risk ; and the entrepreneur 
 takes his share as the wages of superintendence. Each 
 takes all the share which the economic law of the society 
 permits. The statute law naakes no interference. The 
 legislature stands neutral, with hands off. Producers are 
 remanded to the law which the Almighty has imposed on 
 the societary movement. The products and services of 
 each in market are a market for the products and services 
 of aU. No one of the members of this industrial entity — 
 this organism — ^had any possibility of increased earnings, 
 or of making a product with a higher exchange value, out 
 of which he has contributed or could contribute to " the 
 protected industries." The farmer, for instance, put into 
 his pocket all there was in the case for himself. Nobody 
 has taxed him — nobody collects taxes of him — there is no 
 taxation except the cost of satisfying the desires which he 
 thinks it worth while to satisfy, and no mode has ever been 
 pointed out in which he could satisfy them at less" effort. 
 Nobody has " robbed " him. Who has robbed him ? The 
 " protected industries " ? They are an abstraction. Cer- 
 tain laborers in these protected industries earned wages 
 which they expended in food, and clothes, and shelter, and 
 the education of their children. Certain capitalists in the 
 protected industries got their profits, which again got dis- 
 tributed principally to labor, in new tools, new houses, new 
 family wants. Their profits were only such as were usual 
 in the country. Certain organizers got the wages of man- 
 
A STILL FURTHER ANALYSIS. 229 
 
 agement. These wages were only such as other persons, in 
 Europe or America, in possession of equal skill and execu- 
 tive powers, can earn.^ 
 
 Certain landlords received rent, which again is subject 
 to the law of supply and demand. The fulcnim upon 
 which the whole industrial superstructure was raised is the 
 total of our resources and aptitudes, and no one has been 
 raised at the depression of another. The point of reaction 
 is not on one man or one group, but upon all. 
 
 And of the sums which went to capitalists and super- 
 intendents and landlords, the greater, by far the greater 
 portion, went at the last into the hands of laborers in 
 other departments, who were building houses, papering, 
 painting, plumbing, making new stone foundations, and 
 erecting new brick walls, and making new carriages and 
 harness, and so forth, and so forth, new things, and render- 
 
 ' To those wbo so flippantly discourse of " monopolists " and " robbers " 
 in aid of free trade I commend these words, by the author of " What Social 
 Classes owe to each other.'' Most of these careless thinkers seem to have 
 no objections to the rise and success of groat industrial establishments, only 
 so that they are on foreign shores : 
 
 " The great gains of a great capitalist in a modern state must be put un" 
 der the head of wages of superintendence. Any one who believes that any 
 great enterprise of an industrial character can be started without labor must 
 have httle experience of life. Let any one try to get a railroad built, or to 
 start a factory and win reputation for its products, or to start a school and 
 win a reputation for it, or to found a newspaper and make it a success, or to 
 start any other enterprise, and he will find what obstacles he must overcome, 
 what risks must be taken, what perseverance and courage are required, what 
 foresight and sagacity are necessary. Especially in a new country, where 
 many tasks are waiting, where resources are strained to the utmost all- the 
 time, the judgment, courage, and perseverance required to organize new en- 
 terprises and carry them to success are sometimes heroic. Persons who pos- 
 sess the necessary qualifications obtain great rewards. They ought to do so. 
 It is foolish to rail at them. Then, again, the ability to organize and conduct 
 industrial, commercial, or financial enterprises is rare ; the great captains of 
 industry are as rare as great generals. They arc paid in proportion to the 
 supply and demand of them." 
 
230 PROTECTION VS. FREE TRADE. 
 
 ing the thousand services -which do not issue in commodi- 
 ties. The whole fund returns to the treasury of the society, 
 to be distributed over and over again, as men discover new 
 wants and find the power to render new services to each 
 other, as members of this industrial organism, the organic 
 unit, this ensemble. 
 
 All the wages and all the profits in the protected indus- 
 tries are paid out of the exchange values of the products 
 of those industries. What is the gain to the nation, as a 
 whole ? The whole value of the articles produced by these 
 industries, or rather the whole of the new articles them- 
 selves. The gain to the nation, then, is the total price or 
 value of the exports now saved, which must otherwise be 
 sent abroad to buy the same products which we could make 
 in the protected industries. If a ton of iron in England 
 cost fifteen bushels of wheat, and costs twenty bushels in 
 America, we have not lost five dollars by purchasing it at 
 home, but have gained the ton of iron.^ 
 
 ' I am not aware that any satisfactory reply has ever been made to the 
 following argument of Sir Edward Byles in his " Sophistries of Free Trade " : 
 
 " Suppose England to manufacture from English materials gloves to the 
 amount of a million sterling a year. 
 
 " This million sterling does, as we have seen, two things : First, it affords 
 net annual income to that amount, available (every farthing of it) for the 
 support of the population. Secondly, this million sterling creates a market 
 to that amount for other English products. The whole million is every year 
 feeding, clothing, and lodging men, women, and children, and, at the same 
 time, finding a market for cottons, woolens, hardware, corn, timber, silk. 
 When an industrious population are employed, they not only enrich the whole 
 community to the extent to which they themselves are enriched, but by the 
 market which their prosperity affords to other industries. When Manchester 
 is in full employment, what a market does Manchester itself afford, not only 
 for other articles, but even for its own productions ! 
 
 " Now change the supposition. Suppose that French gloves can be im- 
 ported cheaper by five per cent than English gloves can be made. It is the 
 immediate pecuniary interest of all consumers to buy French gloves instead 
 of English ones, and they will be bought accordingly. We will even suppose 
 
A STILL FUKTHER ANALYSIS. 231 
 
 It is a ton of iron added to the annual product of 
 American industry, to be distributed to rent, wages, and 
 profits. But, says the free-trader, the labor spent in pro- 
 ducing the iron might have been put upon some other in- 
 dustry at greater advantage. We have already seen that it 
 
 the French GoTernment to allow the French gloves to be bought by the very 
 same English cottons, woolens, hardware, com, iron, and silk that bought 
 the English gloves before ; nay, we will go further, and admit the extrava- 
 gant postulate that all these English products could, in exchange for the 
 Fi-ench gloves, find as good a market in France as they formerly did in Eng- 
 land. Now take the account. Let us see what individual glove-consumers 
 have gained, and what the English nation has lost. 
 
 " Gloves have in the aggregate cost those who wear them less money than 
 before by five per cent on a million sterling, that is, by £50,000. Glove- 
 consumers have gained by the change £50,000 in one year. But the nation 
 has lost, in the same year, the million sterling which used to maintain Eng- 
 lishmen with their wives and children. Englishmen, as a lody, have, by the 
 change, lost a revenue of £950,000 a year. 
 
 " But this is only part of the mischief ; for, though their revenue, their 
 subsistence is gone, the English men, women, and children remain, and must 
 be supported by public charity. 
 
 " But we have given the free-traders the benefit of three suppositions, no 
 one of which is true. We have conceded, first, that the French Government 
 would allow the free import of as much English produce as would entirely 
 pay for the gloves ; we have conceded, secondly, that all this English produce 
 finds at once as ready and as good a market as it did at home ; we have con- 
 ceded, lastly, that there will be no exportation of the precious metals, de- 
 preciating prices, appreciating the currency, and augmenting the pressure, 
 not only of taxes and public burdens, but of all debts and private obliga- 
 tions. 
 
 " But if these concessions are not true, then, in addition to a million a 
 year lost as revenue, formerly supporting men, women, and children, you lost 
 a market also tor other productions to the extent of a million a year, and are 
 subject to all those numerous evils that afflict industry, when there is a tend- 
 ency to the export of the precious metals. 
 
 " Nor does the mischief stop here. Other commodities which have lost 
 their market will to that extent cease to be produced. And by that cessa- 
 tion not only will the subsistence of the people to that extent disappear, but 
 other markets will be injured, and so the mischief will go on and be felt 
 through every grade of society and in every department of industry." 
 
232 PKOTECTION VS. FKEE TRADE. 
 
 could not have made a product with any higher exchange 
 value. We have already conclusively seen that the trade 
 in a foreign market is forbidden, not by the high rate of 
 wages, but for the want of a foreign market for the spe- 
 cial product here in which the rate of wages is high. We 
 do not know of any " something else " in which the labor 
 could have been employed. 
 
 The addition to the total annual product of our indus- 
 try, the gain to the nation, is the whole value of the cot- 
 ton, tobacco, wheat, and provisions, which we should have 
 been compelled to send abroad to pay for the products of 
 our protected industries. They remained here, and consti- 
 tuted a demand for other American labor. 
 
 The loss is the difference in price between the domestic 
 and foreign commodity, reckoned in present prices and on 
 present exchange values. On no right use of the facts can 
 this loss be made to equal any definite sum. Suppose it 
 $100,000,000. A loss of only six per cent on the value of 
 our exports and an increase of six per cent in the cost of 
 imports alone would come to $100,000,000. It is as likely 
 under free trade to be twenty-five per cent each way. If, 
 now, the farmer says, I could have bought more iron for a 
 given number of bushels of wheat; if the laboring-man 
 says, I could have bought more muslin and blankets and 
 dinner-pails for a given number of dollars received for 
 wages ; if the professor and the capitalist say they could 
 have bought more yards of fine Enghsh broadcloth and 
 decorated china and Axminster carpets with their salaries 
 and dividends — it is pertinent to ask. What could the 
 farmer, the laboring-man, the professor, and the capitalist, 
 have bought them with? Exportables: what are they? 
 Cotton, tobacco, wheat, and provisions ; these are and have 
 been the only purchase-money we had to offer. 
 
 Assuming, now, the possibility of selling enough of 
 
A STILL rURTHER ANALYSIS. 233 
 
 those abroad to buy the mamifactured articles which we 
 consume, a moment's examination of the state of the case 
 will demonstrate the ruinous terms on which we must effect 
 the exchange. Our farmers raise annually, say, $3,600,000,- 
 000 worth of food and raw materials. Constituting some- 
 what less than half the population, they themselves con- 
 sume probably $1,400,000,000 worth. They now export 
 $700,000,000 worth, and sell $1,500,000,000 at home. We 
 now buy abroad $350,000,000 worth of goods like those 
 made in the protected industries, and a like amount — $360,- 
 000,000 — which our climate is unfitted to produce. It is 
 notable that our food exports do not go to the countries 
 which furnish our tea, coffee, sugar, wines, fruits, and luxu- 
 ries. We consume at a low estimate $2,500,000,000 of 
 commodities made in our own protected industries. These 
 We propose to abandon, and supply our needs from abroad. 
 Our demand for foreign manufactured goods will now sud- 
 denly be increased to $2,850,000,000. Our surplus of raw 
 materials and food, increased by the fourth of our people 
 released from the protected industries and going into agri- 
 culture, will now be $1,600,000,000.* But the foreign 
 market has never taken but $350,000,000 in exchange for 
 manufactured commodities. Into that market you are now 
 going to dump $1,600,000,000 food-products, or five times 
 as much as before, and demand in return $2,850,000,000, 
 or seven times as much as before. We want and must 
 have these goods ; they do not need, will not take, ours. 
 Even if the trade could go forward at all, it would be at the 
 loss of all exchange value and at the coUapse of all purchas- 
 
 ' The $'700,000,000 + $900,000,000, the one fourth of $3,600,000,000. 
 This fourth of the people either will or will not go into agriculture. If they 
 " catch on " to the scientific game of the free-trader, they will. If they do 
 not, they must stay in the protected industries and try to produce under Eu- 
 ropean conditions. What else is there to do ? Think of it, and answer. 
 
234 PROTECTION VS. FREE TRADE. 
 
 ing power on our part. We should be hopelessly at the 
 mercy of the foreign market. The absurdity of the pro- 
 posal is fairly fantastic. 
 
 But the exchange could not go forward. We can not 
 buy the "satisfaction of all our desires" in the world's 
 market. For nine tenths of them we have no available or 
 possible means of gratification except by the scheme of 
 direct production. 
 
 No real scientific results can be attained by the atomis- 
 tic view of the co-workers in a given society or nation. 
 Unless burdened by inherited injustices and artificial ante- 
 cedents, the laws of nature will work out just results among 
 the competitions in the body of the nation. The attempt 
 to deal with the individuals, as units, involves us in the 
 vicious error to which Mr. Herbert Spencer has called our 
 attention, that of " mistaking a part for a whole," and thus 
 " its relations to existence in general will be misapprehend- 
 ed."' By this discrete treatment the whole is completely 
 lost sight of, and the aggregates which the whole involve 
 disappear from our investigation. Men may be trusted to 
 pursue the industry which seems to offer the best returns, 
 and this is done by them as individuals. But when we 
 come to the exchanges which are made in international 
 commerce, we must view them from the outside. While, 
 considered as individuals, men may be trusted to pursue 
 the industry which seems to offer the best returns, when 
 we come to international exchanges we must abandon this 
 atomistic view of the co-workers in an organized nation. 
 Our scientific standpoint must be at an elevation which 
 places the given nation in proper perspective with all the 
 other political and industrial units which compose the 
 commercial nations of the world, who also have " desires " 
 which they wish to gratify. The wants of the nation as 
 a whole, and its powers of supplying them as a whole — 
 
A STILL FURTHER ANALYSIS. 235 
 
 wtietlier by domestic production or foreign exchange, or 
 by tlieir joint operation — are aggregates. The nature of 
 our surplus production, and the relation of that surplus to 
 the markets of the world, involve aggregate estimates. 
 The wants of foreign nations are aggregates. The amount 
 of foreign products needed, and the nature of the purchase- 
 money which we carry in our hands, are to be treated as 
 aggregates. Our wants are an aggregate, and the means 
 of buying their gratification is an aggregate. It is the 
 business of the legislator, who stands for all of us, to un- 
 derstand these details, however numerous and vexatious. 
 The founding of a great commercial organization like A. 
 T. Stewart's could not be brought about by the unregu- 
 lated individualism of department superintendents, clerks, 
 and porters. So some one, statesman or layman, must take 
 the trouble to sum up the details of a nation's industrial 
 resources and liabilities into the correct aggregate.^ 
 
 The " equation of international demand " sets a distinct 
 limit to foreign exchanges ; the law of " reciprocal de- 
 mand" hedges our power of "satisfying" our "desires" 
 abroad. Eecurring to Prof. Perry's equation, "the silks 
 which England wants from France do not equal the cottons 
 which France wants from England." 
 
 Now, what is the aggregate of the "desires" of the 
 people of the United States, which they think it worth 
 the while to make the necessary efEort and sacrifice to 
 gratify ? The census of 1880 gave in round numbers the 
 products of our agricultural and extractive industries at 
 
 • Says Prof. Denalow : " The man who says, ' I do not look upon the ag- 
 gregate people of a country eti masse, nor propose any paternal panacea for 
 promoting the general welfare ; I dissolve your so-called general welfare into 
 51,000,000 units, and propose to limit the function of government to keeping 
 those units from breaking each other's heads ' — such a man is not a political 
 economist at all. His calling should be to put on a blue uniform and carry 
 a policeman's club." 
 
236 PKOTECTION VS. FREE TRADE. 
 
 $2,200,000,000, and of our meclianical industries at $5,300,- 
 000,000. Kevised and safe estimates put the former at 
 $3,600,000,000 and the latter at $8,000,000,000. Here, 
 then, is a gross annual productive capacity of $11,600,000,- 
 000. Of this we save annually the sum of $1,000,000,000, 
 which is added to the capital of the country, to be employed 
 for the purposes of future production. The " effective de- 
 sire of accumulation " takes effect to the enormous amount 
 of a thousand millions a year — about three millions a day 
 surplus over expenses — one third of the savings of the 
 whole human family are made in the United States.* 
 
 This leaves, in round numbers, $10,000,000,000 to be 
 spent annually by the people of the United States for the 
 " satisfaction of their desires " for the purchase of services, 
 which issue in commodities — ^to say nothing of the vast 
 number which do not thus issue. This is the tax which ' 
 their natures and " historical antecedents " impose on them 
 as the cost of the lives they see proper to lead. It is a 
 very remarkable evidence of the productive powers of the 
 universal activity which protection has stimulated, that we 
 reproduce every five years the entire estimated value of 
 all the goods, wares, and merchandise, lands, improvements, 
 and money of the entire nation. That value is put at 
 $53,000,000,000, greater by $10,000,000,000 than the value 
 of all the property in England. 
 
 It is probably not possible to ascertain of this aggre- 
 
 ' Mulhall, the statistician, says : " Every day that the sun rises upon 
 the American people it sees an addition of two and a half millions of dollars 
 to the accumulated wealth of the republic, which is equal to one third of 
 the daily accumulation of mankind. These are as follows, viz. : 
 
 " United States $825,000,000 
 
 France 375,000,000 
 
 Great Britain 325,000,000 
 
 Germany 200,000,000 
 
 All other countries 725,000,000." 
 
A STILL FURTHER ANALYSIS. 237 
 
 gate the exact proportion in wMch satisfaction of tliese 
 ten thousand million " desires " is furnished at home and 
 abroad in what are known as "protected industries," that 
 is, industries upon the like products of which made abroad 
 we impose tariff duties for the sake of " protection " and 
 not for " revenue only." 
 
 It has all along been assumed by free-traders that the 
 cost of the domestic article has been increased over that of 
 the like imported article by the amount of the duty im- 
 posed. It was then argued that the price of the entire 
 volume of home manufactures was by the amount of the 
 tariff rate increased to consumers, no part of which went 
 into the Treasury of the United States, but all of which 
 went into the pockets of the home manufacturer. And 
 thus they conceived that they were entitled to an affirmative 
 answer to " the political question about protection : Does 
 the statute enacted by the legislature alter the distribution 
 of property so that one man enjoys another man's earn- 
 ings ; has the State a law in operation which enables one 
 citizen to collect taxes of another ? " 
 
 Prof. Perry puts this tax, levied upon the people for 
 the benefit of the protected industries, at $600,000,000 an- 
 nually, reached, by dead-reckoning, thus : " If now we may 
 fairly suppose that, on the average of each one foreign 
 article paying a duty into the treasury, there were four 
 domestic articles raised each in price as much as the for- 
 eign article paid in duty, then it foUows that the people 
 paid, in each of those years, under chiefly protective tariff 
 taxes, $632,000,000, or $12,640,000,000 in all, no penny of 
 which went to the Treasury of the United States ; that this 
 is a reasonable supposition appears partly from the known 
 proportion between imported and domestic, as to several 
 leading articles: for example, of steel rails in 1880 the 
 domestic was twenty times the imported, and the people 
 
238 PROTECTION VS. FREE TRADE. 
 
 paid nineteen times more nnder the duty than the treasury 
 got. On woolen blankets, in 1881, the treasury took in 
 less than $2,000, while the people paid in the extra price 
 of blankets more than a thousand times that sum that year. 
 And, on iron goods of all kinds, we have seen that the 
 average duty was about seventy-seven per cent, while the 
 vast bulk of the iron consumed is known to be of domestic 
 production; and that this is a reasonable supposition ap- 
 pears further, if we look at the annual average amount of 
 domestic manufactured goods; the census of 1880 gave 
 $5,232,000,000 as the value of home manufactures for that 
 year, which we may fairly take as the average of the twenty 
 years under consideration ; and, if we throw off one third 
 of those as not affected hy the tariff at all, and consider that 
 the rest were only raised in price twenty-two per cent — 
 which is one half the average rate of duty on dutiable goods 
 — then almost precisely the same results will follow as be- 
 fore, namely, an annual average of $632,000,000 paid by 
 the people under the protective tariff, no cent of which 
 reaches the national treasury. An acknowledged statistical 
 expert, J. S. Moore, calculated, from data similar to our 
 own, that the people paid $1,000,000,000, in 1882, extra 
 to the sum reaching the treasury under protective tariff 
 taxes." ^ 
 
 ' This kind of reasoning exposes Perry to the criticism which Prof. Ely 
 fiercely makes on Ricardo and his " Political Economy." Those deductioniats 
 are all alike : " No mention is made of a single event which ever occurred. 
 It is really astounding when one thinks of it. The whole discourse is hypo- 
 thetical. ' Suppose now a machine,' writes Eicardo in one place, ' which 
 could, in any particular trade, be employed to do the work of one hundred 
 men for a year, and that it would last only for one year. Suppose, too, the 
 machine to cost £5,000, and the wages annually paid to one hundred men to 
 be £6,000, it is evident that it would be a matter of indifPerence to the 
 manufacturer whether he bought the machine or employed the men. But 
 suppose labor to rise and consequently the wages of one hundred men for a 
 
A STILL rUKTEER ANALYSIS. 239 
 
 The " one third" indicated in italics is, then, the length 
 and breadth of the field of employment, the " something 
 else " which we can do, when we abandon protection and 
 the protected industries. The Parsee merchant known by 
 the words and figures " J. S. Moore," does not balk at all 
 at putting this tax at $1,000,000,000. One would think 
 that such a reductio ad dbsurdum would arouse suspicion, 
 and lead to a recasting of calculations. 
 
 year to amount to £5,500, it is obvious the manufacturer would now no 
 longer hesitate ; it would be his interest to buy the machine, and get his 
 work done lor £5,000. But will not the machine rise in price ? ... It 
 would rise in price, if there were no stock employed in its construction. . . . 
 If, for example ' — and, in this strain, which suflBciently illustrates his style 
 and method, Kicardo continues indefinitely. Inside of two pages, he intro- 
 duces no fewer than thirteen distinct suppositions, all of them purely imagi- 
 nary." 
 
CHAPTER XI. 
 
 SCHEDULE A PEODtTCTION TTSTDEE FEEEDOM. 
 
 DuEiNG the recent tariff debate in Congress (1884), a 
 dozen or more speakers produced " Schedule A," as they 
 called it.' The schedule is as follows : 
 
 ' This schedule was first propounded by Hon. William R. Springer, in an 
 article entitled " Incidental Taxation," in the " North American Review " for 
 June, 1883, which contains a, very precise and detailed estimate, and which 
 makes the amount of this tax very definitely, ISSejOSSjeSV. 
 
 For the purposes of the argument in hand, it is not necessary to expose 
 the fallacious method of manipulating these figures, some of which are offi- 
 cial and some of which are " rigged " to suit the purposes of their compiler. 
 
 Especially it will be observed that the " estimated rate of increase cid va- 
 lorem " is less in every instance than the rate of duty imposed. This is a 
 concession which sustains the protectionist, and shows progress in the direc- 
 tion which the protectionist urges, that with increasing skill the domestic 
 article can be produced as cheaply as the foreign. Everything on the list 
 (as appears) can be produced and^sold cheaper than the foreign article, plm 
 the duty. It will inevitably result that they can all be sold at the cheapest 
 rate which American skill and competition can achieve. The rates of in- 
 crease given above are purely conjectural, and arc vastly overstated. 
 
 The table makes the contribution of labor to the value of the finished 
 fabrics less than 20 per cent, and rent and profits more than 80 per cent of 
 the proceeds. This is a guess, and a palpable error. On these figures, the 
 foreigner would sell the $2,440,502,649 for $1,883,564,012. Deducting 
 wages at the American rate, this would leave for rent and profits to the for- 
 eign manufacturer, $1,506,851,210, which is again 80 per cent, or, if they 
 had paid the total American wages, the profits would have been over 10 per 
 cent, a rate not possible in Europe, as we have all been taught to believe. 
 
 Again, the number of hands employed in the protected industries is given 
 as l,32'7,88l. If this is meant to include all who are directly and indirectly 
 concerned in producing the finished fabric from the raw materials, and who 
 
SCnEDULE A— PEODUCTION UNDER FEEEDOM. 
 
 241 
 
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242 PEOTECTION VS. FREE TKADE. 
 
 "We deal with the figures as they are, and with the argu- 
 ment which they are intended, by impHcation, to support. 
 They are intended to assert that, somewhere between the 
 producer in the protected industry and the consumer of his 
 product, productive forces are lost ; and that the actual 
 earnings of the latter are, by force of the protective statute, 
 transferred to the former. The inference is meant to be 
 drawn that every individual farmer got less iron for his 
 wheat under this dispensation ; that every individual labor- 
 er, every hedger or ditcher, with two dollars in his pocket, 
 is compelled to spend them both, to procure at home what 
 he could purchase abroad for one dollar; and that some 
 receiver of fixed income, derived from American enter- 
 prise, could take the money which lie received from Ameri- 
 can consumers of his services and buy two broadcloth coats 
 in London, instead of one in New York. 
 
 Extract from Hon. Frank Kurd's * speech in Congress, 
 April 29, 1884 : 
 
 " If I have by a day's labor earned one doUar, it is my 
 
 are supported by the protected industries, the number is evidently below the 
 fact. The number of men engaged in these industries and those necessarily 
 related to them is nearly 5,000,000 — considerably more than one fourth of the 
 adult male population of the country. 
 
 " Sundries " may or may not conceal a large African. I do not know how 
 it is arrived at. 
 
 ^ The depths of pathos which some gentlemen can reach by more rhetoric 
 are beyond the reach of any plumb-line. When it comes to logic, these 
 people strike their heads on hard facts before they get their bodies out of the 
 range of unpleasant exposure. This kind of economics is illustrated by the 
 story of Artemus Ward's first visit to Cleveland. Approaching a stranger, he 
 asked : 
 
 " I beg your pardon, but could you tell a stranger where a dinner could 
 be obtained for a quarter of a dollar ? " 
 
 " Right over the way," was the reply. 
 
 " I beg pardon, but one question more. Could you inform me where a 
 stranger could get the quarter of a dollar ? " 
 
 We await Mr. Hurd's answer to this conundrum. 
 
SCHEDULE A— PEODUCTION UNDER FREEDOM. 243 
 
 own. It represents the toil, the' anxieties, the hf e of one 
 day. It is aH that I have in material product to represent 
 that day. With that dollar I go to purchase from a French- 
 man an article which I wish. The contract is about to be 
 consummated. The Government of the United States 
 steps in with its power and says, ' You shall not buy of this 
 Frenchman ; you must buy of an American ' — a man, say, 
 who manufactures this article at Providence, E. I. I go 
 to him with my doUar, and propose to buy the article 
 which for that sum I could have obtained from the French- 
 man. ' No,' says the manufacturer, ' I charge more than a 
 dollar for this article ; you must pay me two dollars.' " 
 
 This is the old assumption that what is true of the indi- 
 vidual, considered in his social group, is true of him apart 
 from his social group. It is an assumption that a structural 
 part in an organism could perform the same functions, as a 
 separate whole, which it does when correlated with the 
 other units in an organic whole. It is an assumption that 
 what is true of hydrogen in a chemist's jar is true of the 
 hydrogen in the Atlantic Ocean. 
 
 Manufactures are supported by agriculture and mining. 
 But the manufacturer is not supported by the agriculturist 
 and miner, in the sense of, at the expense of — by taxation 
 levied upon one for the other. They are co-workers in one 
 entity. We have the authority of Bastiat for their func- 
 tions in a society : " Agriculture, manufactures, commerce, 
 may be an excellent classification when the object is to de- 
 scribe the processes of art ; but that description, however 
 essential in technology, has little connection with social 
 economy — I should even say that it was positively danger- 
 ous. When we have classed men as agriculturists, manu- 
 facturers, and merchants, of what can we speak but of 
 their class interests, of those special interests to which com- 
 petition is antagonistic, and which are placed in opposition 
 
244 PROTECTIOlf VS. FREE TRADE. 
 
 to tlie general good ? It is not for tlie sake of agriculturists 
 that agriculture exists ; of manufacturers tliat we have man- 
 ufactures, or of merchants that we have exchanges, but in 
 order that men should have at their disposal the greatest 
 amount of commodities of every kind." (" Economic Har- 
 monies.") 
 
 " The illusion which I am combating, that demand and 
 supply are independent economic forces, sometimes assumes 
 another form, in the notion that producers and consumers 
 are distinct classes, and that production and consumption 
 are acts which may go on irrespective of each other." 
 (Prof. Caimes.) 
 
 They are organs of one body. 
 
 Now, it was never true that any particular farmer in 
 the United States, in connection with all the other farmers, 
 could get more iron for his wheat in England than at home. 
 It was never true than any particular laboring-man who 
 had earned two dollars by rendering services to his fellow- 
 citizens here, in connection with all the other like laborers, 
 could buy abroad for one dollar what cost two here. If he 
 spent two dollars in Providence, instead of one dollar in 
 England, it was because the societary movement, of which 
 Providence was a part, enabled him to have the two dol- 
 lars in his pocket, where England would have put but one. 
 He had the two dollars when he started for Providence. 
 It was never true that any professor who receives his twenty- 
 five hundred dollars from his fellow-citizens here, in con- 
 nection with all other salary-earners, could get more broad- 
 cloth for the price of his services abroad than here. Any 
 one of them, having got his wages under the present ar- 
 rangement in his pocket, might buy a single ton of iron, a 
 blanket, or a suit of clothes at a better bargain to-day. 
 The farmer wishes good prices for his wheat, the laborer 
 high wages, and the professor a worthy salary — in return 
 
SCHEDULE A— PEODUCTION UNDER FREEDOM. 245 
 
 for tte services -whicli they render to their neighbors. If 
 their neighbors, the rest of us, are given no chance to ren- 
 der services in return, how are we to pay their profits, 
 their wages, and their salai-ies ? Who is to pay them the 
 means of purchasing the next ton of iron, the next blanket, 
 and the next London suit ? The farmer ? JSTot he : we 
 have seen that his raw products have lost their exchange 
 value, and that free foreign trade has robbed him of all the 
 gratuities of his rich soil. The laborer and the professor 
 have nothing to export. If the return services are to come 
 from abroad, the laborer and the professor, at least, had 
 better live abroad. 
 
 Professors in colleges, the capitalists whose money is 
 invested in banks, railroads, farms, and plantations worked 
 by tenants, go abroad. In London, Paris, and Berlin they 
 purchase many articles of vertu, household decoration, and 
 personal adornment, which we either can not make at all or 
 can not make as cheap as the foreign artisan. Our travelers 
 soon acquire an air of condescension toward Americans 
 and America's products ; they are fond of reckoning the 
 cost in " francs " or " ponnds sterling." On their return 
 they are landed at a custom-house, and the " wealth " they 
 are bringing into the country in the shape of gloves, cra- 
 vats, and the like, is intercepted long enough to enable the 
 Government to collect the share of taxes which they ought 
 to contribute to the common revenue. The professors and 
 the capitalists are hurt as to their feelings, and proceed at 
 once to join a free-trade club. They try to forget that 
 their colleges, banks, railroads, and farms are on the Hud- 
 son, the Delaware, and Mississippi, and not on the Thames, 
 the Seine, and the Congo. They try to ignore the great 
 fact that the earning-power of their possessions is rooted in 
 the American industrial organization. Most of us do not 
 make voyages abroad, and do not encounter the custom- 
 
246 PROTECTION VS. FREE TRADE. 
 
 house officer. The expenditures of the American farmer 
 and laborer, and of every average household, are met here, 
 in our own market, on better terms, both as to abuudance 
 and cheapness, than in any market in the world. We have 
 found no commodity which any foreign nation can furnish 
 us at less cost in labor and abstinence. 
 
 The farmer, the laborer, and the manufacturer resume, 
 then, on our own soil, the system of the division of func- 
 tions which is natural to us. The industrial system is a 
 social co-operation, working automatically. To quote om' 
 author of " Social Classes," who writes forcibly always, 
 and most sensibly when out of range of free-trade prepos- 
 sessions : " All this goes on so smoothly and accurately 
 that we forget to notice it. We think that it costs noth- 
 ing — does itself, as it were. The truth is, that this great 
 co-operative effort is one of the great products of civiliza- 
 tion — one of its costliest products and highest refinements." 
 Our co-operative scheme can only be marred by trying to 
 gear it into foreign machinery. It is ours, local and not 
 cosmopolitan.^ 
 
 ' This industrial structure is not only local in its origin in that it could 
 not be imported — it is also a growth on the soil. 
 
 " Even more important than the differences in the physical strength and 
 vigor of laborers are the Tariations that we find In the skill and intelligence, 
 their foresight, quickness, vigilance, and resource in availing themselves of 
 advantages which forward production and in avoiding or removing all that 
 Impairs it. Superiority in these respects is partly, as I have said, congenital 
 and transmitted through physical heredity ; but to a great extent they are 
 handed down from generation to generation by conscious training and learn- 
 ing ; primarily by technical training and learning of special arts and pro- 
 cesses, though the effort of general education in developing industrial intelli- 
 gence must not be overlooked. Wo must also bear in mind the extent to 
 which industrial efficiency is transmitted by association and unconscious imi- 
 tation. ' The child,' says Prof. Walker, ' becomes a better workman simply 
 by reason of being accustomed, through the years of his own inability to 
 labor, to see tools used with address, and through watching the alert move- 
 ments, the prompt co-operation, the precise manipulation of bodies of work- 
 
SCHEDULE A— PRODUCTION UNDER FREEDOM. 247 
 
 Our author fitly characterizes the attempt of the atom 
 — the unit — the individual, the organ, which endeavors to 
 evade its share of the proper work of the organism and to 
 do better for itself than the whole to which it belongs. 
 " There is no man, from the tramp up to the President, 
 the Pope, or the Czar, who can do as he has a mind to. 
 There never has been any man, from the primitive bar- 
 barian up to a Humboldt or a Darwin, who could do as he 
 had a mind to. The Bohemian who determines to realize 
 some sort of liberty of this kind, accomplishes his purpose 
 only by sacrificing most of the rights, and turning his back 
 on most of the duties, of a civilized man, while filching as 
 much as he can of the advantages of liying in a civilized 
 state." ^ Individualism is an impossibility in either a politi- 
 cal or industrial organism. 
 
 men. This unconscious imitation operates powcrfally in keeping up the 
 habitual enei'gy of individuals in a society where a high average standard 
 of energetic work is maintained. The more prudence and self-control the 
 laborer has, the more he will increase the wealth of the community ; while, 
 again, the more he is actuated by sense of duty and wide public spirit, the 
 more productive his labor will be under circumstances in which the coinci- 
 dence between his own interests and that of society is wanting or obscure.' " 
 (Sidgwick, p. 104.) 
 
 Pascal says, '■ Humanity is like one man who lives and learns always." 
 ' What Mr. Frederick Pollock (" History of the Science of Politics ") says 
 of men in their political relations is equally true of them in their industrial 
 relations : " Man is born to be a citizen in that he comes into an existing 
 social order, and is attached to it by duties of others to himself, and himself 
 to others, which are not and can not be of his own making. He does not 
 come into the world as an unrelated unit, and acquire by some convention a 
 fantastic title to some hundred thousandth undivided part of the indivisible 
 sovereignty of the people." 
 
 " Man is born to be a citizen " is the underlying maxim of Aristotle. The 
 " clanless and masterless man " is a kind of monster. The state is the 
 highest unit yet evolved, and men are not yet citizens of an indefinite uni- 
 verse. A man is born a citizen of a definite state with a definite kind of 
 social existence. The state is natural, first as imposed on man by the gen- 
 eral and permanent conditions of life ; and next, is the only form of life we as 
 
24:8 PROTECTION VS. FREE TRADE. 
 
 So of certain economic Bohemians, they would turn 
 their backs on most of their duties to their fellow-citizens, 
 and, liaving filched all they can of the advantages of hving 
 in our great co-operative system, would sacrifice the right 
 of the society which has placed in their hands the purchase- 
 money hy means of which they supply their wants. 
 
 Bat let us return to our aggregate. Some of us can 
 satisfy some of our desires by exchanges abroad. Can all 
 of us satisfy all our desires by purchase abroad ? We shall 
 see. 
 
 The satisfaction of the aggregate desires of the people 
 of the United States requires an outlay of efEort, and sacri- 
 fice embodied in services and commodities, which have the 
 exchange value of $10,000,000,000 annually. It maybe 
 we were wrong a hundred years ago in laying grounds for 
 having so many people here. It may be that these people 
 are wrong in harboring these desires, the gratification of 
 which subjects them to such an enormous tax. It may be 
 that if they had kept their desires for the necessaries, con- 
 veniences, amusements, and luxuries of life within bouuds, 
 they would not have been put to so much trouble in sup- 
 plying them. It may be that civilization and modem prog- 
 ress and great achievements " don't pay." It may be that 
 the jelly-fish and the clam are better types of " living and 
 being comfortable," and better illustrate the blessings of 
 " leisure." But " inherited traits and historical traditions " 
 are against us. If, after what " God had done in the way 
 of piling up mountains of iron, silver, and gold, filling the 
 bowels of the earth with salt, coal, and petroleum, and cov- 
 
 yet know of, in which man can do the best he is capable of. The substance of 
 Burke's comment on Aristotle is that civil society will not come by counting 
 of heads ; it is a social organism and a social discipline. If it is artificial in 
 its perfection, yet it is more truly a state of nature than a sarage and inco- 
 herent mode of life, or rather it is this, because it is artificial ; for " art is 
 man's nature." " One man," says Aristotle, " is no man." 
 
SCHEDULE A— PRODUCTION UNDER FREEDOM. 249 
 
 ering its surface for centuries witli ricli vegetable mold, 
 and watering it with mighty lakes and rivers, and planting 
 boundless forests," he also set fifty millions of Yankees 
 down among them, with their illimitable capacities, and 
 boundless aptitudes, and insatiable desires, we may rever- 
 ently conclude that he designed the adjustment of the or- 
 ganism to its environment. These desires then are natural, 
 legitimate, and necessary, and we have thought it worth 
 while to gratify them. Either the nature of the organic 
 being with which we are dealing must be changed, or we 
 must change its environment. 
 
 Of this aggregate we satisfy them to the amount in 
 round numbers of $6,700,000,000 by the direct application 
 of our own energies to our own resources. The census 
 shows that laborers on them, embrace one hundred and 
 thirty-five classes. Their labors include most articles of 
 common use, and laborers get a larger share in making 
 these commodities than in making luxuries. These result 
 in productions against which no foreigner can compete — 
 productions not in the " protected industries." 
 
 We import annually commodities which we can not 
 pretend to produce (tea, coffee, fruits, etc.), which gratify 
 other desires to the amount of $300,000,000. 
 
 According to " Schedule A " (which, for the purpose 
 of this argument alone, we accept as correct), the remaining 
 desires are for commodities, some of which are produced in 
 the " protected industries " here, and others of like charac- 
 ter by manufacturers, abroad. They amount, in round 
 numbers, to $3,000,000,000 (domestic, $2,440,502,649 + 
 .$433,173,335 foreign ; total, $2,873,675,984). 
 
 That they are legitimate desires appears from the 
 schedule. They are chemical products ; earthenware and 
 glassware ; metals, iron and steel, and all metal manufact- 
 ures ; wood and wooden-wares ; sugar and molasses ; to- 
 
250 PROTECTION VS. FEEE TRADE. 
 
 bacco ; cotton and cotton goods ; hemp, jute, and flax 
 goods ; wool and woolen goods ; silk and silk goods ; books, 
 paper, etc. ; " sundries." 
 
 Now, the free-trade "proposal is, in order to save $556,- 
 938,637 — ^whieh is the tax which the protective statute en- 
 ables one group of citizens, the manufacturers, to collect 
 of another group, the consumers^hat we shall buy the 
 goods in the foreign market. 
 
 It is a law of international trade that the exports must 
 pay for the imports ; commodities must be paid for by 
 commodities. "We then propose to import goods to the 
 amount of $3,000,000,000 annually. With what do we 
 propose to pay for them ?— $800,000,000 of exports ! Of 
 these, $700,000,000 is in food and raw materials— all the 
 foreign market will take — and $100,000,000 in manufact- 
 ured goods, of the only kind with which, just now, we can 
 beat our competitors. We propose to buy $3,000,000,000 
 with $800,000,000 ! The trade is impossible. - We have 
 been so often confronted with this dilemma, we have dealt 
 with it so carefully, patiently, and even tediously, that it 
 is time to be done with it. It is time to characterize this 
 assumption of an illimitable foreign market; either as con- 
 taining a surplus of commodities we would buy, or as ade- 
 quate to take the proceeds of our " land industries " which 
 we would sell, as it deserves. It is an unfortunate sug- 
 gestion, a vain proposal, a pretentious lie, a stupendous 
 fraud, a solemn humbug. We can not huy more value than 
 we can sell. We can not therefore 'bvy the " satisfaction " 
 of all our "desires" for goods manufactured in the pro- 
 tected industries. Nor are they for sale in any market in 
 the world except our own. 
 
 We now see the bog into which the professors and 
 statesmen have floundered. The fallacy which they have 
 played on themselves is an old one. It is the " fallacy of 
 
SCHEDULE A— PKODUCTIOX UNDER FREEDOM. 251 
 
 division." Surely these people must have run across it in 
 Archbishop Whately's " Logic " : 
 
 " This is a fallacy with which men are extremely apt 
 to deceive themselves, for, when a multitude of particulars 
 are presented to the mind, many are too weak, or too indo- 
 lent, to take a comprehensive view of them, but confine 
 their attention to a single point in turn, and then decide, 
 infer, and act accordingly.. For example, the imprudent 
 spendthrift, finding that he is able to afPord this or that, or 
 the other expense, forgets that all of them together will 
 ruin him." 
 
 It is the illogical attempt to draw a universal conclusion 
 from a particular premise : " Some foreign exchanges are 
 feasible and profitable, therefore all foreign exchanges are 
 feasible and profitable." It is a non sequitur. 
 
 Now we see the trouble with the atomistic view of so- 
 ciety, with this sending the individual all over the planet 
 with a salable article in his peddler's pack to find a pur- 
 chaser. If one man may peddle, all may peddle. 
 
 One man may draw a prize in a lottery, all can not. 
 
 One man may get rich smugghng, all can not. 
 
 Now we can answer the question why, if a man trades 
 with profit between southern Vermont and northern Mas- 
 sachusetts, he should not be allowed to make equal profit by 
 a free trade between northern Vermont and Canada. If 
 one man may thus trade, all may. 
 
 The individual peddler and the individual free-trader 
 may drive a profitable trade for a while. But, if we all 
 trade, and all undertake to buy abroad the satisfaction of 
 our desires, we discover that we can not do it. 
 
 The Minnesota farmer asks what 'difference does it 
 make to him whether the thousand barrels of flour which 
 he sells, at a price fixed in Mark Lane, is consumed in 
 Lowell or Manchester, and why he can not freely import 
 
252 PROTECTION VS. FREE TRADE. 
 
 the things he needs, for the flour he exports. There is no 
 reason, if he were not an individual in a social group, and 
 if the welfare of the group were not the proper end of 
 goremment. If all the individuals in the group did the^ 
 same, all would fail to get the import corresponding to 
 the export ; or, rather, the failure of the export would re- 
 sult in the failure of the import, and their desires would 
 fail of gratification. 
 
 Now, take the nation at large — all-of-us — we can not 
 by exports purchase all the commodities named in Sched- 
 ule A if we connect them by the copulative " and." 
 
 "We can buy $800,000,000 worth, or, under free trade, 
 the foreign market might be slightly enlarged, though free 
 trade would make no more mouths to feed in Europe, nor 
 induce the cultivation of less acres there ; their home pro- 
 duction and our $300,000,000 food-exports seem to keep 
 them alive. 
 
 The exports involved in the discussion are exports of food 
 and raw materials. They are $Y00,000,000 annually, but one 
 half of this amount goes to fruits, wines, tea, coffee, and 
 leaving $350,000,000 with which we can buy just one eighth 
 of the manufactured commodities we need. The other seven 
 eighths we must manufacture for ourselves, or go without. 
 
 We may then buy abroad the commodities named in 
 Schedule A to the amount of $700,000,000 if we go with- 
 out tea, coffee, fruits, etc. We may combine them in any 
 proportion we please, only so that no group exceeds that 
 amount. We may buy, with or without a tariff, " metals," 
 $678,981,448; or, "cotton and cotton goods," "wool and 
 woolen goods," $560,680,843; or, "wood and wooden- 
 ware," " sugar and molasses," " earthenware and tobacco," 
 $597,459,340; or, "chemical products," "silk and silk 
 goods," "books, papers," "hemp, jute, and flax goods," 
 etc., $328,443,980; or, "sundries," $728,110,383; but we 
 
SCHEDULE A— PRODUCTION UNDER FREEDOM. 253 
 
 can not buy them all. The rest we must make or go with- 
 out. "We prefer to make them. 
 
 We now come to see just the economic force of the 
 following point put by Prof. Sumner in his lectures (" Pro- 
 tection in. the United States ") : 
 
 " By the census of 1870, the laborers engaged in manu- 
 facturing pig-iron numbered altogether 27,554, and their 
 wages amounted to $12,400,000. The capital employed 
 is returned at $56,100,000. We are pointed to this as a 
 great industry — a grand thing to have. The duty was, 
 when the census was taken, $9 per ton, and the market 
 price of American over imported iron showed that this 
 sum was directly added to the cost of all we used. The 
 product of the home manufacture was 2,000,000 tons, on 
 which the tariff cost us $18,000,000, of which the public 
 treasury got not one cent. Seven per cent on the capital 
 in pig-iron manufacture would be $3,900,000, which, with 
 the wages paid to labor in that trade, would make $16,- 
 000,000. If, therefore, we had made a bargain with the 
 pig-iron manufacturers to let their capital decay, paying 
 them seven per cent on it and with the people employed 
 to stay idle, while we paid them their full wages, provided 
 that we might have our iron free, we should have made 
 $2,000,000 per annum, to say nothing of the fact that, at 
 the lower price, we might have afforded a larger consump- 
 tion of iron. "We should, moreover, have had 509 steam- 
 engines to apply to other work. We should have saved 
 $18,000,000 worth of coal, charcoal, and coke for other 
 uses, and we should have left 4,000,000 tons of iron-ore in 
 the ground for those who come after us to use when they 
 can do it profitably." 
 
 Without stopping to note the minor suggestions of 
 false inferences and assumptions which the extract con- 
 tains, without pausing to be told to what " other work " 
 
234 PROTECTION VS. FREE TRADE. 
 
 the 509 steam-engines could be applied (for we never shall 
 be told), for what " other uses " the coke and coal could 
 be saved, and when and under what conditions the iron- 
 ore could be "profitably" used — and how much longer 
 the human family should leave all this treasure untouched 
 — and the failure to credit the total annual product of the 
 nation's industry with the total exchange value of the 
 2,000,000 tons of pig-iron (worth $40 per ton in 1869), 
 $80,000,000 !— all of which was distributed within the 
 country to wages and capital — we remand the paragraph to 
 the class of fallacies to which it belongs. 
 
 If there were no political, moral, governmental reasons 
 compelling the independence of this nation of other nar 
 tions, for the supply of a staple like iron, reasons of an 
 industrial, educational, or military nature, and we pro- 
 ceeded on the mere economic notion to get the little iron 
 a purely agricultural people required, we may admit that 
 we should have got it cheaper abroad, temporarily at least. 
 That is, if this want of iron, to be had in no other way, 
 had induced us to import it to the exclusion of some other 
 kind of commodities, we should have got it cheaper by 
 exporting something in which we had greater advantages 
 of production. But when the " desire " for iron takes its 
 place in the catalogue of other "desires," which, in the 
 aggregate, overmastered our purchasing power, we then 
 proceed to procure it and them in the only way which will 
 result in supplying them all. We produce the things we 
 can, and import the things we must, according to the 
 strength of our desires and needs. 
 
 Prof. Sumner has simply treated the group of iron- 
 makers on the atomistic plan. Instead of the individual, 
 he has taken a class. As the only class, and by itself, we 
 should have got its products cheaper (at least temporarily), 
 by importation. As a single desire, it was satisfied (tern- 
 
SCHEDULE A— PRODUCTION UNDER FREEDOM. 255 
 
 porarily, at least) at less effort by exchange. As one of 
 the aggregate of desires amounting to $3,000,000,000, it 
 could only be gratified at the expense of some other satis- 
 faction, more or less urgent. The nation takes its choice 
 of imported satisfaction up to $700,000,000. It can put 
 iron among them if no other considerations prevail. If 
 other considerations do intervene, it produces it under the 
 best conditions available. 
 
 It remains to provide $2,200,000,000 for the satisfaction 
 of desires for which we have no recourse but domestic re- 
 sources and domestic labor. We have been driven to a 
 rather laborious, but we think conclusive demonstration, 
 that seven eighths of the goods made in what are called 
 " protected industries " must be made in the United States. 
 They must, of course, be made under the conditions of re- 
 turns to American capital and labor. The cost of all to 
 the consumer here will be the cost of making the most ex- 
 pensive portion. This is a law which it can not be possible 
 that we ought to stop now to demonstrate, and human 
 legislation is powerless to repeal it. It is the well-known 
 and undisputed law on which rent arises. Nor is it neces- 
 sary to hold with Kicardo that rent is the price paid for 
 the " original and indestructible power of the soil " — it may 
 well be due to the development of the human community 
 inhabiting that soil — it is the price of so much "space," 
 which is also an instrument of production, limited in extent 
 and in exclusive ownership. It is a payment for " space," 
 as Mr. Carey puts it, "because of its nearness to the so- 
 eietary movement." But the principle that when the whole 
 of a given product is necessary to supply the demand, the 
 price of the whole will be the cost of the most costly pro- 
 portion, can not be denied. It will be found laid down in 
 any text-book.^ In the nature of things this must be so, oth- 
 
 ' Commenting on Rioardo's law of rent, Prof. Perry says : " The Ricardo 
 
256 PROTECTION VS. FREE TRADE. 
 
 erwise the most costly portion would not be produced. The 
 producers of the least costly portion make a greater profit, 
 and they may or may not reduce prices. The cost, then, to 
 the consumer of goods made partly under American and 
 partly under European conditions, would not, in the long 
 run, be reduced by foreign trade. Either the importer 
 does or does not reduce his prices. If he does not, the 
 protectire tax, costs the consumer nothing. If he does, he 
 drives the home manufacturer out of business and into 
 something else. In the first case we get the whole supply 
 on the American tenns, which " freedom " will not make 
 less onerous. In the second case we go without the goods. 
 The problem is to get some one to make the seven eighths 
 of the goods we must have, made at home. Prof. Sumner, 
 David A. Wells, Henry J. Philpot, Frank Hurd, and Thomas 
 G. Sheai-man, et id omne, need their share, but I see no 
 
 law of rent lost most of its significance and the simple truth remained, ap- 
 plicable to all products that hare a market rate, that the rate must be presup- 
 posed to be sufficient to meet the cost of that portion produced with the greatest 
 difficulty, otherwise that portion would not be produced at all." ("Political 
 Economy," p. 241.) 
 
 " In order to estimate the influence of this fact upon price, we must dis- 
 tinguish between those commodities, the cheapest manner of the production 
 of which may be extended at pleasure, and those in the production of which it 
 is necessary, in order to satisfy the aggregate want of tliem, to call in the dear- 
 est mode of production to aid the cheapest. In the former instance the price 
 of commodities is naturally regulated by the least coat of production. . . . 
 
 " If the same laws were applicable in the latter case, producers placed in 
 a less faTorable situation " (and high wages puts the American producer in a 
 less favorable situation) " would be compelled to immediately abandon the 
 market. The market, in consequence, would no longer be able to provide for 
 the aggregate need ; and the price of the commodity would continue to rise 
 until the producers who had been driven from the market returned to it again. 
 Hence, here, the price in the long i~u,n is determined by the cost of production 
 of the commodity, produced under the least advantageoits conditions, while such 
 production is necessary in order to satisfy the aggregate need.'" (Roscher, 
 " Politcal Economy," sec. 110.) In other words, we here must depend on our 
 own condition of production for the greater portion of our aggregate needs. 
 
SCHEDULE A— PRODUCTION UKDER FREEDOM. 257 
 
 proposal on their part to undertake their manufacture on 
 European terms, or " under freedom." In truth, we are 
 simply back to Mr. Mill's proposal of the protective tax as 
 the easiest way out of it. What has occurred, and what will 
 occur, is the uncertainty, fluctuations, and ruin which peri- 
 odically overtake the American labor and capital which 
 is subject to such competition, and the consequent failure 
 to get the goods at all. We can not escape " competition," 
 for we are making the same goods for the same market. 
 If, then, at last, the far greater portion of the manufactured 
 goods we consume must be made at home under our con- 
 ditions, and the laws of cost of production here, the whole 
 market may as well be given at once to our own workmen. 
 To the whole consumption the American production must 
 contribute the larger portion. " Inundations of cheap goods," 
 "bankruptcy," and " fire-damaged bargains," are not a nor- 
 mal or reliable source, either of supply or cheapness. It 
 would not seem possible that any elaborations of argument 
 or illustrations are needed to strengthen this statement. 
 The whole significance of the situation, and the whole 
 philosophy of protection as well, was summed up by John 
 0. Calhoun in his speech on our second tariff act of 1816 : 
 " The cotton and woolen manufactures are not to be intro- 
 duced, they are already introduced to a great extent, free- 
 ing us entirely from the hazards and, in a great measure, 
 the sacrifices experienced in giving the capital of the coun- 
 try a new direction. The restrictive measures and the war, 
 though not intended for that purpose, have, 5y the necessary 
 operation of things, turned a large amount of capital to 
 these new branches of industry. But it will no doubt be 
 said, if they are so far established, and if the situation of 
 the country is so favorable to their growth, where is the 
 necessity of affording them protection ? It is to put them 
 heyond the reach of contingency j'^ 
 
258 PEOTEOTION VS. FREE TKADE. 
 
 Since the EeTolutionary War there has been no 
 when the people of the United States have not stood in 
 need of the domestic manufacture for the greater propor- 
 tion of the supply of its manufactured goods. They have 
 always been under the necessity of using an aggregate, the 
 greater portion of which was supplied under our own con- 
 ditions of remuneration to labor and capital. This has 
 been " the necessary operation of things here," and manu- 
 factures were natural to us. It was as well to put them 
 " beyond the reach of contingency " first as last ; otherwise 
 their introduction must depend, as John Eae says, " on the 
 miscarriage of early projectors," or, as Mr. Mill puts it: 
 ""But it can not be expected that individuals should at their 
 own risk, or rather, to their certain loss, introduce a new 
 manufacture, and bear the burden of carrying it on, until 
 the producers have been educated up to the level of those 
 with whom the processes are traditional. A protective 
 duty, continued for a reasonable time, will sometimes be 
 the least inconvenient mode in which a nation can tax it- 
 self for the support of such an experiment." 
 
 And this, without adverting to the powerful operation 
 of the vis inertia of custom, which, as Prof. Sidgwick re- 
 marks, " is no less liable to maintain the importation from 
 abroad of goods which might be advantageously produced 
 in the proximity of their market, than it is to keep any 
 other part of the process of production in an economically 
 backward condition." ' 
 
 ' In this connection it may be interesting to note what " an instructor in 
 political economy in Harvard College " says : " There are two sets of condi- 
 tions under which it is supposable that advantages not natural or inherent 
 may be found in one country as compared with another, under which merely 
 temporary and accidental causes may permit the use of certain branches of 
 industry in the second country, and under which, therefore, there may be 
 room for the application of protection. These are, first, the state of things 
 in a new country which is rapidly growing in population, and in which, as 
 
SCHEDULE A— PRODUCTION UNDER FREEDOM. 259 
 
 And it is a tax only when prices are considered in the 
 period when we are undersold by the foreign maker, for 
 the sake of the destruction of the domestic industry, with 
 the expectation of making good losses by subsequent con- 
 trol of the market and advance of prices. The truth is, no 
 human being knows what foreign goods would cost under 
 free trade and with no manufactures here. 
 
 Mr. Sumner thinks the forces of labor and capital com- 
 mitted to an industry are like the water in the reservoir 
 which supplies the city. It may be turned on and turned 
 off at pleasure — ^now here, now there — or need not be 
 used at all, at your option. , But capital and labor are 
 not aggregates of pure force in any such sense.^ Hence 
 the Professor, in dealing with our epoch of 1816, says 
 ("Protection in the United States," p. 39): "Evidently 
 we can not understand these things without taking into 
 
 population becomes more dense, there is a natural change from exclusive de- 
 votion to the extractive industries toward greater attention to those branches 
 of production classed as manufactures. The transition from a purely agri- 
 cultural state to a more diversified system of industry may, in a complete ab- 
 sence of other occupations than agriculture, be retarded beyond the time 
 when it might advantageously take place. Secondly, when great improve- 
 ments take place in some of the arts of production, it is possible that the 
 new processes may be retained in the country in which they originate, and 
 may fail to be applied in another country, through ignorance, the inertia of 
 habit, and perhaps in consequence of restrictive legislation at the seat of the 
 new methods." (F. W. Taussig, in "Protection to Young Industries," p. 11.) 
 ' This is adverted to by Prof. Ely : " A further hypothesis was the ab- 
 solute lack of friction in economic movements. Not only do capital and labor 
 move with perfect ease from place to place and from employment to employ- 
 ment, but this, it was implicitly maintained, is accomplished without the 
 slightest loss. The silk manufacturer diverts his capital into another employ- 
 ment, like the construction of locomotives, with precisely the same facility 
 with which he turns his family carriage-horse from an avenue into a cross- 
 street, while the Manchester laborer, on a moment's warning, finds a suitable 
 purchaser for his immovable eifects, and, without expense or loss of time, 
 transfers himself to London, where employment is at once offered him at the 
 rate of wagds there current." 
 
260 PROTECTION VS. FREE TRADE. 
 
 account the movements whieli were going on in other in- 
 dustrial nations, but the popular opinion here was that the 
 English had set out, by a sacrifice of some millions' worth 
 of goods, to destroy American manufactures. This belief 
 had deep root, and perhaps has only lately died out, since 
 we have ceased to hear cries of ' British gold,' whenever any 
 one spoke of free trade.. The notion I have referred to re- 
 ceived strong re-enforcement from a remark of Brougham's 
 which you may find quoted in the first popular protection- 
 ist's work you choose to take up, in which he recommended 
 his countrymen to reconquer the American marJcet. If he 
 meant to propose to them to sacrifice their capital in giving 
 several millions' worth of goods to the Americans in order 
 to dest/roy factories which would spring up again the mo- 
 ment they tried to reimburse themselves, they would have 
 been the first to laugh at him." 
 
 The historical fact is that destroyed factories do not 
 thus spring up again, without defensive duties. And Eng- 
 lish human nature, or rather the human nature of Man- 
 chester capital, is in pretty effective action yet. Here is a 
 citation from an oQicial report on strikes, of a Committee 
 appointed by Parliament and made to Parliament in 1854. 
 This will also probably continue to appear in any " popular 
 protectionist's work " : 
 
 "I believe that the laboring classes generally in the 
 manufacturing districts of this country, and especially ia 
 the iron and coal districts, are very little aware of the ex- 
 tent to which they are often indebted for their ieing em- 
 ployed at all, to the immense losses which their employers 
 voluntarily incur in bad times in order to destroy foreign 
 competition, and to gain and keep possession of foreign 
 markets. Authentic instances are well known of employ- 
 ers" (the report is, of course, dealing with English employ- 
 ers) "having in such times carried on their works at a loss 
 
SCHEDULE A— PRODUCTION UNDER FREEDOM. 261 
 
 amounting in the aggregate to three or four hundred thou- 
 sand pounds in as many years. If the efforts of those who 
 encourage the combination to restrict the amount of labor 
 and to produce strikes were to be successful for any length 
 of time, the great accumulations of capital could no longer 
 be made which enable a few of the most wealthy capital- 
 ists to overwhelm all foreign competitors in times of great 
 depression, and thus to clear the loay for the whole trade 
 to step in when prices rise, and to carry on a great busi- 
 ness before foreign capital can again accumulate to estab- 
 lish a competition in prices with any chance of success. 
 The large capitals of this country are the great instrv^ 
 ments of warfare against the competing capitals of other 
 countries, and are the most essential instruments now re- 
 maining by which our manufacturing supremacy can be 
 maintained; the other elements— cheap labor, abundance 
 of raw materials, means of communication, and skilled 
 labor — being rapidly in progress of being equalized." 
 
 "Why wiU not the scientists who hold that "an eco- 
 nomic investigation may be carried on independently" take 
 scientific notice of the sociological forces which wield the 
 economic ones ? 
 
 This theory takes no account of the organization through 
 which the productive forces must operate. When the flow 
 is from the foreign reservoirs through the channel of for- 
 eign trade, the flow from the domestic reservoirs must 
 cease. Bear, in mind we are deahng with competitive in- 
 dustries. " Springing up again " is a very good thing, but 
 it is not met with in practice. Henry Clay impatiently 
 disposed of it as a patent fact (speech, House, March, 
 1821) : " Now I contend that this proposition " (that manu- 
 factures will in due time spring up) " is refuted by all ex- 
 perience, ancient and modem, in all countries. If I am 
 asked why unprotected industry should not succeed in a 
 
262 PROTECTION VS. FREE TRADE. 
 
 struggle with protected industry, I answer, the fact has ever 
 been so, and that is sufficient. I reply that uniform expe- 
 rience evinces that it can not succeed in such a struggle, 
 and that is sufficient. If we speculate on the causes of 
 this universal truth, we may differ about them. Still, the 
 undeniable fact remains." 
 
 But it is easily accounted for. The assumption over- 
 looks in toto the organization by means of which modem 
 industries are carried on. It overlooks the structure through 
 which functions are discharged. If the function ceases (as 
 it does when the foreign supply is on), the structure de- 
 generates. It simply becomes atrophied in accordance 
 with well-known laws in organic life. The structure is the 
 joint adjustment of capital and labor co-ordinated to a com- 
 mon end. When then the function ceases — that is, when the 
 work stops — labor must disband and go elsewhere. Labor 
 must take itself to a market at once, or perish; a day's 
 work to it lost now is lost forever. Capital necessarily fol- 
 lows. If not destroyed, it is paralyzed in rust, friction, 
 and disuse. 
 
 The aggregate consumption is a reservoir holding 2,800,- 
 000,000 gallons. Certain pipes can deliver 350,000,000 
 gallons, and certain others 2,400,000,000. The mechanism 
 is such that when the 350,000,000 run freely, the 2,400,- 
 000,000 stop. If either is to stop, which one do our inter- 
 est and welfare dictate we shall prefer ? To ask this ques- 
 tion is to answer it. 
 
 "We see, then, upon what an utter perversion of the 
 facts " Schedule A " is based. The protective tax does not 
 add a sou marque to the cost of the $2,440,502,647 worth 
 of goods made at home. They are a necessary part of the 
 whole supply, and must cost the price of producing the 
 most expensive portion. The protective tax partly raises 
 the price of the imported commodity, but not to the f uU 
 
SCHEDULE A— PRODUCTION UNDER FREED03I. 263 
 
 amount of tlie tax, and in many articles it adds nothing. 
 A protective tax simply covers the difference in cost of 
 production, but the whole tax in the foreign commodity 
 goes into the public treasury, and besides saves the do- 
 mestic industry ; the iinal result of which' is the whole sup- 
 ply of our whole natural demand at the lowest cost to our 
 people — the lowest cost which our relations to the world 
 permits. 
 
 The abundance of commodities which Americans are 
 to consume lies spread before us in the richness and prodi- 
 gality of nature in field, forest, mines, rivers, and seas. 
 
 Their cheapness depends on the skill and fidelity with 
 which we overcome the obstacles which nature alone offers 
 to lis. We have no false starts to recover, no false tra- 
 ditions to reverse, no false institutions to overthrow. The 
 safe, independent, manly, and heroic course is to accept 
 the challenge nature offers. We formulate our demands on 
 nature, and ask nothing of government but that it keep 
 foreign product off our backs, that it applies laissez faire 
 to ourselves, and "hands off" to all other nations. J^a- 
 ture's returns are unfailing, her markets are never in a state 
 of glut ; ■w^e need never depend for " bargains " on " bank- 
 ruptcy " or " some fire-damaged goods." 
 
 Their distribution depends on the just and fair rewards 
 for services rendered, under Nature's own law of supply 
 and demand, superintended and re-enforced by the decrees 
 of a strong, highly civilized, and well-governed state. The 
 state is not something external to the worker, with a pur- 
 pose foreign or hostile to him. The individual is not the 
 creature of status, but lives under a dispensation of free 
 contract. Human laws do not infringe on his freedom. 
 His only constraint comes from the finer and wider in- 
 stincts of humanity imposed by the social movement, un- 
 folded under the laws of its divine evolution and progress. 
 
264 PKOTECTION VS. FREE TRADE. 
 
 There is crime and overreaching, and the exploitation of 
 labor inseparable from human society, under free trade as 
 well as under protection. But each man has a chance to 
 win "wealth" or the " satisfaction of desires." ' 
 
 I-Ie wins it by the apphcation of his own faculties to 
 American physical, political, and moral conditions. He 
 does not " make it out of anybody else." 
 
 It results, then, that the achievements and satisfactions 
 of so highly differentiated a nation as the United States 
 roast be won by its own people on its own soil. They cost 
 effort, but the effort is reduced to a minimum. Under 
 free trade, we could not win from nature, here, anything 
 at a less cost in labor and abstinence / and it is settled that 
 we can not buy our satisfaction. 
 
 To call this cost a tax may please an economist fond of 
 antitheses. But it is hardly worth while to carry on a con- 
 troversy with any one who sgriously insists on the identity 
 of such antipodal things. 
 
 It appears, then, that some of us, a number whose de- 
 sires, when taken individually or in groups, did not cost in 
 satisfaction more than $700,000,000, could buy their satis- 
 faction by exchanges in a foreign market, provided always 
 that the whole number could be fully employed in the 
 most advantageous -industries, and provided the foreign 
 market continued to take the surplus we offer for sale and 
 the surplus we wish to buy. The trouble is, that our de- 
 sires increase faster than the capacity of the foreign mar- 
 ket. It appears also that when all of us, just as we are, 
 undertake to satisfy our desires by exchanges in the foreign 
 
 ' It sounds harsh, but the author of " What Social Classes owe to each 
 other" says truly: "We each owe it to the other to guarantee rights. 
 Rights do not appertain to results, but only to chances. They pertain to the 
 condition.1 of the struggle for existence, not to any of the results of it ; to 
 the pursuit of happiness, not to the possession of it." 
 
SCHEDULE A— PRODUCTION UNDER FREEDOM. 265 
 
 market, we fall $2,200,000,000 short annually. We fall 
 back then on the domestic production, in which no owner 
 of labor or capital hands over to another anything over and 
 above that which that other's services are entitled to, under 
 the laws of supply and demand, operating equably, fully, 
 and fairly throughout the entire field of industries. 
 
 The Government here has never constrained the citizen 
 to do that which even might have been better for him. It 
 has never invaded the liberty of any citizen to buy what he 
 pleased and sell when he pleased.^ And so it has resulted 
 that, according to our respective desires, we go on and im- 
 port iron and sugar, steel and velvets, figs and India shawls, 
 china-ware and Persian dates, silks and seltzer-water, wines 
 and nutmegs, wool and coffee, tea and London-made hats, 
 raw-hides and sahcylic acid, until the aggregate reaches the 
 $700,000,000. The trade then stops, or ought to stop. 
 If we go further, we export our bulUon. If we still go on 
 we get hopelessly in debt, and bankruptcy ensues upon in- 
 activity thus enforced. "What stops the trade ? Protect- 
 ive taxes ? ISTo. The trade ceases because we have ex- 
 Iiausted onr salable exports. We are locked up in the 
 equation of international demand. " Every transaction in 
 commerce is an independent transaction." The traders 
 who send out the exports are not the ones who bring in the 
 imports, but in due time, each going his own way, they 
 are both brought to bay by the balance of trade — the par 
 of exchange is against us, specie goes out, and we can only 
 resume the operation when commodities may again be paid 
 for by commodities. Two very promising apothegms of 
 Prof. Perry disappear in the test : " Man is man, motive 
 is motive, and exchange is exchange." " Free trade does 
 not compel anybody to trade, does not even recommend 
 
 ' The only exception is the purchase of ships abroad, 
 13 
 
266 PEOTECTION VS. FREE TRADE. 
 
 anybody to trade, it merely allows those to trade who think 
 it for their advantage." 
 
 Man, motive, and exchange are all siibmerged in the 
 law of international balances— the antecedent law of supply 
 and demand. As things are, we stop on the exchange of 
 the $700,000,000. "Free trade" does not even allow the 
 trade except in strict subordiaation to that law: nor is 
 this the old. iete noir of " the mercantile system." * 
 
 What " Schedule A " tends to prove, if its figures were 
 correct, is this : If we conld buy and import the whole 
 $433,173,335 + $2,44:0,502,647 = $2,873,675,984 worth of 
 foreign goods, and provided our exports exchanged at pres- 
 ent prices and the imports cost no more than now, we 
 should save $556,938,637, and, economically, it would be a 
 judicious operation. We concede nothing of its moral and 
 physical effects. But we have seen how the " if " stands 
 for an impossibility in the trade, and the " provided " rep- 
 resents an adverse change in values, ruinous and fatal 
 to us. 
 
 What " Schedule A " actually makes clear and evident 
 is the impossibility of procuring the commodities in any 
 mode except by direct production. There is no other way 
 to get them, and we can not do without them. The cost 
 of their use and consumption is the tax imposed on us for 
 being a highly differentiated organism, a highly civilized 
 
 ' " In this manner new light has been thrown upon our studies, and we 
 learn that our fathers have been wiser than we have been inclined to think, 
 and that it has not been reserved for our day to discover all that Is good and 
 true in the economic life of nations. A concrete example of the fruits of this 
 new method is found in the almost complete reversal of opinion concerning 
 the policy advocated by those we call Mercantilists. It is now acknowledged 
 that they were, on the whole, very shrewd, sensible men, whereas, not long 
 since, doctrines and measures were attributed to them which would lead one 
 to suppose it necessary to go back only two hundred years to discover man 
 with a caudal appendage." — Pkof. Ely. 
 
SCHEDULE A— PEODUCTIOJf UNDER FREEDOM. 267 
 
 people — tlie tax is the penalty of being a vertebrate instead 
 of a moUusk. Tliat is all there is of it. I think protection- 
 ists ought to thank Mr. Springer for " Schedule A." 
 
 If any farmer or manufacturer or transporter is appro- 
 priating more than his share of the $556,938,637, it is not 
 in pursuance of any human statute. If one citizen is eol- 
 lectiag taxes of another citizen, under this state of the 
 facts, it must be in accordance with the divine ordinance 
 Tinder which society is moving to its fulfillment. 
 
 We are, therefore, entitled to answer "the political 
 question about protection : Does the statute enacted by the 
 legislature alter the distribution of property so that one 
 man enjoys another man^s earnings? Has the state a 
 law in operation which enables one citizen to collect taxes 
 of another f " with a clear and demonstrated negative. 
 
 And we can answer " the popular question about pro- 
 tection : Does it prevent me from supporting myself and 
 w.y family by my labor as well as I could if there were 
 no protective tax ? " with an equally emphatic negative. 
 You are supporting yourself and your family, with your 
 standard of life, by less exertion than ia any other country, 
 and you could not increase the ratio of your comfort and 
 happiness to your labor and sacrifice by exchanges made in 
 any market on the face of the earth. Tou can go without 
 the satisfaction of your desires, but you can not buy them , 
 outside of the United States. 
 
 And, now, inasmuch as it is natural to have the men 
 who work for us, work on this side of the Atlantic, espe- 
 cially as they work on the same materials, with the same 
 tools, and with the same skill, let the free-trader give us 
 the reasons for having our workshops on the other side of 
 the ocean. The burden of proof is on him, if he changes 
 this natural order, to establish these three propositions : 
 First, that free trade would increase the total annual prod- 
 
268 PEOTECTION VS. FREE TRADE. 
 
 net of the nation's industry ; second, that it would more 
 equitably distribute the total product; third, that a de- 
 creased total product would exchange for a total of com- 
 modities equal to and as equitably distributed as the total 
 product under protection. 
 
 There are four alternative conditions under which we 
 may attempt to procure the consumable goods indispensar 
 ble and desirable to us, or rather in which we may adjust - 
 the supply of them to our demand for them — in which we 
 may bring our desires and their satisfaction into conformity 
 to each other. We can not buy them to the amount of 
 $3,000,000,000. We can, then, first lessen the demand— 
 the " desires." We can do this either — 
 
 1. By exterminating the people who entertain these 
 various and costly desires, and the human beings who are 
 living under their dominion. 
 
 This will scarcely be regarded as feasible, in view of 
 the progress we have made in Christian civilization. 
 
 2. By eliminating the desires themselves. 
 
 This has been done successfully in Tyre, and Sidon, and 
 Carthage, and Ireland, and Spain, and Egypt, and Poland. 
 Grreat people have lost their energy by their failure to reap 
 returns for its exercise. The pressure of external social 
 and conunercial systems has produced despair, and they 
 ' have disappeared from the arena of human contentions. 
 They work no effective demand for commodities, for they 
 bring no purchase-money in their hands. The hungry boy 
 gazing in the pastry-cook's window makes no demand for 
 tarts without the penny in his hands. If the struggle to 
 procure the penny becomes hopeless, he wiU in time lose 
 his hankering after tarts, and his desire for tarts will be 
 diminished. He is then rid of that source of taxation: 
 
 Second : We can procure the supply, the "satisfaction," 
 either — 
 
SCHEDULE A— PRODUCTION UNDER FREEDOM. 269 
 
 1. By the process of direct production, under a pro- 
 tective or prohibitory tariff, as we have had experience in 
 the United States for a hundred years ; or, 
 
 2. By the process of indirect production, through ex- 
 changes made abroad under free foreign trade. 
 
 The latter is the scheme commended to us by the advo- 
 cates of theoretical, scientific, orthodox, Manchesterian free 
 trade. 
 
 It remains to examine its practical application to the 
 actual facts as they exist in the United States. 
 
 We are now to produce "under freedom" — freedom 
 not "only between the 50,000,000 of us who have accepted 
 the duties and burdens, along with the privileges of Ameri- 
 can citizenship, but freedom for all the world to come and 
 go from our harbors and docks. We are to breathe that 
 metaphysical entity which is longingly spoken of as " the 
 air of commercial freedom." Let us analyze it, and see 
 whether it will exhilarate us or asphyxiate us. 
 
 We are supposed to have completed the exchanges of 
 the $700,000,000 of products in which we are not in com- 
 petition — products of dissimilar kinds; we have put off 
 upon the foreigner all the products in the production of 
 which wages are high — either all we have to spare, or all 
 he cares to take. We now accept the competition which 
 is forced upon us and which we can not evade, in the joint, 
 effort with all the world, to produce $2,200,000,000 of 
 similar products, to be sold in the same market, to wit, our 
 own domestic market. 
 
 The conditions of production are not materially differ- 
 ent on the two sides of the Atlantic, except ia the wages 
 of labor. 
 
 A reasonably fair estimate of the advantages and disad- 
 vantages under which we work will be found in the " Con- 
 temporary Review " for October, 1878, by Mr. Henderson, 
 
270 PROTECTION VS. FREE TRADE. 
 
 "America as a Manufacturing Competitor." They are 
 stated as follows : 
 
 Advantages. — 1. More convenient access to raw mate- 
 rials. 
 
 2. Important natural advantages in the shape of water- 
 power. 
 
 3. A better educated and superior class of work-people. 
 Disadvantages, compared with England, in the — 
 
 1. Lower rates of interest upon capital. 
 
 2. Lower cost of building materials. 
 
 3. Lower wages. 
 
 4. Sounder system of finances and taxation. 
 
 5. Lower rates of fuel and light. 
 
 6. More convenient and ready access to the markets of 
 consumers. 
 
 It will be noted that our "advantages" are all of a per- 
 manent nature. Of the " disadvantages," " 1 " is rapidly 
 disappearing ; " 2 " and " 5 " are questions of amount of 
 labor involved in which we constantly approach equality ; 
 " 3 " is a " disadvantage " under which we propose to con- 
 tinue to labor ; " 4 " is doubtful and temporary, at best ; 
 " 6 " is not true of our home market, which embraces the 
 " consumers " we are primarily strugghng to supply. It 
 resolves itself, at last, mainly into a question of the cost of 
 labor. All the other conditions are equalized or rapidly 
 becoming equalized. 
 
 There is a well-known and recognized law of political 
 economy, as well as of common observation — ^the law of 
 indifference — that there can not be two prices for the same 
 commodity in the same mai'ket. It is thus expressed by 
 Prof. Jevons : " In the same open market, at any one mo- 
 ment, there can not be two prices for the same kind of 
 article." We are now beyond the region of Reciprocal 
 Demand, where one gives cotton cloth for tobacco — or oat- 
 
SCHEDULE A— PKODUCTION UNDER FREEDOM. £71' 
 
 meal for bananas — ^where the trade depends merely on 
 strength of desire and not upon cost of production. We 
 are now in the presence of a fair, stand-up bargain, made 
 in the same market, in which cost of production in money- 
 wages settles the advantage of the parties to it. All other 
 conditions of production being equalized, one of three 
 things must take place — one of three possible adjustments 
 must ensue : 
 
 1. "Wages of laborers in the United States, engaged in 
 these industries (and the same rate must soon follow in all 
 others), must sink to the level paid to workers ia Europe on 
 the same industries. 
 
 2. Wages in Europe will be raised to the level of the 
 American rate — ^which will readily be conceded to be im- 
 possible. We are rich, but our riches are not great enough 
 to " go around " on this scale. 
 
 3. Wages here and abroad will meet on a common level 
 at some intermediate point. 
 
 In either of the last two events we should have lowered 
 the wages of our own workmen : we meet the foreign 
 laborer on a level lower than ours. The result of Bastiat's 
 exposition of human destiny was this : " The constant ap- 
 proximation of all men toward a level which is always 
 rising — ^in other terms, improvement and equalization^ 
 in a single word, harmony." I believe it. The epoch in 
 which it will be true is commonly known as the miUennium. 
 Then, and not until then, will universal free trade be a good 
 theory and good practice. We shall approach it by gradual 
 steps, and not by a catastrophe. The United StS,tes might 
 bring about a cataclysmic ruin of itself by decreeing free 
 trade in the last quarter of the nineteenth century, but it 
 could not bring on the millennium for its own citizens- 
 For the present, its economic salvation depends on its hold- 
 ing to the high level which Providence and JSTatare allow 
 
272 PROTECTION VS. FREE TRADE. 
 
 it to maintain in the interest of " all men " who choose to 
 come here, labor, save, and enjoy here. It will thus best 
 exercise its natural liberty and right to pursue and secure 
 the weKare of its people. 
 
 Prof. Cairnes, when asked how we can compete in the 
 same industry against European labor (I will not say " pau- 
 per labor," for the skilled industrious mechanic in England 
 or on the Continent is not a pauper), with our higher-priced 
 labor, frankly says, in effect, we can not. Let the Ameri- 
 can workman be content with the wages of the hedger and 
 ditcher, and he can compete, etc. His words are : " But, 
 secondly, I beg the reader to consider what is meant by 
 the alleged inability of New England and Pennsylvania to 
 compete, let us say, with Manchester and Sheffield, in the 
 manufacture of calico and cutlery. What it means, and 
 what it only can mean, is that they are unable to do so con- 
 sistently with obtaining that rate of remuneration on their 
 industry which is current in the United States. If only 
 American laborers and capitalists would he content with 
 the wages and profits current in Great Britain, there is 
 nothing that ITcnow of to prevent them holding their own 
 in any markets to which Manchester and Sheffield send 
 their wares.''^ ^ 
 
 Mr. John Stuart Mill's account of the economic phe- 
 nomena which would attend the experiment would be this : 
 "If American producers generally should be unable to 
 compete with English producers at the present rate of 
 wages, a flow of gold (wages being regarded as measured 
 in gold) from America would set in, by which, ultimately, 
 a general fall in the price of labor and commodities would 
 be effected, until American producers gained possession of 
 the market with regard to the commodities in the produc- 
 
 * " Some Principles of Political Economy newly expounded," p. 386. 
 
SCHEDULE A— PRODUCTION UNDER FREEDOM. 2Y3 
 
 tion of wliicli they are at the greatest advantage or at the 
 least disadvantage." 
 
 That is, the coin goes out and gold becomes dear. 
 Prices, reckoned in gold, fall, values depreciate, and goods 
 get so cheap that the process of exportation is resumed, 
 and, in. the end, things come around to an equilibrium. 
 Exportation which is brought about by the necessity of 
 paying debts incurred by excessive importation is uni- 
 formly made at a sacrifice. It is the getting in debt by 
 overtrading, and the necessity of paying debts, vrhich 
 distresses nations as well as individuals when pay-day 
 comes. When the man of business checks out his bank- 
 balances in the course of his business, he suffers no dis- 
 advantage ; but when he checks them out to pay debts 
 incurred in business — while it is the best thing he can do 
 with his money, pay his debts — yet his business stops. It 
 is so with the nation. It is better to pay in- bullion than 
 not to pay at all, but there is no option about it. The coin 
 goes out and the trade stops. We are thrown back on the 
 domestic commerce. 
 
 Mr. Carey has well expressed the law and necessary se- 
 quence of the events : 
 
 " All the facts presented by the history of the United 
 States may be adduced in proof of the assertion that a 
 country which maintains a policy tending to promote the 
 export of raw materials must home against it a balance of 
 trade requiring the export of the precious metals, and must 
 dispense with their services as measure of value." 
 
 These facts may be briefly stated thus : 
 
 " Protection ceased in 1818, bequeathing to free trade 
 a commerce that gave an excess import of specie,- a people 
 among whom existed great prosperity, a large public reve- 
 nue, and a rapidly diminishing public debt. 
 
 " Free trade ceased in 1824, bequeathing to protection 
 
274: PROTECTION VS. FREE TRADE. 
 
 a commerce that gave an excess export of specie, an impov- 
 erislied people, a declining public revenue, and an increas- 
 ing public debt. 
 
 "Protection ceased in 1834:-'35, bequeathing to free 
 trade a commerce that gave an excess import of specie, a 
 people more prosperous than any that had ever then been 
 known, a revenue so great that it had been rendered neces- 
 sary to emancipate tea, coffee, and many other commodities 
 from duty, and a treasury free from all charge on account 
 of public debt. 
 
 " Free trade ceased in 1842, bequeathing to protection 
 a commerce that gave an excess export of specie, a people 
 ruined and their government in a state of repudiation, a 
 public treasury bankrupt, and begging everywhere for 
 loans at the highest rate of interest, a revenue collected 
 and disbursed in irredeemable paper money, and a very 
 large foreign debt. 
 
 " Protection ceased in 1847, bequeathing to free trade 
 a commerce that gave an excess import of specie, a highly 
 prosperous people, State governments restored to credit, a 
 rapidly growing commerce, a large pubhc revenue, and a 
 declining foreign debt. 
 
 " In 1857, with all the hundreds of millions of dollars 
 of gold supplied by CaKfornia exported or locked up by 
 want of credit, commerce was paralyzed; the price of 
 money in commercial cities ranged from ten to thirty per 
 cent, and indebtedness to foreign nations increased to such 
 an amount that the payment of interest alone required a 
 sum equal to all our food-export." 
 
 If the United States should try this experiment, the 
 next thing to be done would be to endeavot to extricate 
 themselves from the predicament in which free trade had 
 placed them, and restore the home market to our own pro- 
 ducers by restrictions, as they did in 1789, 1816, 184:2, and 
 
SCHEDULE A— PRODUCTION UNDER FREEDOM. 275 
 
 1861. There are no indications in history, present experi- 
 ence, or prophecy, by which the United States can secure, 
 by the export of food and raw materials, any greater con- 
 quest of the foreign market than she has already made. 
 She will master the commerce of the world, so far as it will 
 be useful to her, by the export of her food, raw materials, 
 and manufactures, founded and maintained by protection. 
 And she will maintain the protection of her " infant indus- 
 tries " until this dominion is secured, if it takes a century. 
 What is a hundred years in the life of a great people ? 
 
 Those revenue reformers who would reach this triumph 
 of our commerce through manufactures rather than through 
 agriculture and the extractive industries are on the right 
 track. But the way to raise manufactures to this height of 
 achievement is not to begin by radng them to their foun- 
 dations. JS^o man who does not assent to the economic 
 value of protection as a scientific doctrine ought to be al- 
 lowed to tinker with the tariff. 
 
 It is not worth while to pursue the consequences which 
 would attend free trade; no real authority will dispute 
 them. First, the impact of the foreign competition, the 
 fining of our warehouses with the cargoes of foreign fabrics, 
 the abandonment of the straggle by the domestic producer. 
 Then the disbandment of workmen out of employment, or 
 " squeezing," as Mill says, " by their competition, their food 
 and necessaries from the shares of other laborers," the de- 
 struction of the capital invested in buildings and machinery, 
 crumbling to ruin under idleness and rust; the absolute 
 dissipation of the existing industrial organization. Then 
 the loss of our gold and silver, which loosens, cripples, and 
 destroys our whole existing association ; the people to be 
 left, at the last, in a condition of hopeless indebtedness, con- 
 stantly increasing to foreign nations, and consequent con- 
 dition of permanent bankruptcy. When the situation be- 
 
276 PROTECTION VS. FREE TRADE. 
 
 came intolerable, we should be poor enough to enter upon 
 the unprofitable industries, and the time would have arrived 
 when, according to Prof. Sumner, we could use the coal 
 and coke and iron-ore which we had been saving for future 
 generations, and when we could find a use for those " 509 
 steam-engines," for we should have come to that ideal 
 " something else " to do. We have reached the promised 
 land, and the " something else " is done under European 
 conditions of wages, under the European standard of living, 
 comfort, and enjoyment. 
 
 This is exactly what will happen under the attempt to 
 procure $2,200,000,000 in the necessaries, conveniences, 
 and luxuries of life " under freedom." The wickedness 
 of the proposal is more manifest in that the professors, at 
 least, know that these results must fiow from the action of 
 economic forces which are acknowledged elements in the 
 science which they teach. 
 
 We dismiss it as the " paradise of fools." 
 
CHAPTER XII. 
 
 COST OF PEODUCTION — A PAEADOX. 
 
 A VEET formidable attempt has been made by Englisli 
 and American free-traders to solve this question on a con- 
 sideration of " cost of production." 
 
 Prof. Perry, in agi'eement with them, attempts to oflEset 
 the cost of labor in the United States by depreciating the 
 proportion of labor to the other elements of the cost of 
 production. With him " cost of production " is made up 
 of " wages " and " profits." In the proportion in which he 
 could eliminate the labor which enters into a product, he 
 would be enabled to claim that some other reasons than a 
 high rate of wages should be assigned to account for our 
 inability to compete with the foreign manufacturer. This 
 seems to give him a motive for unworthily disparaging the 
 contribution which " labor " makes to our aggregate indus- 
 ti'ial results. It is paid with higher wages by the day, but 
 it is more efficient — the American laborer works more 
 hours per day, and loses a less number of Mondays, because 
 he drinks less Beer on Sundays — and, at last, gives only 
 twenty per cent increased value to the materials his labor 
 enters into. 
 
 So, to avoid the argument that we can not compete 
 with the foreign manufacturer, because wages are high in 
 this country, it is necessary to neutralize their effect in 
 some way, either by reducing the proportion which labor 
 bears to the whole cost of the product— saying that our 
 
278 PROTECTION VS. FREE TRADE. 
 
 labor is more efficient — or that other elements of " cost of 
 production " are higher, such as taxation, raw materials, 
 etc. But after excluding all these items of cost, there still 
 remained the " high rate of wages " to contend with. Mr. 
 David A. "Wells, in his report for 1868 (as Commissioner 
 of Revenue), set off against our rate of wages the higher 
 efficiency of our laborers. He argued that wages were 
 higher, but that our laborers earned more. While the 
 American workman was earning a higher pay per diem, he 
 put by so much a higher effort into his work ; and so it 
 resulted that, effort for effort, the American got no more 
 remuneration than the European. In that way he sup- 
 posed he had answered the protectionist's argument that 
 we could not compete because of high wages. His propo- 
 sition was that the same amount of money purchased no 
 more labor, in the sense of effort, efficiency, here than it 
 did abroad; and that the English operative received as 
 high a compensation for what he actually did as the Ameri- 
 can operative. It was Mr. Brassey's argument over again, 
 probably in his lifetime the greatest employer of labor in 
 the world. The moral he endeavored constantly to en- 
 force was the heavy detriment which Great Britain suf- 
 fered from her dear labor — a detriment so heavy, an eco- 
 nomical drawback so serious, that only her great resources 
 in other respects enabled her to bear up under it against 
 the stream of Continental competition.^ 
 
 ' And right here let us ask why Great Britain, whose " advantageous in- 
 dustries " are mining coal and iron-ore, does not exclusively pursue them, 
 and turn them over to the cheaper labor of the Continent, to be wrought up 
 into the commodities she needs by the cheaper labor there. Englishmen 
 have " historical antecedents," and it is not in their nature, morally, indus- 
 trially, or historically, to " fall in " in the march of the family and stand at 
 the point of their most " advantageous industries " — coal and iron. Coal and 
 iron would not employ all their labor and capital. English statesmen right- 
 fully think it their duty to provide for the welfare of Englishmen who are on 
 
COST OF PRODUCTION— A PARADOX. 279 
 
 So Mr. Brassey was gotten rid of by calling him a 
 " commercial writer " instead of an " economist." What 
 he said was this : " It is the opinion of Mr. Lothian Bell, 
 one of our highest authorities, that after all the efforts of 
 our iron-masters to contend with the difficulties of high- 
 paid labor by the improvement of machinery, labor costs 
 fifteen per cent more in England than on the Continent." 
 (Prof. Perry figures out the disadvantages of America as 
 against England, by reason of higher wages, at only/bwr per 
 cent.) "And this disadvantage, in his opinion, entirely 
 neutralizes the advantages we derive from our great facili- 
 ties in the proximity of our iron-mines to our coal-beds. 
 Our workmen are not sufficiently alive to the necessity for 
 the exercise of the utmost eflEorts of ingenuity in order to 
 enable capital invested in England to hold its own in the 
 industrial campaign." 
 
 This position could not be logically assumed by the 
 scientific free-traders. "What," they said, "is now the 
 grand argument with the people of the United States for 
 the maintenance of protection ? " " Why, the high cost of 
 production in that country." " And what is the evidence 
 of this high cost of production ? " ^ Simply, the high rate 
 of wages which prevails." "How," they ask, "can we, 
 with our high-priced labor, compete with the pauper labor 
 of Europe?" 
 
 " I must frankly own," says Prof. Cairnes, " accepting 
 the point of view of the current theory of cost, I can find 
 no satisfactory reply to this question, and I am quite sure 
 that Mr. Wells, who implicitly adopts this point of view " 
 (in one of his Cobden Club essays), " has wholly failed to 
 furnish one. . . . What he shows is, that labor in Eng- 
 land, though much higher-priced than in most European 
 
 English soil. An Englishman has resources enough to go to the front, and 
 to the front he goes. 
 
280 PROTECTION VS. FREE TRADE. 
 
 countries, and in particular than in Eussia, is still so much 
 more efficient here than there, that the high English rates 
 are practically cheaper for the English capitalist than the 
 lower Continental rates for the capitalists of the Continent. 
 "What is the bearing of this upon the American demand 
 for protection against England? "Will Mr. Wells main- 
 tain that, as the efficiency of English labor is to that of 
 Eussian, so is the efficiency of American labor to that of 
 English ? If not, how does his objection to the protection- 
 ist's criterion of cost, founded on the different degrees of 
 industrial efficiency, affect the argument ? And as little does 
 he seem to me to make good the pertinency of his objection 
 to the other ground taken." (The other ground taken 
 was " the varying purchasing power of money in relation 
 to the laborers' requii-ements." Mr. Wells, like all others 
 who labor to minimize the difference in wages in the 
 United States and England, takes the ground that the 
 workman in the latter can purchase as much by the wages 
 of a day's labor as in the former.) He continues : " It is 
 possible that in a few manufacturing districts in the United 
 States the rent of an artisan's dwelling is higher than in 
 some manufacturing districts in England, but in the most 
 important articles of the laborer's consumption — in the 
 whole list of " provisions," for example — the advantage in 
 respect to price is unquestionably with the American con- 
 sumer." (See Carroll D. "Wright's " Generalizations," 
 Chapter XVIII, infra, page .) 
 
 The free-trader, then, is headed off as he attempts to 
 proceed according to "the current theory of cost." "We 
 retrace our steps, and try a new route. We must start with 
 a different conception of the " cost of production." 
 
 The words "cost of production" are not, they say, now 
 to be interpreted from the capitalist's point of view. They 
 do not represent the expenses which the manufacturer has 
 
COST OF PRODUCTION— A PARADOX. 281 
 
 been put to in order to produce the finished commodity. 
 They do not stand for the outlay in wages and interest — the 
 money which the capitalist has advanced to pay " wages," 
 and that which he will retain as " profits." These words 
 are to be understood as representing the " actual difiiculties 
 of production as measured by the sacrifices which produc- 
 tion requires ; not the amoimt of wages and profits, whether 
 measured in money or produce, comprised in the capital- 
 ist's outlay and return." They stand for the actual labor 
 and abstinence. The saorifioe which is taken into the ac- 
 count is labor, not ih.Q price of labor, the physical or men- 
 tal effort, expended to produce the given commodity. This 
 is reckoned as the cost, and it is estimated in so many days' 
 labor of so many men. In this point of view, a ton of 
 iron costs no more in America than in England ; and in 
 this point of view wages and profits are not elements of 
 cost. " Indeed," says Prof. Oaimes, " it may be doubted if 
 the theory of comparative cost of production as the ruling 
 principle of international trade could ever have been worked 
 out from the point of view which regards cost as consisting 
 in wages and profits ; and, however this may be, it is at 
 least quite certain that the theory of international values, 
 adopted alike by Mill and Eicardo, is absolutely irreconcil- 
 able with that view." 
 
 Prof. Caimes then administers the coup de grace to Mr. 
 David A. Wells, and the protectionists as well, who think 
 that our high rate of wages handicaps us in the industrial 
 race : " The rate of wages, whether measured in money or 
 in the real remuneration of the laborer, affords an approxi- 
 mate criterion of the cost of production, either of money 
 or of the commodities that enter into the laborer's real 
 remuneration, hut in a sense the inverse of that in which it 
 is understood in the argument under consideration. In 
 other words, a high ra,te of wages indicates not a high but 
 
282 PROTECTION VS. FREE TRADE. 
 
 a low cost of production for all commodities measured in 
 wMch the rate of wages is high, as, on the other hand, a 
 low rate of wages indicates a high cost for all measured in 
 which the rate is low. Thus, in the United States the rate 
 of wages is high, whether measured in gold or in the most 
 important articles of the laborer's consumption, a fact 
 which proves that the cost of producing gold, as well as 
 that of producing those other commodities, is low in the 
 United States. On the other hand, the rate of wages in 
 Europe, measured by the same standards, is, at least, as 
 compared with the rates in the United States, low, which 
 again merely proves that the cost of producing the com- 
 modities constituting those standards is high in Europe as 
 compared with their cost in the United States. This ele- 
 naentary truth is so far from being generally appreciated, 
 that I shotdd not be surprised if its simple statement should 
 appear to some persons, and possibly even to some econo- 
 mists, as paradoxicalP 
 
 IMt. Wells had been set down with considerable vigor, 
 because he, in common with protectionists, had indicated, 
 as the disadvantage under which American industry la- 
 bored, the high money-price of labor. His criterion was 
 the " cost of production," as measured by the high rate of 
 wages paid in the manufacture of the articles claiming pro- 
 tection. Mr. "Wells had innocently supposed that a high 
 rate of wages meant, in the protected industries — competing 
 industries — a high cost of labor ; and that the " cost of pro- 
 duction" would be greater or less, according to the cost of 
 the labor which entered into the production. The ele- 
 mentary truth, which Prof. Cairnes thought would appear 
 to be " paradoxical " to some persons, and possibly even to 
 some economists, was this : that in the United States a 
 " high rate of wages " proved that the " cost, of produc- 
 tion " was low. Of course there was a dialectic artifice in 
 
COST OF PKODTJCTION— A PARADOX. 283 
 
 this. It was a case of juggling with the words " cost of 
 production," sometimes meaning the money^rioe of labor ; 
 sometimes meaning the sacrifice^ the physical efforts ex- 
 pended to produce the given commodity. To the same 
 effect Prof. Sumner, in his tarifi commission address : " If 
 it is alleged, as it constantly is in this controversy, in a 
 sweeping way, that American industries need protection, 
 because American wages are higher than foreign wages, it 
 is a case of joining a very wide inference to very inade- 
 quate premises. "What are the comparative conditions of 
 industry in America and elsewhere, as regards convenience 
 and cost of raw materials, quality and cost of machinery, 
 rent of land used, character of the climate as affecting the 
 requirements of various industries, national character as 
 respects industry, diligence, sobriety, intelligence, etc., of 
 laborers, distance from the market, or convenience and cost 
 of transportation, convenience and cost of natural agents 
 (coal or water), taxes and tax system, the security afforded 
 by the excellence or otherwise of the government, etc. ? 
 Surely it is plain that these things are the conditions of 
 production, and the comparative rates of wages, taken apart 
 from the purchasing power of money or the efficiency of 
 labor, to say nothing of all the other conditions enumer- 
 ated, are by no means a criterion for a decision whether an 
 industry can be earned on successfully or not. The lists 
 of comparative wages which have been made and which 
 are relied upon by protectionists, and are often accepted 
 by free-traders as pertinent to the issue, and perhaps as de- 
 cisive of it, have no value at all for the purpose} The em- 
 
 ' Prof. Perry (" Political Economy," edition 1873, chapter on "Foreign 
 Trade "), contending that high wages or low wages, high interest or low in- 
 terest, have little or nothing to do with the profitable exchange of commodi- 
 ties, does say; 
 
 " To this law of foreign trade there is, however, a single not unimportant 
 
284 PKOTECTION VB. FREE TRADE.. 
 
 ployer alleges tliat lie can make no profits because lie' pays 
 high wages. He assumes, apparently, that wages and prof- 
 its displace each other. It is certain that they do nothing 
 of the kind." Now, the protectionist assumes nothing of 
 
 exception. When two nations go into the market of the world with the same 
 commodity, to buy gold and silver, then the absolute money-cost of that com- 
 modity is, as between the two, an important question. That one of the two 
 nations, whose wages are lower and whose rate of interest is less, in the man- 
 ufacture of the common commodity, will, in « trade for gold, undersell the 
 other. . . . This is clear, and it is the only case where foreign trade is deter- 
 mined by the absolute cost of production. But our objector gets no crumb of 
 comfort here ; for, in the first place, the commerce of the world is not a com- 
 merce for gold and silver, but a commerce of commodities, in the exchange 
 of which relative cost is the only principle. And, in the second place, when 
 two nations go into the market of the world for gold, they rarely carry the 
 same commodity. . . . And, in the third place, if two nations do carry the 
 same commodity into the saine market, to buy the same gold, and the nation 
 whose wages and profits are higher is thereby at a disadvantage in the trade, 
 how is a restrictive tariff at home to help that matter ? The true remedy is 
 to cultivate our own peculiar advantages to the highest point, and carry those 
 commodities abroad to buy our gold, and not endeavor to compete with our 
 neighbor in the same commodity." 
 
 This attempt of Prof. Perry to smother the truth in mere verbiage is posi' 
 tively misleading. Let us take a short cut through all this circumlocution. 
 The United States is a gold-producing country. When any foreign manu- 
 facturer offers in this market the same goods offered by the American maau 
 facturor, they are both equally engaged in " a trade for gold." The for. 
 eigner, then, by reason of lower wages and less interest, undersells the domes- 
 tic manufacturer. What is the logical remedy proposed by the Professor 
 Abandon the competing industry in which we are beaten, ' We have seen 
 often enough why we must summon the restrictive tariff if we are to have 
 our wants supplied. The protected industries are these same competing in- 
 dustries. 
 
 The great trades of the world are carried on between countries widely 
 removed from each other in the scale of civilization and in respect to their 
 natural resources and productions. Between such countries " cost of pro- 
 duction " is of no account. Their industries are non-competing. It is a case 
 of reciprocal demand. We do not know and do not care what it costs to pro- 
 duce tea, coffee, ApoUinaris water, Smyrna figs, and the like. If we want 
 them " bad enough," and can pay for them, we bug them, otherwise go with- 
 
COST OF PRODUCTIO^T— A PARADOX. 285 
 
 the kind. It is not they wlio say with the professors, that 
 " wages and profits are the leavings of each other." Prof. 
 Sumner then goes on to allege, what no one, no protection- 
 ist at least, is interested to deny, that " profits and wages 
 may both be high or both low at the same time, or one may 
 be high aad the other low. The fact is, that instead of one 
 being displaced by the other, they most always go together, 
 both high or both low at the same time." 
 
 "Without stopping now to vindicate the American man- 
 ufacturer, as having the common sense to equalize the other 
 conditions enumerated, we are simply to inquire whether, 
 inasmuch as the wages of labor are higher in America than 
 in Europe, that fact fro tanto increases the cost of pro- 
 duction to the American manufacturer. The point is dis- 
 tinctly raised by Prof. Sumner : " Let us look now at the 
 other dogma, high wages make protective taxes necessary. 
 It is the very opposite of the truth. If wages are high, 
 that is the reason why no protection taxes are needed, even 
 if they might be in some other case. In Germany, the 
 protectionists generally allege that lower wages in Ger- 
 many than in England are a proof that Germany is indus- 
 trially inferior, and needs protection against England. The 
 protectionist's argument never flags on account of any little 
 variation in the facts." 
 
 , Prof. Caimes takes a further step : " It is strange that 
 those who employ this argument" (that the cost of pro- 
 ducing commodities is higher in America than in Europe, 
 because the rates of wages measured in money are higher 
 here than there) "should not perceive that it proves too 
 
 out them. In the competing industries it is a question of cost of production. 
 We can't buy all, and therefore must make some. I commend the reader to 
 the clear and intelligent discussion of this distinction between international 
 trade based on cost of production and reciprocal demand, in " Some Loading 
 Principles of Political Economy, Newly Expoimded," by Prof. Caimes, Part 
 III, chap, iii (Harper's edition). 
 
286 PROTECTION VS. FREE TRADE. 
 
 mucli. The high rates of wages in the United States are 
 not peculiar to any branch of industry, but are universal 
 throughout its whole range. If, therefore, a high rate of 
 wages proves a high cost of production, and a high cost of 
 production proves a need for protection, it follows that the 
 farmers of Illinois and the cotton-planters of the Southern 
 States stand in as much need of fostering legislation as the 
 cotton-spinners of New England or the iron-masters of 
 Pennsylvania. ... If American protectionists are not pre- 
 pared to demand protective duties in favor of the Illinois 
 farmer against the competition of his English rival, they 
 are bound to admit either that a high cost ofproduotion is 
 not incompatible with effective competition, or else that a high 
 rate of wages does not prove a high cost of production : and 
 if this is not so in Illinois, then I wish to know why the 
 case should be different in Pennsylvania or New England. 
 If a high rate of wages in the iirst of these States be con- 
 sistent with a low cost of producing com, why may not a 
 high rate of wages in Pennsylvania be consistent with a 
 low cost of producing coal and iron ? — or a high rate of 
 wages in New England be consistent with a low cost of 
 producing calico ? " 
 
 Now we have had a long chase after this subtle paradox, 
 but we are in a situation to take it firmly in our grasp, as 
 also to see just what it is fitted to prove. An Illinois farm- 
 er, on his fertile prairie-land, gathers a large crop of com, 
 say, with a comparatively small amount of labor — that is, at 
 a small physical effort. Measured in com, which is his 
 wages, he gets a high rate of wages ; the cost of production, 
 measured in sacrifice — muscular effort — is low. But it is 
 low only by comparison with the amount of com which a 
 like -effort would produce, say, in England. There is no 
 natural absolute standard uniformly regulating the propor- 
 tion between com and effort ; that depends on the fertility 
 
COST OF PRODUCTION— A PARADOX. 287 
 
 of different soils — ^the advantages of one instrument of pro- 
 duction over another. In England, the farmer expends the 
 same effort and gets less corn. The " cost of production," 
 measured in sacrifice, in effort, is high. Measured in corn, 
 which is his wages, he gets a low rate of wages. What, 
 exactly, does this difference represent? Not, at all, the dif- 
 ference of labor. In the case of the Illinois farmer, it rep- 
 resents the increased quantity of com — wages measured in 
 corn — ^which the land, the natural instrument of produc- 
 tion, had added to his labor. His product is now what 
 labor plus " the gratuitous forces of nature " creates, or, if 
 you dislike that phrase, a natural instrument of high pro- 
 ductive power. The Ilhnois farmer has, with the consent 
 of the Government under which he lives, been allowed, for 
 reasons touching the general weKare, to appropriate a nat- 
 ural instrument of production. His labor alone would, for 
 example, produce fifteen bushels of wheat, as would the la- 
 bor of an English farmer. The fertile soil adds ten bush- 
 els as a gratuity — to somebody. The Enghsh farmer is 
 using a less productive natural instrument, its cost has 
 been increased by the necessary repairs, fertilizing, under- 
 draining, etc., which have been going on for centuries. 
 Labor for labor, the American labor is no more productive 
 than Enghsh labor. The superior product comes from a 
 better instrument of production, placed in the hands of the 
 American laborer by the consent of the society in which he 
 lives. Even though the owner paid full value for it, its 
 use costs the nation at large nothing. 
 
 " If," then asks the Professor, " a high rate of wages 
 in the first of these States be consistent with a low cost of 
 producing corn, why may not a high rate of wages in 
 Pennsylvania be consistent with a low cost of producing 
 iron ? " As before, there is no natural absolute standard 
 uniformly regulating the proportion between effort and 
 
288 PKOTECTION rS. FEEE TRADE. 
 
 iron. The rate of wages, measured in iron, may be as high 
 as when measured in corn — ^it certainly would be if there 
 were no other nations, comparison in which disturbed rela- 
 tive standards. It is money-prices which confuse us. In 
 the limits of the same country, effort for effort, the farmer 
 and furnace-man would reap proportional rewards, under 
 the laws of competition. In the limits of two countries, 
 say England and the United States, with similar conditions 
 of production — the same chemical equivalents in ores, coal, 
 lime, steam, and the same general physical power in their 
 workmen — effort for effort, thew for thew, sinew for sinew 
 — the Englishman and the American would produce, for 
 a given exertion, equal quantities of iron. The " cost of 
 production," estimated in sacrifice, physical labor, would 
 be the same in the two countries. The two quantities of 
 iron would represent equal effort ; for in the example, the 
 forces of nature had contributed equal gratuities to the re- 
 spective workmen — ^they are using equally efficient natural 
 instruments of production. 
 
 Why, then, in America, should not equal efforts em- 
 bodied in Illinois wheat and in Pennsylvania iron ex- 
 change for each other ? They should. It is the aim of 
 protection to cause them to exchange one for the other, 
 not by the force of the statute, but by the decree of ISTar 
 ture ; to equalize the natural facilities of production, to 
 pool the resources of the land, and to enable each Ameri- 
 can to receive his pay for his onerous contribution to the 
 gross annual product. 
 
 Why does not the Pennsylvania iron-master's product 
 exchange, ton for ton, for that made in England, or, in 
 other words, bear the same value in a neutral market? 
 Because the iron-worker in England is compelled to sell 
 the sacrifice, the physical effort, embodied in his product 
 at a lower rate in money than his American brother. There 
 
COST OF PRODUCTION— A PARADOX. 289 
 
 is no difference in " cost of production " in these cases, 
 measured in sacrifice; measured in "wages," tliere is a 
 vast difference. The American workman is fatally under- 
 sold, and so we are around to our starting-point. Our new 
 criterion of cost of production has not availed us. "What 
 we have discovered is, that when capital and lahor in 
 America have possession of superior instruments of pro- 
 duction, there are high returns for labor, considered as 
 effort, and high wages in some industries, reckoned iu the 
 products of the industries. What the market value of 
 these products is or will be, we are furnished with no 
 data for determination. 
 
 Logically, we have reached the end of our abstract 
 reasoning ; but the mere speculation has given us no sense 
 of security for practical action. The whole question is re- 
 solved at last into one oifaet, not of science. I state it in 
 the words of Prof. Cairnes, whom we have so pleasantly 
 followed around this Eobin Hood's barn : " I must, there- 
 fore, contend that the high scale of industrial remuneration 
 in America, instead of beiag evidence of a high cost of 
 production in that country, is distinctly evidence of a low 
 cost of production— of a low cost of production, that is to 
 say, in the first place, of gold^^ (this being a gold-producing 
 country), "and, in the next, of the commodities which 
 mainly constitute the real wages of labor — a description 
 which embraces at once the most important of raw mate- 
 rials of industry and the most important articles of genr 
 eral consumption." 
 
 That is, the group of industries which his economy 
 prescribes that we should pursue are the ones in which 
 land, as a natural instrument of production, adds that 
 increment to the product which marks the distinction be- 
 tween a low "cost of production" and a high "cost of 
 production," in the Professor's sense of the words, 
 
 14 
 
290 PKOTECTIOX VS. FKEE TRADE. 
 
 " As regards commodities not included in this descrip- 
 tion, tile criterion stands in no constant relation of any 
 kind to their cost, and is, therefore, simply irrelevant to 
 the point at issue." 
 
 On the. contrary — ^for here the Professor is guilty of a 
 singular slip — "the commodities not included in this de- 
 scription " are the very ones to the production of which 
 protection does apply, and for the reason that the criterion 
 of wages does stand in such a constant relation to their 
 cost as to keep our products out of our own or a neutral 
 market. Unquestionably there is a vast expanse of neutral 
 territory, in which we efficiently supply our own wants. 
 Lumber, stone, building materials, household goods, car- 
 riages, sewing-machines, guns, clocks, and professorships 
 in colleges, are examples of commodities in which we ask 
 no odds of outsiders. Of the ten thousand millions of our 
 annual consumption, these industries supply six thousand 
 seven hundred millions of commodities in which no people 
 can successfully compete with us, and we need no protec- 
 tion. For the three hundred and fifty millions of foreign 
 fruits, raw materials, and so on, we can not compete, and 
 protection is useless. For the three remaining thousand 
 millions we consume, we are in competition in production. 
 And it is in all these most important articles \h.2bi protection 
 does protect. 
 
 " And now we may see what this claim for protection 
 to American industry, founded on the high scale of Ameri- 
 can remuneration, really comes to : it is a demand for 
 special legislation, and, in consideration of the possession 
 of special industrial facilities — a complaint against the 
 exceptional hounty of natwep 
 
 But the exceptional hounty of nature does not furnish 
 us the exportables with which we can buy the satisfaction 
 of our desires. How next shall we proceed ? 
 
COST OF PRODUCTION— A PARADOX. 291 
 
 Bastiat lias Mmself fumislied a perfect answer, even 
 though he did not intend it : 
 
 "A man who has in his hands the tools necessary for 
 lahor, the materials to xoorh upon, and the provisions for 
 his subsistence during the operation, is in a situation to 
 determine his own remuneration." 
 
 The whole case lies in that nutshell. The nation has 
 the tools of every possible kind known to nature's bounty 
 or to human invention ; perfect stores of force, skill, indus- 
 try, efEective desires of accumulation ; every known motor 
 ever suggested by an a priori economist ; and " the provi- 
 sions for subsistence " during the operation. The operation 
 in our case has consisted in the building up of the most 
 complete industrial organization in the world. We have, 
 by the confession of the free-trader, " accumulated capital 
 far more rapidly than any other people in the world." Our 
 own production has determined our own remuneration. Our 
 annual production in manufactures is greater than that of 
 England ; and the inventory of the wealth of the United 
 States is to-day greater by ten thousand milhons of dollars 
 than that of Great Britain, built up by centuries of war, 
 diplomacy, colonial conquest, protection, and free trade. 
 How could a greater absurdity be conceived than to treat 
 the "provisions for subsistence," which we had in our 
 hands, as the be-all and end-all of our efforts, if they failed 
 to furnish the purchase-money for the gratification of our 
 other wants, and we had at last to resort to home manufac- 
 tures ? "We had only to reach out and gather food from our 
 boundless acres, and then, because it costs us little, call off the 
 people and their masterful energies from " the operation " of 
 the subjugation of a continent which, in the fullness of time, 
 the God of nations had ordained the nation to undertake ! 
 
 This was not the destiny which our " historical ante- 
 cedents " forced upon us. It accorded alike with the divine 
 
292 PROTECTION VS. FREE TRADE. 
 
 ordering of eyents, with the ideals of the people, with the 
 demands and exigencies of the great movement for political 
 and commercial freedom, with the maxims of common 
 sense, and with the canons of sound political economy, upon 
 which alone we were enabled to lead the kind of lives we 
 were fitted to hve. The American people were neither 
 tricked into this order of development by monopolists, be- 
 trayed into it by corruption, nor duped into it by greedy 
 manufacturers. It was the natural order of conducting this 
 mighty " operation," which was made possible heoause food 
 was plenty, and " cost of production " was low. It was the 
 only method by which the vast resources of the land could 
 be made contributory to the welfare of the people possess- 
 ing them. "We are engaged in a common cause — farmer, 
 manufacturer, and laborer — of supplying the " necessities, 
 conveniences, and amusements" of each other. It is not 
 money values we ask ; it is the commodities themselves we 
 make and divide, to each his share in the production. The 
 land-owner, as such, has no distinct right nor distinct inter- 
 est in any different proportion of distribution. In his be- 
 half, it is urged that " we can not afford to compete in any 
 industry which will not pay here as well as those which 
 have special advantages here. If we can not compete, it is 
 because we can not afford to compete. We are too well 
 off." This would be like the workman who dropped his 
 tools and quit work, for the reason that he has " provisions 
 for his subsistence," without the ability to buy and enjoy 
 anything else. When we steadily contemplate the full 
 meaning of the proposition that the United States are to 
 drop their tools and quit all work for the reason that food 
 is cheap, we may thank the Providence which has superin- 
 tended us that the free-trade docl/rinawe is a recent prod- 
 uct ; and we may rely on the sturdy common sense of the 
 people that they will never accept his teaching. 
 
COST OP PRODUCTION— A PARADOX. 293 
 
 Tlie early statesmen looked out upon the dimensions of 
 the republic, and took an inventory of its effects. I know 
 of no better summary of them than I find in the rhapsody 
 of Prof. Perry. The Professor endeavors to break the 
 force of the facts by thrusting between them his ii'relevant 
 suggestions: "The idea that the United States, with a 
 greater variety and abundance of natural resources than 
 any other country on the globe, with an industrious, en- 
 terprising, and skillful people, with mountain-streams 
 which leap to the wheels of industry with a song, with 
 forests and coal-fields and mines, with marts and markets 
 and navigable rivers, with a genius for traffic and a keen 
 eye to profit, the idea that the United States is to be re- 
 duced to a mere farming country, unless Government can 
 be coaxed to tax foreigners and citizens in behalf of some 
 branches of manufacture, which are asserted to be other- 
 wise unprofitable, is too ridiculous for serious repetition. 
 Why? No nation of the earth has such facilities for 
 manufacturing / the raw materials are here, the food is 
 here in abounding measure ; the instruments are here in 
 water, wood, and coal ; cattle and horses and pastures are 
 here j everything is here which a nation, can ask for with 
 which to produce either directly what is wanted, or indi- 
 rectly that with which to purchase at the cheapest rates 
 what is wanted abroad ; and if God shall give us grace to 
 mind our own business, to avoid entangling alUances and 
 wars, to get and keep a sound money, and to rise above 
 the silly jealousies which have hitherto restricted trade — 
 we shall yet be the bee-hive of the nations, the chosen 
 home of the industrial and civilizing arts." 
 
 My good Professor, there is something yet lacking in 
 your inventory. You omit the only factor which, on your 
 philosophy, can start this vast complexity of industry. "We 
 want men who will consent to labor on the terms of the 
 
294 PROTECTION VS. FREE TRADE. 
 
 European laborer — men who will consent to lower the 
 standard of their lives to that of the European, reduced 
 to the hopeless and helpless slavery of industrial systems. 
 
 Bj the terms of your argument you make the returns 
 for rude labor spent on the soil operate as a premium 
 against industries involving skill and capital. The very 
 exigencies of your logic compel you to waste intelligence, 
 energy, inventive talent, educational power, in vocations 
 where they are useless. You want us to raise exportables, 
 in which " cost of production " is low. Why have not the 
 kind of people you describe entered upon the possessions 
 you so glowingly catalogue ? What is the economic reason 
 why we never started on our career, until restrictions of 
 some sort gave us "a hft"? Do you know of anybody 
 who will or can enter upon them " under freedom " ? You 
 think we can, now. Prof. Sumner thinks we can not, and 
 ought not to / we are too rich to do so now ; we must wait 
 until we can afford to take hold of our resources. 
 
 What are "industrious and enterprising and skillful 
 people" without a field of employment? What are "our 
 mountain-streams " without an industry to which they can 
 leap ? What are " our forests," if we are to get our lumber 
 from Canada? What are " coal-iields," if we are to get 
 our coal from Nova Scotia ? What is the use of " mines," 
 if we are to get our metal fabrics from England ? What 
 are our " raw materials," if we are to get our woolen goods 
 from Germany, our cotton goods from Manchester, and our 
 hemp from Kussia ? What are " cattle and pastures," if we 
 are to get our wool from Australia and our tallow from 
 the Baltic ? What are " marts and markets " without prod- 
 ucts in them ? What boots it that we have a " genius for 
 trafiic and a keen eye for profit," if they are to be wasted 
 in " the clash of chaotic cupidities " which "marks the world's 
 market? What is the good of all these resources, if we are 
 
COST OF PRODUCTION— A PARADOS. 295 
 
 not to enter upon their enjoyment ? Why have we not 
 entered upon their enjoyment except under restrictions? 
 Yon have denounced through six hundred pages of your 
 book on " Political Economy " the men who have endeav- 
 ored to appropriate these bounties, as robbers, monopohsts, 
 lobbyists, parasites, thieves. You know there is not an 
 item in your list which your theory of " advantageous in- 
 dustries " allows us to touch, except agricultural products. 
 You have emptied the nation of the power to apply its 
 labor to any occupation, except the soil, in which the forces 
 of nature supplement its returns, and in which you pride 
 yourself that you have shown that the " cost of produc- 
 tion " is low. These are the products which you say should 
 constitute the outgoing cargoes for which in return we are 
 to receive the cotton and metal fabrics of England, the 
 china of France, the woolen goods of Germany, the coal 
 of ISTova Scotia, the hemp and tallow of Eussia, the wool 
 of Australia, and the lumber of Canada. In these products 
 of the industry of America, according to the census of 
 1880, our own laborers added $1,200,000,000 to our stock, 
 which products in market were a market for other $1,200,- 
 000,000 worth of other American labor — American labor, 
 mind you. There is not a single one of these industries 
 which you do not denounce as "unproductive," as "an 
 abomination " when carried on under " protective taxes " 
 — for so you prefer to denominate the scheme of direct, 
 home production. You say they do not pay. You cram 
 a transparent fallacy into that use of the word "pay." 
 Your inventory is at last a humbug, and your radiant pict- 
 ure is a deceitful mirage. 
 
 You shut the American people up to the choice be- 
 tween the horns of a dilemma. They will never become 
 profitable, in your sense of the word, until we can compete 
 in the markets of the world with them. This can come 
 
296 PKOTECTION VS. FREE TKADE. 
 
 about on one of two conditions : Either our workmen must 
 consent to reduce their share of the " cost of production," 
 reckoned in wages, or they must by increased skill render 
 the " cost of their labor " less. They must become more 
 expert and eflScient in proportion to their higher wages. 
 On the latter condition, without restriction, we never 
 should have entered upon these forms of industry. Achil- 
 les himself can not overtake the tortoise unless he starts. 
 Industrial skill and efficiency are only attained by practice, 
 generations after generations — years after years. Our pres- 
 ent industrial scheme is a process of education ; and its fuU 
 effects, as an educational process, are daily required to ena- 
 ble us to " keep up " — to hold our own in the race. That 
 we could rise ^er saltum under the philosophy of laissez 
 faire from an agricultural state to a highly organized, in- 
 dustrial state, is impossible. As is said by Eobert Scott 
 Moffat : " It is impossible for an unorganized industry, at 
 any point of its progress, to attack an organized one with- 
 out entailing loss and submitting to temporary disadvan- 
 tage ; and if immediate advantage alone is to be consulted, 
 the industry of such a country must forever remain unor- 
 gwnized." (" Economics of Consumption.") Mr. MiU has 
 said as much. 
 
 On the former condition — reduced wages — we do not 
 want them on any terms. 
 
 Many excellent people have denoimced Dr. Malthus for 
 enunciating his law of population, as if he had enacted it. I 
 commend his words to free-trade promoters : " If a country 
 had no other means of growing rich, except by seeking 
 success in the struggle with other countries at the cost of 
 the reduction of the wages of labor, I would unhesitatingly 
 say, ' Away with such riches.' It is much to be desired that 
 the working-classes should be well remunerated, and this, 
 for a reason much more important than aU the considera- 
 
COST OF PRODUCTION— A. PARADOX. 297 
 
 tions relating to wealth — that is, the happiness of the great 
 mass of society. Nothing is more detestable than the idea 
 of knowingly condemning the laboring-classes to cover 
 themselves with rags, to lodge in wretched huts, to enable 
 us to sell a few raw stuffs and calicoes to foreign coun- 
 tries." 
 
 Eather let us rejoice that God has given us grace to 
 mind our own business, has enabled us to avoid entangling 
 alliances and wars, and has kept us out of the maelstrom of 
 foreign industrial machinery which would have ingulfed 
 our capital and labor. 
 
 The assumption is that under free trade we shall not 
 abandon any group of industries worth pursuing. Prof. 
 Caimes thinks we could rely on the " exceptional bounty 
 of nature," and worry along with the industries in which 
 his economic paradox, that a high rate of industrial remu- 
 neration was only evidence of a low cost of production, was 
 applicable. " Perhaps I shall here be asked how, if the 
 case be so, the fact is to be explained, since fact it un- 
 doubtedly is, that the people of the United States are un- 
 able to compete in neutral TnarTcets, in the sale of certain 
 {important wares,^ with England and other European coun- 
 tries. No one will say that the people of New England, 
 New York, and Pennsylvania are deficient in any indus- 
 trial qualities possessed by the workmen of any country in 
 the world. How happens it then, that, enjoying industrial 
 advantages superior to other countries, they are yet unable 
 to hold their own against them in the general markets of 
 commerce ? I shall endeavor to meet this objection fairly, 
 and, in the first place, let me state what my contention is 
 with regard to the cost of production in America. I do 
 not contend that it is low in the case of all commodities 
 
 ' According to " Schedule A," the consumption of these " important 
 wares " in the United States amounts to $3,000,000,000 annually. 
 
298 PEOTECTION VS. FREE TRADE. 
 
 capable of being produced in tbe country, but only in tbat 
 of a large, very important, but stillMmited, groujp.''^ 
 
 Here we are back again to the agricultural group. All 
 tlie industries outside of this group, he takes the trouble to 
 say in words, would not be extinguished by free trade. 
 Great Britain would still continue to produce soTne com, 
 and the United States some coal and iron, and some textile 
 fabrics. Transportation over great distances to some of 
 the inland markets of the Tlnited States might operate as 
 a tariff. " It is probable that the abolition of the high 
 import duties now imposed by the latter country would 
 lead to some more or less considerable readjustments of the 
 proportions in which the industries they occasion are car- 
 ried on ; but this is a very different thing from the extinc- 
 tion of those industries. . . . The capital now employed in 
 the United States in developing resources which would he 
 better reserved for another day, would not be slow in finding 
 employment in more profitable channels. ... It can not, 
 therefore, be denied, that under free trade American manu- 
 facturers would not improbably have to undergo the patri- 
 otic anguish of finding themselves undersold in some 
 kinds of goods by foreign merchants in their own mark- 
 ets. But tliei'e would be no need, therefore, for them to 
 despair." 
 
 This is very kind in the Professor. Somehow the phi- 
 losophers in their study-chambers never tell us what these 
 more profitable channels are. What are we to do, Messrs. 
 Professors ? Answer in facts, and not in rhetorical vague- 
 ness and audacious guess-work. The business men of 
 America have been fretting on the edges of all their re- 
 sources for a century. It is probable they have discovered 
 all there is to discover. There is nothing to do except to go 
 on and continue to produce the things we must and will 
 have, and produce them under the American conditions, 
 
COST OF PRODUCTION— A PARADOX. 299 
 
 under protection. This gives us access to the grand in- 
 ventory of resources so eloquently set out by Prof. Perry. 
 We either are or are not worthy of them. 
 
 Our old critical friend Prof. Leslie (who was a free- 
 trader all the time we have been reading his criticism) is 
 as dogmatic as any other professor when he gives us an 
 Englishman's advice as to what Americans ought to do : 
 " The best economy, of course, would have been for Ameri- 
 can capital to confine itself to the fields in which it had 
 superior productiveness, awaiting a rise of wages, and in the 
 cost of coal^mining in England, for competition in others." 
 ("Fortnightly Keview," October, 1881.) This lets the 
 whole free-trade cat out of the bag. Eates of wages will 
 rise in England, the productiveness of our fields will con- 
 stantly diminish, our wages will come down, we shall be 
 on equality with England. Then we shall be so poor that 
 we can afford to compete with England — we are too rich 
 to do it now. It is Prof. Sumner's old proposition : " If 
 we can not compete, it is because we can not afford to com- 
 pete. We are too well off." Most practical business men, 
 foreseeing the time when they must build an extension to 
 their works, would do it when and while they were well 
 enough ofE to afford it, and not wait until forced by their 
 necessities to go into a new enterprise, under compulsion 
 of poverty — especially as in either event it must be done 
 at their own cost, and under the conditions of the average 
 efficiency of the people as & whole. And Mr. Mill is on 
 record as agreeing with the practical business men. 
 
 Few will have had the patience to follow this ingenious 
 and subtle argument, by which free trade was going to 
 determine for us what to do — under the notion of " cost of 
 production." It has landed us in the old bog. Having 
 consciously failed to enlighten us, in this regard, we are 
 exhorted by Prof. Cairnes to abandon protection and go 
 
300 PROTECTION VS. FREE TRADE. 
 
 into the general business of civilisation. " As a scheme 
 for promoting civilization, protection amounts to a plan 
 for putting an end to international trade — putting an end 
 to the chief occasion and most enduring motive for the in- 
 tercourse of mankind, . . . free trade being one of the prin- 
 cipal and most powerful of civilizing agencies." What it 
 really puts " an end " to, what it is " the chief occasion and 
 most enduring motive " to, is the occasion and motive to 
 have the manufactures of the world carried on in the island 
 of Great Britain, and to have Americans truck-farm it for 
 them. No American will have any doubt that when it 
 comes to international trade in civilization, our exports will 
 largely exceed the imports. , I have seen a calculation made 
 that, for every missionary England has sent to foreign lands, 
 she has opened a market for English goods to the amount 
 of fifty thousand pounds. And the London " Times " has 
 given expression to the " patriotic anguish " which Enghsh- 
 men underwent when, in the Russian war, English troops 
 were compelled to " Mil a customer or a debtor of Eng- 
 land." At the same time English gunsmiths sold guns 
 to kill English soldiers, because there must be no interfer- 
 ence with trade, Americans are asked to furnish the 
 ammunition with which they may be themselves slaugh- 
 tered. 
 
 Prof. Caimes advises thus : " If they " (the Americans) 
 " desire to command a market for their products in all quar- 
 ters of the world, they must be prepared to admit the prod- 
 ucts of other countries freely to their own markets, and 
 must learn to seek the benefits of international trade, not 
 in the vain ambition of underselhng other countries, and 
 so making them pay tribute in gold and silver to the United 
 States, but in that which constitutes its proper end and 
 only national purpose — the greater cheapening of its com- 
 modities, and the increased abundance and comfort which 
 
COST OF PEODUOTION— A PARADOX. 301 
 
 result to the whole family of mankiixdr TMs last enter- 
 prise seems rather an indefinite one for American states- 
 men to enter upon, charged, as they are especially, with 
 the welfare of the people of the United States. Our pres- 
 ent mission is to make commodities cheap and abundant 
 for ourselves, and we have been fairly successful so far. 
 
OHAPTEE XIII. 
 
 A CASE m POINT — THE ADSTEALIA EPISODE. 
 
 This business of " advantageous industries " and " cost 
 of production" has received recent illustration in actual 
 history. Gold was discovered in Australia in 1849. Let 
 us look at the course of development there, in the light of 
 its economic and social growth. It sheds Hght on very 
 many phases of economic problems. At the time of the 
 discovery of gold in Australia in 1851 it was a grazing 
 country, with extensive areas of rich, fertile lands. "Wool 
 and tallow were its principal exports. The wages of com- 
 mon labor were about one dollar and a quarter per day. 
 Upon the gold discoveries, a common laborer could earn at 
 the mines, by simple processes of labor involving little capi- 
 tal and moderate skill, five dollars per day; that is, he 
 could produce, by washing the sand, enough gold to be of 
 that worth — say, one quarter of an ounce. The cost of pro- 
 ducing gold thus became, then and there, low. Wages 
 reckoned in gold were high, so long as gold in the outside 
 world held its exchange value. Immediately the rate of 
 wages in the whole country rose to the rate of earnings in 
 the gold-fields. An employer was compelled to pay quad- 
 ruple wages ; the price of all Australian productions rose 
 in the same proportion. In the course of two or three 
 years the more accessible and richer mines became ex- 
 hausted ; processes became more expensive. The rate of 
 earnings in gold-digging were reduced to about two dollars 
 
A CASE IN POINT— THE AUSTRALU EPISODE. 303 
 
 and a lialf per day, and this for some years was tlie cost of 
 labor there. The returns to labor in the most " advantar 
 geoTis industry " and in ordinary callings met at the average 
 about midway between the ante-gold rates and the highest 
 rates under their most efficient conditions. The gold- 
 digger was compelled to share his abundance with the 
 laborers who prosecuted the unprofitable industries. He 
 could not have them serving him in Australia without 
 parting with a share of his earnings at the point of his 
 superiority ; and the people of Australia, as a whole, took 
 the advantage of the gold discoveries at an averaged rate. 
 These people were a tax on him. If the miner could have 
 gotten along without neighbors and helpers, he would have 
 realized the whole of the fruits of his most advantageous 
 industry ; but, xmder an irrepealable law of society, he was 
 compelled to divide. Whoever was allowed to go to Aus- 
 tralia and to work, was necessarily permitted to share in 
 the averaged results. 
 
 Inasmuch as the population, in the main, took to the 
 gold-diggings, and inasmuch as they could not subsist on 
 the gold itself, they were compelled to part with it. So far 
 as they could not supply their wants by Australian produc- 
 tions, they were compelled to export it as the only and best 
 means of payment for imports. The wages of shepherds 
 and ranchmen had doubled, and the cost of raising wool 
 doubled also. The market for wool was in Europe, and 
 the price of wool there had not doubled ; and as Europe 
 was not dependent on Australia for its supplies, wool and 
 tallow could be no longer exported. An unexpected con- 
 sequence saved the industry. Previously, butcher's-meat 
 had had no market at home, and grazing had been carried 
 on principally for the products in wool and tallow. The 
 great influx of population now gave them a sale for their 
 meats, and they were then enabled to continue the exporta- 
 
304 PROTECTION VS. FREE TRADE. 
 
 tion of their old products at old prices ; but tMs was mere- 
 ly an iacident, or rather an accident. The great industry 
 was gold-mining. So long as it remained the most advan- 
 tageous industry, all the others were merely ancillary to it 
 — mere instruments to supply food and clothing to those 
 actually employed in it. How did it ailect them in rela- 
 tion to other nations ? 
 
 Whereas the colony formerly supphed her own wants 
 by her own productions of butter and lumber, she now im- 
 ported her supplies of the former from Ireland and the 
 latter from the Baltic. Her facilities in raising gold were 
 so far superior to the facilities of Ireland and Eussia, that 
 it was her interest to turn her labor and capital to gold- 
 miuing rather than to farming. Her fields were fertile, 
 but they could not hold their own in competition with 
 gold-mines. It resulted that nothing which could be im- 
 ported was now made in the colony. The price of labor 
 was so high that she could not afford to compete with for- 
 eign countries. £uf that price was high iecause the cost 
 of gold was fozo— that is, the returns for labor, reckoned in 
 its product, gold, were high. Reckoned in the commodity 
 which that labor brought forth — gold — these were high re- 
 turns. Gold in Australia was cheap, measured iu the 
 effort, sacrifice, which procured it. In Australia, prices 
 were high, commodities were high. In other countries 
 gold maintained its exchange value, its purchasing power 
 over other commodities. In Australia there was a, rise in 
 prices corresponding to the fall in the cost of gold. If the 
 supply of gold under its lessened cost could have been kept 
 up long enough and in sufficient volume, prices, reckoned 
 in gold, all over the world would have risen, and the equi- 
 librium would have been restored hy a fall in the price 
 of gold. But, as it was, the volume of gold currencies 
 throughout the world was too large to be sensibly affected 
 
A CASE IN POINT— THE AUSTRALIA EPISODE. 305 
 
 in value by tlie reduced cost of it in Australia and Cali- 
 fornia ; and, further, in due course of time the increased 
 cost of procuring gold from the mines of both countries 
 had so far destroyed their special advantages in its produc- 
 tion that commerce has returned to its normal relations. 
 Both manufacturing and agricultural pursuits have been re- 
 sumed. In both countries the actual wealth is increasing, 
 and the decrease in the productiveness of gold-mining has 
 removed an actual barrier to their social and economic 
 progress. The special industry had drawn all labor and 
 capital to it ; but the wealth of the country had been only 
 such as could be effected by exchanges. They did not im- 
 port capital, but consumable goods. 
 
 If studied ia detail, the Austrahan episode furnishes a 
 study of many sides of the problem of international trade. 
 
 It shows in what manner the existence of a specially 
 advantageous industry operates as a barrier to the prosecu- 
 tion of the less advantageous ones, or rather, how, if open 
 to all, it raises wages in aU departments to an equahty 
 with those to be won in it. It explains what the free- 
 trader means when he says we "can not afford to com- 
 pete " with other nations where wages are less. He means 
 to say that we ought to stay in the advantageous pursuit 
 and not try to compete ia the others. He argues that pres- 
 ent current prices are the criterion upon which we ought 
 to conduct our exchanges. What he overlooks is his own 
 error in assuming that because we might advantageously 
 effect some exchanges — ^procure a limited amount of foreign 
 manufactured commodities in that way — we might with 
 equal advantage effect all our exchanges and obtain all the 
 supplies we required in like manner. This is the old fal- 
 lacy of division with which we have already dealt. 
 
 Let us now substitute /boc? in the United States for 
 gold iu Australia, and see how the analogies hold out : 
 
306 PROTECTION VS. FREE TRADE. 
 
 Gold is an article in universal demand, and an over- 
 production is a danger wMcli no pains need be taken to 
 prevent. No gold-miner need anticipate a glut in tie gold 
 market. At all events, prices throughout the world have 
 not risen at all in the proportion in which the cost of gold 
 in AustraUa and California has been reduced. 
 
 Wheat is a product annually renewed, and the history 
 of prices shows the wide and violent fluctuations of its 
 value in the world's market. Especially are the foreign 
 markets accessible to the Auierican surplus characterized 
 by great uncertainties in value and requirements. 
 
 Gold was of no value in Australia, except as it was 
 used for the purposes of foreign trade. The miners and 
 the people there could derive no benefit from it except so 
 far as they parted with it. If it could have been con- 
 sumed or used for purposes of further production in Aus- 
 tralia, can any one doubt that its wealth, as a colony, would 
 have been doubled in virtue of the double production it 
 could have provoked by expending it on new creations ? 
 
 Wheat in the United States has the. function of being 
 directly applied to the subsistence of laborers while enter- 
 ing upon operations directed to further production. The 
 closer the supply was held to the domestic demand, the less 
 would be the loss in its purchasing power, aud the greater 
 the gross annual product of the industry of the nation of 
 native-bom laborers, supplemented by immigration which 
 supplied aU deficiencies. 
 
 In Australia, the disadvantages which the producers of 
 commodities other than gold labored under were too great 
 and exceptional to enable them to enter into competition 
 with the gold-miners in articles for export. In proportion 
 as the cost of procuring gold rose, they were enabled to re- 
 sume the production of other merchandise for exports. 
 
 In the United States the difference between advantages 
 
A CASE IN POINT— THE AUSTRALIA EPISODE. 307 
 
 of raising wheat and manufacturing commodities was never 
 so wide and exceptional. The constantly increasing pro- 
 portion in which we are exporting manufactured goods 
 shows a constant tendency to the equahzing the facilities 
 of production between manufacture and agriculture. One 
 is tempted to wonder — ^if the lamentations of the free- 
 trader, that we do not export more manufactured goods, 
 should be hushed, and if we should export food, raw mate- 
 rials, and the products of our mills — how foreigners are to 
 pay us ; what are they to do for us ; what imports are to 
 pay for all these exports. The truth is, when we get to 
 supplying all our own wants, foreign trade wiU cease, as it 
 ought to. Nobody wants foreign trade for itself. All the 
 high-sounding talk about our sails whitening all the seas is 
 nonsense and buncombe. 
 
 The highest taxes any nation pays are the taxes levied 
 under the form of transportation, especially in the carriage 
 of merchandise which can be produced where it is con- 
 sumed. Commerce is the penalty of making things, or of 
 having things made, in the wrong place. 
 
 We are all familiar with the habit of free-traders, and 
 other loose thinkers, to measure the prosperity of a nation 
 by the amount of its foreign commerce. The true measure 
 is in its domestic exchanges. The total amount of British 
 exports, with its boasted mastery of the world's commerce, 
 was in 1880, $1,400,000,000. For the same year the peo- 
 ple of the United States made exchanges among themselves, 
 through the agencies of railroads alone, and exclusive of all 
 other instrumentalities of trade, such as ships, wagons, 
 boats, and animals, to the extent of over $12,000,000,000 : 
 or, in other words, each four millions of our fifty millions 
 exchanged commodities among themselves, each year, to 
 the extent of more than $1,000,000,000— nearly equal to 
 the entire export trade of Great Britain. 
 
308 PROTECTION VS. FREE TRADE. 
 
 Prof. Caimes has remarked of tlie pheiromena in Aus- 
 tralia : " Tlie foreign trade of Yictoria presents the singular 
 and almost unique spectacle of a steady decline in its 
 amount over a period marked by an extraordinarily rajpid 
 growth of population and general wealth. I have no re- 
 turns of the population of that colony for 1856, but it was 
 probably between 300,000 and 400,000 ; in 1861 it was 
 541,000, and in 18Y0 729,000. In other words, the popu- 
 lation must have nearly doubled itself in these sixteen 
 years ; the general prosperity of the country during the 
 same time being almost unexampled. But the noteworthy 
 cirGumstance is, that while the country was then prosper- 
 ing., its external trade was undergoing constami contrac- 
 tion, falling from a total of $77,44:5,000 in 1856, to 
 $62,350,000 in 1870. The fact, I may mention in passing, 
 shows how little the foreign t/rade of a country, as meas- 
 ured hy its exports and imports, furnishes a correct cri- 
 terion of its industrial progress or growth in real wealth. 
 . . . The result has been, that from being a large importer 
 of breadstuffs, butter, beer, boots and shoes, provisions, 
 spirits, etc., Yictoria has either discontinued altogether, or 
 greatly curtailed her importation of all these commodities, 
 which she now produces from her own internal resources. Is 
 this course of development for the advantage of Yictoria f 
 Plainly, I thinh, if we have regard of her general inter- 
 ests, social and political, as well as pecuniary, we must 
 answer in the affirmative." Then, as if remembering that 
 he was a professor of the science of orthodox English 
 political economy, he feels constrained to add : " Though, 
 as economists, we must also recognize that, looking at the 
 question from a purely material stand-point, this aflSrma- 
 tion can not be made good, since it certainly is a fact that 
 the diminishing returns of her gold-mines have deprived 
 her of that command of foreign markets which she for- 
 
A CASE IN POINT— THE AUSTRALIA EPISODE. 309 
 
 merly possessed ; while tlie resort to her own fields of pro- 
 duction in lieu of foreign markets, being as it is a dernier 
 reasort, can not but indicate a diminishing productiyeness 
 of her general industry." America never had the com- 
 mand of foreign markets with her wheat as Austraha had 
 with her gold, for many and obvious reasons. 
 
 The whole case of protection might be risked on this 
 Concession : " The general interests, social and political, as 
 well as pecuniary," of Australia have been advanced by a 
 resort to her own fields of production, after her people had 
 come to them over the failure of a specially advantageous 
 industry, the pursuit of which alone had retarded her prog- 
 ress and her wealth, even though it had given lier com- 
 mand of the foreign markets ; and that an industry which 
 yielded the precious metals themselves, for which there 
 was an unhmited demand in the markets of the world. 
 
 California presents precisely similar conditions of de- 
 velopment — so that it might almost be said that her spe- 
 cial industry had been a curse to her in retarding all other 
 industry. 
 
 We see now what the free-trader means by " advanta- 
 geous industry " and " cost of production." If our advantage 
 consists in the lower cost of production reckoned in labor 
 and sacrifice, the actual difiiculties of production, we can 
 get no benefit from it except as we part with the commod- 
 ity produced under these conditions. The farmer himself 
 must part with his surplus either at home or abroad, but 
 the nation as a whole is not under that necessity. It may 
 provide, by a protective tariff for example, for its consump- 
 tion at home. If it must be exported in order to evolve 
 its purchasing power, this purchasing power may be lost, 
 either by the competitions of international trade which 
 squeezes out all the value except what is conferred by the 
 contributions of our labor estimated on the Russian and In- 
 
310 PROTECTIOK VS. FREE TRADE. 
 
 dian basis, and eliminate all tlie value conferred, as a gra- 
 tuity, by nature : or it may be lost by the breaking down 
 and failure of tbe foreign market to take it off our hands, 
 in wMcli event the product itself perishes. 
 
 In the former case, we can only receive remuneration 
 for labor, which must issue eventually in European rates, 
 and so lose our only superiority in production ; in the lat- 
 ter case, we can not part at all with our product, and are 
 forced back to domestic markets and domestic manufactur- 
 ing, which we can have, only on the condition of restrict- , 
 ing the import of foreign goods. 
 
 There is no other escape from the dilemma. AU which 
 only shows that a mere bucolic America is not as rich as 
 we assume it to be. We must resort to our other fields of 
 production. We long ago reached our dernier ressort. 
 
CHAPTEE XIY. 
 
 COMPETITION m A FOEEIGN MAEKET COMPELS US TO EXPORT 
 OUE GRATUITIES. 
 
 The analysis wliicli we have been making under the 
 head of "cost of production" has brought us to a crucial 
 test. We are now face to face with another awkward ques- 
 tion. Its proper solution will negative the whole series of 
 propositions not proved, and assumptions not warranted, 
 which so abound in the writings of Profs. Perry and Sum- 
 ner, Mr. David A. "Wells, and the propogandists of the 
 Cobden Olub. 
 
 The people of the United States, by virtue of their soil, 
 climate, rivers, mines, and forests, have a superiority over 
 other nations in " cost of production " in a certain group of 
 industries. 
 
 We have seen that the result of competition is to elimi- 
 nate all the elements of value except the onerous contribu- 
 tions of man. The tendency of economic laws set into op- 
 eration by competition is to equalize values with the labor 
 and abstinence incorporated in commodities. International 
 commerce now takes the place of competition — sets it in 
 operation rather. The nature, capacity, and occupations of 
 an Englishman, a German, a Frenchman, and an American 
 are not so dissimilar that they might not compete on equal 
 terms, and, in the long run, with equal outcome. Their la- 
 bor, their skUl, and their endurance would be equal factors 
 in a given product. But to the labor, skiU, and endurance 
 
312 PROTECTION VS. FREE TRADE. 
 
 of the American are added tlie natural resources of a new 
 continent. Jiaoh nation, as a whole, has the use of its 
 land for nothing. In the case of the United States, this 
 possession gives them a vast and incalculable advantage in 
 our case, not in the selling but in the consuming of its prod- 
 ucts. How far will free foreign trade — international com- 
 merce — ^render that which is a gratuity to us, a common jgos- 
 session to other nations ? We are monopolists to the full 
 extent of the superior productive powers of the soil of our 
 great territory. The monopoly does not belong to the 
 land-owner as such — it does not run with the land into the 
 usufruct of the citizen alone, in whom, as an economic 
 and political expedient, we have vested private title. To 
 what extent will the operations of foreign commerce level 
 us down ? How far shall we be ingulfed if we enter the 
 vortex of free international exchanges ? 
 
 It seems to m,e that, if we are allowed to discuss this 
 question from the stand-point of American nationality, as 
 a question of the wealth and welfare of the citizens of this 
 nation, it is capable of a definite answer. But it is a topic 
 for a man who stands, open-eyed, in the daylight, gazing 
 on actual facts, and not for a dreamer, with his impalpable 
 vision of universal brotherhood, or the blind votary seeking 
 nation£|,l suicide in the cause of universal free trade. It 
 may be that, in the final status of nations and humanity, 
 we shall all ride upon some Mediterranean Sea, and 
 that we shall meet our brethren of other races and ch- 
 mates and civihzations upon some average level. In the 
 mean time, as a nation, we shall best pursue Adam Smith's 
 system of natural liberty by doing the best we can for our- 
 selves. 
 
 An evident economic proposition is this : that by the 
 direct, domestic production of the commodities that we 
 need, if not interdicted by " the natui-e of things," we re- 
 
EXPORTATION OF OUR GRATUITIES. 313 
 
 tain for the citizens of the nation, as a whole, all the gratui- 
 ties which nature has conferred upon us. 
 
 A clearly scientific proposition is this : that in the effort 
 to obtain them by free foreign exchanges we shall part 
 with these gratuities — shall surrender our position as pro- 
 prietors, as against the other nations of the world, of a 
 monopoly of cheap food and raw materials ; and that the 
 food and raw materials which we export will bear no ex- 
 change value over and above the actual labor, sacrifice, 
 effort, which we have expended in their production. 
 
 A further proposition, true alike in morals, justice, and 
 economics, is this : that a commodity which is cheap, by 
 reason, not of an effort embodying less relative skill or 
 labor in its production, but of less highly remunerated 
 labor, is not therefore a gratuity. To us, as a people, the 
 cost of our products is measured by the effort required to 
 overcome the obstacles nature presents, and not the money- 
 price. In the long run, no prosperity can be built up on 
 the unrequited toil of others. 
 
 To establish the first two propositions, I quote at length 
 some paragraphs from Frederic Bastiat's chapter on Com- 
 petition. I trust the reader will patiently go over them : 
 
 "The gift of God" (say in our fertile fields) "has be- 
 come common — and the reader will observe that I avail 
 myself here of a special fact to elucidate a phenom- 
 enon which is universal — this gift, I say, has become 
 common to all. This is not declamation, but the ex- 
 pression of a truth which is demonstrable. "Why has 
 this beautiful phenomenon been misunderstood ? Be- 
 cause community" (commonness) "is realized under the 
 form of value annihilated, and the mind with difficulty 
 lays hold of negations. But I ask, is it not true that 
 when, in order to obtain a certain quantity of sugar or 
 cotton, I give only one tenth of the labor which I should 
 
 15 
 
314 PROTECTION VS. FREE TRADE. 
 
 find it necessary to expend in producing the commodity 
 myself, and this because the Brazilian sun performs the 
 other nine tenths of the work — ^is it not true, I say, that 
 in that case I still exchange labor for labor, and really and 
 truly obta,in, over and above the Brazilian labor, and into 
 the bargain, the co-operation of the climate of the tropics ? 
 Can I not affirm with rigorous exactitude that I have be- 
 come, that all men have become, in the same way as the 
 Indians and Americans, that is to say, grai/uitously, partici- 
 pators in the liberality of nature, so far as the commodities 
 in question are concerned ? . . . 
 
 " England possesses productive coal-mines. That is no 
 doubt a great local advantage, more especially if we sup- 
 pose, as I shall do for the sake of argument, that the Conti- 
 nent possesses no coal-mines. Apart from the considera- 
 tion of exchange, the advantage which this gives to the 
 people of England is, the possession of fuel in greater 
 abundance than other nations — fuel obtained with less la- 
 bor, and at less expense of useful time. As soon as ex-, 
 change comes into operation — keeping out of view compe- 
 tition — the exclusive possession of these mines enables the 
 people of England to demand a considerable remuneration, 
 and to set a high price upon their labor. Not being in a 
 situation to perform this labor ourselves, or procure what 
 we want from another quarter, we have no alternative but 
 to submit. English labor devoted to this description of 
 work will be well remunerated ; in other words, coal will 
 l>e dear " (that is, to a Frenchman), " and the louniy of 
 nature may he considered as conferred on the people of one 
 nation, and not on mankind at large. 
 
 " But this state of things can not last, for a great natural 
 and social law is opposed to it — competition. For the very 
 reason that this species of labor is largely remunerated in 
 England, it will be in great demand there, for men. are 
 
EXPORTATION OF OUR GEATUITIES. 315 
 
 always in quest of liigh remuneration. The number of 
 miners will increase, both in consequence of the sons of 
 miners devoting themselves to their fathers' trade, and in 
 consequence of men transferring their industry to mining 
 from other departments. They will offer to work for a 
 smaller recompense, and their remuneration will go on 
 diminishing until it reach the normal rate, or the rate 
 generally given in the country for analogous worTc. This 
 means that the price of English coal will fall in France / 
 that a given amount of French labor will procure a 
 greater and greater quantity of English coal, or, rather, 
 of English labor incorporated and worked up in coal ; and, 
 finally (and this is what I pray you to remark), that the 
 gift which nature would appear to have hestowed upon 
 England has in reality heen conferred on the whole human 
 race. The coal of Newcastle is brought within the reach 
 of all men gratuitously, as far as the mere material is con- 
 cerned. This is neither a paradox nor an exaggeration — 
 it is brought within their reach Hke the water of the brook, 
 on the single condition of going to fetch it, or remunerat- 
 ing those who undertake that labor for us. When we pur- 
 chase coal, it is not the coal that we pay for, but the labor 
 necessary to extract it and transport it. All that we do is 
 to give a corresponding amount of labor which we have 
 worked up or incorporated in wine or in silk. So true is 
 it, that the liberality of nature has been extended to France, 
 that the labor which we refund is not greater than that 
 which it would have been necessary to undergo had the 
 deposit of coal been in France. Competition has established 
 equality between the two nations as far as coal is concerned, 
 except as regards the inevitable and inconsiderable differ- 
 ence resulting from distance and carriage. 
 
 " From what has been said, we may deduce the solution 
 of one of the problems which have been most keenly con- 
 
316 PROTECTION VS. FKEE TRADE. 
 
 troverted, namely, that of free trade as between nation and 
 nation. If it be true, as seems to me incontestable, that 
 competition leads the various countries of the globe to ex- 
 change with one another nothing else than labor, exertion 
 more and more equalized, and to transfer at the same time 
 reciprocally, and into the bargain, the natural advantages 
 that each possesses, how blind and absurd must those men 
 be who exclude f oreigh products by legislative measures, 
 under the pretext that they are cheap, and have little value 
 in proportion to their aggregate utility ; that is to say, pre- 
 cisely because they include a large proportion of gratuitous 
 utility ! 
 
 " In fact, were it possible for an Individual, a family, 
 a class, a nation, possessed of certain natural advantages, 
 of an important discovery in manufactures, or of the in- 
 struments of production in the shape of accumulated capi- 
 tal, to be set permanently free from the law of competition, 
 it is evident that this individual, this family, this nation, 
 would have forever the monopoly of an exceptionally high 
 remuneration, at the expense of mankind at large. 
 
 " Seeing that the advantages which appear at first to be 
 the property of certain individuals, become, by an admira- 
 ble law of divine beneficence, the common patrimony of 
 all ; seeing that the natural advantages of situation, of fer- 
 tility, of temperature, of mineral riches, and even of manu- 
 facturing aptitude, slip in a short time from the hands of 
 producers, by reason of their competition with each other, 
 and turn exclusively to the profit of consumers, it follows 
 that there is no country which is not interested in the ad- 
 vancement and prosperity of all other countries. Every 
 step of progress made in the East is wealth in prospective 
 for the West. Fuel discovered in the South warms the 
 men of the North. Great Britain makes progress in her 
 spinning-mills ; but her capitalists do not alone reap the 
 
EXPORTATION OF OUR GRATUITIES. 3IY 
 
 profit, for the interest of money does not rise • nor do her 
 operatives, for the wages of labor remain the same. In the 
 long run, it is tlie Russian, the Frenchman, the Spaniard ; 
 in a word, it is the human race, who obtain equal satisfac- 
 tions at a less expense of labor, or, what comes to the same 
 tliiug, superior satisfactions with equal labor." 
 
 This exposition rests upon the undeniable economic re- 
 sults of competition. Bastiat's logic, in this paragraph, is 
 unimpeachable — his rhetoric is sound and the consequences 
 he traces are inexorable. The American farmers are asked 
 to work upon a competition among themselves so intense 
 as to compel them to export all their gratuities. 
 
 I have said that a commodity which was cheap solely 
 by reason of ill-requited labor put into it was not a gratu- 
 ity. We have now left the region of natural agents or 
 tools, and have reached the human being. 
 
 It is easy enough to justify the attempt by one nation 
 to appropriate the natural advantage of situation, of fertil- 
 ity, of temperature, of mineral riches, and of manufactur- 
 ing aptitude in another. These may be made to shp out 
 of the hands of their possessors by their competition with 
 each other. The gains thus achieved are real and advan- 
 tageous. It is giving something for something. The value 
 of the trade depends on the relative situation of the parties 
 to it. But one nation could not long successfully grow 
 rich at the cost of the prosperity of another— no more than 
 an individual. A country in which labor was oppressed 
 and inadequately rewarded, could not justly be said to be 
 in a state of advancement and prosperity. Labor in such a 
 country is in a state of quasi-bankruptcy. It possesses no 
 essential purchasing power. Unless it is in possession of 
 one of the commercial advantages just referred to, it can 
 have nothing to offer to us which possesses any gratuitous 
 element — at least nothing upon which a great people, who 
 
318 PROTECTION VS. FREE TRADE. 
 
 can give that same labor employment as part of themselves, 
 could afford to rely upon as a permanent source of supply. 
 " Cheapness " is a fetich which will cheat its worshipers. 
 It has no more efficacy than the cucumber which the 
 Congo African carries about with him as his god. It is 
 idle to offer a man an article at a low price if he has noth- 
 ing to buy it with. To a purchaser with the means of 
 payment in his hands, price is of little account. A con- 
 sumer in this attitude is strong. The producer can not 
 continue, as such, to deal with a consumer, on terms of 
 bankruptcy, whether he offers commodities or labor for 
 sale. 
 
 I read in Prof. Sumner's tariff commission address 
 these words : " If there is anything cheap anywhere, the 
 protectionists spring into activity to keep the American 
 people from getting it. If there is an abundance of food, 
 clothing, furniture, and other supplies which is offered to 
 the American people on easy terms, the protectionists caU 
 it an inundation and run to set a barrier against it. A few 
 weeks ago I saw a hundred women waiting for hours on 
 the sidewalk for the opening of a store at which some fire- 
 damaged goods were to be sold cheap. A protectionist 
 must hold that these women were insane, or that they were 
 selfishly ruining the coxmtry." 
 
 A protectionist would undoubtedly say that any politi- 
 cal economist who recommended the people of any city or 
 nation to depend, habitually and on system, for the supply 
 of the commodities they need, "on some fire-damaged 
 goods which were to be sold cheap," was in an acute stage 
 of insanity, and that such a case could never become 
 chronic, for the patient must either get well or die in- 
 stcmter. 
 
 To await the prosperity which may come from this 
 source is to await the bargains which come from bank- 
 
EXPORTATION OF OUR GRATUITIES. 319 
 
 rnptcy and commercial disaster. The American worlanen 
 stand here idle to wring gratuities from laborers, pauper- 
 ized, brutalized, bankrupt in industrial, social, and domestic 
 resources! A man or a nation which did either — wait on 
 bankruptcy or fire-damaged goods — with productive forces 
 in its own hands, would reap the punishment inflicted by- 
 outraged nature, by witnessing the disappearance of all 
 producers as .well as of aU products in market. There can 
 be no ordination of justice in heaven or on earth which can 
 make such a scheme operate to confer a gratuity on us. It 
 is a scheme of commerce based on bankruptcy, financially, 
 industrially, and morally, whose fruits, if such it had, we 
 could not appropriate. Moral law and economic law alike 
 remand us to our own fields of labor, under our own natural 
 conditions of sacrifice and abstinence. The God of nations 
 has put it in the power of the people of the United States 
 to redeem the promises we have held out to all the world, 
 to come here and participate in the labor and remuneration 
 which America offers. We can ameliorate the laborer's life 
 if he lives here — our resources will not hold out if we un- 
 dertake to distribute them, through the machinery of foreign 
 commerce, to all the non-resident population of the earth. 
 
 What confers value is the removal of obstacles. The 
 labor of removing the obstacle is what constitutes cost. 
 The expense to the people of the United States, as a whole, 
 is the food eaten and clothing worn out in the process of 
 production. The better clothes and more food put into 
 the laborer's consumption is not to be regarded as the more 
 fuel put into a worse machine or a machine working under 
 disadvantages. It is not cutting with a duller axe. It is 
 using a higher-priced human instrument, capable of the 
 sensation of happiness and a sharer in the actual entity 
 which we call " the general weKare." ' 
 
 ' " We are thus led to notice an ambiguity that is latent in our ordinary 
 
320 PROTECTION VS. FKEE TRADE. 
 
 This is attained distinctly, as an end, by having the 
 laborer here, and is attained directly by employing him 
 here on work which otherwise would not be done here. 
 The sum of the happiness of the human family is increased, 
 but the increase is mainly enjoyed by the American laborer. 
 "We can not cheat Providence by the trick of employing 
 the starving laborer abroad — appropriating his labor, and 
 then sit down, do nothing ourselves, and call it a gra- 
 tuity. The gratuity belongs to those who are on the 
 ground, in possession of the natural advantages which 
 Providence has conferred on us, on condition of their use 
 
 vague estimates of the productive efficiency of human beings ; it is not quite 
 clear whether we are to measure it by the total value of the commodities 
 produced, or by the excess of this value over the value of what is necessarily 
 consumed. The latter measurement is suggested by the analogy of the in- 
 struments, especially the living instruments employed by the laborers, since 
 in measuring the productiveness of useful animals we should always consider 
 not their gross produce, but their net produce after subtracting the value of 
 the food, etc., consumed by them. The analogy is too obvious and irresistible 
 to be ignored ; and we must admit this measurement of the prod.uctive effi- 
 ciency of laborers as valid for some purposes : for instance, any employer 
 who undertook to feed his laborers would rightly use this measurement in 
 reckonings of his private business. But, for the reason given incidentally 
 in the preceding chapter, it is not, I conceive, the measurement normally 
 applicable in our present consideration of the matter from tlie point of view 
 of the community ; so far, that is, as the additional consumption which 
 causes the additional efficiency is held to be desirable, in itself, or in its use 
 of bodily or mental vigor, as an amelioration of the laborer's life, and, there- 
 fore, an element of tlie ultimate end to which the whole process of production 
 is a means." — H. Sidowicb:, " Principles of Political Economy," p. 144. 
 
 Says M. Wolowski : " The abstract deductions of pure science do not 
 leave us without disquietude, since they treat man much more like a material 
 than like a moral force. Under the vigorous procedure of speculation, man 
 becomes a constant quantity for all times and all countries, whereas he is in 
 reality a variable quantity. Man is something different from the sum of the 
 services he may be made to render, and from the sum of enjoyments which 
 may be procured for him. We must not run the risk of lowering him to the 
 level of a living tool ; and from the moment that we are required to take his 
 moral destiny into account, what becomes of abstract calculation ? " 
 
EXPORTATION OF OUR GRATUITIES. 32I 
 
 in productive toil, and does not consist in the power to 
 extort exchange value from unrequited toil and sorrow. 
 If we are to divide with other people, it ought to be, as it 
 must be, on condition of their coming here and casting in 
 their contribution to the common glory and happiness of 
 the citizens of the nation, by helping to swell the annual 
 product, the national income — for the economist and states- 
 man measure success by that income. 
 
 There need be no doubt that, in virtue of the operation 
 of competition, as put by Bastiat, if we enter into it by 
 way of the world's commerce, we could be made to ex- 
 change the products of our labor, and throw the gratuities 
 which nature has conferred on us " into the bargain." 
 
 In the first place, free trade recommends that we all 
 enter into land industries. Our entire population is then 
 in competition, one with another, in the production of 
 exportables. When we go to our markets we find we en- 
 counter the strong competition of all the world which is 
 self-feeding, excepting only England and small tracts of 
 Western Europe. We have drained Europe of its artisans 
 and located them upon our lands, with the twofold result, 
 first, of lessening the competition abroad of workmen in 
 the manufacturing industries there, and diminishing the 
 supply in the market of the goods which we buy; and 
 second, heightening the competition of laborers in agricult- 
 ure here, and reducing the demand for its products which 
 we must sell. This may be a beneficent work. It may 
 help " the constant approximation of all men toward a level 
 which is always rising," but we must descend to reach it. 
 The wealth of nations may be increased, but it is at our 
 expense. 
 
 Accordingly, with strict scientific precision. Prof. 
 Caimes says that while the steam-engine, the spinning- 
 jenny, and the mule cheapen manufactures, " the superior 
 
322 PROTECTION VS. FREE TRADE. 
 
 agricultural resources of foreign countries, made available 
 througli free trade, keep down the price of our agricultural 
 products"; and Prof. Bonamy Price, speaking of our 
 prairie farms, observes, " I call these emphatically Enghsh 
 fields, because political economy knows nothing about po- 
 litical divisions." Free trade enables an Englishman to 
 say that. Americans wish to know how it affects the 
 " political division " we call the United States. He adds : 
 " Political economy asks no questions about the origin of 
 the bread which it finds on English tables. The Australian 
 and American com are as much English corn as that grown 
 in Lincolnshire or Sussex. Of these superlatively rich lands, 
 many pay no rent, and the reason presents itself at once. 
 The cost of carriage eats up that part of thejproduce which 
 could generate rent." The American farmer may well ask 
 some questions about this, and , inquire whether the bread 
 on English tables originates solely in his labor and toil, and 
 whether he has exported his superlatively rich lands with 
 it as a gratuity into the bargain. Herein, also, distinctly 
 appears tha truth of Mr. Carey's maxim that " whoever is 
 compelled to seek a market must pay the cost of getting to 
 that market." Does anybody suppose that Englishmen 
 preach free trade for the purpose of enhancing the price 
 of American food — England, whose population has outrun 
 its native food capacity ? If American food is to be cheap- 
 ened, let us feed it to American workmen. 
 
 The free-trader professedly puts the American farmer 
 in competition with the farmers of Europe, Asia, and Africa, 
 and confidently counts upon our underselling them in a 
 very limited market. Luckily for him and his case, the 
 cost, or rather impossibility, of transportation from some of 
 the rich and undeveloped food-centers of those countries 
 has disguised his weakness. The Slavs of Russia and the 
 Byots of India now loom up with threatening import. 
 
EXPORTATION OF OUR GRATUITIES. 323 
 
 " Pauper labor " seems about to try its hand in competi- 
 tion with the American agriculturist. Free trade must, as 
 it is intended to, tend to put an equality of price on all the 
 labor employed in the raising of portable food over the 
 entire portion of the earth which lies iu the drea of cheap 
 and close commercial intercourse. It may turn out that the 
 iU-timed sneer of the representative of the "Iowa State Free- 
 Trade League," who addressed the tariff commission, that 
 "the American farmer used more wheat in seeding his 
 lands than all the protected iudustries furnished consump- 
 tion for," may result in a different form of irony. 
 
 Any merchant's clerk who had never ventured across 
 the threshold of a free-trade professor's lecture-room could 
 teU where this kind of trading must end. He could in- 
 stinctively point out two considerations which would for- 
 bid the extension of a series of such exchanges. 
 
CHAPTEE XV. 
 
 GENEEAL THEOET OF "WAGES — HIGH KATE OF WAGES IN THE 
 msriTED STATES. 
 
 As yet, political economy has failed to furnish any 
 answer to the question, why the remuneration of industry, 
 as a whole, is such as we find it to be in the various coud- 
 tries of the earth; why the "rate of wages" or "value 
 of labor" and the "rate of profit" or "value of absti- 
 nence " are such as they are in different nations. 
 
 If the labor and capital which enter into the produc- 
 tion of a given commodity are in effective competition, 
 about all we can answer is, that the wages of the laborer 
 will be determined by the competition of the laborers con- 
 tending for employment in it, and the profit on capital by 
 the competition of capital seeking that industry. That is, 
 we can thus get partially at the relative remuneration of 
 the laborers among themselves and of the capitalists among 
 themselves. We know of no principle on which the share 
 of labor, as a whole, and of capital, as a whole, can be de- 
 termined. It does not yet appear that "wages are the 
 leaviags of profits." ^ 
 
 ' A tentative formula as to the result of the competition between capital 
 and labor is the one suggested by Eicardo, Prof. Senior, and others, and may 
 be thus stated : " In proportion to the increase of capital the absolute share of 
 the total product falling to the capitalist is augmented, and his relative share 
 is diminished ; while, on the contrary, the laborer's share is increased both 
 absolutely and relatively." That is, in other words, the rate of interest is de- 
 
GENEKAL THEORY OF WAGES. 325 
 
 There is no single formula which can settle the ex- 
 change relations of commodities, and, at the same time, the 
 exchange relations of labor and the exchange relation of 
 abstinence or profits. They are incommensurable with 
 each other. " Some such aim," says Prof. Cairnes, " seems 
 to have guided the speculations of Bastiat, whose work on 
 the "Harmonies of Pohtical Economy" is, in effect, an 
 essay toward the determination of the required formula; 
 but the result of Bastiat's attempt is not encouraging to 
 those who would essay the same path. He produces, in- 
 deed, generalizations which seem to satisfy the needed con- 
 ditions, but, closely examined, they either collapse into iden- 
 tical propositions, or ai-e found to contain some flagrant 
 petitio principii. 
 
 The economist treats the dealer while offering his com- 
 modity in terms of value, as expressed in price, and the 
 laborer, while offering his services in terms of value, as 
 expressed in wages, as if the commodity and the laborer 
 were equally created in view of an industrial " demand," 
 and they were simply the " supply " to answer it. It is 
 assumed that the forces — labor and capital — are operative 
 under the same conditions of impersonality, and that each 
 only exists for the sake of exchange. "And yet," says 
 Prof. Francis A. Walker, "there is complaint that states- 
 men and the mass of the people entertain such slight re- 
 gard for political economy, whose professors, in the inter- 
 est of the purity and simpHcity of their science, discard 
 from the premises of their reasoning all the ' sympathies, 
 apathies, and antipathies' of mankind, and insist upon 
 treating a Manchester spinner, with a wife and six children 
 — ^ignorant, fearful, and poor, in debt to his landlord and 
 grocer — as possessing the same mobility, economically, and 
 
 creasing, the rate of wages is increasing. But the formula seems to leave out 
 of consideration the increasing number of laborers who compete. 
 
326 PROTECTION VS. FREE TRADE. 
 
 under the same subjection to the impulses of pecuniary 
 interest, as a bale of Manchester cottons on the wharf, free 
 to go to India or to Iceland as the difference of a penny in 
 the price may determine." 
 
 Adam Smith's contribution to the discussion was the 
 terms "supply and demand." This is, in truth, nothing 
 but a statement of the " conditions " of the problem, and 
 furnishes no law for its solution. Mr. MiU is supposed to 
 have demonstrated the inadequacy of that formula. His 
 own doctrine has been successfully challenged by Mr. 
 Thornton and Prof. Cairnes, who agree that the doctrine of 
 the equality of supply and demand, as the condition of 
 market prices, becomes a mere identical proposition. 
 
 This is manifestly a method of generahzuig names in- 
 stead of things. " Nothing is easier," is the criticism of 
 Prof. Cairnes, " than to say that the value of labor, like the 
 value of other things, depends upon supply and demand. 
 We may find the formula in any newspaper we take up, 
 but what light does that throw on the causes which govern 
 the values either of labor or commodities ? Simply none 
 at all, or next to none at all. What we want to know is, 
 not whether an increase of supply will cheapen a commodi- 
 ty or will cheapen labor, and an increase of demand raise 
 the price of each. Every costermonger will tell you this, 
 but what is it that governs supply and demand in each case ? 
 Now, we can not take a step toward dealing with this ques- 
 tion without being brought face to face with the fact that 
 the motives which influence human beings in the production 
 and supply of commodities are not those which influence 
 them in the production and supply of labor; in other 
 words, that the conditions operative in the two cases are 
 distinct.^ 
 
 ' The futility of treating laborers and commodities aa equally objects of 
 sale in the market inheres in the nature of things, and I adopt Prof. Caimes's 
 
GENERAL THEORY OF WAGES. 337 
 
 Tlie discussion is an illustration of the vice of attrib- 
 uting reality to the economists' abstraction — the abortive- 
 ness of contemplating a society of human beings in its- 
 simple aspect as an arena for " buying and selhng." And . 
 so political economy fails to reach any solution of the 
 "burning question" of wages. We turn, then, to the 
 
 language in showing why it must be so. " The production of ' commodi- 
 ties ' is an onerous act, which will only be undertaken in the prospect of 
 reward, whence it follows that the supply of commodities will only be secured 
 on the condition of this prospect presenting itself. On the other hand, the 
 production of labor which, in other words, is the production of human be- 
 ings, is not an onerous act, but a consequence of complying with one of the 
 strongest instincts of humanity — an instinct which, so far from needing the 
 stimulus of reward, ca^ only be kept in due control by powerful restraints. 
 The cost in the production of a commodity is undergone deliberately, and 
 with a distinct view to industrial ends. In the preparation of human beings 
 for a career in life, I will not say that industrial ends have no place at all in 
 the calculation, but I will assert this, that except in the case of professional 
 or technical education — a mere bagatelle in the general expense of rearing a 
 laborer — industrial considerations are entirely subordinate to considerations 
 of a wider and altogether different character. ... A man, whatever be his 
 rank of life, brings up his children — I speak of the common case — as far as 
 he is able, according to the ideas prevailing in that rank of life. He does so 
 ■mainly because he feels certain obligations of morality and affection toward 
 them, and because it would be shameful to do otherwise. His children once 
 arrived at maturity, no doubt his views and theirs will take a direction more 
 distinctly governed by industrial consideration, or at least consideration bear- 
 ing on success in life ; but at this point the supply of labor has been already 
 determined. It is now in existence, and the industrial motive, now that it 
 comes into play, operates not upon the aggregate supply of labor, but merely 
 upon the mode of its distribution. The adaptation of the supply of commodi- 
 ties to the demand is determined by strictly commercial motives ; the adap- 
 tation of the supply of labor to the demand is not so determined. Human 
 beings, at least out of slave countries, are not produced to meet the require- 
 ments of the market. Now, this being so — the conditions determining the 
 phenomena in the two cases being essentially different — what can come of 
 forcing the solution, by dint of verbal refinements, into a single formula ? 
 Simply this : either our theory will be flagrantly untrue, or it will not go more 
 than word-deep, and our show of explanation will merely seem to obscure the 
 essential facts of the problem." 
 
328 PROTECTION VS. FKEE TRADE. 
 
 mechanism of production in America for tlie reasons of 
 the high rate of wages and the high rate of profits which 
 have rewarded our exertions here in the United States. 
 
 Here we shall find a consensus, among free-trade writ- 
 ers, that the productiveness of our labor, and consequently 
 the high rate of wages here, come from agricxilture. And 
 on this is based the logical sequence that we ought all to 
 take to that pursuit, at least until it breaks down. In fact, 
 it has broken down already. 
 
 " The endless opportunities of agriculture in this land 
 are the steady force that lifts our wages and keeps them to 
 their actual height. Cheap and fertile farms, to be had 
 almost for the asking, are open to all laborers and all immi- 
 grants ; . . . and this, on the one hand, reduces the supply 
 of laborers in the mills and factories, and on the other 
 keeps np the rates of wages there to a point marked by the 
 average success of labor in agriculture." (Prof. Perry, 
 "Political Economy," p. 498.) 
 
 " No one will be willing to turn away from the indus- 
 tries for which the country offers the best advantages, to 
 take np those in which other countries have the best ad- 
 vantage, nnless the difference can be made up to him in 
 some way. Hence, manufacturing industry here has al- 
 ways had to contend with the profits possible in agricult- 
 ural pursuits. Wages, so far as any wages-class- has ever 
 yet been developed here, must be high enough to give the 
 same scale of comfort as can be won in using land. The 
 high wages and general high average of comfort are, there- 
 fore, plainly the same thing, and both proceed together out 
 of the &(iiM.^\. physical circumstances of the people." (Prof. 
 Sumner, " Princeton Eeview " essay.) 
 
 " No wonder the protectionists are enraged at the econ- 
 omists who are still stupidly teaching that we can produce 
 nothing except by applying labor and capital to land. . . . 
 
GENERAL THEORY OF WAGES. 329 
 
 "In a new country in wMcli there is an immense 
 amount of unoccupied land, and in wMch the amount of 
 capital required for tilling the soil is small, any man who 
 has a pair of stout hands, although he has no skill and very 
 little capital, may become a land-owner and agriculturist. 
 . . . Every man of the unskilled labor class, therefore, has 
 an alternative offered to him. . . . He owns a thing (his 
 labor) for which there is a high demand in the market. 
 The comfort he could win on the land fixes a minimum 
 below which wages can not fall. If they do temporarily 
 fall below that minimum, the laborers take to the land, as 
 they did in the hard times a few yeai's ago. . . . 
 
 " In the second place, all the protected industries of 
 this country are now parasites on the naturally strong in- 
 dustries. Agriculture now supports itself, and all the rest 
 and their losses ; therefore, even if it were true that all the 
 population would, under free trade, take to agriculture, it 
 is mathematically certain that agriculture could support 
 them all better than under the present arrangements." 
 (Prof. Sumner, Tariff Commission address.) 
 
 Prof. Walker, in a very neat piece of analytic work, 
 under the head of " The Competition of the Farm with 
 the Shop " (" Political Economy," edition 1885, p. 396), 
 has shown how, by virtue of the protective statute, labor- 
 ers in the protected industries, as well as carpenters, 
 blacksmiths, and masons, domestic servants, physicians, 
 lawyers, and schoolmasters, may be let into "a partici- 
 pation in the abundance enjoyed by the agricultural 
 population," as he chooses to express it. And he concludes 
 thus: 
 
 " But while the law may thus create high rates of wages 
 in factory industries, it does not and can not create the 
 wealth out of which that excess of manufacturing wages 
 over those of older countries is paid. That wealth is ere- 
 
330 PROTECTION VS. FREE TRADE. 
 
 ated iy the labor and capital employed in the cultivation 
 of the soil." ^ 
 
 ' " The Competition of the Farm with the Shop. — It has been the com- 
 petition of the farm with the shop which has from the first most effectually 
 retarded the growth of manufactures in the United States. A population which 
 is privileged to lire upon a virgin soil, cultivating only the choicest fields 
 and cropping these through a succession of years without returning anything 
 to the land, can live in plenty, if not fare sumptuously, every day. . . . Now 
 the mode of living on the part of the agricultural population has necessarily 
 set a minimum standard of wages for mechanical labor. With an abundance 
 of cheap land, with a population facile to the last degree in making change 
 of avocation and residence, very few native-bom Americans, and compara- 
 tively few immigrants, are likely to be drawn into factories and shops on 
 terms which imply a meaner subsistence than that secured in the cultivation 
 of the soil. ' 
 
 " The Hand-Trades. — There are certain classes of mechanical pursuits, 
 however, which by their nature secure to those who follow them a minimum 
 remuneration fully up to the standard of the agricultural wages of the region. 
 Such, for instance, are the trades of the carpenter, blacksmith, and mason, 
 in which the work is of a kind which can only be done upon the spot. The 
 house can not be built abroad and imported for the farmer's use ; the wagon 
 must be mended near the place where it broke down ; the horse must be 
 shod, the tools sharpened, by the artisans of the neighborhood. If, then, the 
 farmer will have such services performed, he must admit those who perform 
 them to share of his own abundance. . . . 
 
 "Pebsonal and Professional Services. — But, again, there are certain 
 classes of services of a personal or professional nature which have also se- 
 cured for those rendering them a participation in the abundance enjoyed by 
 the tillers of the soil in the same region. The remuneration received by the 
 members of these classes, whether called the wages of domestic servants, or 
 the fees of physicians and lawyers, or the salaries of schoolmasters and 
 clergymen, or the profits of retail trade, has been out of all relation to the 
 remuneration of similar services in other countries, and has amounted to 
 just what I have termed it — a participation in the abundance enjoyed hy tlie 
 agrieuitural population. Since these services could only he performed upon 
 the spot, the agriculturists have been obliged, if they would have the serv- 
 ices rendered, to pay for them out of the large surplus of their own prod- 
 uctD. . . . 
 
 " The Factory IsdustSies. — But, now, we note that there are still other 
 important classes of service to be rendered, respecting which the rules 
 change. The remuneration of the persons rendering these services no longer 
 
GENERAL THEORY OF WAGES. 33I 
 
 It is eyideut that the artisans who make all that portion 
 of the " snndry articles " which we are " compelled " to 
 
 has reference to the abundance of agricultural production in the several sec- 
 tions of the United States, is no longer irrespective of the remuneration of 
 such similar classes elsewhere. These persona are not, necessarily, admitted 
 to a participation in the fruits of American agriculture. 
 
 " The services referred to are such as can be performed without respect to 
 the location of the consumer of the product. They are nearly identical with 
 what we call, in the technical sense of the term, manufactures. 
 
 " Whenever an American farmer wants a pane of glass set, or a pair of 
 boots mended, or a horse shod, he must pay some one of his neighbors 
 enough for doing the job to keep him in his trade, and to keep him out of 
 agriculture, in the face of the great advantages of tilling the soil in New 
 York, or Ohio, or Dakota, or wherever else the farmer in question may live ; 
 but how much he shall pay the man who makes the pane of glass, or the 
 pair of boots, or the set of horseshoes, will depend upon the advantages of 
 tilling the soil, not where he himself lives, but where the maker of horseshoes, 
 of boots, or of glass, may live. 
 
 " If he will have the work done, he must pay some one somewhere enough 
 to keep him iu his trade and out of agriculture, but not necessarily out of 
 New York agriculture, or Ohio agriculture, or Dakota agriculture ; but, per- 
 haps, out of English agriculture, or French agriculture, or Norwegian agri- 
 culture, such as that may be, with the advantages no less and no more there 
 enjoyed by the cultivators of the soil under the requirement of constant fer- 
 tilization, deep plowing, and thorough drainage, and subject to that stringent 
 necessity which economists express by the term, 'the law of diminishing 
 returns.' . . . 
 
 " Now, to offset and overcome the inducements to engage in agriculture, 
 even in merry England, is a different thing from keeping a man In his trade 
 and out of agriculture in the United States. . . . 
 
 " The American agriculturist, having large quantities of grain and meat, of 
 cotton and tobacco, left on his hands, after providing ample subsistence for 
 his family, and even after hiring the carpenter, mason, and blacksmith, the 
 schoolmaster, lawyer, and doctor, for as much time as he requires their re- 
 spective services, and still further, after putting a good deal into farm-imple- 
 ments and increase of stock, is desirous of obtaining with the remainder 
 sundry arliclcs more or less necessary to health, comfort, and decency. To 
 him, consulting his personal interests, which is all the average man can be 
 expected to do in a bargain, it makes no difference whether the articles he 
 requires are made on one side of the Atlantic or on the other ; but it makes 
 a great difference to him what he is obliged to pay for them ; how much of 
 
332 PKOTECTION VS. FREE TRADE. 
 
 have made on this side of the Atlantic are entitled to par- 
 ticipate in the abundance enjoyed by the agricultural popu- 
 lation, hy the ordinance of nature, and not iy the ordinance 
 of the statute. 
 
 his surplus grain and meat, tobacco and cotton, must go to secure a certain 
 definite satisfaction of his urgent and oft-recurring wants. If he must needs 
 pay some one to stay out of American agriculture and do this work, his sur- 
 plus will not go so far as if he were allowed to pay some one to stay out of 
 English agriculture to do it. ' 
 
 " What the State can do. — But here the state enters and declares that 
 it is socially or politically necessary that these articles, these nails, these 
 horseshoes, this cotton or woolen cloth, or what not, sluM be made on this 
 side of the Atlantic, and not on the other. That necessity the agriculturist, as 
 consumer, can not be expected to feel : 7ie does not care where the things were 
 made ; he only wants them to use. He does not care who makes them ; he 
 does not even care whether they are made at all ; they would answer his pur- 
 pose just as well were they the gratuitous gifts of nature, spontaneous fruits 
 of the soil, or the sea, or the sky. Whatever his own economical theories 
 may be, he will, as purchaser, every time select the cheapest article which 
 will precisely answer his need. He will not, of his own motion, pay more 
 for an article heeause it is made on his side of tlio Atlantic than he could get 
 an equally good article for, bearing the brand of Sheffield, or Birmingham) 
 or Manchester. But if the state says he must, he must ; and consequently the 
 American maker of this article is, \>y force of law, admitted to a participa- 
 tion in the abundance enjoyed by the American agricultural class. The tiller 
 of the soil is now compelled, by the ordinance of the state, to share his bread 
 and meat with the maker of nails or of horseshoes, of cotton or of woolen 
 cloth, just as he was before compelled, by the ordinance of nature, to shave 
 his broad and meat with the blacksmith, carpenter, and mason, the school- 
 master, lawyer, and doctor. 
 
 " It is perfectly true, therefore, ias the protectionist asserts, that a tariff of 
 customs duties upon foreign goods imported into new countries tends to create 
 and maintain high rates of wages in thefactwy industries. But ioT p-otcctive 
 duties, those articles which, in their nature, can be readily and cheaply trans- 
 ported, will be produced predominantly in countries where the minimum stand- 
 ard of mechanical wages is set by agricultural conditions far less favorable 
 than those which obtain in the United States, in Canada, or Australia. 
 
 " But while the law thus can and does create high rates of wages in factory 
 industries, it does not and it can not create the wealth out of which that ex- 
 cess of manufacturing wages, over those of older countries, is paid. Tliat 
 wealth is created by t/ie labor and capital employed in the cultivation of the soil." 
 
GENERAL THEORY OF WAGES. 333 
 
 "We have seen that this will include the producers of 
 about nine tenths of the " sundry articles " made in what 
 is called the " protected industries." 
 
 The extracts selected contain the argument in its full 
 force, and the free-trade economist is entitled to the just 
 force of them. They, nevertheless, do not contain the 
 truth of the matter. They do not give a true analysis of 
 the mechanism of the society, as a whole. They proceed 
 on fallacious assumptions which it is possible to trace up 
 and expose. 
 
 First, then, it is not true that " we can produce noth- 
 ing except by applying labor and capital to land." 
 
 This was the doctrine of the Physiocrates of France, and 
 is now exploded.^ 
 
 ' Their doctrine was this : All national wealth is derived from the soil ; 
 agrioultui'e is the only productive occupation ; the production of raw material 
 is the only calling in which the value of the product exceeds the cost of pro- 
 duction. The labor of the farmer produces not only enough to support him 
 while engaged in the labor, but a surplus over and above this, which may be 
 called the net product. This net product generally falls to the landlord un- 
 der the form of rent, and is the fund from which all expenditures of a public 
 nature must be defrayed. The landlords, since they live without labor, are 
 called the classe disponible, and they may devote themselves to the service of 
 the public. Manufacturers and artisans are unpi-odnctive. They add value, it 
 is true, to the raw material which they work over, but only as much as is 
 equivalent to the cost of their support while engaged in their wort. If they 
 are able to save anything from their income, they do it either by limiting 
 their consumption within too narrow bounds, or by some favoritism of gov- 
 ernment, or of chance, which secures them against competition. Although 
 unproductive, these classes are by no means useless, since by their labor they 
 give permanence to the utility embodied in raw material, and by their im- 
 provements they lessen the cost at which the agricultural classes can supply 
 themselves with the needed manufactures, and so, by diminishing the cost of 
 living of the farmers, they render possible the increase of the ground-rent, 
 that is, of the " net national revenue." The system was refuted by Adam 
 Smith, with partial success (" Wealth of Nations," IV, chap, ix, sec. 28), and 
 since by John Stuart Mill completely. Of course, the materials of all indus- 
 tries, in one sense, come from the earth. Any increase of value conferred 
 
334 PROTECTION VS. FREE TRADE. 
 
 Second. " All the protected industiies of this country 
 are now parasites on the naturally strong industries." 
 
 This is a gisiring petitio 2)rincipii. Agricultural indus- 
 tries here or elsewhere are " naturally strong " in the sense 
 that using natural instruments of production they yield 
 large returns in kind, for labor expended. "What the econ- 
 omist wants to know is, Are they strong in the sense that 
 these large returns have a high exchange value? To 
 assume, as he does, that ours would exchange in the mar- 
 kets of the world at the same rates that they do now under 
 a system of free foreign trade, with a vastly larger supply, 
 is to settle in advance the very question of fact, which is 
 the essence of the controversy. 
 
 Third. "Agriculture now supports itself and all the 
 rest, and all their losses." 
 
 If this simply means that agriculture supplies its want 
 of food to the people, furnishes the means of subsistence, it 
 is true. If it means that the exchange values of the prod- 
 ucts of the manufacturing industries which supply our 
 other wants— ^^e means of Existence — are conferred at the 
 expense of agriculture, it is not true. By the census of 
 1880 the value of the products of the manufacturing indus- 
 tries was $5,369,579,191 ; of farm products, $2,213,4:02,564.* 
 
 If it is meant that agriculture (in case all the popula- 
 tion took to it) would furnish them a living amount of 
 
 upon a material thing by actual human service is an act of production, and 
 every man who confers that value is a producer ; and it is further true, and 
 has been so recognized since the days of Adam Smith, that less value is con- 
 ferred by labor as such in agriculture than in most other departments of pro- 
 duction. 
 
 ' The capital employed in manufactures, $2,'790,2'?2,806 ; net value given 
 to materials used, $2,000,000,000— 71 per cent ; value of farms, $10,19'7,096,- 
 Y^e ; value of productions (revised estimate), $3,600,000,090 — 35 per cent. 
 It may bo noted that the value of the product of English manufactures for 
 the same year was $4,000,000,000. 
 
GENERAL THEORY OF WAGES. 335 
 
 food, and thiis support them, no one is interested to ques- 
 tion it. If it means that, under these circumstances, agri- 
 culture would furnish all the population with the abun- 
 dance they now have at the same price, the Professor again 
 makes an unjustifiable assumption of a conclusion for 
 which he has furnished no premises in the facts, and one 
 which the facts fatally negative. Agriculture could fur- 
 nish the same supply of goods made abroad, on one set of 
 conditions : that the laborers abroad who make the goods, 
 and aU the workmen who make goods for them, consume 
 the same quantity of American food, vegetable and animal, 
 exportable and perishable, which the same workmen here 
 would ; that the exports continue to bear the same prices, 
 and that the foreigners pay the cost of freight both ways, 
 and the commissions, insurance, and profits of the middle- 
 men. Why don't they buy ours ? They have other sources 
 of supply. 
 
 Fourth. "We now come to " the competition of the farm 
 with the shop." ' 
 
 We begin with the agricidturist as the sole occupant 
 of a virgin soil, and the abundance of food and other neces- 
 saries of life which follow its cultivation. The services of 
 the carpenter, blacksmith, and mason are at once necessary 
 to the satisfaction of his desires, and he employs them. 
 What he pays them is not taxation, nor does he pay them 
 out of his abundance. He simply finds himself in the cate- 
 gory of Aristotle — " One man is no man." His wants ex- 
 ceed his powers. Then come the schoolmaster, the doctor, 
 and the parson. It is physically possible that they might 
 go on the land, but not morally possible. If they did, and 
 
 ' The writer has often wondered why Prof. Francis A. Walker (who made 
 the clear analysis given above) seemed to close his eyes to the consequences 
 which his analysis led up to ; or, rather, why he did not carry it a step 
 further, which would have brought him into the clear light of proiectiott. 
 
336 PROTECTION VS. FREE TRADE. 
 
 ■the carpenter, blacksmith, and mason followed suit, they 
 would only hare created a duplicate demand for other car- 
 penters, blacksmiths, and masons, and other schoolmasters, 
 doctors, and parsons. The process would never end, and 
 we should never reach an organism with co-ordinated 
 structure and functions. And so they simply surrender to 
 their humanness and make common cause, supplying their 
 wants in the order of strict necessity. The necessity for 
 food happening to lie at the bottom, they all share what- 
 ever abundance their physical surroundings afford. "Which 
 shall satisfy the desire and necessity for food, and which 
 shall satisfy the desire and necessity for houses, and wells, 
 and education, and religious teaching, is a mere matter of 
 expediency in the " division of labor." This community, 
 now, as a whole, need alike, whether farmer or parson, 
 " sundry articles " more or less necessary to health, com- 
 fort, and decency. Inasmuch as agricultural conditions in 
 foreign countries set a less favorable minimum of comfort 
 on a farm there, the standard of mechanical wages there is 
 lower, and there men can be found to produce these " sun- 
 dry articles " at less wages, and they can in consequence be 
 bought for less price. (This is Prof. Walker's argument, not 
 mine.) The conclusion is, that our community should buy 
 these " sundry articles " in the foreign countries. Well, if 
 they could, there would be no economic objection. Can 
 they ? The moment the surplus of grain and meat, of cot- 
 ton and tobacco, which our community produces, fails to 
 buy the whole supply of "sundry articles" which the 
 whole society needs, a portion must be made by themselves. 
 This portion, now a " necessity," must be produced upon the 
 same conditions under which all the other members of the 
 society are operating. When this portion becomes the 
 larger part of the supply, its producers stand in the same 
 relation to the farmer which the carpenter and schoolmaster 
 
GENERAL THEORY OF WAGES. 337 
 
 did — ihej share the ahundance. not of the farmer, but of 
 the resources of the society. The society as a whole has the 
 use of the land for nothing. They confer a private title to 
 his land upon the farmer, but that is not in the interest of 
 the farmer, as such. It is found the most expedient way to 
 secure the largest production from the soil, and is a mere 
 form of the division of labor. This will be more clearly 
 seen if we take an advantageous industry of some other 
 form — if the farmer produced oil, say, instead of wheat. 
 Title to the oil-well might be conferred on the individual 
 producer. If the number of producers was limited, he and 
 his necessary neighbors might buy abroad all the " sundry 
 articles." The moment their purchase-money — oil — failed 
 for all their supply, and home production became a neces- 
 sity for a part, we at once see the right of the society, as a 
 whole, to share the abundance of the oil industry in work- 
 ing for each other, not the abundance of oil-well owners. 
 The oil-well never was and never can be absolutely private 
 property; it must, in the nature of things, subserve the 
 public purpose. 
 
 ' Or suppose the first comers had found ready-made 
 looms, limited in number, and gave them out in the " di- 
 vision of labor," and in the interest of the best care and 
 highest production, to individual ownership. Up to a cer- 
 tain point, the use of the looms would be the most advan- 
 tageous industry. If, however, the product of the looms 
 failed to buy in the foreign market the food of the whole 
 society, and the society was driven to raise a portion of the 
 food-supply on its own fields, it is evident enough that, 
 in that event, it could not be said that the farmer shared 
 the abundance of the loom-owner ; he simply shared the 
 abundance which belonged to the society as a whole.' 
 
 ' England must buy half its food and most of its raw materials by work- 
 ing its looms. 
 
 16 
 
338 PROTECTION VS. FREE TRADE. 
 
 These natural looms cost tlie society, as a whole, notMiig ; 
 and weaver and farmer are simply different organs of one 
 body. It matters not nnder what disadvantage the home 
 production of the food is carried on, if it is a necessary 
 part of the whole supply. It could not, then, be said that 
 the high wages received by the farmer under these circum- 
 stances — the same wages the weaver got — were created by 
 the labor and capital employed on the looms. 
 
 In the cases put, the land-owner, the oil-producer, and 
 the loom-proprietor are the owners of monopolies. The 
 monopolies must, in the very nature of the case, pass to 
 the people at large. Their owners are trustees for the 
 public.^ 
 
 If we may believe Alexander Hamilton on a question 
 of fact, this was the condition of things, historically, in the 
 United States in 1791, In his report we find this remark- 
 able testimony : 
 
 "A constant and increasing necessity on their part" 
 (the people of the United States) " for the commodities of 
 
 ' " In the first place, land is a monopoly, not by the act of man but of 
 nature ; it exists in limited quantity, not susceptible of increase. Now, it is 
 an acknowledged principle that when the state permits a monopoly, either 
 natural or artificial, to fall into private hands, it retains the right, and can 
 not divest itself of the duty, to place the exercise of the monopoly under any 
 degree of control which is requisite for the public good. The self-interest of 
 the owners of land, under perfect freedom, coincides with the general interest 
 of the community up to a certain point, but not wholly ; there are cases in 
 which it draws in a totally opposite direction." — John Stuart Mill, " Foi't- 
 nightly Review," 1870, p. 642. 
 
 Exactly. When the products of the industry carried on by the owners of 
 a monopoly fail to supply, by exchanges, the wants of a given community of 
 which they are part, when the industrial entity composed of the monopolists 
 fails to supply the wants of the political entity on the same arena, we have 
 reached the point when the self-interests of the monopolists cease to coincide 
 with the general interests of the community. Natural laws and human laws 
 alike, then, operate to compel the monopolists to share their abundance with 
 the whole society. 
 
GENERAL THEORY OF WAGES. 339 
 
 Europe, and only a partial and occasional demand for their 
 own in return, could not but expose them to a state of im- 
 poverishment compared with the opulence to which their 
 political and natural advantages authorize them to aspire." 
 
 "Whose opulence ? Manifestly that of the whole society ; 
 not that merely of the land-owners. 
 
 To the same effect is the resolution of the General As- 
 sembly of Pennsylvania, cited in the Preface of this book. 
 
 In other words, as a matter of fact, more than a hun- 
 dred years ago we in this country found that a portion, 
 more or less, of the " sundry articles " must be made here, 
 on our soil, and that it was just as necessary that makers of 
 that portion should be here, alongside of .us, as it was that 
 the carpenter, blacksmith and mason, the schoolmaster, the 
 doctor and parson, should live in our midst. The vice of 
 the whole analysis is, that it assumes that the farmer would 
 have none of them around him, unless he was compelled 
 to, whereas the farmer, as such, has no more right to have 
 his say about it than the hod-carrier. None of the vast 
 number of artisans engaged in the great production, of 
 which we are all consumers, " participates in the abundance 
 enjoyed by the agricultural population." They participate 
 in the abundance of the society to which they belong, 
 though each must work for his own share. "Without the 
 one hundred and fifty classes of workmen, co-operating in 
 our industrial system, the agricultwral population would 
 have no abundance. They might have enough of mere 
 food^ — so has the Esquimau and the Patagonian. Every 
 workman, farmer, oil-producer, weaver, artisan, pastor or 
 pedagogue, whose mission here is necessary to supply the 
 home demand, is entitled to share in the abundance which 
 our resources, the nation's, make possible. 
 
 If we operated under free trade, and supplied our 
 wants from surplus agricultural products sold abroad, the 
 
340 PROTECTION VS. FREE TRADE. 
 
 surplus would not come out of the farmer, it would not be 
 the abundance, even, of agriculture — it would simply be 
 the form of the surplus which our productive industry, as 
 a whole, realized. The power of that surplus to satisfy our 
 wants is the very question of fact to be settled. It is the 
 same as if we expended our energies in producing gold, or 
 silver, or coal ; we convert our labor into that commodity. 
 The size of the surplus and its salableness depend on the 
 wants of buyers abroad ; and the advantages to be derived 
 from the exchange depend upon the further circumstance, 
 whether their market contains what we want. The mo- 
 ment we are compelled to make a part of the same kind of 
 goods at home, the abundance has failed us for exchange 
 purposes. The home producers of that part must then 
 share this abundance, and as the whole production, domes- 
 tic and foreign, must be sold under like conditions of 
 price, the foreign product, be it more or less, is handi- 
 capped by a duty, to bring the cost to home prices. " But 
 this in no way proves the inexpediency of the duties in 
 question, since they may very well give adequate encour- 
 agement to native industry, without completely excluding 
 the foreign products, and it can not be an objection to them 
 from a purely national point of view, that a part of their 
 effect is merely to levy a tribute on foreigners, for the na- 
 tional exchequer." (Sidgwick, p. 449.) 
 
 So far we have sold our surplus, it would seem, and 
 taken our pay for it on terms onerous to us, and getting 
 worse. "We have had the fuU advantage of our abundance, 
 some of which we have shared with artisans abroad. We 
 have apparently bought all the surplus they had for sale. 
 Free trade would make us share it all with workmen 
 abroad. This we have seen conclusively in Chapter XIY. 
 This would seem to be about all there is in this depart- 
 ment of our inquiry. 
 
GENERAL THEORY OF WAGES. 34.I 
 
 Having got rid of these fallacious views of the correla- 
 tion of the producers in a society, let us see how the high 
 wages in the United States do arise.^ 
 
 In America, wages of common labor have always been 
 high ; not only money- wages, but the real wages, reckoned 
 in the commodities received. It is generally assumed that 
 the minijmim of wages here was high, for the reason that 
 the laborer was sure of a certain amount of comfort if he 
 went on the land ; and this is, too, the mini?num,, which it- 
 self implies that there is some higher rate. But this would 
 be true only in the case he became a land-owner, the pro- 
 prietor of a natural agent. In such event, too, there was 
 always held out to him the rise in the value of his estate 
 by reason of the general advance in society ; he would reap 
 in the end the benefits of the settlement of others around 
 and near him. The labors of other people expended on 
 roads, highways, telegraphs, would confer great value upon 
 him arising out of mere societary growth. In point of fact, 
 the increase of value in agricultural lands has amounted to 
 many thousand millions of dollars over and above the capi- 
 tal and labor spent upon the land — " the unearned incre- 
 ment " of Mr. Mill. 
 
 1 Mr. Da¥id A. Wells, in addressing the Free-Trade Convention which 
 met in Chicago in November, 1885, uses this language: "But whatever may 
 have been the case in former days — -whether it be true or not that certain 
 branches of industry have been more rapidly developed than they would 
 otherwise have been by this method — yet, now we affirm that protection has 
 ceased to protect. We affirm that neither the profits nor the wages in the 
 protected industries are any higher, if as high, as they are in the great body 
 of our industries which are absolutely free from the possibility of foreign 
 competition." 
 
 No one ever pretended or desired that protection could or did raise the 
 wages or profits in the protected industries above the rates current in the 
 country. Labor and capital, in protected employments, simply shared in the 
 abundance of the land, on the principle, to each according to its share in the 
 common product of industry. 
 
342 PROTECTION VS. FREE TRADE. 
 
 The wages, however, of the mere agricultural laborer 
 have never been the criterion of wages paid to artisans and 
 members of the different trades. It is true that every man 
 could go upon the land without capital so long as the lands 
 were in effect sold by the General Government for a nomi- 
 nal sum, or really given away under the homestead acts. 
 It can scarcely be said that the economic instinct was the 
 operative cause in these cases. Many reasons combine to 
 take people to the land. Adam Smith had pointed out 
 some of them ; but they were operative under widely dif- 
 ferent conditions from those which swept so tremendous a 
 wave of immigration over our "Western prairies, and which 
 has now reached the passes of the Rocky Mountains, lost 
 in the returning wave from the Pacific coast. 
 
 "The beauty of the country, besides the pleasure of 
 country life, the tranquillity of mind which it promises, 
 and, wherever the influence of human laws does not dis- 
 tract it, the independence which it really affords, are charms 
 that more or less attract everybody, and in every stage of 
 his existence man seems to retain his predilection for this 
 primitive employment." Again, he says : " From artificer 
 a man becomes a planter, and neither large wages nor the 
 easy subsistence which the country affords " (he is speaking 
 of the American colonies) " can bribe him to rather work 
 for other people than himself. He feels that an artificer is 
 the servant of his customers, from whom he derives his 
 subsistence; but that a planter who cultivates his own 
 land, and derives his necessary subsistence from the labor 
 of his own family, is really a master, and independent of 
 all the world." 
 
 Bat in the very act of indulging in these sentiments, 
 he secures their gratification at the loss of productive re- 
 turns for labor as such. As an industry it is less profit- 
 able than mechanical or manufacturing pursuits, except 
 
GENERAL THEORY OF WAGES. 343 
 
 under conditions never realized. He has more leisure, ex- 
 periences a sense of independence ; but these are secured 
 at the cost of pursuing a less remunerative industry. He 
 enjoys a high sense of security in the nature of his pos- 
 sessions, and a feeling of safety for the future of himself 
 and his family. These induce him to expect and accept 
 smaller pecuniary returns. This very tendency to agricult- 
 ure may be so disproportionate as to result in an economic 
 loss to the community as a whole. Labor which results in 
 an agricultural glut produces nothing, or worse. England 
 itself has passed from the condition of a people unduly ag- 
 ricultural to one unduly mechanical. We tried the experi- 
 ment, and did not find it profitable or enjoyable. The 
 American farmer himself is also the owner of American 
 railroads, bank-stocks, factory-stocks, and all other forms of 
 capital. 
 
 The temperament which moves him, characterizes, how- 
 ever, a very considerable number of men, and is sufiicient to 
 di'ive a palpably undue proportion of our population into 
 the " most advantageous " industry. In an economical 
 point of view, the differences in the purposes and results of 
 the agriculturists must be distinguished from those of the 
 adventurers who seek the gold and silver regions. There 
 is, again, a very important distinction between a capitalist 
 looking to the most remunerative investment for his sav- 
 ings and the laborer seeking a vocation which affords the 
 most comfort and independence for himself and family. 
 
 In truth, we should not need capitalists, as such, in the 
 United States. Until all the lands were taken up, the 
 capitalist could not find laborers for his operations — the 
 laborers would be land-owners. Only as owner of the soil 
 could he get the returns from the soil, the cultivation of 
 which was the most advantageous industry. There has 
 always been a normal rate of wages in the United States 
 
344 PROTECTION VS. FREE TRADE. 
 
 above that paid to agricultural labor. The liigli returns 
 did not come from agricultural labor, but from agricultural 
 ownership. The draft in this direction lessened compe- 
 tition, and prevented wages going down. 
 
 It is a question of some bearing on the general discus- 
 sion, to ascertain precisely what it is which has kept up the 
 high rate of wages in the United States, but it can not be 
 settled out of hand, as we have seen it attempted. The 
 underlying reason seems unquestionably to be found in the 
 character and aims of the men who settled the colonies, 
 under whose dignity of character, and fidelity to their ovm 
 rights as citizens and freedmen, their industries were 
 begun and developed. "With them, life had a serious and 
 energetic aspect. They possessed the high spirit and met- 
 tle of a race who had the interests of a remote future as 
 well as the present in view.^ Self-respecting as they were, 
 they could accept no condition of living which was not 
 befitting themselves. There might be lack of means and 
 power to gratify all the wants of men, with their desires 
 and aspirations, but there was no abatement in their stand- 
 ards. Their surroundings were primitive, but lowly con- 
 ditions of hf e were not incompatible with the purity, de- 
 cency, and heroism of their lives. In the course of his 
 eulogy on President Garfield, Mr. Blaine gets to the root 
 of the matter: "The poverty of the frontier, where all 
 were engaged in a common struggle, and where a common 
 sympathy and hearty co-operation lighten the burdens of 
 each, is a very different poverty, different in kind, difEer- 
 
 ' "In what way," aska Adam Smith, "has Europe contributed to the 
 grandeur of the colonies of America ? In one way, and in one way only, she 
 has contributed a great deal. Mcyna mrum mater. She bred and formed 
 the men who were capable of achieving such great actions, and for laying the 
 foundations of so great an empire. The colonies owe to Europe the educa- 
 tion and ^reat views of their active and enterprising founders, and some of 
 the greatest and most important of them owe to her scarce anything else." 
 
GENERAL TnEOEY OP WAGES. 345 
 
 ent in influence and effect, from that conscious and humili- 
 ating iadigence which is every day forced to contrast itself 
 with neighboring wealth on which it feels a grinding de- 
 pendence. The poverty of the frontier is, indeed, no pov- 
 erty. It is hut the beginning of wealth, and has the 
 boundless possibilities of the future always opening be- 
 fore it." 
 
 Energetic efforts and temporary sacrifice give the hope 
 of permanent achievement, of a secured status as men and 
 self-respecting citizens. 
 
 Labor was their religion. The circumstances which 
 surrounded them enabled them to reap its whole reward. 
 Nothing went to the landlord for " rent," nothing to the 
 capitalist for "profits." In truth, they were under eco- 
 nomic conditions which were entirely anomalous. A peo- 
 ple imbued with the knowledge, and practically realizing 
 the scope of civilization, were face to face with a continent 
 boundless in extent and resources to subjugate it to their 
 uses. In the United States the working-classes were not 
 compelled to carry their whole labor-power to market; 
 indeed, there were no working-classes, as commonly mider- 
 stood. Wages were above the height of urgent necessity. A 
 higher standard of Hving was attained ; necessary wants of 
 the workmen being easily satisfied, their need of decencies 
 increased. And, above all, they were under the general stin;. 
 ulus of a good prospect for the future, by which an honor- 
 able artisan is distinguished from the proletariat. They 
 were, moreover, possessed of that degree of intelligence and 
 self-restraint which prevented an increase in wages from 
 producing an oppressive increase in the number of chil- 
 dren. 
 
 Their "isolation" from European systems was com- 
 plete. The rewards of labor were distributed to them in 
 the exceptional manner that their circumstances allowed 
 
346 PROTECTION VS. FREE TRADE. 
 
 — a division to eacli according to Ms labor. Tlie rewards 
 of labor are distributed now to tbeir descendants in like 
 manner, so far as we have been enabled to retain tbeir eco- 
 nomic condition. It is tbe explanation of tbeir and our 
 Mgb rate of wages, still maintained in tbe face of the 
 greatest influx of laborers wbicb tbe world has ever seen. 
 Prof. Senior bad commented on tbe causes wbicb diverted 
 tbe proceeds of labor from tbe laborer, and wbicb fixed tbe 
 laborer's sbare : "If all tbe laborers were employed in tbe 
 production, direct or indirect, of commodities for tbeir own 
 use, tbe rate of wages would depend solely on tbe product- 
 iveness of tbeir labor.- But it is obvious tbat tbis could 
 never be tbe case unless tbe laborers tbemselves were tbe 
 owners of all tbe capital and all. tbe natural agents of tbe 
 country ; a state of existence so utterly barbarous as to be 
 witbout distinction of ranks or division of labor." (It 
 must be borne in mind tbat the Professor wrote as an Eng- 
 lishman.) " A great portion of the labor employed in a 
 civilized community is employed in tbe production of 
 things in tbe use of which the laborer is not to participate. 
 In a civilized community, therefore, the extent of tbe fund 
 for the maintenance of labor depends not only on tbe pro- 
 ductiveness of labor, but also on the number of persons 
 employed in the production of things for the use of labor- 
 ers, compared with tbe whole number of laboring families. 
 ... If all workmen were employed in nothing but the 
 production of articles consumed by workmen, tbe rate of 
 wages would be determined almost exclusively by tbe ratio 
 between tbe number of tbe working population and the 
 amount of tbeir products. The effect must be much the 
 same when tbe wealthy are exceedingly frugal and employ 
 their savings as fully as possible in the employment of 
 common home labor, while, on the other hand, the exporta- 
 tion of wheat and other articles wbicb the working- classes 
 
GENEEAL THEORY OF WAGES. 347 
 
 constime, in exchange for diamonds, lace, champagne, di- 
 minishes the demand for common labor in a country." To 
 the extent, then, to which lahor is employed in the produc- 
 tion of things which laborers use, will their share of the 
 product be large. There is more for the laborers to divide ; 
 their wages, measured in the commodities produced, will be 
 larger. And labor in America has, in the main, been ex- 
 pended in the production of the very commodities which 
 the laborer consumed. It left large dividends — ^high wages 
 — for them. 
 
 There is nothing in the mere complexity of industry to 
 change the operation of this principle. We have had occa- 
 sion to urge that, by retaining the production of the com- 
 modities in use to our own labor in the United States, we 
 provoke a double production and a double consumption — 
 that there is so much more to divide among producers in 
 their capacity as consumers. 
 
 The power of a people who grow into a higher class of 
 wants to enforce the means of gratifying them even in an 
 old society, has been illustrated in the rise of wages which 
 has taken place in most parts of Europe withia the last 
 twenty years. Improved civilization has produced greater 
 demands and requirements in the class of laboring-men ; 
 all authorities agree that they live, as a whole, better than 
 they used to, and they insist on getting ietter paid. This 
 is true in England, Germany, Belgium, and France. It 
 may be that " where the skies are brightest, the air most 
 genial, the work of husbandry pleasantest, life in every 
 way most agreeable, the price of farm-labor is highest " ; 
 but that does not account for the higher wages of the other 
 labor-classes in all these countries. 
 
 There is a general consensus of opinion among econo- 
 mists as to the causes of this phenomenon. In these causes 
 really lie the only hopeful outlook which we get for the 
 
348 PROTECTION VS. FREE TRADE. 
 
 race of wage-earners. They result from the access given 
 to all the workmen of a society to the productive occupa- 
 tions. They do not result from agricultural conditions nor 
 the opportunity to enter upon agricultural pursuits. When 
 the people of a country co-operate in production, much is 
 produced, and, there is much to divide. In an article on 
 " The Movements of Agricultural Wages in Europe," in the 
 " Fortnightly Keview " for June, 1874, wUl be found a 
 careful statement, founded on official reports, of the causes 
 co-operating to make wages high ; not merely a high rate 
 of money-wages, but a high purchasing power in them. 
 Of Germany it is said : " Speaking generally, the south- 
 western region, whose boundary has just been roughly 
 sketched, is the main region of industrial and commercial 
 enterprise, communication by steam, general activity, in- 
 telligence, and wealth. Vicinity to the chief countries and 
 markets of western Europe, numerous lines of railway, a 
 river crowded with steamers, coal, iron, and their products? 
 cause a greater abundance and more rapid circulation of 
 currency, a greater demand and competition for labor of 
 all kinds, and a generally higher price for agricultural, as 
 well as town or mechanical labor, than is to be found in 
 the northeast of the empire, which lies remote from the 
 traffic, civilization, and progress of the Western world, is 
 much less completely provided with railways, and is in a 
 more primitive condition as regards 'customs, ideas, and 
 industrial life. 
 
 " In Belgium, again, although the principal cause (as 
 in every progressive country in Europe) of diversity in the 
 local rates of agricultural wages is the presence or absence 
 of mines, manufactures, or commerce on a great scale, 
 other causes are at work. 
 
 " In France, as in Germany, the chief causes of high 
 agricultural wages are — proximity to great industrial cen- 
 
GENERAL THEORY OF WAGES. 349 
 
 ters or easy communication witli great markets. In Nor- 
 mandy tile rate of wages is as two to one compared with 
 the rate throughout a great part of Brittany, and there 
 are several reasons for the difference : JSTormandy is much 
 nearer to the market and Paris ; it has great manufacturing 
 towns, and Brittany none. 
 
 " Thus there are various causes in each country for 
 great diversities of agricultural wages, but the most power- 
 ful and the most general cause is the unequal distribution 
 of advantages for manufactures and commerce and of good 
 markets. The currency of all Europe has been vastly aug- 
 mented by new mines and instruments of credit ; the rapid- 
 ity, also, of the circulation of money has multiplied, and 
 the prices of all things, labor included, which have not in- 
 creased in proportion, have by consequence risen. Second- 
 ly, money has increased most, and the price of labor has 
 risen most, in the districts whose money-getting powers 
 have increased most through industrial development and 
 rapid communication with the best markets. 
 
 "Thirdly, our Continental neighbors have acquired in 
 recent years those new avenues of industry and commerce, 
 iron, coal, the steam-engine, steam locomotion, which Eng- 
 land possessed a generation earlier; prices, consequently, 
 have risen in many parts of the Continent to the English 
 scale from a much lower line." 
 
 The writer of this essay, Prof. Leslie, summarizes the 
 results as follows : " Capital, money and its representatives, 
 and the demand for labor, have increased most where the 
 means of production and the means of communication with 
 the best markets have improved most; where coal, iron, 
 and mechanical power have multiplied the product of the 
 human hand, and where railways and other modes of com- 
 munication have made rapidest progress. Broad exempli- 
 fications of the influence of these two sets of conditions 
 
350 PROTECTION VS. FREE TRADE. 
 
 (whicli are closely related to superior natural advantages 
 and the means of development) are to be seen on every 
 side at home and abroad." 
 
 The American farmer has never had any market so 
 good for himself as the home market. Now, when rail- 
 ways have put Mm in communication with all parts of it, 
 the free-trader asks him to abandon it for the imposing, 
 wide-sounding " world's market." The condition of things 
 digested in the abstract, as here quoted, is a demonstra- 
 tion from the facts of actual experience of the power of 
 society association, which Mr. Carey indicated as the cen- 
 tral fact in the progress of civilization, the divinely ap- 
 pointed lever with which man moves the universe. The 
 rate of wages in America has no real relation to the amount 
 of comfort which a man gets by working the soil. The 
 early settler in the country was a man with his wants 
 awakened, wants not only of food and clothing and shelter, 
 which political economy conceives him as mainly striving 
 to supply, but wants of his moral, political, and industrial 
 nature. " The whole boundless continent " was for his 
 appropriation to uses which would not contract his powers. 
 There were inducements to all the industries open to 
 human skill and persistence. His labor could be profitably 
 employed upon the soil ; it would not be unprofitable to 
 employ it upon coal and iron and textile fabrics. The 
 whole tone of things generally about him was energetic. 
 He would not, it is true, starve upon the land, but the 
 steam-engine and the locomotive would add a thousandfold 
 to the efiBciency of any labor he could combine with them ; 
 the mountain-streams would leap with a song to turn his 
 wheels. It had not occurred to him to wait until the higher 
 wages of labor in Europe had made agriculture in America 
 less profitable, and that he was so well off that he could 
 not afford to use the bounties which lay at his feet. The 
 
GENERAL THEORY OF WAGES. 351 
 
 rate of wages in America was higher than the minimum 
 which the alternative of taking to the land afforded, be- 
 cause the American was the kind of man he was, and be- 
 cause the physical conditions of things were such as they 
 were. He could satisfy all the wants of his nature by the 
 application of his energies to the materials about himself — 
 fields, mines, forests, treasures in earth and air and water — 
 at a less cost of effort than the inhabitant of any other 
 country in the world. It comported with his tastes, his 
 aims, his aspirations, his safety, and his independence to 
 produce them directly. "With his farm, and with his own 
 workshop in co-operation, he could make the greatest an- 
 nual product of his industry, and sound political economy 
 justified his methods. And that is the way in which wages 
 came to be high, and these the reasons why they continue 
 to be high. 
 
 " A permanently high rate of wages, both as cause and 
 effect, is very intimately connected with a flourishing con- 
 dition of national life. It proves, on the one hand, great 
 productiveness of the public economy of the people gen- 
 erally, prudence, self-respect, and control, even of the 
 lowest classes ; virtues which, however, are found, on the 
 whole, only where pohtical liberty exists, and where the 
 lowest classes are rightly valued by the higher. On the 
 other hand, it produces a condition of the great majority 
 of that portion of the population who have to support 
 themselves on the wages they receive, worthy of human 
 beings, a condition in which they can educate their chil- 
 dren, enjoy the present, and provide for the future." 
 (Prof. Eoscher.) 
 
 Only the free man cares for the future. The distribu- 
 tion of the aggregate wages earned by American labor did 
 not depend on differences in their social positions. Politi- 
 cal institutions made them equals. American society early 
 
352 PKOTECTION VS. FREE TRADE. 
 
 became definitely industrial. No social discredit attached 
 to labor as such. Since the close of the rebellion in 1865 
 it seems certain that no such exhibition of devotion to use- 
 ful labor of hand and brain has ever been seen in the whole 
 history of the race as has been offered by the citizens of a 
 restored country competing with each other for the fruits 
 of a high civilization. It has been the policy of this coun- 
 try to have free trade in laborers, although just at present 
 the immigration of laborers from China is restricted. Prof. 
 Perry remarks, "If China should precipitate itseK upon 
 the United States, or India upon England, as the mere 
 economical impulse might indicate, it would be disastrous 
 to the Western nations." The disaster would consist in the 
 economic and social degradation of labor, denoted by the 
 low standard of living which the Mongolian adopts. The 
 competition of " cheap Chinese labor " menaces the Eng- 
 lish race in America and Australia in only one respect, 
 the smaller necessary consumption of the Chinese as com- 
 pared with the Englishman. The latter makes a smaller 
 total net produce of a day's labor because his consumption 
 by so much more exceeds that of the former, whose gross 
 earnings are much less. The American or English work- 
 man considers himself a man and not a mere tool. The 
 same general protest takes effect against the cheap laborer, 
 as well as the cheap labor, of any other people, if it be 
 manifested in a lowered standard of life. In America, 
 witness the uprising against the squalid Hungarian now 
 seen in the anthracite coal regions of Pennsylvania. "We 
 can not insist, too frequently and too urgently, on the 
 necessity of maintaining a high rate of wages in the United 
 States. 
 
 Whether men or society, as a whole, have any real con- 
 trol over the distribution of the joint produce of land, 
 capital, and labor, is the one valuable problem of political 
 
GENEEAL THEORY OF WAGES. 353 
 
 economy. In the United States, so far, the facts are that 
 an equitable relation has been established and maintained 
 between rent, interest, and wages. So far as this relation 
 has been realized, it gives satisfaction to every right-minded 
 man. This feeling of satisfaction is one of the principal 
 conditions precedent to the highest prosperity of produc- 
 tion, inasmuch as upon it depends the participation of all 
 owners of funds, lands, and forces. 
 
 Every deviation from this relation or proportion is a 
 misfortune, but never so great as when it takes place at 
 the expense of the wages of labor. " It should never be 
 forgotten," says Prof. Roseher, " that rent is an appropria- 
 tion of the gifts of nature, and that interest is a further 
 fruit obtained by frugality from older labor already re- 
 munerated. Besides, the rate of wages, when high gen- 
 erally, adds to the efficiency of labor, which can not be 
 claimed for interest or rent. The best means to preserve 
 the harmony of the three branches of income is, however, 
 universal activity. . . . Rich or poor, strong or weak, the 
 idler is the knave." 
 
 From whatever point of view we approach the indus- 
 trial organism, it is seen that every new thing which is 
 added to the national income comes from labor, which is 
 repaid by wages. The best distribution of the national 
 income will result from that condition of things which en- 
 ables them to produce real goods in an increasing quantity 
 and variety. Neither rent, interest, nor wages, as such, are 
 any addition to a nation's income. The only true increment 
 possible is the new things, new commodities, which her 
 workmen can be induced to make and add to the inventory 
 of her national possessions. 
 
 The high rate of wages, then, is the product of sev- 
 eral forces. A principal one is the varied standard of 
 living which has become a national habit. If the power 
 
354 PROTECTION VS. FKEE TKADE. 
 
 to live up to that standard resides entirely in the returns 
 which the laborer may get from going upon the land, it 
 introduces a disquieting conception of society, and one 
 which must be looked into in the further discussion. What 
 we have been calling " wages " is, then, in essence, seen to 
 be "rent." It accrues to the landowner as such. The 
 consequences and the responsibilities attaiching thus to the 
 owner of a natural instrument of production become more 
 and more serious as we approach the time, now nearly 
 reached in the United States, when all the land has been 
 appropriated and has passed into private ownership. The 
 option, then, of going upon the land will have ceased, and 
 the laborer must be something of a capitalist, more or less, 
 before he can buy lands, which now will stand him in con- 
 siderable of an investment. It is manifest that the high 
 returns to labor, as such, expended on the soil, depend on 
 several conditions : First, that the laborer on the land is 
 the owner of the land ; second, that his wages, measured 
 in the products which he raises, are subject to the law of 
 diminishing returns ; third, so long as he can not retard 
 the operation of that law, his returns in kind will continue 
 less — that is, the bushels of wheat or com, the bales of 
 cotton, or the pounds of tobacco per acre as a return for 
 a day's work ; but, fourth, the exchange value of his crops, 
 as measured by the quantity of foreign products which he 
 can buy with them, is subject to conditions imposed on 
 him by facts in foreign markets over which he has no con- 
 trol, and which are incapable of prevision by any laws of 
 the game of " catalectics." And the facts in the foreign 
 market are of three descriptions — whether there is a de- 
 mand for all his surplus, the market value of that surplus, 
 and whether it offers him a full supply in return. 
 
 The proposition, then, that the high rate of wages has 
 grown out of the refuge which the laborer has heretofore 
 
GENERAL THEORY OF WAGES. 355 
 
 had in taking to the land, leads us to rather startling pros- 
 pects. Adam Smith had said : " The cheapness and plenty 
 of good land encourage improTement and enable the pro- 
 prietor to pay these high wages. In those wages consist 
 almost the whole price of the land, and, though they are 
 high considered as the wages of labor, they are low con- 
 sidered as the price of what is so very valuable" 
 
 As between us and the rest of the world, our advan- 
 tages consist in something in the nature of rent. " Whole 
 countries may, because of their great natural advantages, 
 possess — so far as the commerce of the entire world is con- 
 cerned — something analogous to rent: thus, for instance, 
 North America, although there that world-rent finds ex- 
 pression in the natural height of the wages of labor and 
 rate of interest." That is, the apparent wages of agricul- 
 tural labor is made up partly of rent. 
 
 In connection with the accepted fact that most articles 
 of consumption which the laboring-man makes by the aid 
 of machinery (and Mill thinks machinery has not reheved 
 the working-man of an hour's labor) have been cheapened 
 some hundreds and some thousands of fold in the last cent- 
 ury, and that the price of food has not decreased at all, 
 the following observations by Prof. Cairnes do not bear 
 an optimistic import. They are somewhat suggestive of 
 " Progress and Poverty." They hint at some further anal- 
 ysis of the relations of men and things in the social state, 
 some such analysis as Mr. Gladstone has been compelled to 
 essay in the recent Irish land acts : 
 
 " The productiveness of industry only affects the rale 
 of wages and profits in so far as it results in a cheapening 
 of the commodities which enter into the consumption of the 
 laborer. 
 
 " Not, indeed, that the introduction of improved pro- 
 cesses into agriculture has been for naught ; it has resulted 
 
356 PROTECTION r& FREE TRADE. 
 
 in a large augmentation of the aggregate returns obtained 
 from the soil, but without permanently lowering its price, 
 and therefore without permanent advantage to either cap- 
 italist, or laborer, or to other consumers. The large addi- 
 tion to the wealth of the country has been neither to prof- 
 its nor to wages, nor yet to the public at large, but to swell 
 a fund ever growing, even while its proprietors sleep — t/ie 
 rent-roll of the owners of the soil. Accordingly, we find 
 that, notwithstanding the best progress of agricultural in- 
 dustry effected within a century, there is scarcely an im- 
 portant agricultural product that is not as dear now as it 
 was a hundred years ago ; as dear, not merely in money- 
 price, but in real cost. The aggregate return from the 
 land has immensely increased, but the cost of the costliest 
 portion of the product, which is that which determines the 
 whole, remains pretty nearly as it was." 
 
 If the rate of wages in the United States was fixed by 
 the wages which a man might earn as a laborer in agricult- 
 ure, not as a land-owner, there might be logical force in 
 the constant injunction by all free-traders to " take to the 
 land." Professors Perry and Sumner iterate it, times with- 
 out number : " The comfort the laborer could win on the 
 land fixes a minimum below which wages can not fall. If 
 they do temporarily fall below that minimum, the laborers 
 take to the land, as they did in the hard times a few years 
 ago. Since the comfort obtainable from au abundance of 
 cheap and fertile land is high, the minimum of wages is 
 high." 
 
 It is submitted, that this does not meet the exigencies 
 of the argument. We are seeking the causes of the aver- 
 age rate of wages, which must be above the minimum. 
 " The comfort " a laborer wins on the land is not a matter 
 of which market values can be predicated, and a foreign 
 commerce must be based on exportable values. If " hard 
 
GENERAL THEORY OF WAGES. 357 
 
 times" drive the laborer to tlie land, it is a temporary ex- 
 pedient. There is no occasion to have any confusion of 
 ideas on this subject. If high wages grow out of agricultu- 
 ral pursuits, the argument is, it is because agriculture gives 
 high returns for labor, and we should buy abroad our other 
 commodities w^ith the products of this most efficient labor. 
 The food and raw materials which can be raised by a great 
 nation of fifty millions of people, great as they are in vol- 
 ume, are not great enough to override the law of supply 
 and demand, and the consequences of a loss of purchasing 
 power. The proprietors of this vast aggregate of indus- 
 tries are as amenable to market values as the single owner 
 of the Apollinaris Spring, the group of individuals who 
 own the oil-wells, and the corporations that control the 
 anthracite coal fields of Pennsylvania. In each case they 
 own efficient instruments of production, but their efficiency 
 consists only in a precise adjustment of production to con- 
 sumption. A monopoly of ownership in the wells, or a 
 limitation in the area of coal, makes this possible. If the 
 number of farms, or the agricultural area, were limited, the 
 American farmers might use the leverage such a situation 
 would give them ; they might keep within the demands of 
 the outside world, and assert their superiority against the 
 worid. But the fathers of the republic threw open a do- 
 main almost without limit, and invited mankind to come 
 and subdivide it into farms almost beyond enumeration. 
 It resulted in a great surplus of food, which the farmer did 
 not need, and which he, at least, must part with to enjoy 
 all his advantages, but which the outside world could not 
 take off his hands. " Man does not live by bread alone." 
 His wants of shelter, mental and moral culture, and his 
 social ambitions, are just as urgent in demanding gratifica- 
 tion. He will make as much effort, pay as much, for one 
 as the other. Whoever renders the services which termi- 
 
358 PROTECTION VS. FREE TRADE. 
 
 nate in the satisfaction of these various desires will receive 
 his wages. "Whoever makes the things needed, whether 
 food, clothing, colleges, churches, or theatres, will get his 
 pay according to his work, provided the work is necessarily 
 done in this political entity. Prof. Sumner, therefore, im- 
 proves his own statement, which we have just quoted, when 
 he adds : " Migh wages, therefore, simply mean that the 
 soil of this continent is rich, the climate is excellent and 
 well varied, the rivers are large and convenient, the mount- 
 ains are full of metal and coal, the people are industrious 
 and energetic, and are eager to accumulate, the public order 
 isfai/rly secure, and the general intelligence is good. The 
 conditions of production are therefore good, and we pro- 
 duce a great deal. We accumulate capital far more rapid- 
 ly than any other people in the world." 
 
 Undoubtedly. But all this production does not come 
 from cultivating the land, nor are the values of products con- 
 ferred by agriculture, nor on the basis of agricultural labor. 
 We do not share the abundance of the owner of the soil. 
 
 To recall what Bastiat says : " A man who has in his 
 hands the tools necessary for labor, the 'materials to work 
 upon, and the provisions for his subsistence during the 
 operation, is m a situation to determine his own remuner- 
 ation." This has been our situation. 
 
 This is the state of our industry under the facts as they 
 are, and under a protective tariff. In his address before 
 the Tariff Commission (and it is a very energetic address) 
 Prof. Sumner undertakes to demonstrate that a protective 
 tari£E lowers wages. I give a paragraph of it, and the reply 
 of Mr. George Basil Dixwell, and submit to the practical 
 judgment and common sense of the reader which is the 
 natural version of the facts. No demonstration is possible, 
 because of the absence of any second term with which 
 comparison can be made. 
 
GENERAL THEORY OP WAGES. 
 
 359 
 
 Prof. Sumner : " Let us next 
 look at the eflfect of protective 
 taxes on the alternative whicli is 
 open to the American laborer to 
 go upon the land. The protective 
 taxes enhance the cost of all arti- 
 cles of clothing, furniture, crock- 
 ery, utensils, tools, and. machine- 
 ry. They also increase the cost 
 of fuel and transportation. They, 
 therefore, reduce the amount of 
 all the commodities mentioned, 
 which a farmer can get for a cer- 
 tain amount of farm products. 
 They, therefore, lessen the profits 
 of agriculture in all its forms, and 
 lessen the attractiveness of the 
 land. Whatever lessens the at- 
 tractiveness of the land lowers 
 the minimum gain of all manual 
 laborers, increases the number of 
 competitors in the labor market, 
 and reduces the amount which the 
 employer needs to bid in order to 
 counteract the advantages of the 
 land. Protective taxes, there- 
 fore, take away from the laborer 
 the advantage which he has by 
 nature in this country ; that is to 
 say, they take away from him 
 part of his advantage in the labor 
 market. Consequently, they low- 
 er wages." 
 
 Mr. Diswell: "The truth is 
 as follows : Protection prevents 
 a vast number of people from fly- 
 ing to the land, and makes them 
 consumers instead of producers 
 of raw materials. It diminishes 
 the aggregate of the farmer's 
 products and increases the de- 
 mand. It, therefore, increases the 
 profits of agriculture in all its 
 forms, and increases the attract- 
 iveness of the land. Whatever 
 increases this, increases the mini- 
 mum gain of all manual laborers, 
 and increases the number of com- 
 petitors for labor, and increases 
 the amount which the employer 
 needs to bid in order to counter- 
 act the advantages of the land. 
 Protection, therefore, secures to 
 the laborer the advantage which 
 he has by nature in this country, 
 and increases it by diversifying 
 employments. Consequently, it 
 raises wages above what they 
 would be under foreign competi- 
 tion. At the same time, it has- 
 tens the moment when increasing 
 skill may compensate for the high- 
 er moneyed cost of labor." 
 
 Prof. Sumner imquestionably undertook a very difficult 
 piece of inductive reasoning. Even with the assumptions 
 of an illimitable foreign market, and the ability of a lim- 
 ited number of farmers to maintain a monopoly of pro- 
 duction, only a moderate success attends his effort. " Pro- 
 
360 PEOTECTION VS. FREE TRADE. 
 
 tective taxes " have not enhanced the cost of the farmer's 
 living in any different proportion from what they have that 
 of all the other co-workers, members in the same society. 
 It is one of the attempts of which Mr. Mill has said, " no 
 one could have looked closely into the sources of fallacious 
 thinking without beeing deeply conscious that the coher- 
 ence and neat concatenation of one's philosophic systems is 
 more apt than we are commonly aware to pass with us as 
 evidence of their truth." 
 
 One ought to be cautious in very positive assertion in a 
 case where absolute knowledge is out of the question, but 
 one may be allowed to suggest that the Professor's " conse- 
 quently " bears a very suspicious resemblance to the " ar- 
 gal" of the clown in the grave-digging scene in "Hamlet." 
 
CHAPTER XVI. 
 
 WHY INDTJSTEIAL KNTTTIES SHOULD COEEESPOMD WITH 
 POLITICAL ENTITIES.' 
 
 Peof. "Walkee remarks: "It is, of course, possible 
 tliat some new analysis of the conditions of production 
 may yet disclose the law which thus makes trade within 
 the lines of sovereignty beneficial, and trade across the 
 boundaries of separate states deleterious to one or both 
 parties ; but, thus far, assertion, coupled with vituperation, 
 has taken the place of the analysis required." 
 
 We venture to submit one form of analysis, and it does 
 not seem necessary to accompany it with vituperation. 
 
 It is indispensable, if a given nation is to live on a 
 given area, that opportunity should be afforded them to 
 render mutual services to each other, or to somebody 
 somewhere else. Otherwise there would be no nation on 
 such a portion of the planet. If there were no such oppor- 
 tunity, the nation would be non-existent. There is no ex- 
 isting or historical nation in which the vast mass of services 
 by which men satisfy each other's desires have not been 
 rendered within the lines of the political entity. To that 
 extent the political entity and the industrial entity, as mat- 
 
 ' In plain English, this inquiry means, why should the people of a 
 given nation (a political entity) endeavor so to arrange matters that the capi- 
 tal and labor of its people (the Industrial entity) should in the main be em- 
 ployed in rendering services to one another, within the geographical limits 
 which the given people inhabit ? 
 17 
 
362 PROTECTION VS. FREE TEADE. 
 
 ter of fact, do correspond. There are, however, in the or- 
 dinary case left outstanding, certain needs which are to be 
 supplied by international exchanges. If the given nation 
 was the product of purely economic forces — was composed 
 of "economic men," and became one of a group of in- 
 dustrial countries constituting a larger industrial society, 
 formed hy free i/radmg, the group, as a whole, would con- 
 tinue to subserve its purposes by free trade. 
 
 This is not an identical proposition, but it is so nearly 
 such as to reduce the question at the head of this chapter 
 to a mere abstract inquiry : for there is no such industrial 
 group as yet on the earth. 
 
 " The most that can be said, at present, so far as an 
 economy of mankind, or a world-economy is concerned, is 
 that it may be shown that important preparations have 
 been made for it. "We are approaching more nearly to it, 
 by the ways of the more and more cosmopolitan character ' 
 of science, the increasing international co-operation of labor, 
 the improvement in the means of transportation, growing 
 emigration, the greater love of peace, and the greater toler- 
 ation of nations, etc." (Roscher, "Political Economy," 
 sec. 12.) 1 
 
 The industrial group so formed would in no wise cor- 
 respond wth the actual political groups as we now see 
 them on our political maps. The external relations of the 
 nations not having grown out of economic movements, 
 there is no a priori certainty, or even likelihood, that the 
 " services " of the individuals in them would or could be 
 so rendered to each other, as if the aggregate of the na- 
 tions, constituting the industrial society, had been evolved 
 
 ' " The hypothesis, in accordance with which this science should discard 
 all consideration of the state, or should refuse to presuppose its formation, 
 would lead us into an ideal region, difficult to define, probably entirely im- 
 possible, and inaccessible to experience." (Roscher, sec. 17.) 
 
ISDUSTEIAL AND POLITICAL ENTITIES. 363 
 
 under the action of steady, uninterrupted economic forces 
 alone. A nation is the resultant of many forces, of which 
 the economic is not the strongest. The people of a nation, 
 if the nation is to exist, may be compelled to exchange 
 services with each other on the soil of the nation. Such we 
 have seen to be the case in the United States, where in any 
 event the people must produce at home about seven eighths 
 of their consumption of commodities in which other na- 
 tions have been unable to help them out. The other na- 
 tions do not need our services to the extent of more than 
 one fourth part in the exchanges which involve an expendi- 
 ture, at home and abroad, of $2,800,000,000. If, now, free 
 trade breaks up our power to render these services to each 
 other here, we at once come to a reason why our industrial 
 entity should correspond with our poHtical entity. The 
 United States, in truth, is the best, as it is the only, type 
 of a nation which has been generated by the harmonious 
 co-operation of moral, social, political, and economic forces. 
 Here the pohtical and industrial entity substantially do 
 correspond. Certainly, the nearer the correspondence, the 
 stronger the. nation. 
 
 The people of a nation are bound together by senti- 
 ments different in degree, not in kind, from those which 
 bind together the members of a household. In the nation, 
 as in the family, there is a vast multitude of services ex- 
 changed between its members which are not economic. 
 The economic and non-economic services are grounded in 
 the same substratum of humanity, and the effort to sepa- 
 rate them and render one here and the other with people 
 in another family, simply means disintegration. It is the 
 union and mutual exchange of these two kinds of services 
 which result in our weKare and create the sentiment known 
 as patriotism. It is a genuine emotion, and is a true eco- 
 nomic force. It reconciles us, also, to accept the averaged 
 
364 PROTECTION VS. FREE TRADE. 
 
 results of our efficiency expended on our own physical 
 conditions. It engenders that sense of community which 
 operates with such force in family and nation. " Thanks 
 to this feeling for the common weal, the eternal and de- 
 structive war — the helium omnium contra OTrnies — which 
 an unscrupulous self-interest would not fail to generate 
 among men engaged in the isolated prosecution of their 
 own economic interests, ceases in the higher, well-ordered 
 organization of society. On it are based the various forms 
 of economy in common — family economy, corporation or 
 association economy, municipal economy, and national 
 economy. And these forces of economy in common are 
 so essentially the condition and complement of industrial 
 economy that the latter without them could either not be 
 maintained at all, or, at least, only in the very lowest stage 
 of civilization." (Koscher, "Political Economy," section 
 12.) If that nation must be the richest in which each in- 
 dividual is most completely left to himseK, savage nations 
 would be the richest. 
 
 Every independent household management, then, con- 
 tains the germ of all politico-economic activity. 
 
 Bear in mind we are dealing with a national family, 
 thus predisposed by various considerations to satisfy their 
 desires by exchanges of services, primarily, with each other 
 when they can ; with strangers, foreigners, when they must ; 
 and further willing and desirous that the family may be as 
 large and prosperous as possible. A group of economic 
 Tmtions, jformed Tnj free trade, might do well to continue to 
 exchange freely with each other. They have reached an 
 adjustment, and no redistribution of its labor or its capital 
 will take place. They go on and grow, or decHne together. 
 If the United States belonged from the start with such a 
 group, we might go on and continue to enjoy the average 
 prosperity or adversity of the growp. 
 
INDUSTRIAL AND POLITICAL ENTITIES. 365 
 
 But we have reached a development very different from 
 that which these conditions imply. It is confessed by all 
 candid economists that a redistribution of labor and capi- 
 tal must take place if a country passes, for instance, from 
 protection to free trade. " There are men, however, who 
 live solely by their labor, and then if labor is suppressed 
 they have no alternative but extinction. Like machines, 
 then, free trade may oblige workmen to remove from one 
 place to another. . . . When such displacement is accom- 
 plished, men will everywhere be better off by reason of the 
 greater productiveness of their labor, but they will perhaps 
 be differently distributed " (among the nations of the earth, 
 he means), " and this can not be effected without suffering " 
 (and capital must follow labor). " The practical conclusion 
 is, that we should create no fresh legal monopolies by means 
 of which worhmen are settled where natiire can not yield 
 them a large recompense " (the italics are mine), " but that 
 when such monopolies already exist, the tariffs which main- 
 tain them must be reformed with prudence and circum- 
 spection." (Dr. de Laveleye, " Elements of Political Econ- 
 omy," p. 238.) 
 
 " A similar injurious effect might result in this country 
 from the sudden introduction of free trade, or even from a 
 sudden great diminution of protection. . . . But it may be 
 for a while harmful to the labor and capital which have 
 been employed in the protected industries. This labor and 
 capital may not be able to withdraw with ease from their ', 
 existing occupation to the more productive industries which 
 need no protection." (Prof. Taussig, De Laveleye, sujtra, 
 p. 2Y7.) 
 
 The point of the citations is to call attention to the re- 
 distribution which must take place in capital and labor. 
 Of course, there can be no assurance that it might not be 
 redistributed entirely otit of the United States. 
 
366 PROTECTION VS. FEES TRADE. 
 
 "We take the case put by Prof. Sidgwick in his " Politi- 
 cal Economy," at page 494 : 
 
 " Suppose a country (A) so thickly populated that addi- 
 tional agricultural produce could not be obtained from the 
 soil except at a rapidly increasing expense, and suppose 
 that one third of its actual produce of this kind — say, for 
 brevity, com-^is now consumed by the persons engaged in 
 its chief branches of manufacture. Suppose that the coun- 
 try, having been strictly protected, adopts free trade, and 
 that consequently the manufactures in question are ob- 
 tained at half the price from another country (B) in ex- 
 change for corn. And for simplicity let us assume that 
 the result of the fall in price is that the sajne total price is 
 paid for the manufactures annually consumed." (Observe 
 that Mr. Sidgwick puts his supposition in terms which 
 could never be so favorably realized in this country.) 
 "What, then, are the manufacturing laborers, thrown out 
 of work by the change, to do ? The course most obviously 
 suggested by the circumstances is that they should emi- 
 grate and supply the labor required in the extended manu- 
 factures of B, or in the newly developed trade between A 
 and B. If they do not do this, there seems to be no gen- 
 eral ground for assuming that they will be aMe to Jmd 
 employment in A as remunerative as that withdrawn from 
 them. , . . And if they could not be profitably employed 
 in agriculture, it is theoretically possible that they could 
 not be employed at all, so that the natural result of free 
 trade may be that A wiU only support a smaller though 
 wealthier population — the economic gain resulting from it 
 to the community, as a whole, being a gain which it would 
 require violent governmental interference to distribute, so 
 as to retain the laborers thereon out of work." * 
 
 ' If we accept the dolorous pictures of Hon. Frank Hurd, David A. Wells, 
 and others, they could not profitably be employed in our agriculture, for 
 
mDUSTRIAL AND POLITICAL ENTITIES. 367 
 
 A redistribution would then take place between the 
 United States and the other political entities composing 
 the international group of free-trading communities — that 
 is, the United States would witness the migration of many 
 laborers and the transfer of mnch capital to other fields of 
 employment. That would result, obviously, in a less gross 
 annual product of this nation's industry. If free trade, 
 under the laws of economy, would depopulate the country, 
 and decapitalize it, I suppose it is one of the functions of 
 American statesmen to erect barriers to that sort of exodus. 
 Whether those who remained would be better off is not 
 the question. The welfare and happiness of those driven 
 away are equally objects of concern with those whom for- 
 tune or accident may place it in their power to remain. 
 
 If, we repeat, the nations of the earth, and their politi- 
 cal and industrial relations, had been evolved from a com- 
 mon economic center, and had widened out on economic 
 motives alone, no economic reason could be given, 6f 
 course, why the industrial entity should correspond to the 
 political entity, for the whole would then constitute one 
 industrial group. Having been thus generated, the whole, 
 in fact, is one industrial entity, and political lines are of no 
 moment. In the group thus generated, the introduction 
 of protection would produce a redistribution and probably 
 a very serious disturbance of labor and capital. Concern- 
 ing an aggregate of trading nations thus formed, the ques- 
 tion is about as pertinent as if we were to ask why a curve 
 equally distant at aU its points from the center should cor- 
 respond to a circle. It would, for that is the law of its 
 
 food, they say, is already "rotting on the ground"; and if we accept the 
 pictures English statesmen, like Lord Salisbury and the Earl Dunrayen, give 
 us, free trade in England has distributed the labor and capital employed on 
 iron ship-plates from England to Belgium, and has left the laborers in its silk 
 manufactures stranded in idleness. They are too poor to emigrate. 
 
368 PROTECTION rs. FEEE TEADE. 
 
 case. But from the equation of a circle you can not gener- 
 ate an ellipse. Whether the curve might not under other 
 conditions have been better as an ellipse would be an in- 
 quiry more germain, in the facts of the actual world. The 
 question, then, we are discussing assumes the existence of 
 certain facts to which it is applicable. And the statesmen 
 of a country (whatever the economists may propose) do not 
 deliberately incline to destroy the political entity in their 
 charge, that, with its fragments, they may piece out some 
 new industrial whole. It is certainly conceivable that the 
 economic services which Germans on German soil, or 
 Erenchmen on French soil, could render to citizens of 
 other nations, might, so to speak, give out, and they yet 
 retain the capacity to serve each other. It is conceivable 
 that there might be nothing which they could do so much 
 better than the workmen of other nations, that with the 
 surplus they could buy what they wanted of them — nor 
 is it inconceivable that the surplus of the other nations 
 should happen to be in the very commodities which the 
 Germans and Frenchmen could make for themselves. The 
 motive to foreign trade ceases. In that case German and 
 French statesmen provide for keeping their workmen em- 
 ployed on services to be exchanged at home. Were it 
 otherwise, the German and French laborers, acting on eco- 
 nomic considerations alone, naight be driven from their 
 native land. There might be nothing else for them to 
 do. But they are held (the great majority are) to the 
 fatherland and to la lelle France by social and political 
 motives, overruling the economic motives. The one teads 
 to take them out of the country, the other tends to keep 
 them in. And so Bismarck and Tliiers, in patriotic co- 
 operation with their people, provide by defensive duties 
 that all their population may mutually serve each other on 
 their native soil. They do not presume to "enlighten 
 
INDUSTRIAL AND POLITICAL ENTITIES. 369 
 
 their desire for profit" — that takes care of itself. The 
 problem is simply to provide the opportunity of economic 
 labor, for a population born or thrown together on a given 
 geographical area, on which area there are overruling po- 
 litical motives for maintaining a political entity. The indus- 
 trial entity must then be made to conform to the political 
 entity, or both perish. Drop aU considerations of patriot- 
 ism, social ties, kindred, politics, and submit to the economic 
 forces alone, and I grant there would be no economic rea- 
 son for any correspondence of the industrial and political 
 entities, in the case of these two nations. Eut, then, there 
 might be no economic reason for the existence of Germany 
 or France. The people and statesmen alike of these na- 
 tions would hardly consent to follow this abstraction, pretty 
 as it is, to the point of their self-annihilation. We have 
 at last, come to one economic problem which can not " be 
 solved independently " of sociological considerations. 
 
 The protective tax may operate to shield the low-priced 
 labor (the "weak") against the high-priced labor (the 
 " strong "), or to defend the high-priced labor against the 
 low-priced labor, the "strong" against the "weak." It 
 has exactly the advantage which Prof. Sumner states, in 
 order to ridicule it, that " it goes as well one end foremost 
 as the other." Why ? Because it is all the while nothing 
 but a proposal to enable the inhabitants of a given pohti- 
 cal entity to wage their war for subsistence against nature, 
 on their own soil, on which, we assume, they do not at- 
 tempt anything which is forbidden by the nature of things 
 — the nature of their things. Common products may be 
 obtained equally well in any properly developed country. 
 In this connection, the words " strong " and " weak " have 
 no relevancy. If they had, all economic men ought to, and 
 would, live ia the strong nation. But, as there are valid 
 reasons why all men do not and can not, the inhabitants of 
 
370 PROTECTION VS. FREE TRADE. 
 
 weak nations must continue to provide material services 
 which they may render each other--the fruitful employ- 
 ment of the forms, of labor which mutually replace each 
 other. 
 
 It is not denied that great migrations are constantly 
 taking place on the face of the earth. The expulsion of 
 the Huguenots from France, in consequence of the revoca- 
 tion of the Edict of Nantes, transferred bodily to Holland 
 and England certain great industries, much to the loss of 
 France. This was expulsion by force, but free trade might 
 do the same. 
 
 These are, it seems to me, valid reasons why statesmen 
 do not submit to the redistribution of capital and lahm 
 whicb free trade must bring about between the group of 
 freely trading nations. It is the old judgment of Napoleon, 
 that the economists would grind the empire to powder, even 
 though it was made of adamant. These considerations, 
 it seems to me, show the expediency, and indeed " the ne- 
 cessity of drawing tbe lines of industrial circumvallation 
 along the boundaries of empire." 
 
 But now we take the reverse problem. Take the 
 United States, for example. " Here," says the free-trader, 
 " are thirty-eight States, trading among themselves with the 
 utmost activity, the exchange of commodities and services 
 being free as the movements of the air, and in this freedom 
 all good citizens rejoice. But this condition of things is 
 made, by the doctrine under examination, to be dependent 
 entirely upon the political relations of these States. "Were 
 they under different governments, the exchange of com- 
 modities and services which now promotes the general 
 wealth and the general welfare would be fraught with 
 mischief and possible ruin." 
 
 The United States are an industrial entity, as they are a 
 political entity. The industrial entity took the form it did 
 
INDUSTEIAL AND POLITICAL ENTITIES. 371 
 
 for the reason, and the only reason, that the exchanges of 
 commodities and services were as " free as the movements 
 of the air." The exchanges were thus free because it was 
 a political entity. Living under the same laws, customs, 
 language, traditions, religion, and ideals, the competition 
 of different capitals was absolutely effective, and the com- 
 petition of labor effective over large areas. This resulted, 
 in the industrial entity submitted to these conditions, in as 
 exact a correspondence of remuneration, in all employ- 
 ments, with the sacrifice undergone, as is possible under 
 existing human progress. The conditions resulted from 
 the uniformity compelled by the political entity.* We are 
 what we are because, while under the same moral, social, 
 and pohtical forces, we developed also under the free play, 
 between the States, of economic forces, pulling with them. 
 We pooled our issues ; we submitted to that community of 
 results which community of interest dictated. It is not sup- 
 posed that an American economist or an American states- 
 man cares in which State, or in what part of the political 
 unit, the greatest prosperity is achieved — on what points 
 its capital and labor are concentrated. The migration of 
 the instruments of production takes the place of a trade 
 in products. That is, capital and labor are perfectly mo- 
 bile within the limits of the nation. If a man doesn't like 
 things in one State, he goes to another, without leaving his 
 pohtical habitat. An American will neither go to Mexico 
 nor send his money to Peru, as he would migrate to Colo- 
 
 ' " One of the principal conditions determining the relative profitableness 
 of particular occupations and the terms on which their products are ex- 
 changed consists in the degree of facility which happens to exist for moving 
 capital and labor from one to the other. Now, this facility is very different 
 in the case of occupations carried on within the limits of a single country 
 and those carried on in diflFerent countries ; and in this difference is to be 
 found the chief fact discriminating the phenomena of international from those 
 of domestic trade." — Prof. Cairnbs, "Political Economy," p. 302. 
 
372 PEOTECTION VS. FREE TRADE. 
 
 rado or make his investments in California. Eut, subject 
 Mexico and Peru to American civilization, laws, customs, 
 and society, incorporate them in our political entity, and 
 the economic and social objections to the transfer would 
 begin to disappear.^ The greatest total annual product of 
 the nation's industry is the object of concern. Nobody, 
 under these circumstances, cares whether the yard of calico 
 is made in Lowell or Ealeigh ; whether the ton of iron is 
 made in Johnstown or Birmingham ; whether the locomo- 
 tive is made in Paterson or Atlanta. The outcome is the 
 common possession, and contribiites to the common glory 
 and happiness of one people — one political entity. We get 
 the best effects, because the economic, social, and political 
 forces are all in operation at once, supplementing each 
 other. Those who take the atomistic view of our structure 
 do not thus think. The gentleman before referred to, as 
 representing the Iowa State Free-Trade League, says : " It 
 does not matter to us whether our tribute goes to Pennsyl- 
 vania or to Europe. So far as we" (Iowa free-traders) 
 " are concerned, I will say it is better to have manufactures 
 at home " (in Iowa), " but it does not concern us a particle 
 to have them in Pennsylvania or Massachusetts." A little 
 matter like that never concerns an American free-trader 
 any more than it does a member of the Cobden Club. 
 This, for illustration only, but it is not a true view of an 
 organism. There is a sense in which the Iowa farmer 
 need not care, as a farmer, whether his wheat is consumed 
 in New York or Liverpool. The market which New York 
 affords is, pro tanto, as valuable as that of liverpooL If 
 market prices are fixed at Liverpool, it is because free trade 
 has brought the whole earth into competition with him. 
 If the price in Liverpool is less than the price in New 
 
 ' The last census shows that there are seven millions of our inhabitants 
 livin" in States other than those of their birth. 
 
INDUSTRIAL AND POLITICAL ENTITIES. 373 
 
 York, plus the cost of carriage (whicli it sometimes is), the 
 "Pennsylvania" or "Massachusetts" market may be in- 
 dispensable to him, as a farmer. But this is collateral. 
 
 If we treat the States of the Union as nations consti- 
 tuting a larger national entity, we may freely grant that 
 the permanent stoppage of a channel of trade which free 
 competition would open could not, in the words of Prof. 
 Sidgwick, " tend to increase the wealth of the industrial 
 society formed hy the aggregate of nations whose trade is 
 thus restricted — supposing such nations to be composed of 
 economic men." 
 
 But while political motives and social motives have 
 constrained the States to form the poUtical aggregate, it 
 by no means as yet appears that any given member of the 
 aggregate may not have sacrificed mere economic progress 
 in joining the Union. The group, as a whole, may be 
 better oflE, but one or more members of it may be the 
 worse off by reason of the unrestricted trade. That is, 
 upon the geographical area which some one State occupies, 
 there might, to-day, have been more men and money, 
 more population and wealth, if it had remained a distinct 
 political and industrial entity ; and have enlarged its do- 
 mestic exchanges by restrictions upon its foreign exchanges. 
 For example, Michigan, by means of protection, might 
 have drawn to itself manufactures of iron, cotton and 
 woolen goods which now swell the inventory of wealth in 
 Pennsylvania and Massachusetts. 
 
 It might not be difficult to prove that " the South," as 
 a geographical section, with her special cotton product, 
 has been a loser by virtue of her membership in this group 
 of free-trading States. Her failure early in the century to 
 turn her labor upon the manufacture of her own cotton into 
 the fabrics which her laborers consumed, was an economic 
 blunder. For such industries, aside from slavery, the only 
 
374 PROTECTION VS. FEEE TRADE. 
 
 disadvantage the South labored under was that the North 
 began hers sooner. As an independent entity, and with 
 restrictions, she, as a section, might have been wealthier 
 than she is. If, now, the South persists in the line of 
 development upon which she has started, she will cause a 
 redistribution of the labor and capital of the nation, which 
 will enrich her as a section. The citizen of the denuded 
 section may go with the new tide if he choose. He may 
 remain and continue as a patriot to rejoice in the aggregate 
 prosperity of the country.' 
 
 We may find other illustrations of the reasons why 
 free trading between industrial entities may profitably stop 
 
 1 The following curious dialogue took place before the Tariff Commis- 
 sion, Prof. Sumner being on the " witness "-stand ("Report," vol. ii, p. 
 2331): 
 
 "Commissioner Kenner: 'That is the doctrine ' (referring to Prof . Sum- 
 ner's previous free-trade discourse) ' that has been advocated in the South 
 for the last fifty or sixty years.' 
 
 " The witness : ' And I hope they will stick to it.' 
 
 " Commissioner Kenner : ' They will not stick to it ; they have seen the 
 folly of it.' 
 
 " The witness : ' They are going to begin to manufacture there, to their 
 very great loss.' 
 
 " Commissioner Oliver : ' To their loss or New England's loss ? ' 
 
 " The witness : ' New England can stand it. I do not think it would be 
 any loss to the country if there was no New England.' 
 
 " Commissioner Kenner : ' I agree with you in that last remark, that it 
 would be no loss to the country.' 
 
 " The witness-. ' And it would be no harm to the country if there was no 
 Louisiana.' 
 
 " Commissioner Kenner : ' Yes, there would bo. I wish you would prove 
 that proposition. We tried to leave the country and you would not let us, 
 and yet you say it would be no loss. That is a non sequitur which I do not 
 understand.' 
 
 " The witness : ' We should all live here and be happy, and get our liv- 
 ing, even if there wasn't any New England, any Louisiana, or any Pennsyl- 
 vania, 1 suppose.' " 
 
 The Professor is evidently willing to take his chances against all catas- 
 trophes — as a " clanless, mastcrlcss man." 
 
INDUSTRIAL AND POLITICAL ENTITIES. 375 
 
 at the lines of a political entity, and open and close -witli 
 the shifting lines of nationality. 
 
 Napoleon found France, Italy, Belgium, and Austria 
 independent kingdonas, with custom-houses on their out- 
 posts. When they became component parts of his empire, 
 he abolished these obstacles to internal commerce and in- 
 troduced free trade throughout its limits. Now, the inquiry 
 of the free-trader is, how can the advantage, the gain of 
 exchanges, depend upon the accident whether the parties 
 to it are or are not citizens of the same political entity ? 
 The answer to the question is tolerably obvious. On the 
 supposition that France, Italy, Belgium, and Austria could 
 become a homogeneous people, with common laws, lan- 
 guage, institutions, and aspirations, the only true marks of 
 nationality (and which, of course, were not realized, but 
 which Napoleon affected to assume would be realized, in 
 order to give his conquest the appearance of rational states- 
 manship), there would then have been the economic condi- 
 tions under which competition becomes effective, and labor 
 and capital perfectly mobile. In all the empire the laborer 
 moves freely to his work, and his migration takes the place 
 of an exchange of products. The parties to the exchange 
 may move out of the lines of the old political entity. By 
 the assumption, both labor and capital would be transferred 
 to the localities and the industries within the empire — the 
 new industrial entity — which would have rendered them 
 most efficient. There would, in due time, have been a 
 redistribution of the population and a reorganization of 
 industry. Taking the empire as a whole, there would have 
 been the greatest annual product of the industry of its 
 people. Without undertaking to forecast the changes in 
 detail, it is evident that one or more of these states would 
 have suffered a drainage of population and a diminution 
 of capital which, as a state, might have crippled it and re- 
 
376 PROTECTION VS. FREE TRADE. 
 
 duced its relative importance, but which, as a component 
 part of the empire, was of no sort of consequence. These 
 changes, when become permanent, would have given great 
 and powerful strength to the empire. If, now, it is again 
 broken up into separate kingdoms, it will be seen that this 
 regime of free trade within the limits of the empire has 
 degraded or ruined some of them. In rearranging, for 
 the best advantages, the industrial forces of the empire on 
 new lines, some of the areas of territory which constituted 
 the original states would have been denuded of portions 
 of their money and men, drawn ofE into new fields. As 
 parts of the empire, such inhabitants as remained in these 
 areas of reduced production could recoup themselves by 
 sentiments of pride and patriotism which terminated in 
 the national prosperity. If they expected to reap eco- 
 nomic results, they would have to move into some other 
 part of the empire. When the geographical subdivision 
 again became a separate political entity, and the old po- 
 litical lines were restored, it might simply find itself hope- 
 lessly poor, and, to recover its status quo, be compelled to 
 recall its men and money by imposing the old duties and 
 setting up the old line of custom-houses. All which 
 shows that free trade may be good policy between the 
 members of certain kinds of industrial groups, and bad 
 policy between other kinds. The group may gain, but a 
 specific member may lose. The very fact that the nations 
 of the earth are of all sizes, shapes, physical resources, and 
 ethnical characteristics, shows that they were not formed 
 by economical or industrial but by political and social 
 motives. Political motives dam up productive forces in 
 certain pools ; free trade, operating on industrial motives, 
 draws them down to a certain water-level. It is manifest 
 that the drainage may uncover one or more of them. The 
 political motive fills them with men— the industrial motive 
 
INDUSTRIAL AND POLITICAL ENTITIES. 377 
 
 may empty them. Non-competing nations will gain, be- 
 cause they need not occupy the same level; competing 
 nations may be drained to the bottom and emptied of pro- 
 ductive agencies — ^labor and capital, men and money. 
 
 We can see, at least, the final conditions under which 
 the industrial entity need not correspond with the political 
 entity — ^the terms on which alone universal free trade is 
 possible. It wiU not come, and it can not come, until the 
 final status of the industry of each political entity has been 
 fixed, when aU " natural " advantages have been explored, 
 when "acquired" advantages have asserted their mastery 
 in the great and deadly competition of races and ideals, and 
 when men have discarded all patriotic pride in the nation, 
 and sunk their allegiance to their proper political entity 
 into the vague worship of some abstract industrial entity. 
 When their relative " advantages " have come to be recog- 
 nized by the nations, and each accepts its place in the hier- 
 archy of industry, then, and only then, can free trade be 
 true in theory as it will be in practice. Then the economic 
 man will correspond with the historical and moral man. 
 Nationality will give place to cosmopolitanism, labor and 
 capital will have undergone their final redistribution over 
 the surface of the globe. Then the " seller, as such," may 
 shoulder his peddler's paclf and seek the " buyer as such," 
 at the farthest end of the earth, and make that " swap " 
 which has been the " reason of his being " ; and no man 
 shaU say, "Tariff!" 
 
 In the mean time the American statesman will continue 
 to busy himseK with the original question, Sow can the 
 people of his cov/ntry create the greatest annual product of 
 their combined industry, and prevent that product from 
 being distributed out of the hands of its true owners in 
 this political entity — the workmen of the eepublic ? 
 
CHAPTEE XVII. 
 
 A FALLACY WHICH FEEE-TEADEES PUT IN THE MOUTHS OF 
 PEOTECTIONISTS — CEEATING INDUSTET. 
 
 It remains to dispose of one other fallacy which free- 
 traders are apt to indulge in ; or, rather, to unload the fal- 
 lacious assumptions which free-traders put into the mouth . 
 of the protectionist. The purpose to confuse the argu- 
 ment is manifest from the very way in which they set 
 about to state their questions. 
 
 " How can anybody then intelligently suppose that a 
 iody of taxes, which somebody must pay, can be so cun- 
 ningly adjusted as to become & positively productive agent, 
 a spur to the progress of society ? Taxes of some kind are, 
 indeed, necessary, but how they can be made a blessing to 
 the payers and enrich the whole society, they must explain 
 who suppose that possible, provided they can explain it." 
 (Perry, " Political Economy," p. 480.) ^ 
 
 ' Prof. Robert Ellis Thompson, in his " Political Economy," pp. 243-428, 
 bad maintained that " protection to industry gives the farmer an abundant and 
 steady market for his breadstuffs, and creates a market for crops more remu- 
 nerative than grain." Perry, in his work at page 504, replies ; the underscored 
 passages in the reply, on careful study, will be found, I submit, to render the 
 answer a palpable failure : " A bigr/er home market consists in more domestic 
 buyers than before, all ready with acceptable pay in their hands. If protec- 
 tion can enlarge the home market, it must be by cither increasing the number 
 of births or diminishing the number of deaths in a given time in a given coun- 
 try.(!) Precisely how a big bundle of taxes, which the whole population must 
 pay itt one form or another, may be made to stimulate birtlis or prolong lives, 
 no reasonable man can see, though a protectionist may see it. If he can see 
 
A FALLACY ASCRIBED TO PROTECTIONISTS. 379 
 
 " It is evident that a protective tariff can not render any 
 foreign capital or labor available to help the nation which 
 lays the tariff. If a nation lays import duties for revenue, 
 some part of them may fall on the foreigner ; but if it lays 
 such duties for protection, it keeps foreign goods out. If, 
 then, the foreigner stays at home, and is forced to keep his 
 goods at home, the protecting country can not make use of 
 him or his goods in any way whatever to suit its ends or 
 avert its misfortunes. Whatever effect the protective taxes 
 exei-t, must be exerted in the protecting country, on its own 
 labor and capital. Any favor or encouragement which the 
 protective system exerts on one group of its population 
 must be won by an equivalent oppression exerted on some 
 other group. To suppose the contrary, is to deny the most 
 obvious apphcation of the conservation of energy to eco- 
 nomic forces. If the legislature did not simply transfer 
 capital, it would have to make capital out of nothing. "We 
 can not collect taxes and redistribute them without loss, 
 much less can we produce forced monopolies and distorted 
 industrial relations without loss." (Prof. Sumner, " Prince- 
 ton Keview.") "Whether the words " forced monopolies " 
 and " distorted industrial relations " are truly descriptive of 
 our industrial organization is exactly the question at issue. 
 
 it and show it, his task is then but half done, for he must see and show how 
 these same men's taxes may multiply return services in the hands of this in- 
 creased population. If he try to get out of this snug place by claiming that 
 the better ' home market ' is made by new immigrants with values in their 
 hands, he can not escape by this route, because he must first see and show 
 what there is in biff taxes to invite immigrants at all ; and besides, he is scared 
 even by the handiwork of ' pauper labor,' and, of course, he is not prepared 
 to welcome the ' pauper laborers themselves ! ' " 
 
 The political policies of the country invited immigrants which even " big 
 taxes " did not repel. The economic policy which increased the number of 
 those, whether natives or immigrants, who are not engaged in farming, but 
 must live on its products and pay for them, did " multiply " the " return 
 services " and enlarged tJie farmer's "home market." 
 
380 PROTECTION VS. FREE TRADE. 
 
 " There is not, and there never can be, any positive 
 virtue in restraint," is the language of Prof. Walker. " Its 
 only office for good is to prevent waste, and save the mis- 
 direction of energy. There can be no life in it, and no 
 force can come out of it. That which is called ' protection ' 
 operates only by restraint; it has, and can have, neither 
 creative power nor healing efficacy. All the energy that 
 is to produce wealth, exists hefore it and without respect to 
 it, and, just to the extent to which protection operates at 
 all, it operates by impairing that energy, and reducing the 
 sum of wealth that might be produced if protection did not 
 exist." 
 
 Now it is manifest that the foregoing propositions of 
 Profs. Perry, Sumner, and Walker are based on the assump- 
 tion that, without protection, all the productive energies of 
 a given people are already devoted to the most productive 
 employments, that they are all fully employed, and that 
 there is " nothing else " to which they might be directed 
 with equal efficiency, and without " waste " and " loss." 
 
 It would be difficult in the same number of words to 
 state more misconceptions of the attitude of protectionists ; 
 more perversions of the application of words to things ; a 
 more glaring example of the ignoratio elenchi, as the logi- 
 cians call it. It is an attempt to transfer to the region of 
 mental dynamics the notion of " the conservation and cor- 
 relation of forces," as understood in respect to the material 
 world. The man who applies a match to a powder-maga- 
 zine creates nothing. But the motive which induces him 
 to apply the match is the occasion of an explosion, and 
 operates to produce rather striking results. 
 
 The protectionist proposes to create nothing. He can 
 create neither matter nor material forces. The energy he 
 proposes to set free is already in the men and things he 
 deals with. He finds abimdant stores of it in the human 
 
A FALLACY ASCKIBED TO PROTECTIONISTS. 381 
 
 agencies and the matter about Mm. When the engineer sub- 
 jects coal to the process of combustion, under the boiler of an 
 engine, he sets in motion mighty machinery. He creates 
 nothing. He only correlates results — he sends them through 
 a structural organization. He sets free the forces in the 
 coal, and he loosens the spring under -which his own ener- 
 gies had been coiled. The protective statute furnishes the 
 motive for his exploding the powder-magazine. New pro- 
 ductive agencies are released ; the protective statute has 
 removed the restriction which had rendered both product- 
 ive tools, the man and machine, inert and useless. The 
 American man and the American coal were as if they were 
 non-existent, so long as we substituted the foreign man and 
 the foreign coal for him and it. It may be that we could 
 produce, with their joint efEort, " something else," and use 
 both the domestic and foreign combination, but that is a 
 distinct issue. If the two schemes will not work together 
 — and, as we have seen, we must use the one or the other — 
 which scheme results in the greatest annual product of the 
 nation's industry? "Which method of procedure results in 
 the satisfaction of the greatest number of the desires of the 
 people of the country? These questions raise the true 
 issue. 
 
 Prof. Sumner takes some pains to disprove the idea 
 that a new country might need " a lift " (as he calls it) to 
 move it on in the way of growth. John Eae, in his " Po- 
 litical Economy " (page 66 et seq.), had very dispassionately 
 proved this. And this is the case to which Mr. Mill had 
 made decided concessions. It seems a work of supereroga- 
 tion to adduce " authority" to establish a proposition which 
 lies so open to observation and common sense. 
 
 Prof. Koscher, not an unqualified protectionist (" Politi- 
 cal Economy," Appendix III, sec. 1), agrees : " Directly, 
 therefore, these hindrances to importation produce no in- 
 
382 PROTECTION VS. FREE TRADE. 
 
 crease, but only a change in tlie direction of the national 
 forces of capital and labor " (assuming that every man ca- 
 pable of working always busies himself, producing for a 
 remunerative market), " an increase only in case that _/<??■- 
 eigin producers are thereby caused to transfer their pro- 
 ductive forces within our limits ; which may certainly be 
 considered the greatest triumph of the protective system/' 
 
 And then he adds (sec. 4), as to the educational and 
 economic effects of the industrial protective system : 
 
 "The sacrifices which the protective system directly 
 imposes on the national wealth consist in products, fewer 
 of which, with an equal straining of the productive forces 
 of the country, are produced and enjoyed than free trade 
 would procure " (temporarily). " But it is possible by its 
 means to huild up new productive forces, to awaken slum- 
 hering ones from their sleep, which, in the long run, may 
 be of much greater value than those sacrifices. Who would 
 say that the cheapest education was the most advantageous ? 
 Only by the development of industry does a nation's econ- 
 omy become mature. The merely agricultural state can 
 attain neither to the same population, nor the same energy 
 of capital, to say nothing of the skillf ulness of labor, as the 
 mixed agricultural state, nor can it employ its natural 
 forces so completely to advantage. How many beds of 
 coal, waterfalls, hours of leisure, and how much aptitude 
 for the arts of industry can be turned to scarcely any ac- 
 count in a merely agricultural state? If, therefore, the 
 protective system could materially promote a national in- 
 dustry, or if it made such industry possible for the first 
 time, the sacrifice connected therewith in the beginning 
 should be considered like the sacrifice of seed made by the 
 sower. But this can be justified only on the three follow- 
 ing conditions : That the seed is capable of germinating ; 
 that the soil be fertile and properly cultivated, and that the 
 
A FALLACY ASCRIBED TO PROTECTIONISTS. 383 
 
 season is favorable.''^ AH wMch conditions are fairly met 
 in the American industrial protective system. 
 , The protective statute renders possible the formation 
 of the structural organization, peculiar to a given country, 
 through which the productive forces take effect. Prof. 
 Walker, in the citation made, intimated that " protection 
 reduced the sum of wealth that might be produced if pro- 
 tection did not exist." He felt constrained to add : 
 
 " I say that might be produced, not that would he pro- 
 duced. The latter point may fairly be disputed between 
 the free-trader — who should rather be called the free-pro- 
 ducer — and the advocate of the system of restricted pro- 
 duction. The channel of the river adds nothing to the 
 force with which the water within its banks tends to its 
 level. On the contrary, that force is reduced by the fric- 
 tion between the flowing water and the sides of the chan- 
 nel. Yet it is the water confined in rivers, and not water 
 spreading widely over the fields, which yields power to 
 manufacturing industry. The force of the steam at the 
 piston-head is less than the force of the steam in the 
 boiler, less by all that is necessary to conduct it thither 
 from the boiler ; yet it is the force of the steam at the 
 piston-head, and not where it is generated, which moves 
 the engine." ' 
 
 ' How production {n/)t creation) ensues upon bringing the right men into 
 contact with right conditions is shown by Prof. Senior (" Political Economy," 
 p, 134). Free trade for Ireland separated the productive forces in Ireland. 
 
 " The climate, the soil, and the sitiiation of Ireland have been described 
 as superior, and certainly are not inferior, to our own. Her poverty has been 
 attributed to the want of material capital, but were Ireland now to exchange 
 her native population for seven millions of our English north-country men, 
 they would quickly create the capital that is wanted. And were England, 
 north of Trent, to be peopled exclusively by a million of families from the 
 west of Ireland, Lancashire and Yorkshire would still more rapidly resem- 
 ble Connaught. Knowledge has been called power — it is far more certainly 
 
384 PKOTECTION VS. FREE TRADE. 
 
 But we have a most notable example of tlie productive 
 eflEects of restrictions. The restrictive statute in this ease 
 became the banks which confined the water in its channel 
 — ^it became the means of conveying the force of the steam 
 at the boilers to the piston-head. This is the English 
 Navigation Act. Enacted in the time of Cromwell, re- 
 enacted and extended three times in the reign of Charles 11^ 
 it remained on the statute-book for two himdred years, and 
 was only repealed after it had wrought its full effects 
 as the scaffolding for English commercial and marine su- 
 premacy. Adam Smith, " the free-trader," the apostle of 
 "natural liberty," called it "that great prohibitive and 
 protective law, intended to advance the merchant marine, 
 the wisest of all English commercial regulations." 
 
 John Adams says of it (" Life and Works," vol. x, p. 
 330) : " Earth, air, sea, all colonies and all weaker nations 
 were to be made subservient to the growth of the British 
 navy and marine, wliich in turn were to be the instruments 
 for the enlargement of British wealth, British commerce, 
 British power, and British domination, as much so as all 
 nations and things were, in times past, to be sacrificed to 
 the grandeur of Home." 
 
 It resulted, as intended, in making Englishmen the sole 
 manufacturers, the sole carriers, and the sole middle-men 
 for all the colonies, and for most of the nations of the earth, 
 until her supremacy was threatened by the great rival built 
 up out of her own colonies here under the American pro- 
 tective system. The preamble to the act was in these 
 words: 
 
 wealth. Asia Minor, Syria, Egypt, and the northern coast of Africa were 
 once among the richest, and are now among the most miserable, countries in 
 the world, simply because they have fallen into the hands of a people with.» 
 out a sufficiency of the immaterial sources of wealth to keep up the material 
 
A FALLACY ASCRIBED TO PKOTECTIONISTS. 385 
 
 " In regard his Majesty's plantation beyond seas are in- 
 habited and peopled by his subjects of this, his kingdom 
 of England, for the maintaining a greater correspondence 
 and kindness between them, and Tceejying them in a firmer 
 dependence upon it, and rendering them yet more bene- 
 ficial and advantageous to it, in further employment and 
 increase of English shipping and seamen, vent of English 
 woolens and other m,anufaGtures and commodities, render- 
 ing the navigation to and from the same more safe and 
 cheap, and making this hingdom a staple, not only of the 
 commodities of these plantations, but also of the commodi- 
 ties of other countries and places for the supplying of 
 them." 
 
 The following striking summary of its results is given 
 hj Mr. Eben Greenough Scott ("The Development of 
 Constitutional Liberty in the English Colonies of America," 
 p. 188) : 
 
 " At last, when England was rent by cruel strife, and in 
 a predicament so sorry as to render her an object of insult 
 to the domineering Dutch, just at the time when it could 
 be least expected of her to rise and resent affront, and 
 when, perhaps, she herself did not seriously contemplate 
 such an act, just at that time she took the step which 
 henceforth wrought such a wonderful change in the des- 
 tiny of herself and of her rival. In a few years the carry- 
 ing-trade of HoUand declined, her magnificent fleet was 
 brought to its destruction, the commerce of the world was 
 transferred from the Dutch to the English shipping, the 
 supremacy of the ocean was shifted from the decks of Fan 
 Tromp to those of Blake, and England was started upon a 
 career of prosperity which at last made her mistress of the 
 seas. All this was accomplished by an act of Parliament 
 in 1651, in the time of Cromwell. It provided simply 
 that thenceforward no goods — the product of Asia, Africa, 
 
 18 
 
386 PROTECTION VS. FREE TRADE. 
 
 or America— should be imported into England or exported 
 out of it but in vessels belonging to the people of Eng- 
 land, and that no goods, the produce or manufacture of 
 any part of Europe, should be imported unless in English 
 ships, or the ships of the country where such goods were 
 produced or manufactured ; and that of these English ships 
 the master, and three fourths of the marines, should be 
 English. . . . Its results far transcended the wildest dreams 
 of Lombard and Yenetian avarice, or the grandest schemes 
 of Spanish and Portuguese conquest. It not only secured 
 to the people who enacted it the greatest share of the world's 
 carrying-trade— Trade knew its master, and followed at 
 once with becoming servility." 
 
 At this time the aristocracy in England held monopo- 
 lies in the trade in hides, wool, salt, gold thread, flax, hemp, 
 and many other commodities. All the guilds were monop- 
 olists. 
 
 There was one vast scheme of monopolies, the results 
 of royal grants for the purposes of royal revenue. There 
 was no competition in the internal trade and manufactures 
 of the country. Under the Navigation Act these monopo- 
 lies passed from individuals to the people at large. Hence- 
 forth the colonies were regarded mainly as feeders to Eng- 
 land's carrying-trade, or consumers of her manufactujjes, or 
 factories for the distribution of its capital, and, in a word, as 
 mere commercial appendages of a great commercial power. 
 
 Adam Smith summarized results in these words : " A 
 great empire " (the American colonies) " has been estab- 
 lished for the sole purpose of raising up a nation of con- 
 sumers, who should be obliged to buy from the shops of 
 our different producers all the goods with which they 
 could supply them." The idea of " a lift " is not so gro- 
 tesque after all. The Navigation Act lay exactly athwart 
 the path which the natural liberty of the individual die- 
 
A FALLACY ASCRIBED TO PEOTECTIONISTS. 387 
 
 tated that he had a right to enjoy, both in offering his la- 
 bor and commodities in any market in the world he might 
 choose. 
 
 The view we have been combating is the modern 
 form of the old argument of Adam Smith and John Stuart 
 Mill — the only solid argument either ever offered against 
 governmental interference in a nation's industries. It is 
 in substance this. Adam Smith says : 
 
 "If a foreign country can supply us with an article 
 cheaper than we can make it ourselves, we had better buy 
 it with some part of the product of our own industry, em- 
 ployed in a way in which we have some advantage." (We 
 have seen that we can not buy our supply of the large 
 number of articles we need.) " The general industry of 
 the country, being always in proportion to the capital 
 which employs it, will not thereby be diminished, no more 
 than that of the above-mentioned artificers, but only left 
 to find out the way in which it can be employed to the 
 greatest advantage. In every period, its revenue might 
 have heen the greatest which its capital could afford." 
 
 Here we are back to the wages-fund theory, which is 
 no longer considered tenable. Doubtless, " to find out the 
 way " is the burden of the problem we are trying to solve. 
 The argument proceeds on the assumption that labor is all 
 the while working as hard as it can on the most profitable 
 employment, and that a definite limited fund of capital 
 only is at its disposal. This is more exactly expressed by 
 Mr. Mill: 
 
 " Yet in disregard of a fact so evident " (that a part 
 only of the capital of a country is allotted to the support of 
 productive labor, and there vnll not and can not be more 
 of that labor than the portion so allotted will feed and pro- 
 vide with the materials to work on), " it long continued to 
 be believed that laws and government, without creating 
 
388 PROTECTION VS. FREE TRADE. 
 
 capital, could create industry, not by making tlie people 
 more laborious or increasing tbe efficiency of their labor — 
 these are objects to wMcli the government can in some 
 degree contribute — ^but when the people already worked as 
 hard and sJcillfuUy as they could he made to, it was still 
 thought that the government, without providing additional 
 funds could create additional employment." 
 
 It is incredible that any sane economist ever thought 
 that a man " could work harder or more skillfully than he 
 could," capital or no capital. A protectionist has no need 
 of an identical proposition like that. 
 
 The syllogism of Adam Smith and Mr. Mill, when put 
 in form, is this : 
 
 Major Premise. — Industry can be increased only by 
 the increase of capital. 
 
 Minor Premise. — Laws and government can not in- 
 crease capital. 
 
 Conclusion. — Therefore, laws and government can not 
 increase industry. 
 
 As Judge Phillips says in his " Proposition concerning 
 Protection and Free Trade " : " This is very transparent 
 logic ; the sophism is glaring. The major is what old 
 Kobert Burton would designate ' a stupend fallacy.' " 
 
 Mr. George Basil Dixwell, in his " Premises of Free 
 Trade examined," has dragged the fallacy into the open 
 day, and the series of propositions is seen to turn on a ques- 
 tion of fact, and not on a process of deductive reasoning. 
 
 " But to make the latter proposition flow from the first, 
 a vast gap has to be filled. It requires to be proved that, 
 in a normal condition of things, there is no unemployed 
 capital, and no funds which, although intended for unpro- 
 ductive consumption, are capable of being instantly turned 
 to the support of production the moment that a new indus- 
 try introduced by a protective law presents a profitable 
 
A FALLACY ASCRIBED TO PROTECTIONISTS. 389 
 
 field of employment. This is a question of fact, and tlie 
 moment we inquire into the facts we find that the unem- 
 ployed capital in the United States is vast, probably much 
 exceeding $1,000,000,000, and that the ability to re-enforce 
 this out of the funds intended for unproductive consump- 
 tion within the year is also most probably a good deal over 
 $700,000,000. Before these facts the whole argument falls 
 to pieces." 
 
 It ought not to be necessary to cite "authority" for an 
 obvious fact, but we venture a citation from a modern 
 English economist : " Even on extraordinary occasions, 
 when unlooked-for events in the political or commercial 
 world disturb ordinary calculations and give enormous ad- 
 vantage to particular industries — such occasions, for exam- 
 ple, as occurred in the early years of railway enterprise, or 
 again in the linen trades on the breaking out of the Ameri- 
 can War — even on such occasions the equilibrium of re- 
 muneration and cost can always be restored, not, indeed, in 
 a moment, but after no long delay, through the action of 
 labor and capital still uncommitted to actual industrial 
 employment, and without any sensible encroachment on the 
 stock already actively employed. The existence of a large 
 amount of capital in commercial countries in disposable 
 form, or, to speak less equivocally, in the form of money 
 or other purchasing power capable of being turned to any 
 purpose required, is a patent and undeniable fact. Nor 
 is it less certain that this capital is constantly seeking the 
 best investments, and rapidly moves toward any branch of 
 industry that happens at the moment to offer special atten- 
 tions." (Cairnes, " Some Leading Principles," etc., p. 63.) 
 
 No. The protective statute does not create energy. 
 It releases the productive forces which await the joint 
 action of the human agent and the material instrument. 
 This action the protective statute induces. It never was a 
 
390 PROTECTION VS. FKEE TRADE. 
 
 question of the " conservation and correlation of forces," 
 but a simple question of commercial fact. 
 
 " Do the restraints imposed by law have the effect to 
 direct the productive force generated by human wants, set- 
 ting in motion human labor, to act upon the natural agents 
 of production with a better actual result than under the 
 rule of freedom? "If the protectionist can show this," 
 says Prof. Walker, " he will make his case." 
 
 "VVe feel entirely confident that this question has been 
 afiirmatively answered in the discussion of facts in fore- 
 going chapters. 
 
CHAPTER XVIII. 
 
 nrotrsTEiAL eesults achieved — some peactical maxims 
 
 OF TARIFF EEFOEM. 
 
 We have endeavored to conduct this inquiry on the 
 sole consideration of economic results — that is, results ter- 
 minating in the greatest product of industry, realized in 
 wages, profits, and rents, and ultimately in consumable 
 commodities and desirable services. The only use made of 
 social considerations has been to account for the common 
 aims which inspire us ; oi political considerations, has been 
 that they furnish the common legal conditions under which 
 we work ; of moral considerations, as indicating the nature 
 and amount of the things our inherited traits lead us to 
 desire. These, together, account for the aggregation on 
 our soil of the people who, among themselves, own all the 
 instruments of production — land, labor, and capital. The 
 motive-power of it all has been the satisfaction of desires. 
 
 The answer to our inquiry required neither learning nor 
 philosophy. The only question was, which was the best 
 way for these men to act under certain niotives? The 
 reply was simply an account of what they did, and the 
 reasons why they acted as they did. If resort has been 
 made to the technical language of the political economist, 
 it has been because the common unfamiliarity with it has 
 engendered the idea that there was some occult explanation 
 not accessible to mere business-men. "We need take no 
 account of any theory which, we may agree, is only " a ra- 
 
392 PEOTECTION' VS. FREE TRADE. 
 
 tional description of a group of co-ordinated facts in their 
 sequence and relations." 
 
 What were our facts ? According to Frantlin and Ham- 
 ilton, the opinion of the whole people of Pennsylvania, as 
 expressed in their act of September 20, 1785, and of the 
 people of all the colonies — according to the testimony of 
 Bancroft, Hildreth, Minot, and other historians, cited in the 
 foregoing pages, and many others who might be cited, the 
 facts were : the farmers, the lumbermen, the carpenters, the 
 masons and day-laborers, the schoolmasters, parsons, and 
 doctors found thefnselves xmable to procure the suppHes of 
 manufactured goods which their " opulence " entitled them 
 to enjoy. They could not trade off their kind of " abun- 
 dance " for these " sundry articles." Without consulting 
 Adam Smith or Jean Jacques Rousseau, by common con- 
 sent they said to certain of their neighbors : " You can 
 make just the things we need — om- cotton, woolen, and iron 
 fabrics. You make them for us, and we will agree to buy 
 them of you. We will patronize you. Invest your money 
 in the requisite ' plant,' and we will see that you are remu- 
 nerated for your capital and labor on the common terms 
 which our joint resources will allow. We will trust your 
 skill and industry for results in cheapness. We will go 
 further. So that neither party may back out, we will put 
 this agreement in the Constitution, authoriziag Congress to 
 ' regulate commerce ' to this end. Of course, with the un- 
 derstanding that if the results do not turn out best for a 
 majority of us, we may annul this arrangement and buy 
 anywhere in the world— have free trade. Certain doctri- 
 naires are abroad who want these goods as well as we, but 
 they preach ' liberty ' and their ' inalienable rights ' of ' ex- 
 change ' — ^they prefer these abstractions to the commodities 
 which satisfy our and their desires. We prefer the com- 
 modities. Nevertheless, you take your chances, that we 
 
INDUSTRIAL KESULTS ACHIEVED. 393 
 
 may repudiate the present understanding, for the majority 
 must rule." 
 
 This is all there ever was in protection, in fact or in 
 law. It was a balancing of the expedients open to them 
 — to enjoy the goods or go without them. They knew, 
 then, for they said so in terms, that the price of the domes- 
 tic goods was higher for the moment than the price of such 
 foreign goods as they could buy. 
 
 Nor did they trust the skill and industry of their manu- 
 facturing neighbors in vain, for the domestic goods, if the 
 whole supply be taken into the account, are cheaper now 
 than the foreign. The results have turned out so well for 
 all of us that the compact is still adhered to. 
 
 And the doctrinaire is still abroad, insisting on free 
 trade as a mode of his liberty — still talking about " rob- 
 bery " and " spoliation," and the " subtle and unjust inva- 
 sion of his rights," growing out of this agreement of the 
 vast majority of his neighbors. The " force " he denounces 
 is the legitimate force of the societary compact. The com- 
 pact will be promptly abrogated when it ceases to work the 
 results intended. But our doctrinaire cares nothing about 
 economic results. He risks his all on the transcendental 
 " liberty " he claims he is entitled to. Let that have full 
 play, and he cares not whether he has prosperity or adver- 
 sity — satisfaction of desires or not — liberty is the desire he 
 wishes to gratify, the rest will regulate itself. " Hence," 
 he concludes, ^^ either prosperity in a free-trade country, 
 or distress in a protectionist country, is fatal to protection- 
 ism, while distress in a free-trade country or prosperity ■ 
 in a protectionist country proves nothing against free 
 trade." Why ? Because the economic results of " liberty " 
 are to be accepted, whether good, bad, or indifferent. The 
 results of "protection" are to be rejected, even though 
 they are the best attainable, because, forsooth, they are 
 
394 PROTECTION VS. FREE TRADE. 
 
 " adventitious." " Liberty " is the panacea for all ills— just 
 as " liberty " was the idol enthroned by the French Eevolu- 
 tionists. " Man," they cried, " is naturally a perfect and 
 solitary whole — tlie will of the lawgiver has transformed 
 him into a fraction of a greater whole." Unregulated 
 liberty is license, violence, disintegration. 
 
 The argument we have essayed has not been conducted 
 on this view of the individual and of the society with 
 which he has necessary relations. We started out with a 
 study of the scientiiic validity and economic operation of 
 defensive duties in the United States. We have traced 
 them, and are willing to submit the necessity of their im- 
 position and results to the test, of observation and experi- 
 ence. Abstract rights are not within the field of discus- 
 sion ; the concrete judgment of the majority of American 
 citizens on a question affecting their general welfare is final 
 and conclusive before any tribunal to which an appeal can 
 be made. 
 
 We have said nothing of the moral and educational ef- 
 fects of protection, or the economic advantages coming from 
 density of population, and its relation to the creation of fresh 
 desires, calling for fresh efforts to their satisfaction, l^or 
 have we discoursed on the utter helplessness of agriculture 
 itself, when unattended with the other arts and sciences. 
 We have only taken the free-trader's premises, the power of 
 agriculture to effect the exchanges needed. We have dis- 
 cussed it from the low elevation of the exchange of material 
 commodities, and that on the sole consideration of their ac- 
 cessibility and cheapness — cheapness, both in the sense of 
 the expenditure of labor and effort upon it, and the money 
 price — accessibility, on the contemplation of other sources 
 of supply. The free-trade view intrinsically contains in it- 
 self the idea that what we want is " leisure" and the tem- 
 perament which prescribes that we save labor by having 
 
INDUSTRIAL RESULTS ACHIEVED. 395 
 
 fewer desires and consequent release of effort to gratify 
 them. It is unnecessary to encumber our discourse with 
 abstruse speculation on the subject. We are not the kind 
 of people which that philosophy contemplates. "We do not 
 ,lead fixed, stationary lives, which run in rigid grooves. "We 
 are a progressive race — with convolutions in our brains 
 which expand, and sutures in our skulls which allow expan- 
 sion. "We have never ventured to try the experiment of 
 returning to fewer and coarser desires, but our whole effort 
 has been to render our organization more sensitive, our pains 
 and pleasures more acute, and our lives more energetic in 
 the pursuit of means by which we might secure the one 
 and avoid the other. We have simply surrendered to the 
 law of our nature under the stimulation of our proper 
 environment. The great facts of our environment are all 
 contained within the geographical area which bounds the 
 nation. The actions and reactions which we undergo are 
 the actions and reactions between the men and the things 
 which are common to us as the inhabitants of a given ter- 
 ritorial area, the social forces which move us are the forces 
 of tlie society of which we are component parts, and not a 
 society in Europe or Asia; the functions which we dis- 
 charge are the functions of the organic unit to which we 
 belong, and not of an organism of which we are not mem- 
 bers, on some other continent ; the whole of which we are 
 parts is the American Nation, and not the abstract hu- 
 manity which cosmopolitanism contemplates. We are a 
 great, healthy, independent entity, with our own co-ordi- 
 nated nervous system, subject to the reflex action of the 
 external world which surrounds us, amenable to the sensa- 
 tions which our adjustment to our own conditions of exist- 
 ence has generated. We have no conceivable calculus by 
 which we could estimate the loss which would accrue to 
 us — the cost — of being an Esquimau, and subsisting on 
 
396 PKOTECTION VS. FEEE TRADE. 
 
 whale-oil, or a Bornean, living on bread-fruit. "We, there- 
 fore, furnish no data by which the free-trader can use us 
 as mere counters in the reckoning of the gains and losses 
 of the unworthy and insignificant game which he conceives 
 us as playing. And thus it happens that when the free- 
 trader has fenced us in by his definitions, he blurts out his 
 protest the moment the true inquiry lands us outside his 
 inclosure— the moment you trace the roots of his science 
 to the true undergound of human nature, he cries, " Halt ! " 
 Prof. Sumner says an economic problem may be worked 
 out by itself.^ He leads us up to the border-land where 
 the problem begins to take hold of vital factors, and ihen 
 wishes us to solve it with the aid of the few tokens he has 
 been pleased to place in our hands. With a given lot of 
 commodities made and in hand, ready for sale by aU the 
 individuals and all the nations of ihe earth, he wants the 
 trade made, the swap instantly accomplished, on the market 
 prices current in the world at the moment. He wants the 
 books instantly balanced all over the world on a given day. 
 Each man trades what he has for what he wants, on a given 
 signal, witli no thought for the morrow. When presented 
 in that form, it is soluble " by itself." Even then, we, in 
 the United States, would be left with a large surplus of 
 unsalable food and raw materials on our hands, and conse- 
 quently would not get what we wanted. But, when we 
 contemplate the morrow, with its development of new de- 
 sires and new forms of consumption, with new products 
 and new forms of production, and that these are the desires 
 of Americans and the products of Americans, we see that 
 it is a question of sociology, and a question of social sci- 
 ence — of science in that society which we call the TJnited 
 States. To deal with the situation as a purely economic 
 one, to stop and palter with the feeble waves which break 
 
 ' See page 74, supra. 
 
INDTTSTEIAL RESULTS ACHIEVED. 397 
 
 along the beacli, is to ignore the massive power of the great 
 ocean itself. 
 
 The problem which is presented is, therefore, as we 
 have seen, over and over again, a political, social, moral, 
 reUgioiis, as weU as an economical one. 
 
 If we had confined our exertions to the raising of food 
 and raw materials, with the needed mechanism of such 
 pursuits, would we have accumulated the material, tools, 
 and instruments, including land and houses, which we now 
 have ? Manifestly not. Should we have made the prog- 
 ress we now have, even in agriculture ? Probably not. 
 "Would a McCormick have been developed, and his reaper, 
 without the skill and genius which comes of the attrition 
 of a race of trained artisans ? We do not, of course, know, 
 bnt probably not. The South previous to the war has 
 shown us what the rude labor needed in cotton-raising can 
 do, and what it can accomplish in the way of progress and 
 achievement. It is no answer to say that they were sub- 
 ject to the conditions of slavery. The real question is, 
 what is the nature of the requirements needed in the rais- 
 ing of cotton ? A gold-mining country has the machinery, 
 and the machinery only, required in that business. A coal- 
 mining country, when that business is the main occupation, 
 needs only the machinery appropriate to that business, and 
 the labor peculiar to it ; an agricultural people vrill come 
 to no implements not indispensable to the working of the 
 soil. In the presence of a race who refuse to limii their 
 labors to that pursuit, we have developed much labor-sav- 
 ing machinery for the farmer ; by himself, would he have 
 done it ? None of us can do more than guess — probably 
 not. What we are, we see and know ; what we might have 
 been under free trade, even as cotton and food raisers, is a 
 matter of idle conjecture and poor guess-work. The free- 
 trader may fairly be called upon to construct his landscape 
 
398 PROTECTION VS. FKEE TRADE. 
 
 under a regime of free foreign trade. He may be fairly 
 challenged to estimate, under the demands of a foreign 
 market alone for our surplus, how far he thinks the area of 
 arable land would now extend westward from the Alle- 
 ghanies ; how he imagines the sites of the cities of Lowell, 
 Troy, Philadelphia, Trenton, Johnstown, Pittsburg, Cleve- 
 land, Wheeling, and Chicago would look. How his land- 
 scape would hold out in churches, and school-houses, and 
 hospitals, and places of amusement ; and how meager and 
 thin would the census be. And whether, in fact, he does 
 not know that, as a whole, the country would not only now 
 be better off, but would be industrially more healthy and 
 more "wealthy," if under wise guidance we had never 
 raised a dollar's worth of surplus food and raw material ? 
 "Whether a sagacious manager would not have done better, 
 treating the land as a food-factory, to have produced supply 
 according to demand. Whether, in fact, he does not know 
 that the loss in exchange value which has accrued from the 
 vast overproduction engendered under liberty would not 
 have paid the cost of aU the machinery which protective 
 tariffs have enabled our people to erect. Whether he does 
 not know that we should have made the best use of our re- 
 sources, and should have shared our prosperity on a higher 
 level with each other, if we could have managed to con- 
 duct our industries so that there would be no surplus — 
 no overproduction anywhere. These propositions are, of 
 course, purely speculative, but the burden is upon the ad- 
 vocate of free foreign trade to answer them. He complains 
 of existing things; let him put his science to some con- 
 structive work, and exhibit demonstrable results.* 
 
 ' These suggestions are put interrogatively. What the true development 
 of the subject-matter jof them demands is a chapter devoted to the explicit 
 proof, which is possible, that without manufactures we should have had no 
 agriculture. As it has been, our agriculture was wasteful, and extensive rather 
 
INDUSTRIAL RESULTS ACHIETED. 399 
 
 So intent has the philosophical free-trader been to pre- 
 serve the status by which he could reach up and pluck his 
 bread-fruit without effort or sacrifice — so anxious for the 
 " leisure " which he thought he had the capacity to enjoy, 
 but had not — so persuaded that he could lead the life and 
 experience the sensuous impressions of the vertebrate, con- 
 sistently with the faculties and habits and " cost of living " 
 of the moUusk, that he really overlooked his humanness — 
 the imperiousness of his desires and his marvelous ability to 
 work their satisfaction. The mandate of the Almighty, to 
 subdue the earth, reached the eai-s of the men in America — 
 an old family in a new home. They had all the accumulated 
 experience and all the inherited traditions of the race. You 
 might attempt to expel their American hiiman nature with 
 a pitchfork, but it would return. The mandate meant more 
 
 than intensive. Wc should have encountered, without the domestic manu- 
 facture, the danger of degeneration in our whole nature, wants, desires, and 
 aspirations, and of the total collapse of our career, with the loss of hope and 
 power to recover the lost ground. It would be idle to attempt any real pict- 
 ure of the American people as mere farmers — food-raisers for foreign capi- 
 talists. The free-trader is prompt to present a mere dogmatic denial that 
 tbey would accept the ro^e, but certainly his philosophy prescribes that they 
 should have accepted it, and he fails to show how it is to be escaped. 
 
 The American farmers would probably present a new type ; their inherent 
 characteristics, energy of soul, intelligence, and manly virtue, would have 
 prevented their degeneration to the level of producers of raw materials else- 
 where. These are the same characteristics which have prevented their ac- 
 ceptance of that status in the world's economy, and which have insisted on 
 nobility of industry and pursuits, under the machinery of protective tariffs. 
 They would constrain them to do the same thing over again, if their history 
 was to be repeated. They had strong arms to do the rude labor required in 
 the cultivation of their fields. But their historical traditions were such as to 
 make social considerations an ingredient in their nature, and compel them to 
 a higher education, which, as rude laborers, would not have paid them. One 
 of Bishop Berkeley's " Queries " was, " whether the awaking of wants is not 
 the most probable way to lead a people to industry." Our ancestors were 
 bom with these various wants, masterful and unappeasable, except by com- 
 plete satisfaction. 
 
400 rKOTECTION vs. FEEE TRADE. 
 
 to them than to run plow-marks across their fields and to 
 resume the pastoral life which their predecessors had. fol- 
 lowed on the plains of Asia. Subtlety of brain furnished 
 free play for deftness of finger. Their divine commission 
 extended to earth, and air, and sea. Elasticity of steam 
 stood for human muscles, electricity did human errands 
 under great oceans, and man's audacious invention dissolved 
 the stable chemical compounds which had locked up the 
 treasures he sought in dead matter. The Promethean fire 
 had been wrested from the sky. Alone, " the wants of 
 man exceeded his powers " ; aggregated in society, " man's 
 powers exceeded his wants." Contemporaneous with the 
 origin of the nation, began the triumphant siege which the 
 human family laid against the obstacles interposed between 
 nature and the gratification of human wants. Engine after 
 engine was wrested from nature, and turned into mechanism 
 which carried the conquest into new regions. The actual 
 achievements of the past have only raised us into the view 
 of the illimitable spaces yet before us. The satisfaction 
 of lower wants has only brought us into the presence of 
 unmeasured higher wants which come trooping in upon us. 
 But, in the mean time, and as the result of the process, 
 vast tracts of nature lay subdued at man's feet. The pro- 
 duction of given commodities, under the progressive effi- 
 ciency of human skill, called for a less and less onerous 
 contribution of human labor. Utilities increased and 
 values diminished. Values diminished, because less human 
 effort was expended in surmounting the obstacles which 
 Nature presented, and with which she resisted man's ad- 
 vances. l:^"ature herself thwarted his purpose to be a jelly- 
 fish, by inflaming him with new desires at the moment 
 when, having planted his feet on the means of satiating old 
 desires, he proposed to sit down for " leisure " — for a regu- 
 lar free-trade dolce far niente — for a good old Patagonian 
 
INDUSTRIAL RESULTS ACHIEVED. 401 
 
 industrial nihilism} Nature flanked us at last ; her old 
 edict still operates : by the sweat of his brow shall man eat 
 his bread; but she has made man of more account and 
 greater than the bread he eats. 
 
 In aU this process, then, commodities have become 
 cheaper to the human family — not cheaper to some, by 
 the temporary and fortuitous circumstances that a portion 
 of the children of Adam labor and strive on a remunera- 
 tion which barely supports the human being as a tool, and 
 that some are able," for a few weeks or a few years, to ex- 
 change a few gratuities of nature with their overburdened 
 and overworked fellows, and thus make good economic 
 bargains out of them, swap a little rude labor of the hands 
 for much travail of the soul — ^but cheaper for aU mankind, 
 by virtue of the mighty and successful assault which our 
 hmnanity has inspired and enabled us to make against the 
 material universe. Shall the American, with the divine 
 equipment with which he is invested, remain behind in this 
 assault? Armed alike in body and soul, shall he shirk 
 heroic duty and fail of heroic rewards by staying at the 
 
 ' " There is immense force, apparently, in tlie fallacy that we want ' in- 
 dustries,' when in fact we want goods to supply our needs ;. in the idea that 
 we want work, when in fact we want leisure. We are trying to sustain life 
 on the face of the earth, and we find it hard work. All our discoveries and 
 inventions have for their object to make it easier ; that is, to get more goods 
 for the same labor, and to sustain more and more highly developed men. For 
 this we want leisure from drudgery as the first and most imperative requisite. 
 Therefore, everything which gels the goods and lessens labor is an advance in 
 civilization; and everything which makes more labor necessary to get the 
 goods tends to barbarism. Labor for a material good is simply a gross ne- 
 cessity, which we are all the time trying to conquer in order to got leisure for 
 pleasanter and higher occupation ; and, above all else, it follows that those 
 whose lives are all spent in drudgery over material needs are most clogged in 
 their efforts for emancipation by everything which increases labor. Hence 
 ifiis aim, with which the early American statesmen set out, has proved a chi- 
 mera. The further we follow it,, the further it leads on. We get more in- 
 dustry and less good." — Sumnek, " Protection in the United States," p. 61. 
 
4:02 PROTECTION VS. FREE TRADE. 
 
 rear and playing " sutler," or be content to furnish " com- 
 missary supplies " ? "VVe may thank God that our " histori- 
 cal traditions " prevented us from being that sort of men. 
 
 Can any theologian measure the gravity of our sin, had 
 we rejected the divine message to subdue the earth, and 
 undertaken to evade that responsibility to a Creator which 
 attaches to highly endowed creatures ? 
 
 Is there any judicial tribunal, in which honor or fair 
 play sat as umpire, which would withhold condemnation of 
 the act of a people whom inertia or cowardice inspired to 
 vacate their place in the history of the race, which this 
 century is writing ? 
 
 Or, on the low level of the free-trader, is there any 
 professor who can reckon up the immeasura,ble economic 
 gains which the people of the United States have reaped 
 by virtue of the entrance of American artisans upon this 
 great warfare against nature ? Can he estimate the cheap- 
 ness which has resulted from this assault and conquest — 
 cheapness to ourselves and to all the world ? Will he 
 attempt to deny that portion of man's power over nature, 
 which the efforts of the American skilled laborer and in- 
 ventor have conferred, in the act of adding their exertions 
 to those of their worse-rewarded but struggling brethren 
 in Europe ? Hour by hour and day by day, the price of com- 
 modities has been reduced by the mighty co-operation of 
 all men everywhere. The momentum of the attack made 
 on our soil, and with our natural forces, has been felt along 
 the whole line. The whole world has had cheaper iron 
 and steel, cotton and woolen, because the builders of Ameri- 
 can furnaces and factories have achieved distinct improve- 
 ments in machinery and processes, because the products of 
 American funiaces and factories have been thrown into 
 the markets of the world — been made available for the 
 consumption of large divisions of the human family. This 
 
IKDUSTRIAL EESULTS ACHIEVED. 403 
 
 is America's contribution to tlie civilization of tlie worid. 
 It matters not that the effort has been to supply the Ameri- 
 can demand by America's production. The efforts hare 
 been expended Iiere on the best natural conditions. The 
 demands we should have made on England, for instance, 
 for iron, have been withdrawn to the advantage of the 
 rest of the world. The American supply now equals the 
 American demand. Manufacturers have as much interest 
 in making cheap things as in making dear things, as much 
 interest in making cheap things as the people have in con- 
 suming cheap things. The price is an index of our power 
 over nature. "What the world wanted was the new thing, 
 and an easy way to get it ; and not the price of it — that de- 
 pends on the hardness of the way to get it. The discovery 
 of the new want of railroads has called upon the labor and 
 capital of the world in the last forty years to a degree in- 
 capable of estimation. A decided proportion of the efforts 
 of ns all has been withdrawn from overcrowded pursuits, 
 and has been directed to the satisfaction of this new and 
 pervading desii'e for cheap transportation.^ Does the free- 
 trader argue for an instant that rails, steel or iron, would 
 have been as cheap as they are now, unless American brains 
 and muscle and money had co-operated in the stupendous 
 and eager effort to build railroads ? Is there use in any 
 debate as to the money price which rails would have borne, 
 if the demands of all the world had been made upon a 
 limited group of producers, say, in Great Britain? Is it 
 not manifest that every pound of iron or steel, and every 
 yard of cotton or woolen goods, produced under natural 
 conditions in America, has operated to reduce the price in 
 all the markets of the world — the price in the United 
 
 ' It is believed that the stoppage of work on the railroad system of the 
 world — ^now aggregating 350,000 miles — will account of itself for the depres- 
 sion now existing in all industrial nations. 
 
404 PROTECTION rS. FREE TRADE. 
 
 States as well as elsewliere? Is it not evident that the 
 protective policy which induced this domestic production 
 was a wise and beneficent scheme — ^in the interest of cheap- 
 ness ; and an unavoidable procedure, if on American soil, 
 rather than foreign soil, the activities of our own people 
 were to be diverted into this channel, and swell the volume 
 of commodities which the family would have, available for 
 division among themselves? What is the sense in post- 
 poning the achievement to a future time ? Does the free- 
 trader fear there are no more worlds to conquer ? Doubt- 
 less, if we had not done it this century, we might have done 
 it the next century ; but we wanted the raiboads now, and 
 we wanted them with sufficient intensity to turn to and 
 make them now. "We wanted those " 509 steam-engines " 
 now. Stop and look deliberately in the face the proposition 
 that America was to buy abroad — import her railroad sys- 
 tem of 125,000 miles, and its equipment of iron and steel 
 machinery ! If it was worth while for the world to have 
 the railroad system, it was worth while for us to make our 
 share of it. "Why not ? And make it here, at home. Why 
 not ? We could not have imported it if we had tried. The 
 welfare of that portion of the human family which was 
 here was greatly increased, and it greatly increased the 
 numbers who came here to participate. I^uture genera- 
 tions must discover for themselves enough of " something 
 else " to do. Doubtless, by the same token, if the colonists 
 had kept away from this continent a century or two longer, 
 future generations would have all the magnificent forests 
 along the Atlantic seaboard still for future use. Does not 
 the free-trader regret the economic loss which we have 
 suffered in cutting down and burning up, in order that we 
 might make arable new ground, the millions and millions 
 of pine and oak trees which the woodmen of Anaerica have 
 sacrificed to premature cultivation? Or, rather, ought he 
 
INDUSTRIAL RESULTS ACHIEVED. 405 
 
 not see and regret that, by our insane haste to overproduce 
 for the foreign market, we have been guilty of the earth- 
 butchery which has made a sterile waste of the Atlantic 
 States south of the Potomac — has robbed the Genesee 
 Valley of its eminence, and reduced the prairie-farms of , 
 Illinois to an average wheat-crop of about ten bushels to 
 the acre ? Was not this an economic blunder— to destroy 
 so ruthlessly all these natural instruments of production ? 
 The result of all which was to skim our lands of riches 
 and bring ourselves earlier under the unmitigated dominion 
 of the "law of diminishing returns," to which all agri- 
 culture is subject. Desiring to know why the inhabitants 
 of Yirginia and North Carolina may now be found in 
 Texas or Arkansas, the answer is, " They borrowed from 
 the earth, but they did not repay, and she expelled them." 
 Or, on another line of considerations, ought he not to 
 see and rejoice that the protective economy has enabled 
 Prof. Sumner, for instance, to escape competition with 
 " the hedger and the ditcher," because it has created a so- 
 ciety in which his "services" as a teaeher'^ were in -de- 
 mand, and allowed him the full use of his natural advan- 
 tages? An economy which gave the society the "serv- 
 ices " of " the late Mr. Scott in running a railroad " instead 
 of keeping him in competition with " an Irish laborer in 
 
 ' If we should take Prof. Sumner at his word, he is engaged in an indus- 
 try which does "not pay." Forgetting his economics, and speaking as u. 
 sociologist, he says ("What Social Classes owe Each Other"): "There is a 
 great continent to be subdued, and there is a fertile soil available to labor, 
 with scarcely any need of capital. Hence the people who have strong arms 
 have what ia most needed, and, if it were not for social considerations, higher 
 education would not pay." 
 
 While saving Prof. Sumner and the late Mr. Scott, we have also saved 
 millions of other workmen who had not strong arms, but did have inspired 
 aptitudes. Fortunately for the Professor, one of the ingredients in the "his- 
 torical traditions " of the people he is dealing with, made " social considera- 
 tions " one of the desires to be satisfied. And this is outside of his science. 
 
406 PROTECTION VS. FREE TRADE. 
 
 digging a ditch " ? "We may bs sure that the society of 
 which they are members were the gainers in utilizing, in 
 appropriate callings, the superiority of the Professor and 
 the organizer. Imagine the wasteful picture of Prof. 
 Sumner devoting his skill to driving a four-horse team 
 hitched to a McCormick reaper on a wheat-factory like the 
 Dalrymple farm in Dakota; and Mr. Scott, seated on a 
 broncho pony, frittering away his marvelous energies on 
 the " round-up " of a herd of Texas steers, for export to 
 meet the foreign demand for beef ! ' 
 
 The time had come when the human family needed 
 this continent — and they needed it all — forests, soil, ores, 
 textiles, cattle, steam, electricity. The development re- 
 quired the skill, effort, and sacrifice of the men who were 
 on the soil, and not of men three thousand miles away. 
 The society was to be built up here. This particular army 
 corps was encamped on the arena of its struggles. It as- 
 sailed the obstacles on its own front. The assault involved 
 all arms of the service. Its impetus would have been 
 weakened, and its final triumph delayed, had it made any 
 detachments in aid of the struggles going on elsewhere, or 
 
 ' " If it is said tliat we can not compete, what is meant ? These phrases 
 are allowed to pass without due examination. I can not compete with my 
 inferiors or with my superiors. I can not compete with an Irish laborer at 
 digging a ditch, and I could not compete with the late Mr. Scott in running 
 a railroad. Could any taxes enable me to run a railroad as Mr. Scott did, 
 and to earn such remuneration as he earned ? Certainly not. No taxes can 
 possibly enable a man to compete with a superior. Could any taxes enable 
 me to compete with an Irish laborer at digging a ditch ? Indeed they could. 
 They might interfere between me and the laborer and prevent me from getting 
 Jm services, and / might be forced to dig m,y men ditch, turning away from 
 other and better paid occupations to give my time to an inferior occupation. 
 That would impoverish me. Such is the only way in which protective taxes 
 can make competition possible. They drive us down to compete with those 
 who are far worse off than we, instead of allowing us the full use of our 
 natural advantages " / — Sumner, " Tariff Commission Report," vol. ii, p. 10. 
 
INDUSTRIAL RESULTS ACHIEVED. 40Y 
 
 left beliind important mimbers to struggle witli harder ob- 
 stacles to no purpose. The I'amparts have been carried, its 
 great labors have been done. It can turn and look at the 
 Held of the conflict. The conflict is past — it has been 
 waged " once for all" — the actual problem now is to find 
 new wants in order to absorb its efforts. AVe turn, then, 
 to new conquests. We no longer ransack our resources in 
 exchange values, to contrive how we can pay for an im- 
 portation of twenty-four thousand tons of iron, as in 1824, 
 at eiglity dollars per ton. We need about five million tons 
 annually, and can make it ourselves for from twelve to 
 fifteen dollars per ton. We are no longer compelled to 
 ease off a too sudden desire for steel rails to be supplied 
 from England at a cost of one hundred and sixty dollars 
 per ton. We can produce all we need at twenty-six dollars 
 per ton. Of course, English and German and French skill 
 has helped cheapen production, but American skill has 
 been an equal factor, and present prices are the resultant 
 of adding the competition of American labor and capital 
 to the existing industrial organization which the human 
 family had set up. Free-traders are quite apt to speak of 
 American skill as bungling — of American commercial in- 
 stincts as dishonest * — of American industrial attempts as 
 
 ' One scarcely knows wheth'er to hold the master or the pupil responsible 
 for the bad morality exhibited in the following passage, taken from Prof. 
 Perry's " Political Economy," at page 514: " While this knit-goods bill was 
 pending (in Congress, in 18S2), iJie. writer met an old pupil, a manufacturer, 
 and asked him, ' What are you running on now ? ' 'On these knit goods they 
 are making such a fuss about at Washington.' ' I thought you spun and 
 wove cotton.' 'I do.' ' Are not knit goods woolen ? ' 'No.' 'Is there no 
 wool in what you are making ? ' ' J^ot a shred.' ' I thought this bill was to 
 protect woolen manufactures.' ■' Oh, we are obliged to print the Jigure of a 
 sheep OH every piece we make, hut every fiher of it is cotton.' " 
 
 Now, however valuable this incident might be as the basis of a discourse 
 in criminal jurisprudence, it is rather narrow as the foundation of an argu- 
 ment against protection. 
 
408 PKOTECTION VS. FKEE TRADE. 
 
 if they were an "abomination" — of American products 
 as if they were coarse, valueless, worthless, and the whole 
 capital and labor put into them as "wasted" and "frit- 
 tered away." There is no end of praise for the " cheap 
 and nasty " products of foreign shops. A man who con- 
 tinues to sit on the top rail of " leisure," in the Sleepy 
 Hollow of cheapness) and takes no note of this grand con- 
 flict between human forces and physical conditions on 
 the plains above, is an economic idiot. He misconceives 
 the real scope of the problem of human society — the real 
 motives of the mundane struggles of humanity — the real 
 outcome of our earthlj'- efforts and sacrifices, the subjection 
 of Nature by turning against her her own enginery — the 
 true, final issue, cheapness. 
 
 The distributive justice which is realized ia the rewards 
 and remunerations between man and man, between group 
 and group, is administered by a higher power. 
 
 In what degree have we ourselves profited by the cheap- 
 ness which we have helped to bring about ? Every com- 
 modity made by the average American workman, for con- 
 sumption in the average American household, is as cheap, 
 in money price, as anywhere else in the world. The cotton 
 and woolen goods the average American citizen wears, the 
 shoes on his feet, the food that he eats, the ordinary crock- 
 ery on his table, the carpets on his floors, the utensils used 
 in the kitchen, and the chains and plows and tools used 
 on the farm, the fuel that warms his house and cooks his 
 food, the fare on the railroad which bears him on the 
 pleasure excursion or to distant friends, are cheapened 
 American products, and could not be imported, tariff or no 
 tariff. Some exceedingly fine prints, some silks and velvets, 
 some decorated china, some wines, some h-io-d-hrao, are 
 imported for the rich or fashionable or luxurious, and they 
 properly furnish revenue until our own production can 
 
INDUSTRIAL RESULTS ACHIEVED. 409 
 
 take these forms. A yisit to any large dry-goods store will 
 show many articles upon the mamifactm-e of which Amer- 
 icans are as yet iinwiUing to bestow the requisite time, or 
 unable to expend the requisite still, on terms of European 
 compensation. / desire to repeat it, however, that all the 
 commodiUes which enter into the consumption of the ordi- 
 nary well-to-do American family are produced here at no 
 greater cost in labor, and no greater average price in 
 money, than anywhere else in the world} In all the great 
 
 ' The most complete attainable statistics of wages of labor and cost of 
 living, and a comparative statement of these as between Massachusetts and 
 Great Britain, will be found in the " Fifteenth Annual Report of the Bureau 
 of Statistics of Labor,'' page 469, issued in 1884 by the Massachusetts Bureau 
 of Labor, and compiled by Carroll D. Wright, Esq., chief of the bureau. 
 
 The report states : " In the ninety industries in Massachusetts and Great 
 Britain, supplying statistics of average weekly wages for the period between 
 the years 1840 and 1883, the wages of at least one and a, quarter million 
 (1,250,000) of employes are represented." 
 
 The grand comparison gives this result, as to wages : 
 
 " That (lie general average weekly wage of the employes in the industries 
 considered was 77'49 per cent higher in Massachusetts than in Great Britain." 
 
 As to cost of living : 
 
 " JTuif, on any basis of expenditure, the prices of articles entering into the 
 cost of lining were on the average n'^9 per cent higher in Massachuseiis, hi 
 1883, than in Cheat Britain ; that of this figure ll'Ifi per cent was due lo 
 higher kents in Massachusetts, leaving 5'80 per cent as indicative of the higher 
 cost of living in Massachusetts, as compared with Great Britain, as regards 
 tJie remaining elements of expense. 
 
 " The Massachusetts working-man expends 48'41 per cent more on his 
 family than the working-man in Great Britain. Of this 4841 per cent, 5*80 
 per cent is paid extra for articles which could be purchased 5'80 per cent 
 cheaper in Great Britain ; 11'49 per cent is paid extra to secure more and 
 larger rooms and more air-space than the working-man in Great Britain- en- 
 joys ; the remainder, 31"12 per cent, indicates also an extra amount expended 
 by the Massachusetts working-man to secure better home surroundings," the 
 better and more furniture, the better and more food, the better and more 
 clothing, etc., which constitute the higher standai'd of living he indulges, 
 compared with the working-man in Great Britain. 
 
 These figures lead to this grand result : 
 
 " That the higher pbiCes in Massachusetts are represented by 5'80 per 
 19 
 
410 PROTECTION VS. FEEE TRADE. 
 
 fields of consumption the domestic supply is nearly equal 
 to tlie domestic demand. In tliese departments the Ameri- 
 can struggle, under defensive duties, has worked its full 
 results. In others, success is just in view. And all along 
 the line definite progress is being made in the direction of 
 cheapness, and the full supply of all our domestic wants by 
 the direct act of domestic production.' That is all there is 
 
 cent; tJiat increased accommodations in Jiotmnff (11'49) and the general 
 HIGHEB STANDARD OF LIVING (31'12) maintained by Massachusetts worMng-men 
 as compared with the standard of living of working-men in Great Britain is 
 represented by 42"61 (11'49 + 31'12) per cent of the total greater cost (not 
 higher) of JiS'Jfl per cent, or, stated as a direct ratio, the standard op living 
 op Massachusetts working-men is to that op the working-men op Great 
 Britain as 1"42 to 1." 
 
 ' " There are named, in a late report (' Annual Statements, Treasury De- 
 partment, by Counties and by Customs Districts, of Imports and Exports of 
 the United States, for the Fiscal Year ending January 30, 1883 ') by the Bureau 
 of Statistics, 112 classes of manufactured products that are imported. But 
 mauy of them are more largely exported, showing that other countries de- 
 pend on us for such products more than we depend on other countries. In 
 less than one fifth of these classes does the excess of imports over exports 
 exceed one twentieth part of the home consumption. The excess in cutlery, 
 for instance, is only 4 per cent of the consumption, in ' other manufactures ' 
 of iron only 3 per cent, in lead and paints each 3 per cent, and in carpets 
 only 4 per cent. Practically the home manufaoture supplies the whole de- 
 mand in 90 out of the 112 classes. We import over one twentieth of the 
 entire consumption in only 22 classes, viz. : cotton goods, lime, and glue, 
 each 5 per cent ; steel ingots, and ground coffee and spices, each 8 per cent ; 
 hair, 9 per cent; sauces and pickles, 10 per cent; woolen goods, 11 per 
 cent ; drugs and dyes, 12 per cent ; zinc and books, each 14 per cent ; glass 
 and fancy goods, each IS per cent ; combs, 20 per cent ; salt, 25 per cent ; 
 earthen and stone ware, 40 per cent ; silk goods, 43 per cent ; misccllaneoug 
 forms of steel, 46 per cent ; buttons, 46 per cent ; flax and hemp goods, 65 
 per cent ; sheet-iron, 86 per cent, and tin, 97 per cent. Only three out of 
 the 112 classes are supplied more largely by foreign than by home produc- 
 tion. This serves to show how few branches of manufacture there are that 
 do not closely approach ability to supply the entire home demand. With a 
 little more growth, if undisturbed, nearly all will command the home market 
 entirely, and by competition at home secure as low prices as consumers can 
 reasonably desire."— W. M. Grosvenob. 
 
INDUSTRIAL RESULTS ACHIEVED. 411 
 
 of it. That was the end proposed, and the only end pro- 
 posed. Abundance and cheapness are the only economic 
 ends conceivable to which hnman exertions can legiti- 
 mately be directed. There have been blunders, there have 
 been miscalculations, there has been immaturity, there has 
 been vacillation, there have been ambitious attempts to 
 scale inaccessible heights, but, on the whole, it may be 
 affirmed, without the introduction of speculative con- 
 jectureSj that all this has been achieved here at less 
 waste, at less friction, at less miscarriage of effort, at 
 less misdirection of energy, at fewer false steps, at lower 
 outlay of capital, at less expenditure of hard work, than 
 the industrial system of any other people.^ It is the 
 best, as it is the latest, product of human genius, care, adap- 
 tation of means to ends, co-operation, coiirage, and foresight. 
 The faculty of invention by which we turned material forces 
 to our use, we have seen successfully exercised in the field 
 of social forces, through the intervention of the Govern- 
 ment, which has formulated the corporate resolution of the 
 people to supply their wants from their own resources. 
 When the people resolved that they could and would do 
 all these things for themselves, they, at that moment, im- 
 posed a protective tariff on themselves. So favorable were 
 the social, political, and physical conditions in the United 
 States that they reacted on the economic conditions. Our 
 industries built themselves, just as the Pacific EaUroad was 
 carried across the continent on itself. The true source of 
 our effective progress was, of course, the material condi- 
 tions which surrounded us, and in the nature of the human 
 agency which moved us ; but the true results were possible 
 
 ' In the midst of these congratulations it is only proper to drop a note of 
 sympathy for the anguish of certain free-traders who are persuaded that 
 somehow protection broke down in the presence of the problemsj of emery, 
 copper, nickel, and spool-thread I 
 
412 PROTECTION rs. FREE TRADE. 
 
 only by the access whicli the one had to the other ; were 
 accompHshed only by the actual appHcation of the one to 
 the other. It looks hke a truism to say that our resources 
 could only become utilized on the condition that we used 
 them ; but the free-trader, by impKcation, denies it. The 
 human agent was drawn to this field of employment from 
 the four ends of the earth. He came under the multiplied 
 attractions of moral, political, material, and economic ad- 
 vantages. The supply of labor was thus secured. The 
 only capital required was the subsistence in food and cloth- 
 ing, consumed by labor, while the great operation was be- 
 ing carried forward. To these premises, our unquestioned 
 successful career of achievement stood in the relation of a 
 true propter hoc, and no cheap fortuitous post Jioc. The 
 conclusion was contained ia the premises, and necessarily 
 flowed from them. 
 
 ISov was the local prosperity of the workers in this 
 geographical theatre of the division of human labor the 
 only beneficent result of American endeavor. The West- 
 em republic became a vent for the overcrowded labor 
 of all Europe, and our wages withstood the terrible ia- 
 flux ; we assimilated even the garbage damped upon our 
 shores. The workshops of England, Germany, Kussia, and 
 France felt the relief which our great draft made upon 
 them. The demand we made for labor here thinned the 
 ranks of competing hands and brains there. Their wages 
 and standards of living rose responsive to the removal of 
 repressive burdens there. The general level of welfare 
 was raised through all the world. When the founders of 
 the nation invited the human instruments of production to 
 our own soil, they entered into an implied contract to pro- 
 vide opportunity to render material services here — one to 
 the other. The transfer of the laborer himseK took the 
 place of a trade in the products of his labor. Glad and 
 
INDUSTRIAL RESULTS ACHIEVED. 413 
 
 prosperous as liiings became here, they led also to gladness 
 and prosperity elsewhere. The places in Europe made va- 
 cant by the seven million immigrants, who have reached 
 us since 1860, have widened the margin of comfort and 
 enjoyment of every laboring -man and his family in every 
 country in Europe. The human family has been the 
 gainer in a large sense, but it was also true, all this time, 
 that we kept our higher rate of progress by entering into 
 possession of all our own resources, moral, mental, and ma- 
 terial. We divided on a higher level by dividing with each 
 other. "We reaped greater economic gains by plowing 
 our fields, rather than by plowing the ocean. We pock- 
 eted all the profits by the domestic exchanges, rather than 
 export all our gratuities in the illusive rewards of foreign 
 commerce. We have retarded our descent to the common 
 level of rewards for labor and abstinence — wages and profits 
 — which seems to be the admitted outcome of our struggles, 
 and miist fiow from the improved appliances which render 
 labor and capital mobile over large areas of the earth. 
 
 The American experiment has added incalculably, di- 
 rectly and indirectly, to the welfare and civilization of the 
 whole race — resulting from our joint contest over nature : 
 for the others, by draining them of surplus laborers, working 
 at disadvantage, under unproductive conditions — by giving 
 them a chance to recover their courage, their esprit de 
 corps, their social integrity — ^by affording them an example 
 of the worth of man and the dignity of labor ; for ourselves, 
 by dividing among ourselves the remunerations for hard 
 and skillful toil on the maxims of justice and equity, and 
 foregoing the silly ambition of sending our products in 
 ships all over the world, in the idle expectation that we 
 could find better bargains among foreigners than among 
 ourselves. 
 
 So signal has been our own success in supplying our 
 
414 PROTECTION VS. FEEE TEADE. 
 
 own wants that a class of theoretical free-traders have 
 changed their whole premises and their whole line of ar- 
 gument within the last few years. "We were first told hy 
 the professors that a new country had neither the labor nor 
 the capital to carry on great organized industries ; that we 
 must wait until one accumulated and the other multiplied, 
 and that, " when competition had become as severe here as 
 abroad, indiistries would come in naturally and of their 
 own accord " ; " that we had not the arts and sciences and 
 the skill of older nations; that we had not their misery 
 and their want, and that the advantages and disadvantages 
 of those states were about equally divided," and that in con- 
 sequence we must " take to the land." Protectionists have 
 thought that if we could get Natm-e on our side, and get 
 her to take a hand in our interest, the sooner we appropri- 
 ated her services the better. 
 
 Now we are told that we have too much labor and capi- 
 tal, and that we must reverse the currents of our commerce. 
 Let us see how this school go about it. Mr. David A. 
 Wells, in the " North American Review " for September, 
 1884, says, inter alia ; 
 
 " It is clear that there is no need whatever, at present, 
 for any more furnaces or factories to supply any domestic 
 or home demand, and that, if even the existing furnaces 
 and factories are to be kept fully employed, and any con- 
 struction of new ones entered upon, a larger market, or a 
 market outside of the country, must in some way be ob- 
 tained." Then he deduces certain conclusions which he 
 calls " axioms " : 
 
 " First. There is no sufficient market for our surplus 
 agricultural products except a foreign market, and, in de- 
 fault of this, such surplus will either be not raised, or, if 
 raised, will rot on the groxmd." ^ 
 
 ' Mr. Wells has a formidable rival in rhetoric and a dangerous competitor 
 
INDUSTRIAL RESULTS ACHIEVED. 4-15 
 
 " Second. Tlie domestic demand for tlie products of om- 
 existing furnaces and factories is very far short of tlie ca- 
 pacity of sucli furnaces and factories to supply, and until 
 
 in logic in the Hon. Frank Hurd. In the speech by the last-named gentle- 
 man in Congress, before referred to, he says : 
 
 " It must not be forgotten, as I said a while ago, this wheat finds its mar- 
 ket in Liverpool in competition with all the wheat of the world. The price 
 of the wheat there is determined by the competition. This competition not 
 only fixes the price of the wheat sold there, but of every bushel sold at 
 home. It is the Liverpool market which determines the price of wheat 
 which may be sold at Chicago, Toledo, Milwaukee, or any of the great grain 
 centers of the West. 
 
 " I say to the farmer of America that the prospect for him is by no means 
 encouraging. With elevators, granaries, and warehouses all filled to over- 
 flowing, with the old crop still unsold, with the vast fields of the great West 
 greening to the coming harvests, with o-ops unexcelled in India, almost ready 
 for the market, with splendid promise among almost all the wlieat-growing 
 nations of the earth, and with the price of wheat less than eighty cents in 
 Chicago, I predict that before January next the price of wheat will be so 
 low that it will not pay tlie cost of production, and the com raised on the 
 Western prairies will be burned again for fuel, as was the case several years 
 ago. When that time arrives the farmers will be beggars in the midst of their 
 own plenty, and paupers by the side of their own golden gathered slieaves. [Ap- 
 plause.] There is absolutely no relief to the American farmer except in the 
 making of foreign markets for him " ! 
 
 That is to say, forsooth, videlicet — i. e., the non food-producers of the 
 world take a certain amount of food, the market price of which is fixed at 
 Mark Lane, London. The American farmers, in competition with the farmers 
 of all the world, have this market plus the home market to the non-food- 
 raisers here. Taken as a whole, the price of wheat is so low " that it will 
 not pay the cost of production." Mr. Hurd'a remedy: abandon the ex- 
 changes between the American farmer and the American manufacturer; 
 abandon the capital and labor in American protected industries, and turn 
 them upon the land. 
 
 One may try a long time without seeing the force of this logic. The 
 American artisan will be glad to make common cause with the farmer, and 
 their joint labors will supply all their wants. In that event, it is not appar- 
 ent how either can be beggars in the midst of their own plenty, and paupers 
 by the side of their own golden gathered sheaves. Mr. Hurd's " logic " fairly 
 rises into the region of humor. 
 
416 PEOTECTION VS. FREE TRADE. 
 
 larger and more extended markets are attainable, domestic 
 competition, while not preventing large sales (for a nation of 
 fifty-six millions requires a large amount of commodities), 
 wiU nevertheless continue, as now, to reduce profits to a 
 minimum" (as protectionists iave always contended it 
 would), " and greatly restrict the extension of the so-caUed 
 manufacturing industries. 
 
 " Third. With restricted opportunities for labor and the 
 profitable employment of capital, the continual addition to 
 our population from natural increase or immigration will 
 inevitably tend, through increased competition, to reduce 
 the wages of labor and promote social discontent and an- 
 tagonisms between employers and employes." 
 
 Concluding, however, from a general review of our sit- 
 uation : 
 
 " But, in our case, whatever has happened has, as yet, 
 occasioned no scarcity of capital for every fairly promising 
 investment." 
 
 From all which it is proposed to deduce the logical 
 conclusions — abolish all protective tariffs, raise more food 
 " to rot on the ground " — supplement our existing furnaces 
 and factories, and relieve the increasing competition of 
 laborers here, by availing ourselves of the " services " of all 
 the laborers of Europe, embodied in imported commodities 
 made in the furnaces and factories there. 
 
 Indeed — 
 
 " Here is a pretty mess, 
 Here is a state of things," 
 
 revealed by this Ko-ko of political economy. 
 
 At first blush it would seem, admitting Mr. "Wells's 
 axioms, that we had really, through the contemned and 
 derided protective economy, reached the opportunity for 
 the " leisure " so eloquently pleaded for by Prof. Sumner, 
 only he wanted to enjoy the leisure before we had laid 
 
INDUSTEIAL RESULTS ACHIEVED. 417 
 
 grounds for indulging in it — ^Iie proposed leisure at the be- 
 ginning, instead of at tlie end of an industrial career. 
 
 Mr. Wells proposes to reverse matters, and export manu- 
 factured commodities. We then find ourselves confronted 
 by a state of facts the operation of which has been indicat- 
 ed among the primary laws of political economy. We are 
 remanded to the fundamental difficulty pointed out by 
 Alexander Hamilton (whose writings, by-the-way, betray 
 his intimate acquaintance with Adam Smith's " Wealth of 
 Nations "), to wit, " The vain project of selling everything 
 and buying nothing." We are called upon to answer 
 Prof. Sumner's query, embodying his objection to starting 
 in, on the protective system at all : " What, then, I ask, is 
 the rest of the world to do for us ? If we take all the in- 
 dustries, how will they pay us for what we do for them ? " ^ 
 
 ' We here, again, encounter the eloquence of our friend Hon. Frank 
 Hurd : 
 
 " Last year England sold abroad one billion five hundred million dollars' 
 worth of manufactured goods, and America, exclusive of the manufactured 
 products of agriculture, sold abroad barely seventy million dollars' worth. 
 Fifteen hundred millions of dollars for that little stormy island, and seventy 
 million dollars for this continent ! Yet we have opportunities and advantages 
 vastly superior to hers. She has to go thousands of feet under the land and 
 under the sea to get her iron and her coal, and go thousands of miles over 
 the land and the sea to get her cotton and her wool. We find here our iron 
 and coal close to the surface, on the mountains and hill-sides, and can tumble 
 them together into the furnaces. We have the vast cotton-fields of the sunny 
 South and the wide pasture-fields of the West for sheep to give us abun- 
 dance of cheap cotton and cheap wool. It is an ineffaceable stain on the 
 American name that the markets of the world have thus been surrendered 
 to Great Britain, our great rival. Think you that if we could have sold 
 abroad of our manufactured goods one billion dollars' worth last year, there 
 would have been this stagnation, overproduction, and depression ? 
 
 " If I could burn into the brains of the manufacturers of America one 
 sentence, it would be this : ' Turn from this constant introspection, to the na- 
 tions of the earth ; down with the walls, out to the sea.' There are 2,000,- 
 000,000 people in the world who want to buy what you make." 
 
 Shutting our eyes to the beauties of this burst of rhetoric, let us submit 
 
418 PROTECTION VS. FKEE TRADE. 
 
 We are brought face to face with the formulated judg- 
 ment of approved economists: "The great trades of the 
 world are carried on between countries pretty widely re- 
 moved from each other, either in the scale of civilization, 
 or in respect to their natural resources and productions: 
 while, m proportion as countries approximate each other 
 in natural resources, or in the industrial qualities of their 
 inhabitants, the scope for international trade is narrowed ; 
 it is even possible that it should fail altogether. The rea- 
 son of this is by no means mysterious. The advantages 
 to be derived from the separation of employments are, in 
 countries in which industry has made any considerable 
 progress, in general realised to their full extent h/ the sepa- 
 ration which takes place within the limits of these coun- 
 tries." (Gaimes, " Political Economy," p. 300.) 
 
 " It will also be apparent, that nations possessing exact- 
 ly simila/r powers of production can not gain iy mutual 
 commerce, and consequently will not have any such com- 
 merce, how&oerfree from artificial restrictions." (Jevons, 
 " Theory of Political Economy," p. 210.) 
 
 " This is so strikingly the case, that the growth of a 
 nation's foreign trade is sometimes vaguely spoken of as 
 though it constituted absolute and unquestioned evidence 
 of advance in industrial prosperity. It may, therefore, be 
 useful to point out — ^what might otherwise seem too ob- 
 vious to bo worth stating — that it is, cceteris paribus, an 
 economic disadvantage that any commodity should be pro- 
 duced at a distance from the market in which it is nomi- 
 
 it to a little logic. Mr. Hurd, with our full home supply of food, cotton, 
 wool, coal, iron, silver, gold, copper, and most raw materials, in what will the 
 2,000,000,000 ( ! ) people of the world, who want " of our manufactured goods 
 one billion dollars' worth," pay us ? Suppose you take the trouble to think 
 this over, and be ready with a specific answer. Really, now, what do you 
 seriously consider to be the reason why we don't and never can reach them ? 
 
INDUSTEIAL EESULTS ACHIEVED. 419 
 
 nally sold ; and that if, in any case, this disadvantage can 
 be got rid of — without creating an equally serious draw- 
 back — through the production at home of some commodity 
 hitherto imported from abroad, the resulting diminution of 
 trade would obviously he a marTc of industrial improve- 
 ment and not of retrogression.''^ (Sidgwick, " Principles of 
 Political Economy," p. 214.) 
 
 " The noteworthy circumstance is, that while the coun- 
 try was then prospering " (he is speaking of Australia) " its 
 external trade was undergoing constant contraction. The 
 fact, I may mention in passing, shows how little the foreign 
 trade of a country, as measured Tyy its exports and imports, 
 furnishes a correct criterion of its industrial progress or 
 growth in real worthP (Caimes's Essays : " The Australian 
 Episode." i) 
 
 Let us see. Here in the United States is a people with 
 an abundant supply of appropriated capital, with an ade- 
 quate number of furnaces and factories, with a surplus of 
 food and raw materials, with all the cotton and woolen 
 ■goods they need, with all the houses to cover their work- 
 men, their wives and children, with the blankets on their 
 beds, with the carpets on their floors, and furniture, with 
 the crockery on their tables, with the cooking utensils in 
 their kitchen, with all the iron and steel they can use, with 
 railroads to carry them to distant fields of business or pleas- 
 ure, with literature, with churches, with places of amuse- 
 ment ; over and above all these, capital as yet uncommitted 
 to any enterprise, becoming cheaper and cheaper, and only 
 seeking a " field of employment " ; labor to use this capital, 
 with constantly increasing productive power to make the 
 more and multiplying new things, which will eventually 
 
 ' Every economist who attempts to demonstrate the commercial prosperity 
 of England or Holland under free trade, does it by manipulation of her cus- 
 tom-house returns. May be, for British progress, this is the test. Certainly, 
 we in the United States can better measure our wealth by our census returns. 
 
420 PROTECTION VS. FREE TRADE. 
 
 be divided among tlie laborers. All tbis is going along 
 peacefully under tbe law, or ratber tbe tendency, wbicb 
 Prof. Senior more fully pointed out, tbat, imder tbe in- 
 creasing efficiency of tbe co-operation between capital and 
 labor, capital is getting a less and less proportionate sbare 
 of tbe product, and labor is getting a constantly increasing 
 proportionate sbare of tbe joint product. Eeally, tbis is 
 quite as optimistic a result as Carey and Bastiat ever antici- 
 pated. It is a fair inquiry, wbat more a people so situated 
 can enjoy ? Any foreign commerce wbicb tbey need can 
 only be for tbe products of otber climates, and for com- 
 modities tbe product of noiv-competing groups of industries. 
 And it is tbis commerce witb non-cornpeting industries 
 wbicb it is our true policy to build up, wbetber witb Soutb 
 America, Asia, Africa, or Europe. 
 
 On sucb a commerce tbere will be no restrictions, nor 
 bave we ever imposed any. We sball bave time arid 
 money, also, to devote to tbe one outstanding conquest 
 wbicb free trade bas prevented us as yet from essaying. I 
 say free trade bas prevented us from essaying, because in 
 the carrying-trade tbere bas been no attempt to impose 
 restrictions, except as to our coasting-trade. Tbere bas 
 been absolute free trade in freigbting. Wbatever may 
 bave bappened to our sbip-owners, by reason of tbe Hmita- 
 tions imposed on buying sbips abroad, our ports bave been 
 as free, in ocean ca/rrying-t/rade, to all tbe world as tbey bave 
 been to ourselves. "We bave been driven oflE tbe seas, not 
 by tbe tariff on sbips, but by foreign competition, " under 
 freedom." Doubtless we bave been able to do better witb 
 our capital and labor in providing for our internal com- 
 munications, by means of railroads and tbe commerce on 
 our rivers and lakes. If we bad bougbt tbe sbips we could 
 not bave sailed tbem. Tbe president ' of tbe only American 
 
 ' Mr. Henry D. Walsh, of Philadelphia. 
 
INDUSTRIAL RESULTS ACHIEVED. 421 
 
 company operating a line of steamers, carrying the Ameri- 
 can flag, running from Philadelphia, will tell you that, if 
 their steamers were presented to the company as a gift, 
 they could not be profitably employed in foreign trade in 
 competition with the salaries and wages and expenses of 
 Enghsh officers and seamen. " At the time of the repeal 
 of the navigation laws all the best judges thought that the 
 carrying-trade of the world must pass into the hands of 
 the Americans. It has passed into our own. There are 
 probably several causes for this ; but the most important, 
 to my mind, is that America has found in her internal 
 development — in her farming, and in the railways which 
 farming creates and sustains — an industry more profitable 
 to herself and to the world than the ocean carrying-trade." 
 (T. H. Farrar, " Free Trade vs. Fair Trade.") Free trade 
 in freighting has driven us out of that industry. But we 
 have about finished our system of internal communica- 
 tions. Ko people can do everything at once. Under 
 proper defensive duties we are again about to enter this 
 great field of employment, at present unoccupied by 
 American labor and capital. We shall wrest from England 
 a portion of the $500,000,000 annually charged the nations 
 of the earth by her for carrying their products on the ocean. 
 "We shall at least rid ourselves of the tax which this opera- 
 tion imposes on us. The issue of that struggle is plainly 
 foreshadowed in the generous words of Mr. Gladstone, in 
 his article " Kin beyond Sea," " North American Keview," 
 September, 1878 : 
 
 "I do not speak of political controversies between 
 them" (the thirty-eight States of the Union) "and us, 
 which are happily, as I trust, at an end^ I do not speak of 
 the vast contribution which from year to year, through the 
 operations of a colossal trade, each makes to the wealth and 
 comfort of the other, nor of the friendly controversy which 
 
422 PROTECTION V8. FREE TRADE. 
 
 in its own place it might be well to raise between the lean- 
 ings of America to protectionism, and the more daring reli- 
 ance of the old country upon free and unrestricted inter- 
 course with all the world. Nor of the menace which in 
 the prospective development of her resources America 
 offers to the commercial pre-emiaence of England. On 
 this subject, I will only say it is she alone who, at a coming 
 time, can, and probably will, wrest from us that commercial 
 supremacy. We have no title, I have no inclination, to 
 murmur at thcprospect. If she acquires it, she will make 
 the acquisition by the right of the strongest, but in this 
 instance the strongest means the best. She will probably 
 become what we are now, the head servant in the great 
 household of the world, the employer of all employed, be- 
 cause her service wiU be the most and ablest. We have 
 no more title against her than Venice or Genoa or Hol- 
 land has had against us. One great duty is entailed upon 
 us, which we, unfortunately, neglect, the duty of prepar- 
 ing, by a resolute and sturdy effort, to reduce our public 
 burdens, in preparation for a day when we shall probably 
 have less capacity than we have now to bear them." 
 
 I hope the most inveterate and obstinate doctrinau-e in 
 America will not object to this coming era of universal 
 free trade, based on the United States as the economic cen- 
 ter of the world, and can contemplate, with complacent 
 satisfaction, the commerce of the world growing by con- 
 centric layers from the industrial point d'appui which our 
 protectionism has established here ; and may take pure sci- 
 entific comfort in the fact that then our industrial entity and 
 our political entity may be separated without the redistribu- 
 tion of our capital and labor throughout the planet. We 
 are to become the center of gravity for terrestrial exchanges. 
 
 It is tolerably obvious that this grand plan of exporting 
 manufactured goods, which free-trade economists now hint 
 
INDUSTEIAL KESULTS ACHIEVED. 423 
 
 at, can not be carried out if we destroy the manufactories 
 themselves. It therefore becomes us, in view of present 
 revenue reform schemes, to explore the methods proposed. 
 Our present industries have been organized on the basis of 
 protection in the past, and these can only be kept in pros- 
 perity by judicious apphcation of Hke principles in the fu- 
 ture. Even if the present distribution of labor and capital 
 is an artificial one, it may be fatal to change it. ' If, on the 
 contrary, it has been made as the result of sound economic 
 doctrines, any changes and adjustments ought to be made 
 by statesmen who believe in the vahdity of the protective 
 idea. Mere "tinkering" with the tariff by doctrinaires 
 would be intolerable. And surely the system ought not 
 to be overthrown unless it has failed. 
 
 Now the logical scientific free-trader wiU be found at 
 least consistent. Kejecting in toto the validity of protec- 
 tion in the past, or prospectively, he would at once proceed 
 with the " reform " in the direction of free trade — or, at 
 least, for a "tariff for revenue only," "adjusted to the 
 needs of the government economically administered." It 
 is evident enough that such a tariff may have no relation 
 whatever to protection. If for "revenue only," duties 
 should be levied on the imports of commodities which we 
 do not produce — a " protective " tariff is necessarily levied 
 upon commodities which we do produce.^ 
 
 Therefore it is that the a priori free-traders make their 
 attack direct, and they do not flinch from the consequences 
 of their doctrines. Says Prof. Perry (" Political Economy," 
 page 510) : 
 
 ■ " These three, then, are the yital principles of a revenue tariff, namely, 
 low duties on few articles, and these wholljf foreign, . . . and, therefore, the 
 three vital principles of protection must be conceded to be high duties on 
 many kinds of goods, the counterparts of whiclh are made or grown at home." — 
 Peket, pp. 481-184. 
 
424 PROTECTION VS. FREE TRADE. 
 
 " The suppressed argumentation is something like this : 
 Certain tariff-taxes are now a part of the law of the land. 
 Property has been invested in virtue of this tariff law; 
 therefore the tax must be touched gingerly, if at all. The 
 just argument would take this form : All laws hostile to 
 the public welfare are in their nature void, and should be 
 at once repealed. Protective tariff-taxes are radically in 
 conflict with the general interests of the people ; therefore 
 such taxes should be at once repealed." 
 
 Prof. Sumner is uncertain whether a repeal of the tariff 
 laws will produce any inconvenience at all, but says with 
 confidence : 
 
 " It is generally assumed that it will be wise to do away 
 with the system gradually and slowly. It is said that in- 
 dustries will receive a shock or be destroyed by any sudden 
 action. No reason for these assumptions has ever been 
 given, and they are not found in any facts or sound rea- 
 soning. On the contrary, delay in the process of reform 
 would produce evils that would be avoided if the change 
 could all be made in a day. The period of transition is 
 the one of hardship, so far as there would be any hard- 
 ship ; therefore it is wise policy to shorten the period of 
 transition as much as possible." ^ 
 
 If the principle of protection, of defensive duties, is 
 to be abandoned, these gentlemen are right. There is no 
 
 ' Henry J. Philpot, of Des Moinea, Iowa, an amateur economist, was be- 
 fore the Tariff Commission, before which he made an address. He repre- 
 sented the " Iowa State Free-Trade League." In the course of his examina- 
 tion by the commission, this question was asked and this answer given : 
 
 " Q. Why do you not adopt a policy, then, of letting them " (the protected 
 industries) " down at once? " 
 
 A. " We do not want to tear them down. If we can not live in an atmos- 
 phere of commercial freedom, then I say for myself, and I know that I repre- 
 sent the sentiments of thousands of people in Iowa, let them come down, and 
 the quicker the better." 
 
INDtJSTRIAL RESULTS ACHIEVED. 425 
 
 use in delaying with " horizontal " scaling. Whatever in 
 this line is to be done by the tariff reformers had better be 
 done at once ; and whatever the manufacturers must do, in 
 the readjustment they will undergo, they had better do 
 at once. There is no use in waiting to see if our silk-fac- 
 tories can be converted into rag-carpet mills, plenty as rags 
 will be, or if our iron-furnaces may not be changed into 
 creameries. If it is true that the protected industries are 
 " unprofitable " and " sink the money of other groups of 
 industries," they ought to be stopped at once. If their 
 machinery is " unproductive," it is not " valuable " prop- 
 erty, and should be abandoned. If the capital invested in 
 them is " worse than idle," it should be withdrawn. The 
 whole inventory of wealth invested in them is worthless, is 
 naught, and may as well be wiped off the national ledger, 
 charged to " profit and loss," first as last. 
 
 We venture to assert that no statesman will be found, 
 with sufficient confidence in the abstract deductions of the 
 free-trade economist, to thus cavalierly wipe out the ma- 
 chinery, the capital, and the laborers, in the industries 
 which supply $2,400,000,000 worth of the commodities 
 annually consumed by the people, until somebody points out 
 some other source of supply on equally advantageous terms. 
 
 The case is in a nut-shell ; first, to determine upon the 
 end sought, then the appropriate means to it. The social 
 (or, if you please, the self-seeking) instincts of a people de- 
 termine what line of commercial pohcies is best ; having 
 determined that, the public opinion, embodied in legisla- 
 tion, consolidates the forces and sends them through a 
 definite structural organization, the form of which is given 
 by the statutory enactment. Otherwise we fall back on 
 the inane doctrine of laissezfaire. This, as we have seen, 
 involves an oversight of the distinctions between different 
 forms of social development under the operation of the in- 
 
426 PEOTECTION VS. FEEE TRADE. 
 
 ward forces of society, and the direction whicli may be 
 given them by the intervention of the governmental decree 
 — according as that government is internal, " in and of the 
 people," embodying their judgment, or is imposed by some 
 external power. In the one case, the interest and views of 
 the supreme dynastic political power may not be coincident 
 with the real interests and views of the people; in the 
 other, the social development is free, natural, and as the 
 people wish and decree it. In the one case, will be evolved 
 the history of the kings of England or France, for instance ; 
 in the other, the history of the people of the United States. 
 In the one case, the proverbial sentiment is " apres nous le 
 deluge " ; in the other, the struggle is for the earthly im- 
 mortality of the nation, and it is in consequence " frequent- 
 ly compelled to make immediate sacrifices for the sake of a 
 distant future, a thing which can never be to the private in- 
 terest of the mortal individuals who compose it." (Eoscher.) 
 The social forces which issue in growth of an indefinite 
 form may be made to assume definite form by human con- 
 trol. Every law for establishing common schools illus- 
 trates this. Men can exercise their teleological faculties 
 as well in the control of the social forces as in th« control 
 of the forces of the material world. Prevision and design 
 are as available in the one case as the other. We make 
 gravity, steam, and electricity operate on artificial lines, 
 and take them o£E the lines they would naturally have 
 taken. Our success depends on our knowledge of the 
 powers we are dealiag vrith, the wisdom of the end we 
 seek, and the sagacity of our application of means to an 
 end. The end must be definitely apprehended, wise, and 
 attainable. Under these conditions, invention is as useful 
 and applicable in human society and government as in the 
 outer physical world.* 
 
 ' " Society is simply a compound organism, whose acts exhibit the result- 
 
INDUSTRUL RESULTS ACHIEVED. 427 
 
 The man who asserts that the American people do not 
 clearly apprehend what they want, are incapable of adjust- 
 ing means to the end, and that the national legislature is 
 wanting in the wisdom, sagacity, and honesty to provide 
 the necessary statute, assumes the burden of a very mighty 
 responsibility. The only other alternative is to fall back 
 on laisses faire, a barren conservatism which can only re- 
 sult, m our case, in a stationary existence and arrested de- 
 velopment. 
 
 The true principles of protection were applied in the 
 Tariff Act of 1816. It was drawn by A. J. Dallas, of 
 Pennsylvania, then Secretary of the Treasury. He divided 
 the importables into three classes : 
 
 First.^ Those of which a full domestic supply could be 
 produced. 
 
 Second. Those of which only a partial domestic supply 
 could be afforded. 
 
 Third. Those produced at home very slightly or not 
 at all. 
 
 ant of all tlie individual forces which its members exert. Those acts, 
 whether individual or collective, obey fixed laws. Objectively viewed, society 
 is a natural object, presenting a variety of complicated movements produced 
 by a particular class of natural forces. The question simply is. Can man 
 ever control these forces to his advantage, as he controls other and some 
 very complicated natural forces ? Is it true that man shall ultimately obtain 
 the dominion of the whole world except himself ? I regard society and the 
 social forces as constituting just as much a legitimate field for the exercise of 
 human ingenuity as do the various material substances and physical forces. 
 The former have been investigated and subjugated. The latter are still pur- 
 suing their wild, unbridled course. The former still exist, still exhibit their 
 indestructible dynamic tendencies, still obey the laws of motion, still operate 
 along the lines of least resistance. But man, by teleological foresight, has 
 succeeded in harmonizing these lines of least resistance with those of great- 
 est advantage to himself. . . . Legislation (I use the term in its most general 
 sense) is nothing else but invention. It is an effort so to control the forces 
 of a state as to secure the greatest benefits to its people." — Ward, " Dynamic 
 Sociology," vol. i, p. 35. 
 
428 PROTECTION rs. FREE TRADI;. 
 
 This classification is a good and safe one yet, because it 
 scientifically reaches the end proposed. 
 
 On the first class, duties should be laid heavy enough 
 to secure the market to the home manufacturer, leaving it 
 to domestic competition to keep down the price. 
 
 On the second class, the duties should be laid so as to 
 leave the door open to foreign competitors and yet afford 
 a fair protection to the domestic producers. Wise states- 
 manship and famiharity. with our resources wiU enable any 
 intelligent statesman to adjust the duties in this class so as 
 to afford "revenue" and " incidental protection." 
 
 On the third class the duties, so far as, protection is con- 
 cerned, will be nothing unless revenue considerations in- 
 tervene ; the protectionist would put them all on the free 
 list. Whatever duties are put on them will result in " reve- 
 nue only." 
 
 It is not to be disguised that, in practice, it may be 
 difficult to find the wisdom, strength, and singleness of aim 
 to introduce protection only so far as it is advantageous to 
 the community. But the problem is no more insoluble 
 than any other one involving intelligence and honesty. 
 Bearing in mind that the purpose of protection is to enable 
 domestic producers to supply the domestic demand, protec- 
 tion should not cease imtil that end is reached. When it 
 is reached, the protective statute is inoperative, whether 
 repealed or not. The only practical purpose of a repeal in 
 terms would be to shut the mouths of tricky economists 
 and to silence noisy demagogues. 
 
 See. Consumers may rely upon two sources of supply : 
 
 First. Upon the foreign maker and foreign market for 
 cheapness. 
 
 Second. Upon a second and independent market at 
 home. We have made our choice of the latter, by nearly a 
 hundred years of legislation. 
 
INDUSTRIAL RESULTS ACHIEVED. 429 
 
 Two distinct modes of lev^ang duties arise : 
 
 In the first case, if the duty does not give the home 
 producer a chance, if it does not operate to create a second 
 supply for the consumer, it does not protect, and has no 
 business to exist, except for revenue. 
 
 In the second case, if the duty does operate to give the 
 home producer a living chance, in spite of foreign compe- 
 tition, the duty, be it high or low, is protective. 
 
 Mr. William M. Grosvenor has condensed these con- 
 siderations into two sentences : 
 
 " I. The consmner suffers if a revenue duty is not as 
 low as possible, to yield needed revenue. 
 
 " II. The consumer suffers if a protective duty is not 
 high enough to build up a hom^ supply and secure ulti- 
 mate cheapness." 
 
 A horizontal reduction all around, as proposed in the 
 Morrison bill, for example, has no justification, whether 
 revenue or protection be the end sought. For revenue only, 
 it imposes a higher duty than is needed. Yor protection, it 
 is not high enough to save the home producer. The dikes 
 which the Hollanders have built to keep out the sea must 
 be high enough to exclude the sea at the highest as well as 
 at the lowest tides. 
 
 Our present tariff is levied on only fifteen schedules or 
 
 classes. In 1880 the imports, both dutiable and free, were 
 
 . $650,619,979, Of this amount, $202,557,411 came in free 
 
 of duty. The total amount of the duty collected on the 
 
 remainder was $193,800,897.' 
 
 • In 1882 the net income of Great Britain was £71,945,000. Of this 
 amount — 
 
 Customs duties amounted to £19,287,000 
 
 Composed of duties on tobacco £8,800,000 
 
 Wine and spirits 5,500,000 
 
 Tea 4,000,000 
 
 Currants, raisins, and fruits 500,000 
 
430 PROTECTION VS. FREE TRADE. 
 
 The census of 1880 gave the total product of our manu- 
 factures at $5,369,667,706, but it is believed to be nearer 
 $8,000,000,000. In that year our total imports were, in 
 round numbers, $600,000,000, as against a home product 
 of $8,000,000,000j more than thirteen times as much. But 
 taking the census figures, the home product under each 
 schedule, according to which duties are levied, is as fol- 
 lows : * 
 
 In the process of mining anthracite coal, veiy consid- 
 erable quantities of the strata are left in, in the form of 
 pillars, for the support of the surface, and the towns and 
 cities that often cover it. The coal thus necessarily left is 
 part of the cost of miaing the balance. Occasionally some 
 reckless operators, thinking the coal left in is of more value 
 
 Coffee, cocoa, and ohiccory.. £300,000 
 
 Beer 6,000 
 
 All other articles 14,000 
 
 These " customs duties " on imported articles are offset by certain " excise 
 taxes " on like articles made in England. . These excise taxes amounted in 
 1882, on spirits produced, £14,300,000; beer, £8,600,000; wine and spirit 
 licenses, £1,800,000. This is mainly a tariff for revenue only. It is easy 
 enough to see that all these taxes fall on the laboring-man. 
 
 Home product in 1880. 
 
 ' Schedule A, chemicals c $ll'7,40'7,O64 
 
 " B, earthen and glass ware 28,956,693 
 
 C, metals 604,553,460 
 
 " D,woods 509,485,611 
 
 E,sugars 181,404,520 
 
 r,tobacco 118,665,366 
 
 G, provisions 1,036,672,680 
 
 " H,liquors 142,122,048 
 
 " I, cottons 210,950,383 
 
 " J,flax 5,518,866 
 
 " K, woolens 267,182,914 
 
 L,silk 41,033,045 
 
 " M and N, sundries— paper, etc 1,159,989,916 
 
 Remainder 945,825,550 
 
 $5,369,667,706 
 
INDUSTEIAL RESULTS ACHIEVED. 431 
 
 than the surface and the buildings upon it, proceed to re- 
 move so many of the pillars as they dare. This process is 
 called " robbing the mine." The tariff reformers, who 
 really hate the industrial system reposing on tariffs, now 
 propose to remove the supports and let it down. They 
 are proceeding to " rob the mine." Statesmen and econ- 
 omists who believe the system can be vindicated, at the 
 cost even of the supports, will be in no _ hurry to ingulf 
 the vast wealth thus supported — especially as in a short 
 time it is manifest that it will be self-supporting. Except 
 as a matter of form, it wiU then be immaterial whether 
 they are left in or not. " Eobbing the mine " will then be 
 harmless. In the mean time it is unwise as it is unneces- 
 sary to remove the pillars. 
 
 We have encountered no practical disappointment as 
 yet with our national legislature. A commission of judi- 
 cious, honest, and pure men, having a permanent existence, 
 with no private purpose in view, dealing only with the 
 economic forces in play, with power to act, would be a 
 national tribunal, to whose decision might be committed 
 the commercial considerations involved. It is not neces- 
 sary that Congress should undertake to enlighten anybody's 
 desire for profit. Congress itseK is enlightened by the na- 
 tional instinct for profit. At any rate, a protectionist will 
 be satisfied if Secretary Dallas's plan is honestly carried out. 
 
 This is not exactly the place to suggest a tariff bill. 
 When Prof. Sunmer was before the Tariff Commission 
 (" Eeport," vol. ii, p. 2325) he was asked this question : 
 " Suppose the present tariff was wiped out, and we were 
 to follow your theory of letting labor seek its own market, 
 and letting the products of labor be sold wherever they 
 can be sold at the highest price, regardless of a tariff or 
 any outside consideration, what system would you advise 
 us to adopt ? " 
 
432 PROTECTION VS. FREE TRADE. 
 
 The answer was : 
 
 " I am not a statesman at all ; I can not formtilate a 
 revenue system for the country. I have never taken such 
 a matter upon me ; it is quite out of my hne." 
 
 Illustrations may, nevertheless, be given of the applica- 
 tion of the principles our discussion has led up to.^ 
 
 ' Van Buren Denslow, LL. D., of Chicago, has submitted the laws of the 
 incidence of customs duties as follows. These laws are correctly deduced 
 from observation ; 
 
 " 1. No duty can be protective unless there is some domestic production 
 of the commodity on which it rests, nor unless the domestic supply is inade- 
 quate to fill the domestic demand. For instance, a duty on coffee would not 
 be protective, because there is no domestic production of it. The duty on 
 cotton or wheat is not protective, because the domestic production is more 
 than adequate to supply the demand. 
 
 " 2. In the case of every really protective duty, therefore, there is a do- 
 mestic production which the duty is constantly stimulating into a condition 
 more nearly approximating to that of fully supplying the demand. Hene^ 
 in the case of every really protective duty, the foreign price, with duty added, 
 ceases to be the criterion for fixing the American price, for the latter is being 
 constantly more and more determined by a new factor, viz., the competition 
 and cost of production among American producers. Thus, for several years 
 the American demand for steel rails was so great that America developed a 
 capacity of production greater than that of England before the price began 
 to fall under the influence of American competition between producers ; but 
 America reached a capacity of producing 1,500,000 tons, and our demand 
 was only 1,100,000 tons ; the price fell to $40, though the foreign price, with 
 freight and duty added, would have been $52. 
 
 " 3. In the ratio that American production becomes competent to supply 
 the American demand, the price ceases to be in any manner affected by the 
 duty. It depends on American cost of production only. For instance, there 
 are cotton prints now selling in America for four and a half cents a yard, and 
 which we export to China and all African and South American ports in com- 
 petition with English prints selling at the same price. On the importation 
 of these cotton prints there is a duty of five cents per yard. They are, there- 
 fore, not importable. But the duty forms no element whatever in the price, 
 because American competition produces the prints as cheaply as English 
 competition. 
 
 " 4. Hence, the improbability that the price of an American manufacture 
 is affected by the duty at all increases as the American supply becomes ade- 
 
INDUSTEIAL RESULTS ACHIEVED. 433 
 
 Eaw materials of manufactures for wHeh. there is only 
 partial domestic supply may be free. If we had, for in- 
 stance, no iron-ores in this country, or not sufficient to sup- 
 ply the demand of "Bessemer" steel-works, such a raw 
 
 quate to fill the American demand, and when we see the American article going 
 abroad as an export, that fact becomes conclusive proof that, whether a duty 
 rests on the article or not, its price is as low in America as in England or 
 any other part of the world. Yet Prof. Perry, in addressing an Iowa au- 
 dience, told them that a returned missionary had told him that paper was 
 cheaper in Natal, South Africa, than in the United States, and he argued, of 
 course, that the dearness was caused by the duty. Had he looked at our 
 commerce reports, he would have seen that we ship paper to South Africa, and 
 that the missionary was as likely to have used American as English paper 
 while at Natal. 
 
 " 5. In strange obliviousness of all these principles concerning prices, it 
 is the constant habit of free-trade theorists to charge that the greater the 
 domestic production on any protected article the greater the ' tax ' upon the 
 people, since in all cases the whole amount of the domestic product is, they 
 say, raised in price by the amount of the tax, whereas the fact is that the 
 greater the domestic production the more difflcult it is to raise the price in 
 the least degree by any duty that can be laid upon it ; because at the least 
 rise in price, though it be by only one tenth of the duty, the domestic pro- 
 duction expands in quantity, and so prevents absolutely a further rise in 
 price. Thus, in my judgment, the wool that was protected by a duty of 
 thirteen cents a pound can be demonstrated to have sold during three years 
 past at not more than three cents a pound higher than the foreign price of 
 wools of similar quality, because American wool-growers, producing nine 
 tenths of the American supply (and those of them who produced it in Texas 
 and the Territories, produced it nearly as cheaply as it could be produced in 
 Australia), had too much to sell to admit of the American price rising to the 
 foreign price with duty added. 
 
 " 6. When the American supply is wholly or nearly adequate to the 
 American demand, it may, nevertheless, happen that the article will be im- 
 ported, notwithstanding the American price is no higher than the foreign. 
 In every such case the foreigner either divides the duty with the American 
 consumer or pays it all. I hold it to be demonstrable that about $35,000,000 
 of our customs revenue are in this manner paid by foreigners, and are not a 
 tax on the American consumer at all. 
 
 " Such are the duties on wool and a share of those on woolen goods, the 
 whole duty on lumber, coal, wheat, barley, rye, and other agricultural prod- 
 ucts, including rice, part of the duties on cottons, and lately on silks, much 
 20 
 
434 PROTECTION VS. FREE TRADE. 
 
 material, thoiigli technically iron-ore, sliould be duty free 
 for it is really a distinct kind of commodity. If any one 
 knows a " raw material " not now on tlie free list, let him 
 name it and put it on the free list. 
 
 If the demand of the country for sugar were to be sup- 
 plied from the cane, a duty on cane-sugar could not be^o- 
 teetive — ^that is, it is a semi-tropical product, and the domes- 
 tic demand could not be supplied from the home product. 
 Sugar, therefore, should be on the free list, unless it was 
 decreed a proper subject of taxation for " revenue only." 
 
 If the entire demand for wool could be supplied at 
 home, it affords a subject for the application of a protect- 
 ive tax. If there are special kinds of wool of which there 
 is no expectation of full home supply, that is a distinct 
 commodity and is a proper subject for the free list. 
 
 A duty on wheat, or coal,' or iron-ore, or lumber, or 
 cotton, or watches, would not be protective, because the 
 domestic production supplies the domestic demand. The 
 price is made here, and the duty imposed would fall on the 
 importer and not on the consimier. 
 
 of the duties on cultery, iron-ore, crude iron, earthenware, and nearly every 
 competing article. 
 
 " Briefly stated, then, the most important law concerning the incidence of 
 a customs duty is that no duty can enhance the price of any article of which 
 the country is producing an adequate supply ; nor can any duty raise the 
 price in favor of producers without setting producers into competition with 
 each other, which competition constantly tends to reduce the price to the 
 lowest one at which its production can be maintained. Hence a protective 
 duty, once properly and wisely laid, never needs repeal any more than a fort 
 once wisely built needs tearing down. Its only effective repeal, considered 
 as a, tax, is the reduction in prices effected by its operation. The repeal of 
 the duty after this reduction in prices is effected is an idle and needless cere- 
 mony. The repeal of the duty before this reduction in prices ensues is a 
 war upon the domestic production before it is ripe for the foreign competi- 
 tion." 
 
 ' For a very satisfactory demonstration of this, see a monograph, " The 
 Duty on Coal," by Israel W. Morris, Esq., Philadelphia, 1872. 
 
INDUSTRIAL RESULTS ACHIEVED. 435 
 
 A duty on tea or coffee or tropical fruits would not be 
 protective, because there is no domestic production, and the 
 duty all goes into the Treasury. 
 
 A duty on the products of competing industries abroad 
 operates partly for revenue and partly as protection. In 
 the majority of instances the price of the foreign com- 
 modity is not increased by the full amount of the protect- 
 ive duty, because American competition reduces the home 
 cost. 
 
 Whenever the American production in stich industries 
 reaches the American demand, the price ceases in any man- 
 ner to be affected by the protective duty, for the reason 
 that the cost of production imder American conditions set- 
 tles the market price. In the latter case, if the article is 
 imported, the foreign producer pays the whole duty, or at 
 best divides it with the home consumer, and the tax goes 
 into the national Treasury. Prof. Henry Sidgwick, in his 
 " Principles of Political Economy," at page 491, very neatly 
 demonstrates this with the remark that " a simple case will 
 show how a duty may at once protect the native manufact- 
 urer adequately and recoup the country for the expense 
 of protecting him." 
 
 These illustrations exhibit the interplay of the forces 
 involved. If we may rely with any confidence on the com- 
 mon sense, sMU, honesty, and productive energies of the 
 American people, in the future as we have in the past, to 
 make what they can and buy what they must, we may safely 
 leave the whole case in their hands under the fostering care 
 and protective shield of defensive duties. The nearer we 
 come to organizing and conducting our coMPETDiTG indus- 
 tries as if we were the only nation on the planet, the more 
 we shall make, and the more we shall have to divide among 
 the makers. 
 
 THE END. 
 
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 L'HISTOIRE DE JULES CESAR, par S. M. I. Napoleon HI. 
 
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D. APPLETON & C0.'8 PUBLIOATIONS. 
 
 HISTORY OF ENGLAND, from the Accession of Jamea II. By 
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 DIGEST OF ANCIENT AND MODERN HISTORY. By 
 
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 O. K. Adams's Manual qf Historical Literature. 
 
 MANUAL OF ANCIENT AND MODERN HISTORY. By 
 
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 8vo. Cloth, $3.50 ; or, in separate volumes, $2.00 each. 
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 MoDEEN History. — Containing the Rise and Progress of the Principal 
 
 European Nations, their Political History, and the Changes in their 
 
 Social Condition; with a History of the Colonies founded by 
 
 Europeans. 
 
 Dryness is generally cbaracteristic of condensed historical outlines ; in the 
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 The American edition has been revised throughout by Dr. Henry, and en- 
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 HISTORY OF THE JEWS FROM 420 B. C. E. TO THE 
 
 YEAR 70 C. E. By Morris J. Kaphall. 2 vols. 12mo. 
 Cloth, $4.00. 
 
 HISTORY OF THE MIDDLE AGES. By A. L. K(eppen. 
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 This truly excellent work supplies, in a very satisfactory manner, a want 
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 matter, lucid in arrangement, and full of ripe scholarship and research. 
 
 " The author's purpose was to present an accurate description of the world 
 during the different periods from the ultimate divinion of the Roman Empire, 
 down to the conquest of Constantinople in the Bast, and the discovery of Amer- 
 ica in the West. He has made ample use of the best geographical authorities, 
 and has brought together a vast amount of minute information on subjects that 
 are often very obscure."— Dr. C. K. Adams''s Manual qf Hislorical Literature. 
 
 New York: D. APPLETON & CO., 1, 3, & 5 Bond Street. 
 
D. APPLETON & CO/S PUBLICATIONS. 
 
 HISTORY OF CIVIIilZATIOlV IN ENGLAND. By Henky 
 
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 party, let him be as orthodox in church creed as the other is heterodox, as dog- 
 matic as the author is skeptical — let him, in short, find his prejudices shocked 
 at every turn of the argument, aud all his prepossessions whistled down the 
 wind — still, there is so much in this extraordinary volume to stimulate reflection 
 aud excite to inquiry, and provoke to earnest investigation, perhaps (lo this or 
 that reader) on a track hitherto untrodden, and across the virgin soil of nntilled 
 fields, fresh woods and pastures new, that we may fairly defy the most liostile 
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 ing glad of having done so, or having begun it, or even glanced at almost any one 
 of its pages, to pass it away unread."— iVe?^ Monthly Magazine (London). 
 
 THE ENGLISH CONSTITtTTION, AND OTHER POLITICAL 
 
 ESSAYS. By Walter Bagehot. Latest revised edition. Contain- 
 ing Essays on the Characters of Lord Brougham and Sir Robert 
 Peel, Bart., never before published in this country. With an Amer- 
 ican Preface. 12mo. Cloth, $2.00. 
 
 "A work that deserves to be widely and familiarly known. Its title, however, 
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 political sense, has very different significations iu England and in this country. 
 With US it means a written instrument. The English have no such written docu- 
 ment. By the national Constitution they mean their actual social and political 
 order — the whole body of laws, usages, and precedents, which have been in- 
 herited from former generations, and by which the practice of government is 
 regulated. A work upon the English Constitution, therefore, brings us naturally 
 to the direct consideration of ine structure and practical working of English 
 political institutions and social life. Mr. Bagehot ia not bo much a partisan or an 
 advocate as a cool philosophical inquirer, with large knowledge, clear insight, 
 independent opinions, and great freedom from the bias of what he terms 'fliat 
 territorial sectarianism called patriotism.' Taking up in succession the Cabinet, 
 the Monarchy, the House of Lords, the House of Commons, he considers them 
 in what may be called their dynamical inter-actions, and in relation to the 
 habits, traditions, culture, and character of the English people. We doubt if 
 there is any other volume so useful for our countrymen to peruse before visiting 
 England."— .^<wi the American Pr^ace. 
 
 HISTORY OF EUROPEAN MORALS FROM AUGUS- 
 TUS TO CHARIiEMAGNE. By William E. H. Lecky. 
 2 vols. 12mo. Cloth, $3.00; half calf, extra, $7.00. 
 
 " So vast ia the field Mr. Lecky Introduces ns to, so varied and extensive the 
 information he has collected in it, fetching it from far beyond the limits of his 
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 indicate the line hd follows. . . . The work is a valuable contribution to our 
 higher English literature, as well as an admirable ^ide for those wtio may care 
 to go in person to the distant fountains from which Mr. Lecky has drawn for 
 them so freely."— Xom?(?» TiTnes. 
 
 New York: D. APPLETON & CO., 1, 3, & 5 Bond Street. 
 
D. APPLETON & CO.'S PUBLICATIONS. 
 
 A HISTORY OF ENGLAND IN THE EIGHTEENTH 
 CENTURY. By William E. H. Leckt, author of "History of 
 the Kise and Influence of the Spirit of Rationalism in Europe," etc. 
 Vols. I, II, III, and IV. Large 12mo. Cloth, $2.25 each ; half calf, 
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 " On every gronnd which shonld render a history of eighteenth-centnry Eng- 
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 xnateriala accumntated in these'volamea attest an industry more strenaoas and 
 comprehensive than that exhibited by Troude or by Macaulay. But it ia his 
 enpreme merit that he leavea on the reader's mind a conviction that he not only 
 possessca the acntenees which can discern the truth, but the unfUnchin" Duroose 
 otttu\h-te\aag."— New York Sun. "'^ " 
 
 "Lecky has not chosen to deal with events in chronological order, nor does 
 he present the details of personal, party, or military affairs. The work is rather 
 an attempt 'to disengage from the great maaa of facts those which relate to the 
 permanent forces of the nation, or which indicate some of the more enduring 
 features of national life.' The author's manner haa led him to treat of the power 
 of monarchy, aristocracy, and democracy ^ of the history of political ideas ; of 
 manners and of beliefs, as well as of the increasing power of Parliament and of 
 the press."— Z>r. C. K. Adams's Manual of Bistorical Literature. 
 
 HISTORY OF THE RISE AND INFLUENCE OF THE 
 SPIBIT OF RATIONALISM IN EUROPE. By Will- 
 iam E. H. Lecky. 2 vols. Small 8vo. Cloth, $4.00 ; half calf, 
 extra, $8.00. 
 
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 ence upon life' — which predispoaea men, in history, to attribute all kinds of 
 phenomena to natural rather than miraculous causes ; in theology, to esteem 
 succeeding systems the expressions of the wants and aspirations of that religious 
 sentiment which is planted in all men ; and. In ethics, to regard as duties only 
 those which conscience reveals to be such." — Dr. C. K. Adams's Manual qf 
 Historical Literature. 
 
 THE LEADERS OF PUBLIC OPINION IN IRELAND: 
 SWIFT, FLOOD, GRATTAN, O'CONNELL, By Will- 
 iam E. H. Leckt. 12mo. Cloth, $1.75. 
 
 "A writer of Lecky'a mind, with his rich imagination, his fine ability to ap- 
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 the written page, could hardly have found a period in British history more har- 
 moniona with hie literary style than that which witnessed the riac, the ripening, 
 and the fall of the four men whose impress upon the development of the 
 national spirit of Ireland was not limited by the local questions whose discussion 
 constituted their fame."— iV^eto Tcyrk Evening Post. 
 
 HISTORY OF HENRY THE FIFTH : KING OF ENGLAND, 
 LORD OF IRELAND, AND HEIR OF FRANCE. By George M. 
 TowLE. . Svo. Cloth, $2.50. 
 
 New York : D. APPLETON & CO., 1, 3, & 5 Bond Street. 
 
D. APPLETON £ CO.'S PUBLIGATI0N8. 
 
 KISE AND PROGRESS OF THE ENGLISH CONSTITU- 
 
 TION. By Sir Edwakd S. Ckeasy. 12mo. Cloth, $1.50. 
 
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 take its place in all libraries as a most useful commentary on English history. 
 As an account of the gradual development of free institutions in Kngland, it con- 
 nects itself with our own history, especially with the progress of opinion in the 
 early part of oor Revolutionary struggle. 
 
 "As a manual for the use of the historical student while he is laying the 
 foundation for a knowledge of the English Constitution, this little book is with- 
 ont a superior. It combines accuracy with vivacity, and should be constantly 
 used by the student in the early period of his studies." — Dr. G. K. Adams^t 
 Manual qf Historical Literature. 
 
 A CHII-D'S HISTORY OF ENGLAND. By Charles Dickens. 
 New Ilousehold Edition. With Illustrations. Square 8to. Paper, 
 75 cents; cloth, $1.25. 
 
 THE ENGLISH REFORMATION: HOW IT CAME ABOUT, 
 AND WHY WE SHOULD UPHOLD IT. By Cunningham Geikie, 
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 12.00. 
 
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 do this than Dr. Oeikie's 'History of the English Reformation." "—.Yew Tork 
 Christian Union. 
 
 "His grouping of facts is often masterly, his style is bold and incisive, and 
 his sketches of eventful periods or eminent personages are vivid and graphic." 
 — Harper^ a New Mcrnthly Magazine. 
 
 ANECDOTAL HISTORY OF THE BRITISH PARLIA- 
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 tory. Compiled by G. H. Jennings. Crown 8to. Cloth, |2.50. 
 
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 YOUNG IRELAND : A FRAGMENT OF IRISH HISTORY, 1840 
 
 TO 1850. By the Hon. Sir Chables Gavan Dufft, K. C. M. G. 8yo. 
 
 Cloth, $3.00; cheap edition, $1.50. 
 
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 New York: D. APPLETON & CO., 1, 3, & 5 Bond Street. 
 
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 CAMEOS FROM ENGLISH HISTORY. By Chamotie M. 
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 THREE CENTURIES OF ENGLISH LITERATURE. By 
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 HISTORY OF THE UNITED STATES OF AMERICA, 
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 HISTORY OF THE FORMATION OF THE CONSTITU- 
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 croft's History. 
 
 HISTORY OF THE PEOPLE OF THE UNITED 
 
 STATES, FROM THE REVOLUTION TO THE CIVIL WAR. 
 
 By John B. McMastee. 5 vols. Bvo. Vols. I and II now ready. 
 
 Cloth, $2.50 each. 
 
 Scope or the Wobk. — In the course of this narrative much. is written of 
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 from the America in which we live, it has been the author's purpose to describe 
 the dress, the occupations, the amusements, the literary canons of the times ; to 
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 paralleled in the annals of human affairs. 
 
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