*tatc (QaUege of Agriculture Kt afornell llni»erBttH Xltbtrarg Cornell University Library HF2611.G34 Protection or free trade: an examination 3 1924 013 921 808 Cornell University Library The original of tliis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924013921808 BOOKS BY HENKY GEORGE. A Pbbplexed Philosophbh ISmo, cloth, $1.00; paper, 50 cents. Progbess and Povbkty. 13mo, cloth, $1.00; paper, 50 cents. Popular edition, 25 cents. In German, 35 cents. Social Problems. 12mo, cloth, $1.00; paper, 50 cents. Popular edition, 35 cents. Protection or Free Trade? 13mo, cloth, $1.00; paper, 50 cents. Popular edition, 25 cents. Property in Land, The Condition of Labor, and The Land. Question, bound together in one volume. 13mo, cloth, $1.00; paper, 50 cents. Above five books are also bound in half calf or half morocco, at $3.00 per volume. The Land Question. Paper, 30 cents Property in Land. A Controversy with the Duke of ArgyU. Paper, 30 cents. The Condition op Labor. An Open Letter to Pope Leo XIIL 13mo, cloth, 75 cents; paper, 30 cents. For sale hy all booJcsellers, or sent postpaid on receipt of price Tiy Sterling Publishing Co., 17 Clinton Place, New York. PROTECTION OR FREE TRADE AN EXAMINATION OF THE TARIFF QUESTION WITH ESPECIAL REGARD TO THE INTERESTS OF LABOR HENRY GEORGE 'Prove all things; hold fast that which is good " NEW YORK: STERLING PUBLISHING COMPANY. 1897. Copyright, 1886, by Henry George. (All righii -reserved. ) (3 \'")\s>o~h THE EAST RIVER PRESS SGS ANO 867 CHERRY SrHEE' NEW VORK. TO THE MEMORY OF THOSE ILLUSTRIOUS PRENCHMBK OP A CENTURY AGO, QUESNAT, TUKGOT, MIRABEAU, CONDORCBT, DUPONT AND THEIR FELLOWS, WHO IN THE NIGHT OP DESPOTISM PORESAW THE GLORIES OP THE COMING DAY PREFACE. In this book I have endeavored to determine whether protection or free trade better accords with the interests of labor, and to bring to a common conclusion on this subject those who really desire to raise wages. I have not only gone over the ground generally tra- versed, and examined the arguments commonly used, but, carrying the inquiry further than the controversial- ists on either side have. yet ventured to go, I have sought to discover why protection retains such popular strength in spite of all exposures of its fallacies ; to trace the con- nection between the tariff question and those still more important social questions, now rapidly becoming the " burning questions " of our times ; and to show to what radical measures the principle of free trade logically leads. "While pointing out the falsity of the belief that tariffs can protect labor, I have not failed to recognize the facts which give this belief vitality, and, by an exam- ination of these facts, have shown, not only how little the working classes can hope from that mere " revenue re- form " which is miscalled " free trade," but how much they have to hope from rekl free trade. By thus har- monizing the truths which free traders perceive with the facts that to protectionists make their own theory plausible, I believe I have opened ground upon which those separated by seemingly irreconcilable differences pf opinion may unite for that full application of the VI PREFACE. free-trade principle which would secure both the largest production and the fairest distribution of wealth. Bv thus carrying the inquiry beyond the point where Adam Smith and the writers who have followed him have stopped, I believe I have stripped the vexed tariff question of its greatest diflBculties, and have cleared the way for the settlement of a dispute which otherwise mighb go on interminably. The conclusions thus reached raise the doctrine of free trade from the emasculated form in which it has been taught by the English econo- mists to the fullness m which it was held by the prede- cessors of Adam Smith, those illustrious Frenchmen, with whom originated the motto Laissez, faire, and who, whatever may have been the confusions of their termi- nology or the faults of their method, grasped a central truth which free traders since their time have ignored. My effort, in short, has .been to make such a candid and thorough examination of the tariff question, in all its phases, as would aid men to whom the subject is now a perplexing maze to reach clear and firm conclusions. In this I trust I have done something to inspire a move- ment now faint-hearted with the earnestness and strength of radical conviction, to prevent the division into hostile camps of those whom a common purpose ought to unite, to give to efforts for the emancipation of labor greater defiuiteness of purpose, and to eradicate that belief in the opposition of national interests which leads peoples, even of the same blood and tongue, to regard each other as natural antagonists To avoid any appearance of culling absurdities, I have, in referring to the protectionist position, quoted mainly from the latest writer who seems to be regarded by Amer- ican protectionists as an authoritative exponent of theil views — Professor Thompson^ of the IJuiversitjr of Penij- BjlvanJar CONTENTS. CHAPTER PAOI I. Introditctoet 1 II. Cleaking Gkound 13 III. Of Method 35 IV. Protection as a Univeesal Need 30 V. The Peotective Unit 40 VI. Trade 49 VII. Peoduction and Producers 66 VIII. Tariffs for Revenue 76 IX. Tariffs for Protection , 881 X. The EncoubagemiJnt of Industry 103 XI. The Home Market and Home Trade 113 XII. Exports and Imports 121 XIII. Confusions Arising from the Use of Monet . 133 XIV. Do High Wages Necessitate Protection ? 145 / XV. Op Advantages and Disadvantages as Reasons , FOE Peotection 154 [ XVI. The Development of Manufactuees 163 XVII. Protection and Producers 177 XVIII. Effect op Protection on American Industry. 193 I XIX. Protection and Wages 208 XX. The Abolition of Protection 231 XXI. Inadequacy op the Free-Trade Argument 238 Viii COJSfTElsrTS. ■ CHAPTEB PAflfi XXII. The Real Weakness of Free Trade 244 XXIII. The Real Strength of Protection 257 XXIV. The Paradox 270 XXV. The Robber that Takes All tpat is Left 285 XXVI. True Free Trade ; 396 XXVII. The Lion in the Wat 312 XXVIII. Free Trade and Socialism 320 XXIX. Practical Politics 335 XXX. Conclusion 350 PROTEOTlOlsr OR FREE TRADE? CHAPTER I. INTRODUCTORY. Near the window by which I write, a great bull is tethered by a ring in his nose. Grazing round and round he has wound his rope about the stake until now he stands a close prisoner, tantalized by rich grass he cannot reach, unable even to toss his head to rid him of the flies that cluster on his shoulders. Now and again he struggles vainly, and then, after pitiful ■ bellowings, relapses into silent misery. This bull, a very type of massive strength, who, because he has not wit enough to see how he might be free, suffers want in sight of plenty, and is helplessly preyed upou by weaker creatures, seems to me no unfit emblem of the working masses. In all lands, men whose toil creates abounding wealth are pinched with poverty, and, while advancing ■civilization opens wider vistas and awakens new de- sires, are held down to brutish levels by anjmal needs. Bitterly conscious of injustice, feeling in their inmost souls that they were made for more thai? so narrow a life, they, too, spasmodically struggle and cry out. But until they trace effect to cause, until they see how 2 PROTECTION OR FREE TRADE. they are fettered and how they may be freed, their struggles and outcries are as vain as those of the bull. Nay, they are vainer. I shall go out and drive the bull in the way that will untwist his rope. But who shall drive men into freedom? Till they use the reason with which they have been gifted, nothing can avail. For them there is no special providence. Under all forms of government the ultimate power lies with the masses. It is not kings nor aristocracies, nor land-owners nor capitalists, that anywhere really enslave the people. It is their own ignorance. Most clear is this where governments rest on universal suf- frage. The workingmen of the United States may mould to their will legislatures, courts and constitutions. Politicians strive for their favor and political parties bid against one another for their vote. But what avails this ? The little finger of aggregated capital must be thicker than the loins of the working masses so long as they do not know how to use their power. And how far from any agreement as to practical reform are even those who most feel the injustice of existing condi- tions may be seen in the labor organizations. Though beginning to realize the wastefulness of strikes and to feel the necessity of acting on general conditions through legislation, these organizations when they come to formulate political demands seem unable to unite upon any measures capable of large results. This political im potency must continue until the masses, or at least that sprinkling of more thoughtful men who are the file leaders of popular opinion, shall give such heed to larger questions as will enable them to agree on the path reform should take. Jt is witb the hope of promoting such agreement INTRODUCTORY. 3 that I propose in these pages to examine a vexed ques- tion which must be settled before there can be any effi- cient union in political action for social reform — the question whether protective tariffs- are or are not helpful to those who get their living by their labor. This is a question important in itself, yet far more important in what it involves. Not only is it true that its examination cannot fail to throw light upon other social-economic questions, but it leads directly to that great "Labor Question" which every day as it passes brings more and more to the foreground in every country of the civilized world. For it is a ques- tion of direction — a question which of two divergent roads shall be taken. Whether labor is to be benefited by governmental restrictions or by the abolition of such restrictions is, in short, the question of how the bull shall go to untwist his rope. In one way or another, we must act upon the tariff question. Throughout the civilized world it everywhere lies within the range of practical politics. Even when protection is most thoroughly accepted there not only exists a more or less active minority who seek its overthrow, but the constant modifica- tions that are being made or proposed in existing tariffs are as constantly bringing the subject into the sphere of political action, while even in that country in which free trade has seemed to be most strongly rooted, the policy of protection is again raising its head. Here it is evident that the tariff question is the great political question of the immediate future. For more than a generation the slavery agitation, the war to which it led and the problems growing out of that war have absorbed political attention in the 4 PROTECTION OB FREE TRADE. United States. That era has passed, and a new one ia beginning, in which economic questions must force themselves to the front. First among these questions, upon which party lines must soon be drawn and polit- ical discussion must rage, is the tariff question. It behooves not merely those who aspire to political leadership, but those who would conscientiously use their influence and their votes, to come to intelligent conclusions upon this question, and especially is this incumbent upon the men whose aim is the emancipa- tion of labor. Some of these men are now supporters of protection ; others are opposed to it. This division, which must place in political opposition to each other those who are at one in ultimate purpose, ought not to exist. One thing or the other must be true — either protection does give better opportunities to labor and raises wages, or it does not. If it does, we who feel that labor has not its rightful opportunities and does not get its fair wages should know it, that we may unite, not merely in sustaining present protection, but in de- manding far more. If it does not, then, even if not positively harmful to the working classes, protection is a dfelusion and a snare, which distracts attention and divides strength, and the quicker it is seen that tariffs cannot raise wages the quicker are those who wish to raise wages likely to find out what can. The next thing to knowing how anything can be done, is to know how it cannot be done. If the bull I speak of had wit enough to see the uselessness of going ona way, he would surely try the other. My aim in this inquiry is to ascertain beyond per- adventure whether protection or free-trade best accords with the interests of tliose who live by their labor INTEODUCTOEY. 5 I differ with those who say that with the rate of wages the state has no concern. I hold with those who deem the increase of wages a legitimate purpose of public policy. To raise and maintain wages is the great ob- ject that all who live by wages ought to seek, and workingmen are right in supporting any measure that will attain that object. Nor in this are they acting selfishly, for, while the question of wages is the most important of questions to laborers, it is also the most important of questions to society at large. Whatever ' improves the condition of the lowest and broadest social stratum must promote the true interests of all. Where the wages of common labor are high and remu- nerative employment is easy to obtain, prosperity will be general. Where wages are highest, there will be the largest production and the most equitable distribu- tion of wealth. There will invention be most active and the brain best guide the hand. There will be the greatest comfort, the widest diffusion of knowledge, the purest morals and the truest patriotism. If we would have a healthy, a happy, an enlightened and a virtuous people, if we would have a pure government, firmly based on the popular will and quickly responsive to it, we must strive to raise wages and keep them high. I accept as good and praiseworthy the ends avowed by the advocates of protective tariffs. What I propose to inquire is whether protective tariffs are in reality conducive to these ends. To do this thoroughly I wish to go over all the ground upon which pro- tective tariffs are advocated or defended, to consider what effect the opposite policy of free trade would have, and to stop not until conclusions are reached of which we may feel absolutely sure. 6 f>R6TECflO]Sr OR FREE TRADfi. To some it may seem too much to think that this can be done. For a century no question of public policy has been so widely and persistently debated as that of Protection vs. Free Trade. Yet it seems to-day as far as ever from settlement — so far, indeed, that many have come to deem it a question as to which no certain con- clusions can be reached, and many more to regard it as too complex and abstruse to be understood by those who have not equipped themselves by long study. This is, indeed, a hopeless view. We may safely leave many branches of knowledge to such as can de- vote themselves to special pursuits. We may safely accept what chemists tell us of chemistry, or astron- omers of astronomy, or philologists of the development of language, or anatomists of our internal structure, for not only are there in such investigations no pecuni- ary temptations to warp the judgment, but the ordinary duties of men and of citizens do not call for such special knowledge, and the great body of a people may entertain the crudest notions as to such things and yet lead happy and useful lives. Far diflEerent, however, is it with matters which relate to the production and dis- tribution of wealth, and which thus directly affect the comfort and livelihood of men. The intelligence which can alone safely guide in these matters must be the in- telligence of the masses, for as to such things it is the common opinion, and not the opinion of the learned few, that finds expression in legislation. If the knowledge required for the proper ordering of public affairs be like the knowledge required for the prediction of an eclipse, the making of a chemical an- alysis, or the decipherment of a cuneiform inscription, or even like the knowledge required in any branch of art or handicraft, then the shortness of human life and the necessities of human existence must forever condemn the masses of men to ignorance of matters which direct- ly affect their means of subsistence. If this be so, then popular government is hopeless, and, confronted on one side by the fact, to which all experience testifies, that a people can never safely trust to any portion of their number the making of regulations which affect their earnings, and on the other by the fact that the masses can never see for themselves the effect of such regula- tions, the only prospect before mankind is that the many must always be ruled and robbed by the few. But this is not so. Political economy is only the economy of human aggregates, and its laws are laws which we may individually recognize. What is re- quired for their elucidation is not long arrays of statis- tics nor the collocation of laboriously ascertained facts, but that sort of clear thinking which, keeping in mind the distinction between the part and the whole, seeks the relations of familiar things, and which is as possible for the unlearned as for the learned. Whether protection does or does not increase na- tional wealth, whether it does or does not benefit the laborer, are questions that from their nature must admit of decisive answers. That the controversy be- tween protection and free trade, widely and ener- getically as it has been carried on, has as yet led to no accepted conclusion cannot therefore be due to diffi- culties inherent in the subject. It may in part be ac counted for by the fact that powerful pecuniary interests are concerned in the issue, for it is true, as Macaulay said, that if large pecuniary interests were concerned in denying the attraction of gravitation, that moRt obvious 8 PROTECTION OR FREE TRADE. of physical facts would have disputers. But that sa many fair-minded men who have no special interests to serve are still at variance on this subject can only, it seems to me, be fully explained on the assumption that the discussion has not been carried far enough to bring out that full truth which harmonizes all partial truths. The present condition of the controversy, indeed, shows this to be the fact. In the literature of the sub- ject, I know of no work in which the inquiry has yet been carried to its proper end. As to the effect of protection upon the production of wealth, all has prob- ably been said that can be said ; but that part of the question which relates to wages and which is primarily concerned with the distribution of wealth has not been adequately treated. Yet this is the very heart of the controversy, the ground from which, until it is thor- oughly explored, fallacies and confusions must con- stantly arise, to envelop in obscurity even that which has of itself been sufficiently explained. The reason of this failure is not far to seek. Politi- cal economy is the simplest of the sciences. It is but the intellectual recognition, as related to social life, of laws which in their moral aspect men instinctively rec- ognize, and which are embodied in the simple teachings of him whom the common people heard gladly. But, like Christianity, political economy has been warped by institutions which, denying the equality and brother- hood of man, have enlisted authority, silenced objec- tion, and ingrained themselves in custom and habit of thought. Its professors and teachers have almost in- variably belonged to or been dominated by that class which tolerates no questioning of social adjustments that give to those who do not labor the fruits of ESTTRODUCTOEY. 9 labor's toil. They have been like physicians employed to make a diagnosis On condition that they shall dis- cover no unpleasant truth. Given social conditions such as those that throughout the civilized world to- day shock the moral sense, and political economy, fear- lessly pursued, must lead to conclusions that will be as a lion in the way to those who have any tenderness for "vested interests." But in the colleges and universities of our time, as in the Sanhedrim of old, it is idle to ex- pect any enunciation oftruths unwelcome to the powers that be. Adam Smith demonstrated clearly enough that pro- tective tariffs hamper the production of wealth. But Adam Smith — the university professor, the tutor and pensioner of the Duke of Buccleugh, the prospective holder of a government place — either did not deem it prudent to go further, or, as is more probable, was pre- vented from seeing the necessity of doing so by the at- mosphere of his time and place. He at any rate failed to carry his great inquiry into the causes which from " that original state of things in which the production of labor constitutes the natural rdfcompense or wages of labor " had developed a state of things in which nat- ural wages seemed to be only such part of the produce of labor as would enable the laborer to exist. And, following Smith, came Malthus, to formulate a doctrine which throws upon the Creator the responsibility for the want and vice that flow from man's injustice — a doctrine which has barred from the inquiry which Smith did not pursue even such high and generous minds as that of John Stuart Mill. Some of the pub- lications of the Anti-Corn-Law League contain indi- cations that if the struggle over the English corn lawa 1* 10 PEOTECTION OK FREE TRADE. had been longer continued, the discussion might have been pushed further than the question of revenue tariff or protective tariff ; but, ending as it did, the capitalists of the Manchester school were satisfied, and in such discussion as has since ensued English free traders, with few exceptions, have made no further advance, while American advocates of free trade have merely followed the English free traders. On the other hand, the advocates of protection have evinced a like indisposition to venture on burning ground. They extol the virtues of protection as fur- nishing employment, without asking how it comes that any one should need to be furnished with employment ; they assert that protection maintains the rate of wages, without explaining what determines the rate of wages. The ablest of them, under the lead of Carey, have re- jected the Malthusian doctrine, but only to set up an equally untenable optimistic theory which serves the same purpose of barring inquiry into the wrongs of labor, and which has been borrowed by Continental free traders as a weapon with which to fight the agi- tation for social reform. That, so far as it has yet gone, the controversy be- tween protection and free trade has not been carried to its logical conclusions is evident from the positions which both sides occupy. Protectionists and free traders alike seem to lack the courage of their convic- tions. If protection have "the virtues claimed for it, why should it be confined to the restriction of imports from foreign countries ? If it really " provides employ- ment " and raises wages, then a condition of things in which hundreds of thousands vainly seek employment, and wages touoh the point of bare subsistence, demand^ INTBODUOTOET. 11 a far more vigorous application of this beneficent prin ciple than any protectionist has yet proposed. On the other hand, if the principle of free trade be true, the substitution of a revenue tariff for a protective tarifiE is a ridiculously inefficient application of it. Like the two knights of allegory, who, halting one on each side of the shield, continued to dispute about it when the advance of either must have revealed a truth that would have ended their controversy, pro- tectionists and free traders stand to-day. Let it be ours to carry the inquiry wherever it may lead. The fact is, that fully to understand the tariff question we must go beyond the tariff question as ordinarily debated. And here, it may be, we shall find ground on which honest divergences of opinion may be reconciled, and facts which seem conflicting may fall into harmonious relations. OHAPTEE IL CLEARING GEOUND. The protective theory has certainly the weight oi most general acceptance. Forty years ago all civilized countries based their policy upon it ; and though Great Britain has since discarded it, she remains the only considerable nation that has done so, while not only have her own colonies, as soon as they have obtained the power, shown a disposition to revert to it, but such a disposition has of late years been growing in Great Britain herself. It should be remembered, however, that the pre- sumption in favor of any belief generally entertained has existed in favor of many beliefs now known to be entirely erroneous, and is especially weak in the case of a theory which, like that of protection, enlists the sup- port of powerful special interests. The history of man- kind everywhere shows the power that special inter- ests, capable of organization and actiqp, may exert in securing the acceptance of the most monstrous doc- trines. We have, indeed, only to look around us to see how easily a small special interest may exert greater influence in forming opinion and making. laws than a large general interest. As what is everybody's busi- ness is nobody's business, so what is everybody's in- terest is nobody's interest Two or three citizens of a seaside town see that the building of a custom-house or CLEARING GROUND. 13 the dredging of a creek will put money in their pock- ets ; a few silver miners conclude that it will be a good thing for them to have the government stow away some millions of silver every month ; a navy contractor wants the profit of repairing useless iron-clads or building needless cruisers, and again and again such petty inter- ests have their way against the larger interests of the whole people. What can be clearer than that a note directly issued by the government is at least as good as a note based on a government bond? Yet special interests have sufficed with us to institute and maintain a hybrid currency for which no other valid reason can be assigned than private profit. Those who are specially interested in protective tariffs find it easy to believe that protection is of gen- eral benefit. The directness of their interest makes them active in spreading their views, and having con- tiol of la:fge means — for the protected industries are those in which large capitals are engaged — and being ready on occasion, as a matter of business, to spend money in propagating their doctrines, they exert great influence upon the organs of public opinion. Free trade, o& ihe contrary, offers no special advantage to any particular interest, and in the present state of social morality .Wefits or injuries which men share in common with i,i>eir fellows are not felt so intensely as those which affect them specially. I do not mean to say that the pecuniary interests which protection enlists suffice to explain the wide- spread acceptance of its theories and the tenacity with which they are held. But it is plain that these in- terests do conatitijte it power of ' the kind most potent in forming opinivu and influencing legislation, and U PfiOTECTION OR FREE TRADE. that this fact weakens the presumption the wide accept ance of protection might otherwise afford, and is a rea- son why those who believe in protection merely because they have constantly heard it praised should examine the question for themselves. Protection, moreover, has always found an effective ally in those national prejudices and hatreds which are in part the cause and in part the result of the wars that have made the annals of mankind a record of blood- shed and devastation — prejudices and hatreds which have everywhere been the means by which the masses have been induced to use their own power for their own enslavement. For the first half century of our national existence American protectionists pointed to the protective tariff of Great Britain as an example to be followed; but since that country, in 1846, discarded protection, its American advocates have endeavored to utilize national prejudice by constantly speaking of protection as an American system and of free trade as a British inven- tion. Just now they are endeavoring to utilize in the same way the enmity against everything British which long oppressions and insults have engendered in the Irish heart, and, in the words of a recent political plat- form, Irish- Americans are called upon "to resist the introduction into America of the English theory of free trade, which has been so successfully used as a means to destroy the industries and oppress the people of Ireland." Even if free trade had originated in Great Britain we should be as foolish in rejecting it on that account as we should be in refusing to speak our mother tongue because it is of British origin, or in going back to hand CI/EAliiNG GROUND. 15 and water power because steam engines were first intro- duced in Great Britain. But, in trath, free trade no more originated in Great Britain thaa did trie habit of walking on the feet. Free trade is the natural trade — the trade tbat goes on in the absence of artificial re- strictions. It is protection that had to be invented. But instead of being invented in the United States, it was in full force in Great Britain long before the Uni- ted States were thought of. It would be nearer the truth to say that protection originated in Great Britain, for, if the system did not originate there, it was fully developed there, and it is from that country that it has been derived by us. Nor yet did the reaction against it originate in Great Britain, but in France, among a school of eminent men headed by Quesnay, who were Adam Smith's predecessors and in many things his teachers. These French economists were what neither Smith nor any subsequent British economist or states- man has been — true free traders. They wished to sweep away not merely protective duties, but all taxes, direct and indirect, save a single tax upon land values. This logical conclusion of free-trade principles the so- called British free traders have shirked, and it meets to- day as bitter opposition from the Cobden Club as from American protectionists. The only sense in which we can properly speak of " British free trade " is the same sense in which we speak of a certain imitation metal as " German silver." " British free trade " is spurious free trade. Great Britain does not really enjoy free trade. To say nothing of internal taxes, inconsistent with true free trade, she still maintains a cordon of custom-house ofl&cers, coast guards and baggage searchers, and still ppUe^ts over a hwdi'ed million dollars of her reveAii? 16 PROTECTION OE FEEE TEADE. from import duties. To be sure, her tariff is " for rev- enue '>nly," but a tariff for revenue only is not free trade. The ruling classes of Great Britain have adopt- ed only so much free trade as suits their class inter- ests, and the battle for free trade in that country has yet to be fought. On the other hand, it is absurd to talk of protection as an American system. It had been fully developed in Europe before the American colonies were planted, and during our colonial period England maintained a more thorough system of protection than now anywhere exists — a system which aimed at building up English industries not merely by protective duties, but by the repression of like industries in Ireland and the colonies, and wherever else throughout the world English power could be exerted. What we got of protection was the wrong side of it, in regulations intended to prevent American industries from competing with those of the mother country and to give to her a monopoly of the American trade. The irritation produced in the growing colonies by these restrictions was the main cause of the revolution which made of them an independent nation. Protec- tionist ideas were, doubtless at that time latent among our people, for they permeated the mental atmosphere of the civilized world, but so little disposition was there to embody those ideas in a national policy, that the American representatives in negotiating the treaty of peace endeavored to secure complete freedom of trade between the United States and Great Britain. This was refused by England, then and for a long time afterward completely dominated by protective ideas. But during. the period following the r9y9li).ti90 CLMARINS a&OtJND. 17 in wiiicli the American Union existed during the Articles of Confederation, no tariff hampered impor- tations into the American States. The adoption of the Constitution made a Federal tariff possible, and to give the Federal Grovernment an independent revenue a tariff was soon imposed; but although protection had then begun to find advocates in the 'United States, this first American tariff was almost nominal as compared with what the British tariff was then or our tariff is now. And in the Federal Constitution state tariffs were prohibited — a step which has resulted in giving to the principle of free trade the greatest extension it has had in modern times. Nothing could more clearly show how far the American people then were from accepting the theories of protection since popularized among them, for the national idea, had not then acquired the force it has since gained, and if protection had then been looked upon as necessary the .'different States would not without a struggle have given up the power of imposing tariffs of their own. Nor could protection have reached its present height in the United States but for the civil war. While at- tention was concentrated on the struggle and mothers were sending their sons to the battle-field, the interests that sought jJrotection took advantage of the patriotism that was ready for any sacrifice to secure protective taxes such as had never before been dreamed of — taxes which they have ever since managed to keep in force, and even in many 'cases to increase. The truth is that protection is no more American than is the distinction made in our regular army and navy between commissioned officers and enlisted men — a dis- 18 PROTECTION Or FilEE TRADE, tinction not of degree but of kind, so that thete is be- tween tbe bigbest non-commissioned officer and the lowest commissioned of&cer a deep gulf fixed, a gulf wbicb can only be likened to that wbich exists between wbite and black where the color line is drawn sharpest. This distinction is historically a survival of that made in the armies of aristocratic Europe, when they were officered by nobles and recruited from peasants, and has , been copied by us in the same spirit of imitation that has led us to copy other undemocratic customs and in- stitutions. Though we preserve this aristocratic dis- tinction after it has been abandoned in some European countries, it is in no sense American It neither origin- ated with us nor does it consort with our distinctive ideas and institutions. So it is with protection. "Whatever be its economic merits there can be no doubt that it conflicts with those ideas of natural right and personal freedom which received national expression in the es- tablishment of the American Republic, and which we have been accustomed to regard as distinctively Ameri- can. What more incongruous than the administering of custom-house oaths and the searching of trunks and hand-bags under the shadow of " Liberty Enlightening the World?" As for the assertion that " the English theory of free trade "has been used "to destroy the industries and oppress the people of Ireland," the truth is that it was " the English theory of protection " that was so used. The restrictions which British protection imposed upon the American colonies were trivial as compared with those imposed upon Ireland. The successful resistance of the colonies roused in Ireland the same spirit, and led to the great movement of "Irish Volunteers," who, with CLEAEIJ^G GEOtND. 19 cannon bearing the inscription " Free Trade or ! " forced the repeal of those restrictions and won for a time Irish legislative independence. Whether Irish industries that were unquestionably hampered and throttled by British protection could now be benefited by Irish protection, like the question whether protection benefits the United States, is only to be settled by a determination of the effects of pro- tection upon the country that imposes it. But without going into that, it is evident that the free trade be- tween Great Britain and Ireland which has existed since the union in 1801, has not been the cause of the backwardness of Irish industry. There is one part of Ireland which has enjoyed comparative prosperity and in which important industries have grown up- some of them, such as the building of iron ships, for which natural advantages cannot be claimed. How can this be explained on the theory that Irish industries cannot be re-established without protection ? If the very men who are now trying to persuade Irish- American voters that Ireland has been impover- ished by "British free trade" were privately asked the cause of the greater prosperity of Ulster over other parts of Ireland, they would probably give the answer made familiar by religious bigotry — that Ulster is en- terprising and prosperous because it is Protestant, while the rest of Ireland is sluggish and poor because it is Catholic. But the true reason is plain. It is, that the land tenure in Ulster has been such that a larger por- tion of the wealth produced has been left there than in other parts of Ireland, and that the mass of the peo- ple have not been so remorsely hunted and oppressed. In Presbyterian Skye the same general poverty, the 20 PROTECTION OR FREE TRADfi. same primitive conditions of industry exist as in Catho- lic Connemara, and its cause is to be seen in the same rapacious system of landlordism which has carried off the fruits of industry and prevented the accumulation of capital. To attribute the backwardness of industry among a people who are steadily stripped of all they can produce above a bare living, to the want of a pro- tective tariff or to religious opinions is like attributing the sinking of a scuttled ship to the loss of her figure- head or the color of her paint. What, however, in the United States at least, has tended more than any appeals to national feeling to dis- pose the masses in favor of protection, has been the difference of attitude toward the working classes as- sumed by the contending policies. In its beginnings in this country protection was strongest in those sec- tions where labor had the largest opportunities and was held in the highest esteem, while the strength of free trade has been the greatest in the section in which up to the civil war slavery prevailed. The political party which successfully challenged the aggressions of the slave power also declared for a protective tariff, while the men who tried to rend the Union in order to es- tablish a nation based upon the right of capital to own labor, prohibited protection in the constitution they formed. The explanation of these facts is, that in one section of the country there were many industries that could be protected, while in the other section there were few. While American cotton culture was in its earlier stages, Southern cotton planters were willing enough to avail themselves of a heavy duty on India cottons, and Louisiana sugar growers have always been persist- ent sticklers for protection. But when cotton raised OLEAEING GEOUND. 21 for export became the great staple of tlie South, pro- tection, in the absence of manufactures, was not only clearly opposed to dominant Southern interests, but assumed the character of a sectional imposition by which the South was taxed for the benefit of the North. This sectional division on the tariff question had no reference whatever to the conditions of labor, but in many minds its effect has been to associate protection with respect for labor and free trade with its enslave- ment. Irrespective of this there has been much in the pre- sentation of the two theories to dispose the working classes toward protection and against free trade. Workingmen generally feel that they do not get a fair reward for their labor. They know that what prevents them from successfully demanding higher wages is the competition of others anxious for work, and they are natiirally disposed to favor the doctrine or party that proposes to shield them from competition. This, its advocates urge, is the aim of protection. And what- ever protection accomplishes, protectionists at least pro- fess regard for the working classes, and proclaim their desire to use the powers of government to raise and maintain wages. Protection, they declare, means the protection of labor. So constantly is this reiterated that many suppose that this is the real derivation of the term, and that " protection " is short for " protection of labor." On the other hand, the opponents of protection have, for the most part, not only professed no special interest in the well-being of the working classes and no desire to raise wages, but have denied the justice of attempt- ing to use the powers of government for this purpose 22 PEOTBCTION OR FREE TRADE. The doctrines of free trade have been intertwined with teachings that throw upon the laws of nature respon- sibility for the poverty of the laboring class, and foster a callous indifference to their sufferings. On the same grounds on which they have condemned leg- islative interference with commerce, free-trade econ- omists have condemned interference with hours of labor, with the rate of wages, and even with the employ- ment of women and children, and have united protec- tionism and trades unionism in the same denuncia- tion, proclaiming supply and demand to be the only true and- rightful regulator of the price of labor as of the price of pig iron. While protesting against re- strictions upon the production of wealth they have Ignored the monstrous injustice of its distribution, and have treated as fair and normal that competition in which human beings, deprived of their natural oppor- tunities of employing themselves, are compelled bybit- ng want, to bid against one another. All this is true. But it is also true that the needs of labor require more than kind words, and are not to be satisfied by such soft phrases as we address to a horse when we want to catch him that we may put a bit in his mouth and a saddle on his back. Let me ask those who are disposed to regard protection as favorable to the aspirations of labor, to consider whether it can be true that what labor needs is to be protected ? To admit that labor needs protection is to acknowl- edge its inferiority ; it is to acquiesce in an assumption that degrades the workman to the position of a depend- ent, and leads logically to the claim that the employ^ is bound to vote in the interest of the employer who ;provi^ him with work. There is something in th? CLEARING GROUND. 23 very word " protection " that ought to make work- ingmen cautious of accepting anything presented to them under it. The protection of the masses has in all times heen the pretense of tyranny — the plea of monarchy, of aristocracy, of special privilege of every kind. The slave owners justified slavery as protect- ing the slaves. British misrule in Ireland is upheld on the ground that it is for the protection of the, Irish. But, whether under a monarchy or under a ret public, is there an instance in the history of iiy* wocld in which the ''protection" of the laboring massesabs* not meant their oppression ? The protection th^fetij@^9 who have got the law-making power into thfciteMds. have given to labor, has at best always b¥gitt-!tte«pjl^ tection that manigives to cattle — he protagtsi-thsmiith&t he may use and, eat them. idBnailBnir xltrw There runs through protectionist fat^fespiot^isil toS- cern for labor a lojie of condescendji^of ft^oafelgeJHiifiipe insulting to men who feel the true digsJIgrDtjbbJfo^a* frankly expressed contempt oaisd^fe^^-flatlja^Sife^on that pauperism is the naturaiiTjQpiaisiitiptqBiIofcJf^QEpiftfi which it n^ust everywhere fall uli!ie$gIfiggfi^?Q}^g%j;(p^q tected. It is never intimated tfca^xlSi|olaoflrj£gf5«!«£ife the capitalist needs protection. They, it is ^ira)J©*£h sumed, can take care of themselves. It is only the poor workingman who must be protected. What is labor that it should so need protection? Is not labor the creator of capital, the producer of all wealth ? Is it not the men who labor tbat feed and clothe all others ? Is it not true, as has been said, that the three great orders of society are " workingmen, beggarmen and thieves ? " How, then, does it come fhat workingmen alone need protection? When th§ 24 PROTECTION OE FREE TRADE. first man came upon the eartli who was there to pro- tect him or to provide him with employment? Yet whenever or however he came, he must have managed to get a living and raise a family ! When we consider that labor ,is the producer of all wealth, is it not evident that the impoverishment and dependence of labor are abnormal conditions re- sulting from restrictions ^nd usurpations, and that instead of accepting protection, what labor should de- mand is freedom ? That those who advocate any ex- tension of freedom choose to go no further than suits their own special purpose is no reason why freedom it- self should be distrusted. For years it was held that the assertion of our Declaration of Independence that all men are created equal and endowed by "their Creator with unalienable rights, applied only to white men. But this in nowise vitiated the principle. Nor does it vitiate the principle that it is still held to apply only to political rights. And so, that freedom of trade has been advocated by those who have no sympathy with labor should not prejudice us against it. Can the road to the industrial emancipation of the masses be any other than that of freedom ? CHAPTER HL OF METHOD. On the deck of a stip men are pulling on a rope and on her mast a yard is rising. A man aloft is clinging to the tackle that raises the yard. Is his weight assist- ing its rise or retarding it ? That, of course, depends on what part of the tackle his weight is thrown upon, and can only be told by noticing whether its tendency is with or against the efforts of those who pull on deck. If in things so simple we may easily err in assuming cause from effect, how much more liable to error are such assumptions in regard to the complicated phenom- ena of social life. Much that is urged in current discussions of the tariff question is of no validity whatever, and however it may serve the purpose of controversy, cannot aid in the discovery of truth. That a thing exists with or follows another thing is no proof that it is because of that other thing. This assumption is the fallacy post hoc, ergo propter hoc, which leads, if admitted, to the most preposterous conclusions. Wages in the United States are higher than in England, and we differ from England in having a protective tariff. But the assumption that the one fact is because of the other, is no more valid than would be the assumption that these higher wages are due to our decimal coinage or to our republican form of government. That Eng- 2 ^6 PEOTECflON OR FREE TRADfi. land has growa in wealth since the abolition qf pfG> tection proves no more for free trade than the growth of the United States under a protective tariff does for protection. It does not follow that an institu- tion is good because a country has prospered under it, nor bad because a country in which it exists is not prosperous. It does not even follow that institutions to be found in all prosperous countries and not to be found in backward countries are therefore beneficial. For this, at various times, might have been confidently asserted of slavery, of polygamy, of aristocracy, of es- tablished churches, and it may still be asserted of pub- lic debts, of private property in land, of pauperism, or of the existence of distinctively vicious or criminal classes. Nor even when it can be shown that certain changes in the prosperity of a country, of an industry, or of a class, have followed certain other changes in laws or institutions can it be inferred that the two are related to each other as effect and cause, unless it can also be shown that the assigned cause tends to produce the assigned effect, or unless, what is clearly impossible in most cases, it can be shown that there is no other cause to which the effect can be attributed. The almost endless multiplicity of causes constantly operating in human societies, and the almost endless interference of effect with effect, make that popular mode df reasoning which logicians call the method of simple enumeration woi-se than useless in social investigations. As for reliance upon statistics, that involves the ad- ditional difficulty of knowing whether we have the right statistics. Though " figures cannot lie," there ia in their collection and grouping such liability to over- sight and such temptation to bias that they are to b? Of MBTflOD. 27 distrusted in matters of controversy until they have been subjected to rigid examination. The value of most arguments turning upon statistics is well illus- trated in the story of the government clerk who, being told to get up the statistics of a certain question, wished first to know which side it was desired that they should support. Under their imposing appearance of exact- ness may lurk the gravest errors and wildest assump- tions. To ascertain the effect of protective tariffs, we must inquire what they are and how they operate. When we thus discover their nature and tendencies, we shall be able to weigh what is said for or against them, and have a clew by which we may trace their results amid the complications of social phenomena. For the largest communities are but expansions of the smallest com- munities, and the rules of arithmetic by which we cal- culate gain or loss on transactions of dollars apply as well to transactions of hundreds of millions. Thus the facts we must use and the principles we must apply are common facts that are known to all and principles that are recognized in every-day life. Starting from premises as to which there can be no dispute, we have only to be careful as to our steps in order to reach conclusions of which we may feel sure. We cannot experiment with communities as the chem- ist can with material substances, or as the physiologist can with animals. Nor can we find nations so alike in all other respects that we can safely attribute any difference in their conditions to the presence or ab- sence of a single cause without first assuring our- selves of the tendency of that cause. But the imag- ination puts at our coiaamand a method of investi- 28 PROTECTION OB FREE TRADE. gating economic problems which is within certain limits hardly less useful than actual experiment. We may test the working of known principles by mentally separating, combining or eliminating con- ditions. Let me explain what I mean by an illus- tration 1 have once before used.* When I was a boy I went down to the wharf with another boy to see the first iron steamship that had ever crossed the ocean to Philadelphia. Now, hearing of an- iron steamship seemed to us then a good deal like hearing of a leaden kite or a wooden cooking-stove. But we had not been long aboard of her, before my comrade said in a tone of contemptuous disgust : " Pooh ! I see how it is. She's all lined with wood ; that's the jeaaoii she floats." I could not controvert him for the moment, but I was not satisfied, and sitting down on •vhe whari when he left me, I set to work trying mental experiments. If it was the wood inside of her that tnade her float, tiicn tiie more wood the higher she would float ; and, mentally, I loaded her up with wood. But, as I was familiar with the process of making boats out of blocks of wood, I at once saw that, instead of floating higher, she would sink deeper. Then, I mentally took all the wood out of her, as we dug out our wooden boats, and saw that thus lightened she would float higher still. Then, in imagination, I jammed a hole in her, and saw that the water would run in and she would sink, as did our wooden boats when ballasted with leaden keels. And, thus I saw, as clearly as though I could have actually made these experiments with the steamer, that it was not the * Lecture before the students ot the University of California, on the •• Study of Political Economy," April, 1877. OF METHOD. 29 ■wooden lining that made her float, but her hollowness, or, as I would now phrase it, her displacement of water. In such ways as this, with which we are all familiar, we can isolate, analyze or combine economic principles, and, by extending or diminishing the scale of propo- sitions, either subject them to inspection through a men- tal magnifying glass or bring a larger field into view. And this each one can-do for himself. In the inquiry upon which we are about to enter, all I ask of the reader is that he shall in nothing trust to me. CHAPTEE IV. PROTECTION AS A UNIVERSAL NEED. To understand a thing it is often well to begin by looking at it, as it were, from the outside and observing its relations, before examining it in detail. Let us do this with the protective theory. Protection, as the term has come to signify a certain national policy, means the levying of duties upon im- ported commodities for the purpose of protecting from competition the home producers, of such commodities. Protectionists contend that to secure the highest pros- perity of each nation it should produce for itself every- thing it is capable of producing, and that to this end its home industries should be protected against the com- petition of foreign industries. They also contend (ift the United States at least) that to enable workmen t6 obtain as high wages as possible they should be pro- tected by tariff duties against the competition of goods produced in countries where wages are lower. With- out disputing the correctness of this theory, let us con- sider its larger relations. The protective theory, it is to be observed, asserts a general law, as true in one country as in another. However protectionists in the United States may talk of "American protection" and "British free trade," protection is, and of necessity, must be, advocated as of universal application. American protectionists use the PBOTECimON AS A UNIVERSAL NEED. 31 arguments of foreign protectionists, and eyea where they complain that the protective policy of other coun- tries is injurious to us, commend it as an example which we should follow. They contend that (at least up to a certain point in national development) protec- tion is everywhere beneficial to a nation, and free, trade everywhere injurious; that the prosperous nations have built u.p their prosperity by protection, and that all nations that would be prosperous must adopt that policy. And their arguments must be universal to have any plausibility, for it would be absurd to assert that a theory of national growth and prosperity applies to some countries and not to others. Let me ask the reader who has hitherto accepted the protective theory to consider what its necessarily uni- versal character involves. It was the realization of this that first led me to question that theory. I was for a number of years after I had come of age a protec- tionist, or rather, I supposed I was, for, without real examination, I had accepted the belief, as in the first place we all accept our beliefs, on the authority of others. So far, however, as I thought at all on the subject, I was logical, and I well remember how when the Florida and Alabama were sinking American ships at sea, I thought their depredations, after all, a good thing for the state in which I lived — California — since the increased risk and cost of ocean carriage in Ameri- can ships (then the only way of bringing goods from the Eastern States to California) would give to her in- fant industries something of that needed protection against the lower wages and better established indus- tries of the Eastern States which the Federal Constitu- tion prevented her from securing by a State tariff. The S2 tEOTECTIOlSf OK FREfi TRADE. full bearing of such notions never occurred to me till I happened to hear the protective theory elaborately ex- pounded by an able man. As he urged that American industries must be protected from the competition of foreign countries, that we ought to work up our own raw materials and allow nothing to be imported that ' we could produce for ourselves, I began to realize that these propositions, if true, must be universally true, and that not only should every nation shut itself out from every other nation ; not only should the various sections of every large country institute tariffs of their own to shelter their industries from the competition of other sections, but that the reason given why no people should obtain from abroad anything they might make at home, must apply as well to the family. It was this that led me to weigh arguments I had before accepted without real examination. It seems to me impossible to consider the necessarily universal character of the protective theory without feeling it to be repugnant to moral perceptions and in- consistent with the simplicity and harmony which we everywhere discover in natural law. What should we think of human laws framed for the government of a country whitoh should compel each family to keep con- stantly on their guard against every other family, to expend a large part of their time and labor in prevent- ing exchanges with their neighbors, and to seek their own prosperity by opposing the natural efforts of other families to become prosperous ? Yet the protective theory implies that laws such as these have been im- posed by the Creator upon the families of men who tenant this earth. It implies that by virtue of social laws, as immutable as the physical laws, each nation PEOTECTION AS A UNIVERSAL NEED. 33 inust stand jealously on guard against every other na- tion and erect artificial obstacles to national inter- , course. It implies that a federation of mankind, such as that which prevents the establishment of tariffs be- tween the states of the American Union, would be a disaster to the race, and that in an ideal world each nation would be protected from every other nation by a cordon of tax collectors, with their attendant spies and informers. Such a theory might consort with that form of poly- theism which assigned to each nation a separate and hostile Grod ; but it is hard to reconcile it with the idea of the unity of the Creative Mind and the universality of law. Imagine a Christian missionary expounding to a newly discovered people the sublime truths of the gospel of peace and love — the fatherhood of God ; the brotherhood of man ; the duty of regarding the interests of our neighbors equally with our own, and of doing to others as we would have them do to us. Could he, in the same breath, go on to declare that, by virtue of the laws of this same God, each nation, to prosper, must defend itself against all other nations hj a pro- tective tariff ? Eeligion and experience alike teach us that the highest good of each is to be sought in the good of others ; that the true interests of men are harmonious, not antagonistic ; that prosperity is the daughter of good will and peace ; and that want and destruction follow enmity and strife. The protective theory, on the other hand, implies the opposition of national interests ; that the gain of one people is the loss of others ; that each must seek its own good by constant efforts to get ad- vantage over others and to prevent others from getting 34 PROTECTION OR FREE TRADE. advantage over it. It makes of nations rivals instead of co-operators ; it inculcates a warfare of restrictions and prohibitions and searchings and seizures, which differs in weapons, but not in spirit, from that warfare which sinks ships and burns cities. Can we imagine, the nations beating their swords into plowshares and their spears into pruning-hooks and yet maintaining hostile tariffs ? No matter whether he call himself Christian or Deist, or Agnostic or Atheist, who can look about him with- out seeing that want and suffering flow inevitably from selfishness, and that in any community the golden rule which teaches us to regard the interests of others as carefully as our own would bring not only peace but plenty? Can it be that what is true of individuals ceases to be true of nations — that in one sphere the law of prosperity is the law of love ; in the other that of strife? On the contrary, universal history testifies that poverty, degradation, and enslavement are the in- evitable results of that spirit which leads nations to regard each other as rivals and enemies. Every political truth must be a moral truth. Yet who can accept the protective theory as a moral truth ? A few months ago I found myself one night, with four other passengers, in the smoking car of a Pennsyl- vania limited express train traveling west. The con- versation, beginning with fast trr.ins, turned to fast steamers, and then to custom-house experiences. One told how, coming from Europe with a trunk filled with presents for his wife, he had significantly said to the custom-house inspector detailed to examine his trunks that he was in a hurry. "How much of a hurry?" said the officer, "Ten dollars' worth of a hurry," was PEOTECTIOISr AS A UNIVERSAL NEED. 35 tte reply. The officer took a quick look through the trunk and remarked, " That's not much of a hurry for all this." " I gave him ten more," said the story-teller, " and he chalked the trunk." Then another told how under similar circumstances he had placed a magnificent meerschaum pipe so that it would be the first thing seen on lifting the trunk lid, and, when the officer admired it, had replied that it was his. The third said he simply put a greenback con- spicuously in the first article of luggage ; and the fourth told how his plan was to crumple up a note, and put it with his keys in the officer's hands. Here were four reputable business men, as I after- ward found them to be — one an iron worker, one a coal producer, and the other two manufacturers — men of at least average morality and patriotism, who not only thought it no harm to evade the tariff, but who made no scruple of the false oath necessary, and regarded the bribery of customs officers as a good joke. I had the curiosity to edge the conversation from this to the sub- ject of free trade, when I found that all four were staunch protectionists, and by edging it a little fm-ther I found that all four were thorough believers in the right of an employer to discharge any workman who voted for a free-trade candidate, holding, as they put it, that no one ought to eat the bread of an employer whose interests he opposed. I recall this conversation because it is typical. Who- ever has traveled on trans- Atlantic steamers has listened to such conversations, and is aware that the great ma- jority of the American protectionists who visit Europe return with purchases which they smuggle through, even at the expense of a " custom-house oath" and a 36 PBOTECTION OK FREE TRADE. greenback to the examining officer. Many of our larg est under- valuation smugglers have ■ been men of the highest social and religious standing, who gave freely of their spoils to churches and benevolent societies. Not long ago a highly respected banker, an extremely religious man, who had probably neglected the pre- cautions of my smoking-car friends, was detected in the endeavor to smuggle through in his luggage (which he had of course taken a " custom-house oath " did not contain anything dutiable) a lot of very valuable pres- , ents to a church ! Conscientious men will (until they get used to them) shrink from false oaths, from bribery, or from other means necessary to evade a tariff, but even of be- lievers in protection are there any who really think such evasions wrong in themselves ? What theoreti- cal protectionist is there, who, if no one was watch- ing him, would scruple to carry a box of cigars or a dress pattern, or anything else that could be carried, across a steamer wharf or across Niagara bridge? And why should he scruple to carry such things across a wharf, a river, or an imaginary line, since once inside the custom house frontier no one would object to his carrying them thousands of miles ? •That unscrupulous men, for their own private ad- vantage, break laws intended for the general good proves nothing ; but that no one really feels smug- gling to be wrong proves a good deal. "Whether we hold the basis of moral ideas to be intuitive or utili- tarian, is not the fact that protection thus lacks the support of the moral sentiment inconsistent with the idea that tariffs are necessary to the well-being and progress of roaukind ? If, a,§ is held by some, moral PROTECTlOiir aS a tTNItEfiSAL NEED. 37 perceptions are implanted in our nature as a means wliereby our conduct may be instinctively guided in such way as to conduce to the general well being, how is it, if the Creator has ordained that man should prosper by protective tariffs, that the moral sense takes no cognizance of such a law? If, as others hold, what we call moral perceptions be the result of general experience of what conduces to the common good, how is it that the beneficial effects of protection have not developed moral recognition? To make that a crime by statute which is no crime in morals, is inevitably to destroy respect for law ; to resort to oaths to prevent men from doing what they feel injures no one, is to weaken the sanctity of oaths. Corruption, evasion and false swearing are inseparable from tariffs. Can that be good of which these are the fruits? A system which requires such spying and searching, such invoking of the Almighty to witness the contents of every box, bundle and package — a sys- tem which always has provoked, and in the nature of man always mast provoke, corruption and fraud — can it be necessary to the prosperity and progress of mankind? Consider, moreover, how sharply this theory of pro- tection conflicts with common experience and habits of thought. Who would think of recommending a site for a proposed city or a new colony because it was very difficult to get at ? Yet, if the protective theory be true, this would really be an advantage. Who would regard piracy as promotive of civilization ? Yet a discriminating pirate, who would confine his seizures to goods which might be produced in the country to which they were being carried, would be as beneficial to that country as a tariff. WhetHer protectionists or free traders, we all hean witli interest and pleasure of improvements in trans- portation by water or land ; we are all disposed to re- gard tlie opening of canals, the building of rail- ways, the deepening of harbors, the improvement of steamships, as beneficial. But if such things are beneficial, how can tariffs be beneficial ? The effect of such things is to lessen the cost of transporting commodities ; the effect of tariffs is to increase it. If the protective theory be true, every improvement that cheapens the carriage of goods between country and country is an injury to mankind unless tariffs be com- mensurately increased. The directness, the swiftness and the ease with which birds cleave the air, naturally excite man's desire. His fancy has always given angels wings, and he has ever dreamed of a time when the power of traversing those unobstructed fields might also be his. That this tri- umph is within the power of human' ingenuity who in this age of marvels can doubt ? And who would not hail with delight the news that invention had at last brought to realization the dream of ages, and made navigation of the atmosphere as practicable as naviga- tion of the ocean? Yet if the protective theory be true this mastery of another element would be a mis- fortune to man. For it would make protection impos- sible. Every inland town and village, every rood of ground on the whole earth's surface, would at once become a port of an all-embracing ocean, and the only way in' which any people could continue to enjoy the blessings of protection would be to roof their coun- try in. It is not only improvements in transportation that gadfECflON AS A tJNI'V'^EBSAL JiTEED. 3§ are antagonistic to protection ; but all labor-saving invention and discovery. The utilization of natural gas bids fair to lessen the demand for native coal far more than could the free importation of foreign coal. Borings in Central New York have recently revealed vast beds of pure salt, the working of which will de- stroy the industry of salt making, to encourage which we impose a duty on foreign salt. "We maintain a tariflE for the avowed purpose of keeping out the pro- ducts of cheap foreign labor ; yet machines are daily invented that produce goods cheaper than the cheapest foreign labor. Clearly the only consistent protection- ism is that of China, which would not only prohibit foreign commerce, but forbid the introduction of labor- saving machinery. The aim of protection, in short, is to prevent the bringing into a country of things in themselves useful and valuable, in order to compel the making of such things. But what all mankind in the individual affairs of every-day life, regard as to be desired is not the making of things, but the possession of things. CHAPTER V. THE PEOTECTIVE UNIT. The more one considers the theory that every nation ought to " protect " itself against every other nation, the more inconsistent does it seem. Is there not, in the first place, an obvious absurdity in taking the nation or country as the protective unit and saying that each should have a protective tariff ? * What is meant by nation or country in the protec- tionist theory is an independent political division. Thus Great Britain and Ireland are considered one nation, France another, Germany another, Switzerland another, the United States, Canada, Mexico, and each * That protectionist writers are themselves conscious of this ab- surdity is to be seen in their constant effort to suggest the idea, too preposterous to be broadly stated, that nations instead of being purely arbitrary political divisions of mankind, are natural, or divinely appointed, divisions. Thus, not to multiply instances. Professor Robert Ellis Thompson {Political Economy, p.. 34) defines a nation as " a people speaking one language, living under one gov- ernment, and occupying a continuous area. This area is a district ■whose natural boundaries designate it as intended for the site of an independent people." This definition is given in large typo, while underneath is appended in small type : "No one point of this defi- nition is essential save the second." Tet in spite of this admission that the " nation " is a purely arbitrary political division, Professor Thompson endeavors throughout his . book to suggest a different impression to the mind of the reader, by talking of "the existence of nations as parts of the world's providential order," the "provi- dential boundaries of nations," etc. THE PEOTECTIVE UKIT. 41 of tlie Central and South American republics are others. But these divisions are arbitrary. They do not co- incide with any differences in soil, climate, race or in- dustry — they have no maximum or minimum of area or population. They are, moreover, continually chang- ing. The maps of Europe and America used by school children to-day are very different from the maps their fathers used. The difference a hundred years ago was greater yet ; and as we go further back still greater differences appear. According to this theory, when the three British kingdoms had separate governments it was necessary for the well-being of all that they should be protected from each other, and should Ire- laud , achieve independence that necessity would re- cur; but while the three countries are united under one government, it does not exist. The petty states of which a few years ago Germany and Italy consisted ought upon this theory to have had, as they once had, tariffs between them. Yet, now, upon the same theory, they no longer need these tariffs. Alsace and Lorraine when provinces of France needed to be protected against Germany. Now that they are German prov- inces they need protection against France. Texas, when part of Mexico, required a protective tariff against the United States. Now, being a part of the United States, it requires a protective tariff against Mexico. "We of the United States require a protective tariff against Canada, and the Canadians a tariff against us, but if Canada were to come into the Union the necessity for both of these tariffs would disappear. Do not these incongruities show that the protective theory is destitute of scientific basis ; that instead of originating' in any dgcjuotion from principles or induo 42 PROTECTION OR FREE TRADE. tion from facts, it has been invented merely to serve the purposes of its inventors ? Political changes in nowise alter soil, climate, or industrial needs. If the three British kingdoms do not now need tariffs against cSne another, they could not have needed them before the union. If it is not injurious to the various states of Italy or Germany to trade freely with each other now, it could not have been injurious before they were united. If Alsace and Lorraine are benefited by free trade with Germany now, they would have been bene- fited by it when French provinces. If the people of the opposite shores of the Great Lakes and St. Lawrence Eiver would not be injured by the free exchange of their products should Canada enter the American Union, they could not be injured by freedom to ex- change their products now. Consider how inconsistent with the protective theory is the free trade that prevails between the states of the American Union. Our Union includes an area almost as large as Europe, yet the protectionists who hold that each European country ought to protect itself against all the rest make no objections to the free trade that ex- ists between the American states, though some of these states are larger than European kingdoms, and the dif- ferences between them, as to natural resources and. in- dustrial development, are at least as great. If it is for the benefit of Germany and France that they should be separated by protective tariffs, do'es not iN'ew Jersey need the protection of a tariff from New York and Pennsylvania? and do not New York and Pennsyl- vania also need to be protected from New Jersey? And if New England needs protection against the Province of Quebec, and Ohio, Illinois and Michigan THE PROTECTIVE UNIT. 43 against the Province of Ontario, is it not clear that the,se states also need protection from the states which adjoin them on the south? "What difference does it make that one set of states l>cloug to the American Union and the other to the Canadian Confederation ? Industry and commerce, when left to themselves, pay no more attention to political lines than do birds or fishes. Clearly, if there is any truth in the protective theory it must apply not only to the grand political divisions but to all their parts. If a country ought not to import from other countries anything which its own people can produce, the same principle must apply to every subdivision; and each state, each county and each town- ship, must need its own protective tariS. And further than this, the proper application of the protective theory requires the separation of mankind into the smallest possible political divisions, each defend- ed against the rest by its own tariff. For the larger the area of the protective unit, the more diificalt does it become to apply the protective theory. With every extension of such countries as the United States the possibility of protection, if it can be applied only to the major political divisions, becomes less, and were the poet's dream realized, and mankind united in a " Fed- eration of the World," the possibility of protection would vanish. On the other hand, the smaller the pro- tective unit the better can the theory of protection be applied. Protectionists do not go so far as to aver that all trade is injurioas. They hold that each country may safely import what it cannot produce, but should restrict the importation of what it can produce. Thus dis- crimination is required, which becomes more possible the smaller the protective unit. 44 PROTECTION OR FREE TRADE. Upon protective principles tte same tariff will no bet- ter suit all tlie states of our Union than the same sized shoes will fit all our sixty million people. Massachu- setts, for instance, does not produce coal, iron or sugar. These, then, on protective principles, ought to come' into Massachusetts free, while Pennsylvania enjoyed protection on iron and coal, and Louisiana on sugar. Oranges may be grown in Florida, bit not in Minne- sota ; therefore, while Florida needs a protective duty on oranges, Minnesota does not. And so on through the whole list of states. To " protect " them all with the same tariff is to ignore as to each that part of the protective theory which permits the free importation of commodities that cannot be produced at home ; and, by compelling them to pay higher prices for what they cannot produce, to neutralize the benefits arising from the protection of such commodities as they do produce. Furthermore, while Massachusetts, on the protective theory, does not need protection on coal, iron and sugar, which she cannot produce, she does need pro- tection against the beef, hogs and breadstuffs with which she is " deluged " from the West to the injury of her agricultural Industries, and of which protection would enable her to raise enough for her home con- sumption. On the other hand, the Wegt needs pro- tection against the boots and shoes and woolens of Massachusetts, so that Western leather and wool could be worked up at home, instead of being carried long distances in raw form, to be brought back in finished form. In the same way the iron workers of Ohio need protection against Pennsylvania more than they do against England, while it is only mockery to protect Bocky Mountain coal niiners against the QOal of Wova THE PROTECTIVE UNIT. 45 Scotia, British Columbia and Australia, which cannot ^ome into competition with them, while not protecting them against the coal of Iowa ; or to protect the infant cotton mills of the South against Old England while giving them no protection against New England. Upon the protective theory protection is most needed against like industries. All protectionists agree that the United States has greater need of protection against Great Britain than against Brazil ; and Canada against the United States than against India — all agree that if we must have free trade it should be with the countries most widely diiJering as to their productions from our own. Now there is far less difference between the pro- ductions and productive capacities of New Hampshire and Vermont, of Indiana and Illinois, or of Kansas and Nebraska, than there is between the United States as a whole and any foreign country. Therefore, on the pro- tective theory, tariffs between these states are more needed than between the United States and foreign countries. And since adjoining townships differ less in industrial capacities than adjoining states, they re- quire protective tariffs all the more. The thirteen American colonies came together as thir- teen independent sovereignties, each retaining the fuU^ power of taxation, including that of levying duty on im- ports, which was not given up by them until 1787, eleven years after the Declaration of Independence, when the Federal Constitution was adopted. If the protective theory, then dominant in Great Britain, had at that time had the hold upon the American people which it afterward obtained, it is certain that tbe power of protecting themselves would never have been given up by the states. And had the Union continued as 46 ffiOTECTtON OR FREE *aAl)@. at first formed, or had the framers of the Constitution lacked the foresight to prohibit state tariffs, there is no doubt that when we came to imitate the British system of protection we shou.ld have had as strong a demand in the various states for protection against other states as we have had for protection, against foreign coun- tries, and the arguments now used against free trade with foreign countries would to-day be urged against free trade between the states. Nor can there be any doubt that if our political or- ganization made our townships independent of one another, we should have, in our townships and villages, the same clamor for protection against the industries of other townships and villages that we have now for the protection of the nation against other nations. I am writing on Long- Island, near the town of Jamaica. I think I could make as good an argument to the people of that little town as is made by the pro- tectionists to the people of the United States. I could say to the shopkeepers of Jamaica, " Your townsmen now go to New York when they want to purchase a suit of clothfti- or a bill of dry goods, leaving to you only the fag ends of their custom, while the farmers' wagons that pass in a long line over the turnpike every night, carrying produce to New York and Brooklyn, bring back supplies the next day. A protective tariff will compel these purchases to be made here. Thus ■ profits that now go to New York and Brooklyn will be retained in Jamaica ; you will want larger stores and better houses, can pay your clerks and journeymen higher wages, will need more banking accommodations, will advertise more freely in Jamaican newspapers, and thus will the town grow and prosper." THE PROTECTIVE UNIT. 47 "Moreover,"! might say, "what a useless waste of labor there is in carrying nailk and butter, chickens, eggs and vegetables to New York and Brooklyn and bringing back other things. How much better for our farmers if they had a home market. This we can secure for them by a tariff that will protect Jamaican industries against those of New York and Brooklyn. Clothing, cigars, boots and shoes, agricultural imple- ments and furniture may be manufactured here as well as in those cities. Why should we not have a cotton factory, a woolen mill, a foundry, and, in short, all the establishments necessary to supply the wants of our people ? To get them we need only a protective tar- iff. Capital, when assured of protection, will be gladly forthcoming for such enterprises, and we shall soon be exporting what we now import, while our farmers will find a demand at their doors for all their produce. Even if at first they do have to pay somewhat higher prices for what they buy they will be much more than compensated by the higher prices they will get for what they sell, and will save an eight or ten mile haul to Brooklyn or New York. Thus, instead of Jamaica remaining a little village, the industries which a pro- tective tarijff will build up here will make it a large town, while the increased demand for labor will make wages higher and employment steadier." I submit that all this is at least as valid as the pro- tective arguments that are addressed to the people of the whole United States, and no one who has listened to the talk of village shopkeepers or noticed the comments of local newspapers can doubt that were our townships independent, village protectionists could get as ready a hearing as national protectionists do now, 48 PEOTECTION OR FREE TRADE. But to follow the protective theory to its logical con- clusions we cannot stop with protection between state and state, township and township, -Adllage and village. If protection be needful between nations, it must be need- ful not only between political subdivisions, but between family and family. If nations should never buy of other nations what they might produce at home, the same principle must forbid each family to buy anything it might produce ? Social laws, like physical laws, must apply to the molecule as well as to the aggregata But a social condition in which the principle of protec- tion was thus fully carried out would be a condition of utter barbarism. CHAPTER VL TRADE. Protection implies piwention. To protect is to preserve or defend. Wliat is it that protection by tariff prevents ? It is trade. To speak more exactly, it is that part of trade which consists in bringing in from other countries com- modities that might be produced at home. But trade, from which "protection" essays to pre- serve and defend us, is not, like flood, earthquake, or tornado, something that comes without human agency. Trade implies human action. There can be no need of preserving from or defending against trade, unless there are men who want to trade and try to trade. Who, then, are the men against whose efforts to trade " pro- tection " preserves and defends us ? If I had been asked this question before I had come to think over the matter for myself, I should have said that the men against whom " protection " defends us are foreign producers who wish to sell their goods in our home markets. This is the assumption that runs through all protectionist arguments — the assumption that foreigners are constantly trying to force their pro- ducts upon us, and that a protective tariff is a means for defending ourselves against what they want to do. Yet a moment's thought will show that no effort of foreigners to sell us their products could of itself make 3 50 PEOfECTION' OS fRteE TRA1)E. a tariff necessary. For the desire of one party, how- ever strong it may be, cannot of itself bring about trade. To every trade there must be two parties who mutually desire to trade, and whose actions are recipro- cal. No one can buy unless he can find some one will- ing to sell ; and no one can sell unless there is some other one willing to buy. If Americans did not want to buy foreign goods, foreign goods could not be sold here even if there were no tariff. The efficient cause of the trade which our tariff aims to prevent is the de- sire of Americans to buy foreign goods, not the desire of foreign producers to sell them. Thus protection really prevents what the " protected " themselves want to do. It is not from foreigners that protection pre- serves and defends us ; it is from ourselves. Trade is not invasion. It does not involve aggression on one side and resistance on the other, but mutual con- sent and gratification. Tliere cannot be a trade unless the parties to it agree, any more than there can be a quarrel unless the ■ parties to it differ. England, we say, forced trade with the outside world upon China, and the United States upon Japan. But, in both cases, what was done was not to force the people to trade, but to force their governments to let them. If the people had not wanted to trade, the opening of the ports would have been useless. Civilized nations, however, do not use their armies and fleets to open one another's ports to trade. What they use their armies and fleets for, is, when they quar- rel, to close one another's ports. And their effort then is to prevent the carrying in of things even more than the bringing out of things — importing rather than ex- porting. For a people can be more quickly injured by ffeAfefi. SI preventing them from getting things than by prevent- ing them from sending things away. Trade does not require force. Free trade consists simply in letting people buy and sell as they want to buy and sell. It is protection that requires force, for it consists in prevent- ing people from doing what they want to do. Protect- ive tariffs are as much applications of force as are blockading squadrons, and their object is the same — to prevent trade. The difference between the two is that blockading squadrons are a means whereby nations seek to prevent their enemies from trading ; protective tariffs are a means whereby nations attempt to prevent their own people from trading. What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war. Can there be any greater misuse of language than to apply to commerce terms suggesting strife, and to talk of one nation invading, deluging, overwhelming or in- undating another with goods ? Goods ! what are they but good things — things we are all glad to get ? Is it not preposterous to talk of one nation forcing its good things upon another nation ? Who individually would wish to be preserved from such invasion ? Who would object to being inundated with all the dress goods his wife and daughters could want ; deluged with a horse and buggy ; overwhelmed with clothing, with groceries, with good cigars, fine ■ pictures, or anything else that has value ? And who would take it kindly if any one should assume to protect him by driving off those who wanted to bring him such things ? In point of fact, however, not only is it impossible for one nation to sell to another, unless that other wants to buy, but international trade does not consist in send- 52 tUOtECTIOff Oft FftEE TRADE. ing out goods- to be sold. The great mass of the im- ports of every civilized country consists of goods that have been ordered by the people of that country and are imported at their risk. This is true even in our own case, although one of the eflEects of our -tariff is that many goods that otherwise would be imported by Americans are sent here by European manufacturers, because undervaluation is thus made easier. But it is not the importer who is the cause of impor- tation. Whether goods are brought here by American importers or sent here by foreign exporters, the cause . of their coming here is that they are asked for by the American people. It is the demand of purchasers at retail that causes goods to be imported. Thus a pro- tective tariff is a prevention by a people not of what others want to do to them, but of what they them- selves want to do. When in the common use of the word we speak of individuals or communities protecting themselves, there is always implied the existence of some external enemy or danger, such as cold, heat or accident, savage beasts or noxious vermin, fire or disease, robbers or invaders ; something disposed to do what the protected object to. The only cases in which the common meaning of the word does not imply some external enemy or danger are those in which it implies some protector of superior intelligence, as when we speak of imbeciles, lunatics, drunkards or young children being protected against their own irrational acts. But the systems of restriction which their advo- cates have named "protective" lack both the one and, the other of these essential qualitifes of real protection. What they defend a people against is not external 53 enemies or dabgers, but wnat^lSt pe(J)le tliemselves want to do. ^Sj&^'*ittffi£^ftti#ii^ji|^ot the protec- tion of a superiorS^^jgjjjj(j^gJ]|^^i^!uaan wit lias not yet been able to devise 'ftTiy scheme by which any intelligence can be secured in a Parliament or Con- gress superior to that of the people it represents. That where protective tariffs are imposed it is in accordance with the national will I do not deny. What I wish to point out is that even the people who thus impose protective tariffs upon themselves still want to do what by protective tariffs they strive to prevent themselves from doing. This is seen in the tendency of importation to continue in spite of tar- iffs, in the disposition of citizens to evade their tariff whenever they can, and in the fact that the very same individuals who demand the imposition of tariffs to prevent the importation of foreign commodities are among the individuals whose demand for those com- modities is the cause of their importation. Given a people of which every man, woman and child is a pro- tectionist, and a tariff unanimously agreed upon, and still that tariff will be a restriction upon what these people want to do and will still try to do. Protection- ists are only protectionists in theory and in politics When it comes to buying what they want all protec tionists are free traders. I say this to point out not the inconsistency of protectionists, but something more significant. " I write." "I breathe." Both propositions assert action on the part of the same individual, but action of different kinds. I write by conscious volition ; I breathe instinctively. I am conscious that I breathe only when I think of it Yet my breathing goes o'" 54 PEOTECTION OR FREE TRADE. whether I think of it or not — when my consciousness is absorbed in thought, or is dormant in sleep. Though with all my will I try to stop breathing, I yet, in spite of myself, try to breathe, and will continue that en- deavor while life lasts. Other vital functions are even further beyond consciousness and will. "We live by the continuous carrying on of multifarious and delicate processes apparent only in their results and utterly irresponsive to mental direction. Between the man and the community there is in these respects an analogy which becomes closer as civilization progresses and social relations grow more complex. That power of the whole which is lodged in governments is limited in its field of consciousness and action much as the conscious will of the indi- vidual is limited, and even that consensus of personal beliefs and wishes termed public opinion is but little wider in its range. There is, beyond national direction and below national consciousness, a life and relation of parts and a performance of functions which are to the social body what the vital processes are to the physical body. What would happen to the individual if all the functions of the body were placed under the control of the consciousness, and a man could forget to breathe, or miscalculate the amount of gastric juice needed by his stomach, or blunder as to what his kidneys should take from the blood, is what would happen to a nation in which all individual activities were directed by government. And though a people collectively may institute a tariff to. prevent trade, their individual wants and de- girQ^ will still forge th^m to try to trade, just a§ lEA-i>E. 55 when a man ties a ligature round his arm, his blood will bcill try to circulate. For the effort of each to sat- isfy his desires with the least exertion, which is the motive of trade, is as instinctive and persistent as are the instigations which the vital organs of the body obey. It is not the importer and the exporter who are the cause of trade, but the daily and hourly de- mands of those who never think of importing or ex-' porting, and to whom trade carries that which they demand, just as the blood carries to each fibre of the body that for which it calls. It is as natural for men to trade as it is for blood to circulate. Man is by nature a trading animal, impelled to trade by persistent desires, placed in a world where everything shows that he was intended to trade, and finding in trade the possibility of social advance. Without trade man would bo a savage. Where each family raises its own food, builds its own house, makes its own clothes and manufactures its own tools, no one can have more than the barest necessaries of life, and every local failure of crops must bring famine. A people living in this way will be independent, but their independence will resemble that of the beasts. They will be poor, ignorant, and all but powerless against the forces of nature and the vicissi- tudes of the seasons. This social condition, to which the protective theory would logically lead, is the lowest in which man is ever found — the condition from which he has toiled upward. He has progressed only as he has learned to satisfy his wants by exchanging with his fellows and has freed and extended trade. The difference between jjaked savages possessed only of the rudiments of the 56 PROTECTION OE FREE TRADE. arts,' cowering in ignorance and weakness before the forces of nature, and the wealth, the knowledge and the power of our highest civilization, is due to the exchange of the independence which is the aim of the protective system, for that interdependence which comes with trade. Men cannot apply themselves to the pro- duction of but one of the many things human wants demand unless they can exchange their products for the products of others. And thus it is only as the growth of trade permits the division of labor that, beyond the merest rudiments, skill can be developed, knowledge acquired and invention made; and that productive power can so gain upon the requirements for maintaining life that leisure becomes possiblg and capital can be accumulated. If to prevent trade were to stimulate industry and promote prosperity, then the localities where he was most isolated would show the first advances of man. The natural protection to home industry afforded by rugged mountain chains, by burning deserts, or by seas too wide and tempestuous for the frail bark of the early mariner, would have given us the first glimmerings of civilization and shown its most rapid growth. But, in fact, it is where trade could best be carried on that we find wealth first accumulating and civilization beginning. It is on accessible har- bors, by navigable rivers and much traveled high- ways that we find cities arising and the arts and sciences developing. And as trade becomes free and extensive — as roads are made and navigation improved ; as pirates and robbers are extirpated and treaties of peace put an end to chronic warfare — so does wealth augment and civilization grow. All our TRADE. ^ 61 great labor saving inventions, from tbat of money to tliat of the steam engine, spring from trade and pro- mote its extension. Trade has ever been the extin- guisher of war, the eradicator of prejudice, the diffuser of knowledge. It is bj trade that useful seeds and animals, useful arts and inventions, have been carried over the world, and that men in one place have been enabled not only to obtain the products, but to profit by the observations, discoveries and inventions of men in other places. In a world created on protective principles, all habit- able parts would have the same soil and climate, and be fitted for the same productions, so that the inhabit- ants of each locality would be able to produce at home all they required. Its seas and rivers would not lend themselves to navigation, and every little section in- tended for the habitation of a separate community would be guarded by a protective mountain chain. If we found ourselves in such a world, we might infer it to be the intent of nature that each people should de- velop its own industries independently of all others. But the world in which we do find ourselves is not merely adapted to intercommunication, but what it yields to man is so distributed as to compel the people of different localities to trade with each other to fully satisfy their desires. The diversities of soil and climate, the distribution of water, wood and mineral deposits, the currents of sea and air, produce infinite differences in the adaptation of different parts to different produc- tions. It is not merely that onezone yields sugar and coffee, the banana and the pineapple, and another wheat and barley, the apple and the potato ; that one supplies furs and another cottonj that here are hillsides adapted 8* 68 PHO*ECT*iON OR FREE lEAbfi. to jjasture and there valleys fitted for the plow ; here granite and there clay ; in one place iron and coal and in another copper and lead ; but that there are differences so delicate that, though experience tells us they exist, we cannot say to what they are due. Wine of a cer- tain quality is produced in one place which cuttings from the same vines will not yield in another place, though soil and climate seem alike. Some localities, without assignable reason, become renowned for pro- ductions of one kind and some for productions of an- other kind ; and experience often shows that plants thrive differently in different parts of the same field. These endless diversities, in the adaptation of different parts of the earth's surface to the production of the different things requi/ed by man, show that nature has not intended man to depend for the supply of his wants upon his own production, but to exchange with his fellows, just as the placing of the meat before one guest at table, the vegetables before another, and the bread before another, shows the intent of the host that they should help one another. Other natural facts have similar bearing. It has long been known that to obtain the best crops the farmer should not sow with seed grown in his own fields, but with seed brought from afar. The strain of domestic animals seems always improved by imported stock, even poultry-breeders finding it best to sell the male birds they raise and supply their places with cocks brought from a distance. Whether or not the same law holds true with regard to the physical part of man, it is certain that the admixture of peoples produces stimulating mental effects. Prejudices are worn down, ■jnts are sharpened, language enriched, habits and cus- TRADE. 59 toms brougM to tue test of comparison and new ideas enkindled. The most progressive peoples, if- not always of mixed blood, have always been the peoples who came most in contact with and learned most from others. " Home keeping youths have ever homely wits" is tru» of nations. And, further than this, it is characteristic of all the inventions and discoveries that are so rapidly increas- ing our power over nature that they require the greater division of labor, and extend trade. Thus every step in advance destroys the independence and increases the interdependence of men. The appointed condition of human progress is evidently that men shall come into closer relations and become more and more dependent upon each other. Thus the restrictions which protectionism urges us to impose upon ourselves are about as well calculated to promote national prosperity as ligatures, that would impede the circulation of the blood, would be to pro< mote bodilj; health and comfort ? Protection calls upon us to pay officials, to encourage spies and in- formers, and to provoke fraud and perjury, for what ? Why, to preserve ourselves from and protect ourselves against something which offends no moral law ; some- thing to which we are instinctively impelled; some- thing without which we could never have emerged from barbarism, and something which physical nature and social laws alike prove to be in conformity with the creative intent. It is true that protectionists do not condemn all trade, and though some of them have wished for an ocean of fire to bar out foreign products, others, more reasonable if less logical, would permit a country to import things dO PROTECTION OE FREE TRAUE. it catinot produce. The international trade wUch they concede to-be harmless amounts not to a tenth and per- haps not to a twentieth of the international trade of the world, and, so far as our own country is concerned, the things we could not obtain at home amount to little more than a few productions of the torrid zone, and even these, if properly protected, might be grown at home by artificial heat, to the incidental encouragement of the glass and coal industries. But, so far as the cor- rectness of the theory goes, it does not matter whether the trade which "protection" would permit, as com- pared with that it would prevent, be more or less. What "protection" calls on us to preserve ourselves from, and guard ourselves agai nst, is trade. And whether trade be between citizens of the same nation or citizens of dif- ferent nations, and whether we get by it things that we could produce for ourselves or things that we could not produce for ourselves, the object of trade is always the same. If I trade with a Canadian, a Mexican, or an Eng- lishman it is for the same reason that I trade with an American — that I would rather have the thing he gives me than the thing I give him. Why should I refuse to trade with a foreigner any more than with a fellow-citizen when my object in trading is my advantage, not his ? And is it not in the one case, quite as much as in the other, an injury to me that my trade should be prevented? What difference does it make whether it would be pos- sible or impossible for me to make for myself the thing for which I trade. If I did not want the thing I am to get more than the thing I am to give, I would not wish to make the trade. Here is a farmer who proposes to ex- change with his neighbor a horse he does not want for a couple of cows he does want. Would it benefit these TRADE. 61 fanners m prevent this trade on the ground that one might breed his own horses and the other raise his own cows ? Tet if one farmer lived on the American and the other lived on the Canadian side of the line this is just what both the American and Canadian governments would do. And this is called " protection." It is only one of the many benefits of trade that it enables people to obtain what the natural conditions of their own localities would not enable them to produce. This is, however, so obvious a benefit that protectionists cannot altogether ignore it, and a favorite doctrine with American protectionists is that trade ought to follow meridians of longitude instead of parallel.-! of latitude, because the great differences of climate and conse- quently of natural productions ai'e between north and south.* The most desirable reconstruction of the world on this theory would be its division into "countries " consisting of narrow strips running from the equator to the poles, with high tariffs on either side and at the equatorial end, for the polar ice would serve the pur- pose at the other. But in the meantime, despite this notion that trade ought to be between north and south rather than between east and west, the fact is that the great commerce of the world is and always has been between east and west. And the reason is clear. It is that peoples most alike in habits and needs will call most largely for each other's productions, and that the *"This, then, is our position respecting commerce * * * that it should interchange the productions of diverse zones and climates, following in its trans-oceanic voyages lines of longitude oftener than lines of latitude." — Horace Greei.ey, Political Economy, p. 39. " Legitimate and natural commerce moves rather along the meridians than along the parallels of latitude. " — Prof. Roberi Ellis Thompson, Political Economy, p. 317. 6z PEOTECTION OR FREE TRADE. pourse of migration and of assimilating influences has been rather between east and west than between north and south. Difference in latitude is but one element of difference^ in climate, aud difference in climate is but one element , of the endless diversity in natural productions and ca- pacities. In no one place will nature yield to labor all that man finds useful. Adaptation to one class of pro- ducts involves non-adaptation to others. Trade, by permitting us to obtain each of the things we need from the locality best fitted for its production, enables us to utilize the highest powers of nature in the produc- tion of them all, and thus to increase enormously the ^um of various things which a given quantity of labor expended in any locality can secure. But, what is even more important, trade also enables as to utilize the highest powers of the human factor in production. All men cannot do all things equally well. There are differences in physical and mental powers which give different degrees of aptitude for dif- ferent parts of the work of supplying human needs. And far more important still are the differences that arise from the development of special skill. By de- voting himself to one branch of production a man can acquire skill which enables him, with the same labor, to produce enormously more than one who has not made that branch his specialty. Twenty boys may have equal aptitude for any one of twenty trades, but if every boy tries to learn the twenty trades, none of them can become good workmen in any; whereas, if each devotes himself to one trade, ail may become good workmen. There will not only be a saving of the time and effort required for learning, but each, more- I'RADfi. 63 over, can in a single vocation work to mncli better ad- vantage, and may acqiiire and use tools which it would be impossible to obtain and employ did eacb attempt the whole twenty. And as tbere are differences between individuals wbich fit them for different branches of production, so, but to a ixLuch greater degree, are there such differences between communities. Not to speak again of the dif- ferences due to situation and natural facilities, some things can be produced witb greater relative advantage wbere population is sparse, otbers where it is dense, and differences in industrial development, in habits, customs and related occupations, produce differences in relative adaptation. Such gains, moreover, as attend tbe division of labor between individuals, attend also the division of labor between communities, and lead to that localization of industry wbicb causes different places to become noted for different industries. Wher- ever the production of some special thing becomes the leading industry, skill is more easily acquired, and is carried to a higher pitch, supplies are most readily procured, auxiliary and correlative occupations grow up, and a larger scale of production leads to the employment of more efficient methods. Thus in the natural devel- opment of society trade brings about differentiations of industry between communities as between individuals, and with similar benefits. Men of different nations trade with each other for the same reason that men of the same nation do — because they find it profitable ; because they thus obtain what they want with less labor than they otherwise could. Goods will not be imported into any country unless they can be obtained more easily by producing some- .64 ?EOTEdTi01? OR fRiSE TRADE. thing else and exchanging it for them, than by produc- ing them directly. And hence, to restrict importations must be to lessen productive power and reduce the fund from which all revenues are drawn. Any one can see what would be the result of for- bidding each individual to obtain from another any commodity or service which he himself was naturally fitted to produce or perform. Such a regulation, were any government mad enough to adopt it and powerful enough to maintain it, would paralyze the forces that make civilization possible and soon convert the most populous and wealthy country into a howling wilder- ness. The restrictions which protection- would impose upon foreign trade differ only in degree, not in kind, from such restrictions as these. They would not re- duce a nation to barbarism, because they do not affect all trade, and rather hamper than prohibit the trade they do affect ; but they must prevent the people that adopt them from obtaining the abundance they might otherwise enjoy. If the end of labor be, not the ex- penditure of effort, but the securing of results, then whether any particular thing oaght to be obtained in a country by Jiome production, or by importation, de- pends solely upon which mode of obtaining it will give the largest result to the least labor. This is a question involving such complex considerations that what any country ought to obtain in this way or in that cannot be settled by any Congress or Parliament. It can safely be left only to those sure instincts which are to society what the vital instincts are to the body, and which always impel men to take the easiest way open to them to reach their ends. When not caused by artificial obstacles, any tendency TRADE. 65 in trade to take a certain course is proof tlat it ought to take that course, and restrict! ^ns are harmful because they restrict, and in proportion as they restrict. To assert that the way for men to become healthy and strong is for them to force into their stomachs what nature tries to reject, to regulate the play of their lungs by bandages, or to control the circulation of their blood by ligatures, would be not a whit more absurd than to assert that the way for nations to become rich is for them to restrict the natural tendency to trade. CHAPTER VIL , PRODUCTION AND PRODUCERS. Remote from neighbors, in a part of the country where population is only beginning to come, stands the rude house of a new settler. As the stars come out, a ruddy light gleams from the little window. The house- wife is preparing a meal. The wood that burns so cheerily was cut by the settler, the flour now turning into bread is from wheat of his raising ; the fish hiss- ing in the pan were caught by one of the boys, and the water bubbling in the kettle, in readiness to be poured on the tea, was brought from the spring by the eldest girl before the sun had set. The settler cut the wood. But it took more than that to produce the wood. Had it been merely cut, it would still be lying where it, fell. The labor of haul- ing it was as much a part of its production as the labor of cutting it. So the journey to and from the mill was as necessary to the production of the flour as the planting and reaping of the wheat. To produce the fish the boy had to walk to the lake and trudge back again. And the production of the water in the kettle required not merely the exertion of the girl who brought it from the spring, but also the sinking of the barrel in which it collected, and the making of the bucket in which it was carried. As for the tea, it was grown in China, was carried on PRODtJCTIO]Sr AND PROnUCEBS. 67 a bamboo pole upon the shoulders of a man to some river village, and sold to a Chinese merchant, who shipped it by boat to a treaty port. There, having been packed for ocean transportation, it was sold to the agency of some American house, and sent by steamer to San Francisco. Thence it passed by railroad, with another transfer of ownership, into the hands of a Chi- cago jobber. The jobber, in turn, in pursuance of another sale, shipped it to the village store-keeper, who held it so that the settler might get it when and in such quantities as he pleased, just as the water from the spring is held in the sunken barrel so that it may be had when needed. The native dealer who first purchased this tea of the grower, the merchant who shipped it across the Pacific, the Chicago jobber who held it as in a reservoir until the store-keeper ordered it, the store-keeper who, bring- ing it from Chicago to the village, held it as in a smaller reservoir until the settler came for it, as well as those concerned in its transportation, from the coolie who carried it to the bank of the Chinese river to the brake- men of the train that brought it from Chicago — were they not all parties to the production of that tea to this family as truly as were the peasants who cultivated the plant and gathered its leaves ? The settler got the tea by exchanging for it money obtained in exchange for things produced from nature by the labor of himself and his boys. Has not this tea, then, been produced to this family by their labor as truly as the wood, the flour or the water ? Is it not true that the labor of this family devoted to producing things which were exchanged for tea has really pro- duced tea, even in the sense of causing it to be grown, 68 PROTECTION OR FREE TRADE. cured and transported ? It is not the growing of the tea in China that causes it to be brought to the United States. It is the demand for tea in the United States — that is to say, the readiness to give other products of labor for it — that causes tea to be grown in China for shipment to the United States. To produce is to bring forth, or to bring to. There is no other word in our language which includes at once all the operations, such as catching, gathering, extracting, growing, breeding or making, by which human labor brings forth from nature, or brings to conditions adapted to human uses, the material things desired by men and which constitute wealth. When, therefore, we wish to speak collectively of the oper- ations by which things are secured, or fitted for human use, as distinguished from operations which consist in moving them from place to place or passing them from hand to hand after they have been so secured or fitted, we are obliged to use the word production in distinc- tion to transportation or exchange. But we should always remember that this is but a narrow and special use of the word. While in conformity with the usages of our language we may properly speak of production as distinguished from transportation and exchange, just as we may prop- erly speak of men as distinguished from women and children, yet in its full meaning, production includes transportation and exchange, just as men includes women and children. In the narrow meaning of the word we speak of coal as having been produced when it has been moved from its place in the vein to the sur-. face of the ground ; but evidently the moving of the Qoal from th.§ mouth of the mine to those who are to tEODDCTION AND PRODUCERS. 69 use it is as necessary a part of coal productioD, in tte full sense, as is the bringing of it to the surface. And while we may produce coal in the United States by digging it out of the ground, we may also just as truly produce it by exchanging other products of labor for it Whether we get coal by digging it or by bringing it from Nova Scotia or Australia or England in exchange for other products of our labor, it is, in the one case as truly as in the other, produced here by our labor. Through all protectionist arguments runs the notion that transporters and traders are non-producers, whose support lessens the amount of wealth which other classes can enjoy.* This is a short-sighted view. In the full sense of the term transporters and traders are as truly producers as are miners, farmers or manufact- urers, since the transporting of things and the exchang- ing of things are as necessary to the enjoyment of things as is extracting, growing or making. There are some operations conducted under the forms of trade that are in reality gambling or blackmailing, but this does not alter the fact that real trade, which consists in exchang- ing and transporting commodities, is a part of produc- tion — a part so necessary and so important that without it the other operations of production could only be car- * "In my conception, the chief end of a true political economy is the conversion of idlers and useless exchangers and traffickers into habitual, efiective producers of wealth." — Horace Greeley, Politi- caZ Economy, p. 29. The trader "adds nothing to the real wealth of society. He neither directs and manages a vital change in the form of matter as does the farmer, nor a chemical and mechanical change in form as does the manufacturer. He merely transfers things from the place of their production to the place of demand. "—Prof. R. E. Thomp. SON, Political Economy, p. 198. ried on in the most primitive manner and with the most niggard, results. And not least important of the functions of the trader is that of holding things in stock, so that those who wish to use them may be able to get them at such times and places, and in such quantities, as are most convenient. This is a service analogous to that per- formed by the sunken barrel which holds the water of a spring ,so that it can be had by the bucketful when needed, or by the reservoirs and pipes which enable the inhabitant of a city to obtain water by the turning of a faucet. The profits of traders and " middlemen " may sometimes be excesaive (and anything which hampers trade and increases the capital necessary to carry it on tends to make them uxcessive) but they are in reality based upon the perfonnance of services in holding and distributing things as well as in transporting things. "When Charles Pouriei was young," says Professor Thompson {Politieal Economy, p. 199), -'he was on a visit to Paris, and priced at a street stall some apples of a sort that grew abundantly in his native province. He was amazed to find that they sold for many times the sum they would bring at home, having passed through the hands of a host of middlemen on their way from the owner of the orchard to the -eater of the fruit. The impression received at that instant never left him ; it gave the first impulse to his thinking out his socialistic scheme for the reconstruction of society, in which among other sweeping changes the whole class of traders and their profits are to be abolished. " This story, quoted approvingly to convey an idea that the trader is a mere toll gatherer, simply shows what a superficial thinker Fourier was. If he had undertaken to bring with him to Paris a supply of apples and to carry them around with him so that he could have one when he felt like i^ l^e would have formed a much PSeDtrCTION AsTD f&bOt^OEBS. 71 truer idea of wliat he was really paying for in the in- creased price. That price included not merely the cost of the apple at its place of growth, plus the cost of transporting it to Paris, the octroi at the Paris gates,* the loss of damaged apples, and remuneration for the service and capital of the wholesaler, who held the apples in stock until the vender chose to take them, but also payment to the vender, for standing all day in the streets of Paris, in order to supply a few apples to those who wanted an apple then and there. So when I go to a druggist's and buy a small quan- tity of medicine or chemicals I pay many timas the original cost of those articles, but what I thus pay isin much larger degree wages than profit. Out of such small sales the druggist must get not only the cost of what he sells me, with other costs incidental to the busi- ness, but also payment for his services. These services consist not only in the actual exertion of giving me what I want, but in waiting there in readiness to serve me when. I choose to come. In the price of what he sells me he makes a charge fOr what printers call' " waiting time.'' And he must manifestly not merely charge " waiting time " for himself, but also for the stock of many different things only occasionally called for, which he must keep on hand. He has been wait- ing there, with his stock, in anticipation of the fact that * The octroi, or municipal tariff on produce brought into a town, is still levied in France, though abolished for a time by the Revo- lution. It is a survival of the local tariffs once common in Europe, which separated province from province and town from country. Colbert, the first Napoleon, and the German ZoUverein did much in reducing and abolishing these restrictions to trade, producing in this way good results which are sometimes attributed by protection, ists to external tariffs. 72 PROTECTION Oil FREE TRADE. such persons as myself, in sudden need of some small quantities of drags or chemicals, would find it cheaper to pay him many times their wholesale cost than to go further and buy larger quantities. What I pay him, even when it is not payment for the skilled labor of compounding, is largely a payment of the same nature as, were he not there, I might have had to make to "a messenger. If each consumer had to go to the producer for the small quantities individually demanded, the producer would have to charge a higher price on account of the greater labor and expense of attending to such small transactions. A hundred cases of shoes may be sold at wholesale in less time than would be consumed in suiting a customer with a single pair. On the other hand, 'the going to the producer direct would involve an enormous increase of cost and trouble to the con- sumer, even when such a method of obtaining things would not be utterly impossible. What " middlemen " do is to save to both parties this trouble and expense, and the profits which compe- tition permits them to charge in return are infinitesimal as compared with the enormous savings effected — are like the charge made to each consumer for the cost of the aqueducts, mains and pumping engines of a great system of water supply as compared w^th the cost of providing a separate system for each house. And further than this, these middlemen between producer and consumer effect an enormous ecc'nomy in the amount of commodities that it is necessary to keep in stock to provide for a given consumption, and con- sequently vastly lessen the loss from deterioration and decay. Let any one consider what amount of stores PRODUCTION AND PRODUCERS. 73 would be, needed to keep in their accustomed supply even f6r a month a family used to easy access to those handy magazines of commodities which retail dealers maintain. He will see at once that there are a number of things sach as fresh meat, fish, fruits, etc., which it is impossible to keep on hand, so as to be sure of having them when needed. And of the things that would keep longer, such as flour, sugar, oil, etc., he will see that but for the retail dealer it would be necessary that much greater quantities should be kept in each house, with a much greater liability to loss from decay or a.ccident. But it is when he comes to things not constantly needed, but which, when needed, though it may not be once a year or once a lifetime, may be needed very badly — that he will realize fully how the much-abused " middleman " economizes the capital of society and in- creases the opportunities of its members. A retail dealer is called by the English a " shop- teeper" and by the Americans a " store-keeper." The American usage best expresses his real function. He is in reality a keeper of stores which otherwise his cus- tomers would have to keep on hand for themselves, or go without. The English speak of the shops of co- operative supply associations as "stores," since it is in them that the various things required from time to time by the members of those associations are stored until called for. But this is precisely what, without any formal association, the retail dealer does for those who buy of him. And though co-operative purchasing associations have to a certain extent succeeded in England (they have generally failed in the United States) there can be DO question that the functions of keeping things in Store and distributing them to consumers as neeuwi are 7 74 PBOTECTION OR FEEE TRADE. on the whole performed more satisfactorily and more economically by self-appointed store or stock- keepers than they could be as yet by formal asso- ciations of consumers. And the tendencies of the time to economies in the distribution as well as in the production of commodities, are bringing about through the play of competition just such a saving of expense to the consumer as is aimed at by co-op- erative supply associations. That in civilized society to-day there seem to be too many store-keepers and other distributors is quite true. But so there seem to be too many pro- fessional men, too many mechanics, too many farm- ers, and too many laborers. What may be the cause of this most curious state of things it may hereafter lie in our way to inquire, but at present I am only concerned in pointing out that the trader is not a mere " useless exchanger," who '' adds nothing to the real wealth of society," but that the transport- ing, storing, and exchanging of things are as neces- sary a part of the work of supplying human needs as is growing, extracting, or making. Nor should it be forgotten that the investigator, the philosopher, the teacher, the artist, the poet, the priest, though not engaged in the production of wealth, are not only engaged in the production of utilities and satisfactions to which the production of wealth is only a means, but by acquiring and difius- ing knoAvledge, stimulating mental powers and ele- vating the moral sense, may greatly increase the ability to produce wealth. For man does not live by bread alone. He is not an engine, in which so much fuel gives so much power. On a capstan bar PRODUCTION AND PEODUCEES. 75 or a topsail halyard a good song tells like muscle, and a " Marseillaise " or a " Battle Hymn of the Republic " counts for bayonets. A hearty laugh, a noble thought, a perception of harmony, may add to the powBT of dealing even with material things. He who by any exertion of mind or body adds to the aggregate of enjoyable wealth, increases the sum of human knowledge or gives to human life higher elevation or greater fullness — he is in the large meaning of the words, a " producer," a " working man," a " laborer," and is honestly earning honest wages. But he who without doing aught to make man- kind richer, wiser, better, happier, lives on the toil of others — he, no matter by what name of honor he may be called, or how lustily the priests of Mammon may swing their censers before him, is in the last analysis but a beggarman or a thief. CHAPTBE VIIL TARIFFS FOE REVENUE. Tariffs may embrace duties on exports as well as on imports ; but duties on exports are prohiBited by the Constitution of the United States and are now levied only by a few countries, such as Brazil, and by them only on a few articles. The tariff, as we have to consider it, is a schedule of taxes upon imports. The word "tariff" is said to be derived from the Spanish town of Tarifa, near Gibraltar, where the Moors in the days of their power collected duties, prob- ably much after the manner of those Chinese local cus- tom houses called " squeeze stations." But the thing is older than the name. Augustus Caesar levied duties on imports into Italy, and there were tariffs long before the Caesars. The purpose in which tariffs originate is that of rais- ing revenue. The idea of using them for protection is an afterthought. And before considering the protect- ive function of tariffs it will be well to consider them as a means for collecting revenue. It is usually assumed, even by the opponents of pro- tection, that tariffs should be maintained for revenue. Most of those who are commonly called free traders might more properly be called revenue tariff men. They object, not to the tariff, but only to its protective features, and propose, not to abolish it, but only to r§' TARIFFS FOR REVENUE. 77 Strict it to revenue purposes. Nearly all the opposi- tion to the protective system in the United States is of this kind, and in current discussion a tariff for revenue only is usually assumed to be the sole alternative to a tariff for protection. But since there are other ways of raising revenue than by tariffs this manifestly is not so. And if not useful for protection, the only justification for any tariff is that it is a good means of raising rev- enue. Let us inquire as to this. Duties on imports are indirect taxes. Therefore the question whether a tariff is a good means of raising revenue involves the question whether indirect taxa- tion is a good means of raising revenue. As to ease and cheapness of collection indirect taxa- tion is certainly not a good means of raising revenue. While there are direct taxes, such as taxes on real estate and taxes on legccies and successions, from which great revenues can easily and cheaply be col- lected, the only indirect taxes from which any consid- erable revenue can be obtained require large and expensive staffs of officials and the enforcement of vexatious and injurious regulations. To collect the in- direct tax on tobacco and cigars, France and some other countries make the trade and manufacture a strict government monopoly, while Great Britain prohibits the culture of tobacco under penalty of fine and im- prisonment — a prohibition particularly injurious to Ireland, where the soil and climate are in some parts admirably adapted to the growth of certain kinds of to- bacco. In the United States we maintain a costly in- quisitorial system which assumes to trace every pound of tobacco raised or imported, through all its stages of manufacture, and requires the most elaborate returns of 78 PfiO'tSOTlOl^' OR FBEE TRADE. private business to be made to government officials. To more easily collect an indirect tax upon salt the government of British India cruelly prevents Lhe mak- ing of salt in many places wbere the natives suffer from the want of it. While indirect taxes upon spir- ituous liquors, vrherever resorted to, require the most elaborate system of prohibition, inspection and espion- age. So witb the collection of indirect taxes upon imports. Land frontiers must be guarded and sea-coasts watched ; imports must be forbidden except at certain places and under regulations which are always vexatious and fre- quently entail wasteful delays and expenses; consuls must be maintained all over the world, and no end of oaths required ; vessels must be watched from the time they enter harbor until tbe time .they leave, and every- thing landed from them examined, down to tbe trunks and satchels and sometimes the persons oJ' passengers, while spies, informers and " bloodhounds " must be en- couraged. But in spite of prohibitions, restrictions, searcliings, watchings, and swearings, indirect taxes on commodi- ties are largely evaded, sometimes by the bribery of officials and sometimes by the adoption of methods for eluding their vigilance, which though costly in them- selves, cost less than the taxes. All these costs, how- ever, whether borne by the government or by the first payers (or evaders) of the taxes, together with the increased charges due to increased prices, finally fall on consumers, and thus this method of taxation is extremely wasteful, taking from the people much more than the government obtains. A still more important objection to indirect taxation TARIFFS FOR REVENUE. 79 is that -when imposed on articles of general use (and it is only, from such articles that large revenues can be had) it bears with far greater weight on the poor than on the rich. Since such taxation falls on people not according to what they have, but according to what they consume, it is heaviest on those whose constimp- tion is largest in proportion to their means. As much sugar is needed to sweeten a cup of tea for a working- girl as for. the richest lady in the land, but the propor- tion of their means which a tax on sugar compels each to contribute to the government is in the case of the one much greater than in the case of the other. So it is with all taxes that increase the cost of articles of general consumption. They bear far more heavily on married men than on bachelors ; on those who have children than on those who have none; on those barely able to support their families than on those whose incomes leave them a large surplus. If the million- aire chooses to live closely he need pay no more of these indirect taxes than the mechanic. I have known at least two millionaires — possessed not of one, but of from six to ten millions each— who paid little more of such_ taxes than ordinary day laborers. Sven if cheaper articles were taxed at no higher rates than the more costly, such taxation would be grossly unjust ; but in indirect taxation there is always a tendency to impose heavier taxes on the cheaper articles used by all than on the more costly articles used only by the rich. This arises from the necessities of the case. Not only do the larger amounts of articles of common consumption afford a wider basis for large revenues than the smaller amounts of more costly ^.rticles, but taxes imposed on them cannot be so easily 80 PROTECTION OR FREE TRADE. evaded. For instance, wliile articles in use by tlie poor as well as the ricli are under our tariS taxed fifty and a hundred, and even a hundred and fifty per cent, the tax on diamonds is only ten per cent., and this comparative light tax is most difficult to enforce, owing to the high value of diamonds as compared with their bulk. Even where discrimination of this kind is not made in the imposition of indirect taxation, it arises in its collection. Specific taxes fall more heavily upon the cheaper than the costlier grades of goods, while even in the case of ad valorem taxes, under- valuation and evasion are easier in regard to the more valuable grades. That indirect taxes thus bear far more heavily on the poor than on the rich is undoubtedly one of the reasons why they have so readily been adopted. The rich are ever the powerful, and under all forms of government have most influence in forming public opinion and framing laws, while the poor are ever the voiceless. And while indirect taxation causes no loss to those who first pay it, it is collected in such insidious ways from those who finally pay it that they do not realize it. It thus affords the best means of getting the largest revenues from the body of the people with the least remonstrance against the amount collected or the uses to which it is put. This is the main reason that has induced governments to resort so largely to indirect taxation. A direct tax, where its justice and necessity are not clear, provokes outcry and oppo- sition which may at times rise to successful resistance; but not only do those indirectly taxed seldom realize it, but it is extremely difficult for them to refuse pay- ment. They are not called on ^.t get times to pay TAEIFFS FOR REVENUE. 81 definite sums to government agents, but the tax becomes indistinguisbably blended with the cost of the goods they buy. When it reaches those who must finally pay it, together with all costs and profits of collection, it is not a tax yet to be paid, but a tax which has already been paid, some time ago, and many removes back, and which cannot be separated from other elements which go to make up the cost of goods. There is no choice save to pay the tax or go without the goods. If a tax-gatherer stood at the door of every store, and levied a tax of twenty-five per cent, on every article bought, there wo aid quickly be outcry ; but the very people who would fight rather than pay a tax like this, will uncomplainingly pay higher taxes when they are collected by store-keepers in increased prices. And even if an indirect tax is conscioasly realized, it cannot easily be opposed. At the beginning of our Eevolution the indirect tax on tea levied by the British government, without the consent of the American colo- nies, was successfully resisted by preventing the land- ing of the tea; but if the tea had once got into the hands of the dealers, with the taxes on it paid, the English government could have laughed at the oppo- sition of the patriots. When in Ireland, during the height of the Land League agitation, I was much struck with the ease and certainty with which an xmpopular government can collect indirect taxes. At the begin- ning of the century the Irish people, without any assistance from America, proved in the famous Tithe war that the whole power of the English government could not collect direct taxes they had resolved not to pay ; and the strike against rent, which so long as per S2 PROTECTION OR FREE TRADE. sisted in proved so effective, could readily liave been made a strike against direct taxation. Had the gov- ernment which was enforcing the claim of the landlords depended on direct taxation, its resources could thus have been seriously diminished by the same blow which crippled the landlords; but during all the time of this strike the force used to put down the popular movement was being su|3ported by indirect taxation on the people who were in passive rebellion. The people who struck against rent could not strike against taxes paid in buying the commodities they used. Even had rebellion been active and general, the British govern- ment could have collected the bulk of its revenues from indirect taxation, so long as it retained command of the principal towns. It is no wonder that princes and ministers anxious to make their revenues as large as possible should prefer a method that enables them to " pluck the goose with- out making it cry," nor is it wonderful that this prefer- ence should be shared by those who get control of popular governments ; but the reason which renders indirect taxes so agreeable to those who levy taxes is a sufficient reason why a people jealous of tlieir liberties should insist that taxes levied for revenue only should be direct, not indirect. It is not merely the ease with which indirect taxes can be collected that urges to their adoption. Indirect taxes always enlist active private interests in their favor. The first rude device for making the collection of taxes easier to the governing power is to let them out to farm. Under this system, which existed in France up to the Eevolution, and still exists in such countries as Turkey, persons called farmers of the TARltfs S*6r EEVBNUE. 83 revenue buy the privilege of collecting certain taxes and make their profits, frequently very large, out of the greater amount which their vigilance and extortion enable them to collect. The system of indirect tax- ation is essentially of the same nature. The tendency of the restrictions and regulations necessary for the collection of indirect taxes is to con- centrate business and give large capital an advantage. For instance, with a board, a knife, a kettle of paste and a few dollars' worth of tobacco, a competent cigar maker could set up in business for himself, were it not for the revenue regulations. As it is, in the United States, the stock of tobacco which he must procure is not only increased in value some two or three times by a tax upon it ; but before the cigar maker can go to work he must buy a manufacturer's license and find bonds in the sum of five hundred dollars. Before he can sell the cigars he has made, he must furthermore pay a tax on them, and even then if he would sell cigars in less quantities than by the box he must buy a second license. The effect of all this is to give capital a great advantage, and to concentrate in the hands of large manufacturers a business in which, if free, workmen could easily set up for themselves. But even in the absence of such regulations indirect taxation tends to concentration. Indirect taxes add to the price of goods not only the tax itself but also the profit upon the tax. If on goods costing a dollar a manufacturer or merchant has paid fifty cents in tax- ation, he will now expect profit on a dollar and fifty cents instead of upon a dollar. As, in the course of trade, these taxed goods pass from hand to hand, the amount which each successive purchaser pays on account 84 l^KOTilCTiOJSf OK FHEE TEAl)fi. of the tax is constantly augmenting. It is not merely inevitable that consumers have to pay considerably more than a dollar for every dollar the government receives, but larger capital is required by dealers. The need of larger capital for dealing in goods that have been enhanced in cost by taxation, the restrictions imposed on trade to secure the collection of the tax, and the better opportunities which those who do busi- ness on a large scale have of managing the payment or evading the tax, tend to concentrate business, and, by checking competition, to permit large profits, which must ultimately be paid by consumers. Thus the first pay- ers of indirect' taxes are generally not merely indifferent to the tax, but regard it with favor. That indirect taxation is of the nature of farming the revenue to private parties is shown by the fact that those who pay such taxes to the government seldom or never ask for their reduction or repeal, but on the con- trary generally oppose such propositions. The manu- facturers and dealers in tobacco ard cigars have oever striven to secure any reduction in the heavy taxes on those articles, and the importers who pay directly the immense sums collected by our custom houses have never grumbled at the duties, however they may grumble at the manner of their collection. When, at the time of the war, the national taxation was enormously in- creased there was no opposition to the imposition of indirect taxation from those who would thus be called upon to pay large sums to the government. Ou the contrary, the imposition of these taxes, by enhancing, the value of stock in hand, made many fortunes. And since the war the main difficulty in reducing tarcation has been the opposition of the very men who pay these TARIFFS FOR REVENUE. 85 taxes to tlie government. The reduction of tlie war tax on whisky was strongly opposed by the whisky ring, composed of great distillers. The match manufactuxers fought bitterly the abolition of the tax on matches. Whenever it has been proposed to reduce or repeal any indirect tax Congress has been beset by a persistent lobby urging that, whatever other taxes might be dis- pensed with, that particular tax might be left in full force. In order to provide an excuse for keeping up indirect taxes all sorts of extravagant expenditures of the national money have been made, and hundreds of millions have been voted away to get them out of the Treasury."" Despite all this extravagance, we have a surplus ; yet we go on collecting taxes we do not need because of the opposition of interested parties to their reduction. This opposition is of the same kind and springs from the same motives as that which the farmers of the revenue under the old French syslum would have made to the abolition of a tax which enabled them to extort two millions of francs from the French people for one million which they paid to the govern- ment. Now, over and above the great loss to the people which indirect taxation thus imposes, the manner in which it gives individuals and corporations a direct and sellish interest in public affairs tends powerfully to the corruption of government. These moneyed inter- ests enter into our politics as a potent demoralizing force. What to the ordinary citizen is a question of public policy, affecting him only as one of some sixty * Just now (1886) the interests concerned in keeping up indirect taxation are urging a worse than useless scheme for spending enor- jnous sums on iron-clad coast defences. 9 86 PROTECTION OR FREE TRADE. millions of people, is to them a question of special pecuniary interest. To this is largely due the state of things in which politics has become the trade of pro- fessional politicians ; in which it is seldom that one who has not money to spend can, with any prospect of suc- cess, present himself for the suffrages of his fellow-citi- zens ; in which Congress is surrounded by lobbyists, clamorous for special interests, and questions of the utmost general importance are lost sight of in the struggle which goes on for the spoils of taxation. That under such a system of taxation our government is not far more corrupt than it is, is the strongest proof of the essential goodness of republican institutions. That indirect taxes may sometimes serve purposes other than the raising of revenue I do not deny. The license taxes exacted from the sellers of liquor may be defended on the ground that they diminish the number of saloons and lessen a traffic injurious to public morals. And so taxes on tobacco and spirits may be defended on the ground that the smoking of tobacco and the drinking of spirits are injurious vices, which may be lessened by making tobacco and spirits more expensive, so that (except the rich) those who smoke may be com- pelled to smoke poorer tobacco, and those who drink to drink viler liquor. But merely as a means of raising revenue, it is clear that indirect taxes are to be con- demned, since they cost far more than they yield, bear with the greatest weight upon those least able to pay, add to corruptive influences, and lessen the control of the people over their government. AH the objections which apply to indirect taxes in general apply to import duties. Those protectionists ^re right who declare that protection is the only just)- TARIFFS FOS EEVENUE. 87 fication for a tariff,* and the advocates of "a tariS for revenue only " have no case. If we do not need a tariff for protection we need no tariff at all, and for the purpose of raising revenue should resort to some system which will not tax the mechanic as heavily as the millionaire, and will not call on the man who rears a family to pay on that account more than the man who shirks his natural obligation, and leaves some woman whom in the scheme^of nature it was intended that he should support, to take care of herself as best she can. * " Tariffs for revenue should have no existence. Interferences with trade are to be tolerated only as measures of self -protection." — H. C. Carey, Past, Present and Futwre, p. 473. " Taxes for the sake of revenue should be imposed directly, be- cause such is the only mode in which the contribution of each in- dividual can be adjusted in proportion to his means." — Prof. E. P. Smiih, Political Economy, pp. 265-8. " Duties for revenue * * * are highly unjust. They inflict all the hardship of indirect and imequal taxation without even the purpose of benefiting the consumer." — Pbop. R. B. Thompson, Political Economy, p. 333. CHAPTEE IX. TAEIFPS FOR PROTECTION. Protective tarifis differ from revenue tariffs in tbeir object, wliich is not so mucli tliat of obtaining revenue as that of protecting home producers from tbe compe- tition of imported commodities. The two objects, revenue and protection, are not merely distinct, but antagonistic. The same duty may raise some revenue and give some protection, but, past a certain point at least, in proportion as one object is secured the other is sacrificed, since revenue depends on the bringing in of commodities ; protection on keep- ing them out. So the same tariff may embrace both protective and revenue duties, but while the protect- ive duties lessen its power of collecting revenue, the revenue duties by adding to the cost of home production lessen its power of encouraging home producers. The duties of a purely revenue tariff should fall only on commodities not produced in the country ; or, if levied on commodities partly produced at home should be balanced by equivalent internal taxes to prevent inci- dental protection. In a purely protective tariff, on the other hand, commodities not produced in the country : should be free and duties should be levied on com- modities that are or may be produced in the country. And, just in proportion as it accomplishes its object, TARIFFS FOE PROTECTION. 89 the less revenue will it yield. The tariff of Great Britain is an example of a purely revenue tariff, in- cidental protection being prevented by excise duties. There is no example of a purely protective tariff, the purpose of obtaining revenue seeming always to be the original stock upon which protective features are grafted. The tariff of the United States, like all actual protective tariffs, is partly revenue and partly protect- ive, its original purpose of yielding revenue having been subordinated to that of giving protection, until it may now be best described as a protective tariff yield- i^ ing incidental revenue. As we have already considered the revenue functions of tariffs, let us now consider their protective functions. Protection, as the; word has come to be used to denote a scheme of national policy, signifies the levying of duties on the importation of commodities (as a means) in order (as an end) to encourage domestic industry. ^ Now, when the means proposed in any such scheme is the only means by which the proposed end can be reached, it is only needful to inquire as to the desir- ability of the end ; but when the proposed means is only one of various means we must satisfy ourselves that it is the best. If it is not, the scheme is con- demned irrespective of the goodness of its end. Thus the advisability of protection does not, as is generally assumed, follow the admission of the advisability of encouraging domestic industry. That granted, the advisability of protection is still an open question, since it is clear that there are other ways of encourag- ing home industry than by import duties. [ Instead of levying import duties, we might, for in- stance, destroy a certain proportion of imported com- 90 PfiOTECTIOiif OR fREii TEA^E. modities, or require the ships bringing them to sail so many times round the world before landing at our ports. In either of these ways precisely the same pro- tective effect could be secured as by import duties, and in cases where duties secure full protection by prevent- ing importation, such methods would involve no more waste. Or, instead of indirectly encouraging domestic producers by levying duties on foreign goods, we might directly encourage them by paying them bounties. As a means of encouraging domestic industry the bounty has over the protective system all the advan- tages that the system of paying public officers fixed salaries has over the system prevailing in some countries, and in some instances in our own, of letting them make what they can. As by paying fixed salaries we can get officials at such places and to. perform such functions as we wish, while under the make-what-you- can system they can only be got at places and in ca- pacities that will enable them to pay themselves, so do bounties permit the encouragenient of any industry, while protection permits only the encouragement of the comparatively few industries with which imported commodities compete. As salaries enable us to know what we are paying, to proportion the rewards of different offices to their respective dignity, responsibility and arduousness, while make-what-you-can may give to one official much more than is necessary, and to others not enough, so do bounties enable us to see and to fix the encouragement to each industry, while the protect- ive system leaves the public in the darlc and makes the encouragement to each industry almost a matter of chance. And as salaries impose on the people much lighter and more fairly apportioned burdens than does fARiFFS FOB PJROfECriOl?. 91 the make-wliat-you-can system, so is tlie difference be- tween bounties and protection. To illustrate the working of the two systems, let it be assumed desirable to encourage aerial navigation at public expense. Under the bounty system we should offer premiums for the building and successful operation of air ships. Under the protective system we should impose deterrent taxes on all existing methods of trans- portation. In the one case we should have nothing to pay till we got what we wanted, and would then pay a definite sum which would fall on individuals and locali- ties in general taxes. But in the other case we should have to suffer all the inconveniences of obstructed transportation before we got air ships, and whether we got them or not ; and while these obstructions would, in some cases, more seriously affect individuals, busi- nesses and localities than in others, we should never be able to tell how much they distorted industry and cost the people, or how much they stimulated the invention and building of air ships. In the one case, moreover, after aerial navigation had proved successful, and the stipulated bounties had been paid, the air-ship men would hardly have the audacity to ask for more bounties, and would not be likely to get them if they did. In the other case, the public would have grown accustomed to the taxes on surface transportation, while the air-ship proprietors, if they had not convinced themselves that these taxes were necessary to the con- tinued prosperity of aerial navigation, could readily prfieud so, and would have, in opposing their repeal, the advantage of that inertia which tends to the con- tinuance of anything that is. The superiority of the bounty system over the pro- 92 PftOTECTldJSf OR FREE 'DfiADE. tective system for the encouragement of any single in- dustry is very great ; but it becomes greater as the number of industries to be encouraged is increased. When we encourage an industry by a bounty we do not discourage any other industry, except as the neces- sary increase in general taxation may have a discour- aging effect. But when to encourage one industry we raise the price of its products by a protective duty, we at the same time produce a directly injurious effect upon other industries that use those products. So complicated has production become, so intimate are the relations between industries, and in so many forms do the products of one industry enter into the materials or processes of others, that what will be the effect of a single protective duty it is hard for an expert to say. But when it comes to encouraging not one nor a dozen, but a thousand different industries, it is impossible for human intelligence to trace the multifarious effects of I raising the prices of so many products. The people cannot tell what such a system costs them, nor in most cases can even those who are supposed to be its bene- ficiaries really tell how their gains under it compare with their losses from it. The " drawback " system is an attempt to prevent, so far as exports are concerned, the discouragement to which the protection of one industry subjects others. Draw- backs are bounties paid on exports of domestic goods to aa amount which it is calculated will compensate for the addition a duty on material has made to their cost. But drawbacks not only leave home prices undimin- ished, but while fruitful of fraud, can only in small part prevent the discouragement of exports, since it is only on goods into which dutiable commodities have TARIFFS FOR PROTECTION. 93 entered in large proportion and obvious ways that drawbaclis are allowed, or iliat it is worth the while of the exporter to attempt to collect them. In 1884, for instance, the United States paid out a larger sum in drawbacks on copper than was received in duties on copper, yet it is certain that very many exports into which copper entered, and which were therefore en- hanced in cost by the duty, got no drawback what- ever. And so of drawbacks on refined sugar, for which we are paying a sum greatly in excess of the duties collected on the raw sugar, though many of our ex- ports, such as those of condensed milk, syrups and pre- served fruits, are much curtailed by these duties. The substitution of bounties for protection in en- couraging industry would do away with the necessity for such inefficient, fraud-provoking, and back-action devices. Under the bounty system prices would not be raised, except as affected by general taxation. Each encouraged producer would know in dollars and cents how much encouragement he got, and the people at large would know how much they paid. In short, all and even more than protection can do to encourage home industries can be done more cheaply and more certainly by bounties. It is sometimes asserted, as one of the advantages of tariff duties, that they fall on the producers of im- ported goods, and are thus paid by foreigners. This assertion contains a scintilla of truth. An import duty on a commodity of which the production is a closely controlled foreign monopoly may in some cases fall in part or in whole upon the foreign producer. For instance, let us say that a foreign house or combi- pation has a monopoly in the production of a certaifl 94 PROTECTION OR FREE TRADE. article. Within the limits of cost on the one hand and the highest rate at which any can be sold on the other, the price of such article can be fixed by the producers, who will naturally fix it at the point they conclude will give the largest aggregate profits. If we impose an import duty on such an article they may prefer to reduce their profit on what they sell to this country rather than have the sale diminished by the addition of the duty to the price. In such case the duty will fall upon them. Or, again, let us suppose a Canadian farmer so situ- ated that the only market in which he can conveni- ently sell his wheat is on the American side. Wheat being a commodity of which our home production not merely supplies home demands, but leaves a surplus for export, the duty on wheat does not add to price, and the Canadian farmer so exceptionally situated that he must send wheat to this side although there is no general demand for Canadian wheat, cannot get back in enhanced price the duty he must pay. The two classes represented by these instances sug- gest all the cases in which import duties fall on for- eign producers.* Such cases, too unimportant to be * In certain cases where an import duty, levied in one country on the produce of another, has the efEect of reducing price in the exporting country at the expense of rent, it may, in some part, fall upon foreign land-owners. John Stuart Mill (Chap. III. , Book V., Political Economy), further maintains that taxes on imports fall in part, not on the foreign producer of whom we buy, but on the foreign consumer to whom we sell — since they increase the cost of products we export. But this is only to say that the injury which we do ourselves by protection must in some part fall upon those with whom we trade. And even if import duties do, in such ways, jjpfljpw^t jncfe^sp tl)e post to foreigners of what thejr ^et fropj us, TAElFPS FOR MOTECTION. 9£ considered in any estimates of national revenue, are only the rare exceptions to the general rule that the ability to tax ends with the territorial limits of the taxing power. And it is well for mankind that this is so. If it were possible for the government of one countrj', by any system of taxation, to compel the peo- ple of other countries to pay its expenses, the licrld would soon be taxed into barbarism. But the possibility of exceptional cases in which im- port duties may in part or in whole fall on foreign producers, instead of domestic consumers, has in it, even for those who would gladly tax "foreigners," no shadow of a recommendation for protection. For it will be noticed that the cases in which an import duty falls on foreign producers, are cases in which it can afford no encouragement to home producers. An import duty can only fall on foreign producers when its payment does not add to price ; while the only and thus, in some degree, compel them to share our loss, yet they also handicap us when we come into competition with them. Thus, assuming that our tariflE upon imports may at times, to some slight extent, have increased the price which English consumers have had to pay for our cotton, wheat or oil, the increased cost of production in the United States has certainly operated far more strongly to give English producers an advantage over American pro- ducers in markets in which they compete, and to enable England to take the lion's share of the ocean-borne commerce of the world. The minute tracing of the actions and reactions of taxation upon international trade is, however, more a, matter of theo- retical nicety than of practical interest, since the general conclu- sion will be that stated in the text, that while we cannot injure ourselves without injuring others, the taxing power of a Govern- ment is substantially restricted to its territorial limit. The clearest exception to this is in the case of export duties on articles of which the country levying the export dnty has a monopoly, as Brazil has of India-rubber and Cuba of the Havana tobacco. 96 PROTECTION OE FREE TRADE. possible way in which an import duty can encouraga home producers is by adding to price. I~ It is sometimes said that protection does not in- I crease prices. It is suiHcient answer to ask, how then can it ' encourage ? To say that a protective duty en- courages the home producer without raising prices, is to say that it encourages him without doing anything for him. Wherever beneath this assertion, as regard- less of fact as it is of theory, there is any glimmering of reason, it is either in the notion that protective duties do not permanently add to prices, because they bring about such a competition between home pro- ducers as finally carries prices down to the previous level ; or else in a confused idea that it would be an advantage to home producers to be secured the whole home market, even if at no higher prices. But as to the first, the only way in which a pro- tective duty can increase home Competition in the pro- duction of any commodity is by so increasing prices as to attract producers to the industry by the superior profits to be obtained. This competition, when free to operate, ultimately reduces profits to the general level.* But this is not to say that it reduces prices to what they would be without the duty. The profits of Louisiana sugar growing are now, doubtless, no larger than in other occupations involving equal risks, but the duty on sugar does make the price of sugar very much higher in the United States than it is in England, where there is no duty upon it. And even where there is no ' reason in natural or social conditions why a commodity should not be produced as cheaply as in any foreign * The efEect of protection upon profits in the protected iuaustries will be more fully examined in Chapter XVII. TARIFFS FOR PROTECTION. 97 country, the effect of the net- work of duties, of which the particular duty is but a part, is to increase the cost of production, and thus, though profits may fall, to keep prices above the point of free importation. Did_thfi price of a protected article fall to the point at which the foreign product could not be imported were there no duty, the duty woald cease to protect, since the foreign product would not be imported if it were abolished^, and the producers for whose protection it was imposed would cease to care for its retention. In what instance has this been the case ? Are any of our protected in- dustries less clamorous for protection now than they were forty years ago ? - As to the second notion, it is to be observed that the only way in which a protective duty can give the home market to home producers is by increasing the price at which foreign products can be sold in it. Not merely does this increase in the price of foreign products compel an increase in the price of domestic products into which they enter, but the shutting out of foreign products must increase the price of similar domestic products. For it is only where prJces are fixed by the will of the producer that increase or decrease in supply does not result in increase or decrease of price. Thus, while the newspaper business is not a monopoly, the publication of each individual paper is, and its price is fixed by the publisher. A publisher may, and in most cases will, prefer increased circulation to increased prices. And if competition were to be lessened, or even cut off, as, for instance, by imposing a stamp duty on, or pro- hibiting the publication of all the newspapers of New York save one, it would not necessarily follow that the price of that paper would be iooreased. But the 98 PBOTECnON OR FREE TRADE. prices of the great mass of commodities, and especially the great mass of commodities which are exported and imported, are regulated by competition. They are not fixed by the will of producers, but by the relative intensity of supply and demand, which are brought to \ an equation in price by what Adam Smith called " the higglmg of the market," and hence any lessening of supply caused by the shutting out of importations will 1 at once increase prices. \ In short, the protective system is simply a system of encouraging certain industries by enabling those carry- ing them on to obtain higher prices for the goods they produce. It is a clumsy and extravagant mode of giv- ing encouragement that could be given much better and at much less cost by bounties or subsidies. If it be wise to "encourage" American industries, and this we have yet to examine, the best way of doing so would be to abolish our tariff entirely and to pay bounties from funds obtained by direct taxation. In this way the cost could be distributed with some ap- proach to fairness, and the citizen who is worth a million times more than another could have the satis- faction of contributing a million times as much to the encouragement of American industry. I do not forget that, from the bounties given in the colonial days for the killing of noxious animals to the subsidies granted to the Pacific railroads, experience has shown that the bounty system inevitably leads to fraud and begets corruption, while but poorly accom plishing the ends sought by it But these evils are in separable from any method of "encouragement,"' and attach to the protective more than to the bounty sys- tem, because its operations are not so clear. If pro' TARIFFS FOB PEOTECTION. 99 teotion has been preferred to bounties it is not that it is a better means of encouragement, but for the same reason that indirect has been preferred to direct taxa- tion^-because the people do not so readily realize what is being done. Where a grant of a hundred thousand dollars directly from the treasury would raise an out- cry, the imposition of a duty which will enable the appropriation of millions in higher prices excites no comment. Where bounties have been given by our States for the establishment of new industries they have been comparatively small sums, given in a single payment or in a subsidy for a definite term of years. Although the people have in some cases been willing thus to pay bounties to a small extent and for a short time, in no case have they consented to regard them as a settled thing, and to keep on paying them year after year. But protective duties once imposed, the pro- tected industry has always been as clamorous for the continuance of protection as it was in the beginning for the grant of it. And the people not being so con- scious of the payment have permitted it to go on. It is often said by protectionists that free trade is right in theory but wrong in practice. Whatever may be meant by such phrases they involve a contradiction in terms, since a theory that will not agree with facts must be false. But without inquiring into the validity of the protective theory it is clear that no such tariff as it proposes ever has been or ever can be made. The theory of free trade may be carried into practice to the point of ideal perfection. For to secure free . trade we have only to abolish restrictions. But to carry the theory of protection into practice some articles must be taxed and others left untaxed, and, as to the 100 PEOTECTION OR FREE TRADE. articles taxed, different rates of duty must be imposed. And as tlie protection given to any industry may be neutralized by protection that enhances the price of its materials, careful discrimination is required, for there are very few articles that can be deemed finished products in relation to all their uses. The_^nLshed products_gf_some Jndustries are the materials or tools of__otber industries. Thus, while the protection of any industry is useless unless sufficient to prqduce the desired effect, too much protection is likely, even from a protective standpoint, to do harm. It is not merely that the ideal perfection with which the free trade theory may be reduced to practice is im- possible in the case of protection, but that even a rough approximation to the protective theory is impossible. There never has been a protective tariff that satisfied protectionists, and there never can be. Our present tariff, for instance, is admitted by protectionists to be full of the grossest blunders.* It was only adopted be- * For instance, to cite only one case, the last Tariff Act, wnich went into effect in July, 1883, raised the duty on the fabric used in the manufacture of niching and rufflings from 35 to 125 per cent., while leaving the duty of the finished article at 35 per cent. Previous to this, say the manufacturers of these goods, in , a memorial addressed to the Secretary of 'the Treasury, they not only supplied the American market, but sold hundreds of thou- sands of dollars' worth every year to Canada, the West Indies and other countries, the labor-saving machinery which they had in use giving them an advantage which, in spite of the 35 per cent, tax on their material, enabled them to successfully compete with European factories. But the 125 per cent, duty has not only cut off this export trade completely, but has led to such an importation of British goods that, as the memorial declares, thousands of hands have lost their employment, and three-fourths of the manufacturer.s engage4 in (b§ business hav? been utterly ruined. This, of oowse, TARIFFS FOE PROTECTION. 101 caoise, after a long wrangle, it was found impossible to agree upon a better one, and it is only maintained and defended because any attempt to amend it would begin a scramble out of which no one can tell what sort of a tariff would come. This has been the case with every former tariff, and must be the case with every future tariff. To make a protective tariEE that would even roughly accord with the protective theory would require in the first place a minute knowledge of all trade and indus- try, and of the manner in which an effect produced on one industry would act and react on others. This no king, congress or parliament ever can have. But, fur- ther than this, absolute disinterestedness is required, for the fixing of prbtective duties is simply the distribution of pecuniary favors among a crowd of greedy appli- cants. And even were it possible to obtain for the making of a protective tariff a body of men themselves disinterested and incapable of yielding to bribery, to threats, to friendship or to flattery, they would have to be more than human not to be dazed by the clamor and misled by the representations of selfish interests. The making of a tariff, instead of being, as the pro- tective theory requires, a careful consideration of the circumstances and needs of each industry, is in prac- tice simply a great " grab " in which the retained ad- vocates of selfish interests bully and beg, bribe and log- roll, in the endeavor to get the largest possible pro- tection for themselves without regard for other interests or for the general good. The result is, and always was not intended by Congress. The ruffling industry is only one lof the many minor industries that were thrown down and trampled upon in the last tariff scramble. i02 pROTiiCTidKf dfi fkM TM6f, must be, the enactment of a tariff wMch resembles the theoretical prbteotioriist's idea of what a protective tariff should be about as closely as a bucketful of paint thrown against a wall resembles the fresco of a Eaphael. But this is not alL After a tariS has been enacted, come the interpretations and decisions of treasury offi- cials and courts to unmake and re-make it,* and duties are raised or lowered by a printer's placing of a comma or by arbitrary constructions, frequently open to grave suspicion, and which no one can foresee, so that, as Horace Greeley naively says {Political Economy, p. 183) : " The longer a tariff continues the more weak spots are found, the more holes are picked in it, untU at last, through the influence of successive evasions, constructions, decisions, its very father could not discern its original features in the transformed bantling that has quietly taken ifs place." Under the bounty system, bad as it is, we can come much nearer to doing what we want to, and to know- ing what we have done. * The Secretary of th? Treasury states that there are now (Feb- ruary, 1886) over 2,300 tariff cases pending in the Southern Dis- trict of New York alone. ;, CHAPTER X. THE ENCOURAGEMENT QF INDUSTRY. Without questioning the end sought by them we have seen that protective tariffs are to be condemned as a means. Let us now consider' their end — the en- couragement of home industry. There can be no difference of opinion as to what encouragement means. To encourage an industry in the protective sense is to secure to those carrying it on larger profits than they could of themselves obtain. Only so far and so long as it does this can any protec- tion encourage an industry. But when we ask what the industries are that pro- tection proposes to encourage we find a wide difference. Those whom American protectionists have regarded as their ablest advocates have asked protection for the encouragement of " infant industries " — describing the protective system as a means for establishing new in- dustries in countries to which they are adapted.* They * " Whoever vrill consult Alexander Hamilton's Report on Man- ufactures, the writings of Matthew Carey, Hezekiah Niles and their compeers, with the speeches of Henry Clay, Thomas Newton, James Tod, Walter Forward, Rollin C. Mallary, and other forensic champions of protection, with the messages of our earlier Presidents, of Governors Simon Snyder, George Clinton, Daniel D. Tompkins, De Witt Clinton, etc., cannot fail to note that they champion not the maintenance, but the creation ot home manufactures." — Hoeace CrBEELET, Political Economy, p. 34. 104 PSOTECTION Ofi FREE TRADE. have scouted the idea of attempting to encourage all industry, and declared the encouragement of industries not adapted to a country, or already established, or for a time longer than necessary for their establishment, to be waste and robbery. As it is now popularly ad- vocated and practically applied in the United States the aim of protection, however, is not the encourage- ment of " infant industries " but the encouragement of " home industry " — that is to say, of all home industries. And what has proved true in our case is generally true. Wherever protection is once begun, the imposition of duties never stops until every home industry of any i political strength that can be protected by tariff gets I some encouragement. It is only in new countries and m the beginnings of the system that the encourage- ment of infant industries can be presented as the sole , end of protection. European protectionists can hardly' ask protection, on the ground of their infancy, for in- dustries that have been carried on since the time of tke / -Eomans. And in the United States to ask now the en- I couragement of such giants as our iron, steel and textile ' industries as a means for their establishment would, I after all these years of high tariffs, be manifestly ' absurd. We have thus two distinct propositions to examine — the proposition that new and desirable industries should be encouraged, which still figures in the apolo- getics of protection, and the proposition popularly urged .and which our protectionist legislation attempts to carry into effect — that home industry should be encouraged. As an abstract proposition it is not, I think, to be denied that there may be industries to which temporary THE ENCOURAGEMENT OF ESTDUSTET. 105 encouragement might profitably be extended. Indus- tries capable, in their development, of mu6h public benefit have often to struggle under great disadvan- tages in their beginnings, and their development might sometimes be beneficially hastened by judicious en- couragement. But there are insuperable difficulties in the -way of discovering what industries would repay encouragement. There are, doubtless, in every con- siderable community some men of exceptional powers who, if provided at public expense with an assured living and left free to investigate, to invent, or to think, would make to the public most valuable returns. But it is certain that, under any system yet devised, such livings, if instituted, would not be filled by men of this kind ; but by the pushing and influential, by flatterers and dependents of those in power or by respectable nonentities. The very men who would give a good return in such places would, by virtue of their qualities, be the last to get them. So it is with the encouragement of struggling in- dustries. All experience shows that the policy of en- couragement once begun, leads to a scramble in which it is the strong, not the weak ; the unscrupulous, not the deserving, that succeed. What are really infant industries have no more chance in the struggle for governmental encouragement than infant pigs have with full grown swine about a meal tub. Not merely is the encouragement likely to go to industries that do not need it, but it is likely to go to industries that can only be maintained in this way, and thus to cause absolute loss to the community by diverting labor and capital from remunerative industries. On the whole, the ability of any industry to establish and sustain 106 PROTECTION OE FREE TRADE. itself in a free field is tlie measure of its public utility, . and that " struggle for existence " which drives out un- profitable industries is the best means of determining what industries are needed under existing conditions and what are not. Even promising industries are more apt to be demoralized and stunted tban to be aided in healthy growth by encouragement that gives them what they do not earn, just as a young man is more likely to be injured than benefited by being left a fortune. The very difficulties with which new industries must con- tend not merely serve to determine which are really needed, but also serve to adapt them to surrounding conditions and to develop improvements and inventions that under more prosperous circumstances would never be sought for. Thus, while it may be abstractly true that there are industries that it would be wise to encourage, the only safe course is to give to all " a fair field and no favor." Where there is a conscious need for the making of some invention or for the establishment of some in- dustry which, though of public utility, would not be commercially profitable, the best way to encourage it is to offer a bounty conditional upon success. Nothing could better show the futility of attempting to make industries self-supporting by tariff than the confessed inability of the industries that we have so long encouraged to stand alone. In the early days of the American Eepublic, when the friends of pro- tection were trying to ingraft it upon the Federal revenue system, protection was asked, not for the main- tenance of American industry, but for the establish- ment of "infant industries," which, it was asserted, would, if encouraged for a few years, be able to takq THE ENCOURAGEMENT OF INDTJSTEY. 107 care of themselves. Tlie infant boys and girls of that time have grown to maturity, become old men and women, and with rare exceptions have passed away. The nation then fringing the Atlantic seaboard has ex- tended across the continent, and instead of four million now numbers nearly sixty million people. But the "infant industries," for which a little temporary pro- tection was then timidly asked, are still infants in their desire for encouragement. Though they have grown mightily they claim the benefits of the "Baby Act" all the more lustily, declaring that if they cannot have far higher protection than at the beginning they dreamed of asking they must perish outright. When United States Senator Broderick, shot by Chief-Justice Terry in a duel, died without making a will, a Dublin man wrote to the editor of a San Fran- cisco newspaper claiming to be next of kin. He gave the date of his birth, which showed him 'forty-seven years of age, and wound up by adjuring the editor to help a poor orphan, who had lost both father and mother. The "infant industry" argument nowadays always reminds me of that orphan. Protectionist writers have not yet given up the "in- fant industry" plea, for it is the only ground on which with any semblance of reason protection can be asked; but in the face of the facts they have extended the time in which it is averred that protection can establish an infant iDdustry. The American people used to be told that moderate duties for a few years would enable the protected industries to stand alone and defy foreign competition. But in the latest edition of his Political Economy (p. 233), Professor Thompson, of the Univer- sity of Pennsylvania, tells us that " it will ordinarily 108 PROTECTION OR FREE TRADE. take the lifetime of two generations to acclimatize thoroughly a new manufacture, and to bring the native production up to the native demand." When we are told that two generations should tax themselves to establish an industry for the third, well may we ask, " What has posterity ever done for us ? " Yet even this promise is not borne out by facts. In- dustries that we have been protecting for more than two generations, now need, according to protectionists, more protection than ever. The popular plea for protection in the United States to-day is not, however, the encouragement of infant industries, but the encouragement of home itodustry, that is, all home industry. Now it is manifestly impossible for a protective tariff to encourage all home industry. Duties upon com- modities entirely produced at home can, of course, have no effect in encouraging any home industry. It is only when imposed upon cordmodities partly im- ported and partly produced at home, or entirely im- ported, yet capable of being produced at home, that duties can in any way encourage an industry. No tariff which the United States imposed could, for in- stance, encourage the growth of grain or cotton, the raising of cattle, the production of coal oil or the mining of gold or silver ; for instead of importing these things we not only supply ourselves, but have a surplus which we export. Nor could any import duty encourage any of the many industries which must be carried on where needed, such as building, horseshoeing, the printing of newspapers, and so on. Since these industries that cannot be protected constitute by far the larger part of the industries of every country, the utmost that by ^ THE ElsrCOORAGEMENT OF INDUSTBY. 109 protective tariff can be attempted is tlie encoaragement of only a few of the total industries of a country. Yet in spite of this obvious fact, protection is never urged for the encouragement of the industries that alone can profit by a tariff. That would be to admit that to some it gave special advantages over others, and so in the popular pleas that are made for it pro- tection is urged for the encouragement of all industry. If we ask how this can be, we are told that the tariff encourages the protected industries, and then the pro- tected industries encourage the unprotected industries ; that protection builds up the factory and iron furnace, and the factory and iron furnace create a demand for the farmer's productions. Imagine a village of say a hundred voters. Imagine two of these villagers to make such a proposition as this: "We are desirous, fellow-citizens, of seeing you more prosperous and to that end propose this plan : Give us the privilege of collecting a tax of five cents a day from every one in the village. No one will feel the tax much, for even to a man with a wife and eight children it will only come to the paltry sum of fifty cents a day. Yet this slight tax will give our village two rich citizens who can afford to spend money. We will at once begin to live in commensurate style. We will enlarge our houses and improve our grounds, set up carriages, hire servants, give parties and buy much more freely at the stores. This will make trade brisk and cause a greater demand for labor. This, in turn, will create a greater demand for agricultural produc- tions, which will enable the neighboring farmers to make a greater demand for store goods and the labor of mechanics. Thus shall we all become prosperous." 10 no PEOTEOTtON OB JREE *BADS. There is in no country under the sun a village in which the people would listen to such a proposition. Yet it is every whit as plausible as the doctrine that encouraging some industries encourages all industries. The only way in which we could even attempt to encourage all industry would be by the bounty or siib- sidy system. Were we to substitute bounties for duties as a means of encouraging industry it wouid not only become possible for us to encourage other industries than those now encouraged by tariff, but we should be forced to do so, for it is not in human nature that the farmers, the stock raisers, the builders, th^ newspaper publishers and so on, would consent to the payment of bounties to other industries without demanding them for their own. Nor could we consistently stop until every species of industry, to that of the bootblack or rag-picker, was subsidized. Yet evidently the result of such encouragement of each would be the discourage- ment of all. For as there could only be distributed what was raised by taxation, less the cost of collection, no one could get back in subsidies, were there any fairness in their distribution, as much as he would be called upon to pay in taxes. This practical reduction to absurdity is not possible under the protective system, because only a small part of the industries of a country can thus be "encour- aged," while the cost of the encouragement is concealed in prices and is not realized by the masses. The tax- gatherer does not demand from each citizen a contribu- tion to the encouragement of the favored few. He sits down in a custom house and by taxing imports enables the favored producer to collect "encourage- ment " from hia fellow- citizens in higher prices. Yet THE ENCOURAGEMENT OF INDUSTRY. Ill it is as true of encouragement by tarifi as of encourage- ment by bounties that the gain to some iuvolves loss to others, and since encouragement by tariff involves far more cost and waste than encouragement by bounty, the proportion which the loss bears to the gain must be greater. However protection may affect special forms of industry it must necessarily diminish the total return to industry — first, by the waste inseparable from encour- agement by tariff, and, second, by the loss due to the transfer of capital and labor from occupations which they would choose for themselves to less profitable occupa- tions which they must be bribed to engage in. If we do not see this without reflection, it is because our at- tention is engaged with but a part of the effects of pro- tection. We see the large smelting works and the mas- sive mill without realizing that the same taxes which we are told have built them up have made more costly every nail driven and every needleful of thread used throughout the whole country. Our imaginations are affected as were those of the first Europeans who vis- ited India, and who, impressed by the profusion and magnificence of the Rajahs, but not noticing the abject poverty of the masses, mistook for the richest country in the world what is really the poorest. But reflection will show that the claim popularly made for protection, that it encourages home industry (i. e., all home industry), can be true only in one sense — the sense in which Pharaoh encouraged Hebrew in- dustry when he compelled the making of bricks with- out straw. Protective tariffs make more work, in the sense in which the spilling of grease over her kitchen floor makes more work for the housewife, or as a ram ^jjftt wets his hay makes more work for the farmgf, CHAPTEE XL THE HOME MAEKET AND HOME TRADE. We should keep our own market for our own producers, seems by many to be regarded as the same kind of a proposition as, We should keep our own pasture for our own cows, whereas, in truth, it is such a proposition as, We should keep our own appetites for our own cookery, or, We should keep our own transportation for our own legs. What is this home market from which protection- ists tell us we should so carefully exclude foreign produce? Is it not the home demand — the demand for the satisfaction of our own wants? Hence the proposition that we should keep our home market for home producers is simply the proposition that we should keep our own wants for our own powers of satisfying them. In short, to reduce it to the individual, it is that we ought not to eat a meal cooked by another, since that would deprive us of the pleasure of cooking a meal for ourselves, or make any use of horses or railways because that would deprive our legs of em- ployment. A short time ago English protectionists (for pro- tection is far tropi dead in England) were censuring the government for having given large orders for powder to German instead of to English producers. It turned out that the Germans were making a new powder called "cocoa," which in heavy guns gives great TH£ HOME MARKET AK-f) HOME TRADE. 113 velocity with low pressurp, and with which all the continental powers had at once provided themselves. Had the English government refused to buy from foreign producers, English ships, in the event of war, which then seemed imminent, would have been placed at a serious disadvantage. Now, just as the policy of reserving home markets for home producers would in war put a country which should adhere to it at a great disadvantage — even to the extent, if fully carried out, of restricting the country that does not produce coal to the use of sailing ships, and compelling the country that yields no iron to fight with bows and arrows — so in all the vocations of peace does this policy involve like disadvantages. To strictly reserve our home market for home producers would be to exclude ourselves from participation in the advantages which natural conditions or the peculiar skill of their people give to other countries. If bananas will not grow at home we must not eat bananas. If India rubber is not a home production we must not avail ourselves of its thousand uses. If salt can only be obtained in our country by evaporating sea water we must continue so to obtain our salt, although in other countries nature has performed this work and provided already -crystallized salt in quantities sufficient not only for their people, but for us too. Because we cannot grow the cinchona tree we must shake with ague and die from malarial diseases, or must writhe in agony under the oculist's knife because the beneficent drug that gives local insensibility is not a home pro- duction. And so with all those products in which the peculiar development of industry has enabled the people of various countries to excel. To reserve out Il4 PKoTECTION OB FREE TRADE. home market to home productien is to limit the world from which our wants may be supplied to the bounds of our own country, how little soever that may be. And to place any restrictions upon importations is, in so far as they operate, to deprive ourselves of oppor- tunities to satisfy our wants. It may be to the interest of a shopkeeper that the people of his neighborhood should be prohibited from buying from any one but him, so that they must lake such goods as he chooses to keep, at such prices as he chooses to charge, but who would contend that this was to the general advantage? It might be to the interest of gas companies to restrict the number and size of windows, but hardly to the interest of a com- munity. Broken limbs bring fees to surgeons, but would it profit a municipality to prohibit the re- moval of ice from sidewalks in order to encourage surgery ? Yet it is in such ways that protective tariffs act. Economically, what difference is there between restricting the importation of iron to benefit iron producers and restricting sanitary improvements to benefit undertakers. To attempt to make a nation prosperous by pre- venting it from buying from other nations is as ab- surd as it would be to attempt to make a man pros- perous by preventing him from buying from other men. How this operates in the case of the individual we can see from that practice which, since its applica- tion in the Irish land agitation, has come to be called " boycotting." Captain Boycott, upon whom has been thrust the unenviable fame of having his name turned into a verb, was in fact "protected." He had a pro- tective tariff of the most efficient kind built around him THE fiOMB MARKET AND HOME TRADE. 116 by a neighborLood decree more effective than act of Parliament. No one would sell him labor, no one would sell him milk or bread or meat or any service or commodity whatever. But instead of growing pros- perous, this much-protected man had to fly from a place where his own market was thus reserved for his own productions. What protectionists ask us to do to ourselves in reserving our home market for home producers, is in kind what the Land Leaguers did to Captain Boycott. They ask us to boycott ourselves. In order to convince us that this would be for our benefit, no little ingenuity has been expended. It is asserted (1) that restrictions on foreign trade are bene- ficial because home trade is more profitable than foreign trade; (2) that even if these restrictions do compel people to pay higher prices for the same commodities, the real cost is no greater, and (3) that even if the cost is greater they get it back again. Strangely enough, the first of these propositions is fortified by the authority of Adam Smith. In Book II, Chapter V., of The Wealth of Nations, occurs this pas- sage: " The capital which is employed in purchasing in one part of the country in order to sell in another the produce of the industry of that country, generally replaces by every such operation two dis- tinct capitals that had both been employed in the agriculture or manufactures of that country, and thereby enables them to con- tinue that employment. * * * The capital which sends Scotch manufactures to London, and brings back English corn and man- ufactures to Edinburgh, necessarily replaces by every such opera- tion two British capitals which had both been employed in the agriculture or manufactures of Q-reat Brilain. " The capital employed in purchasing foreign goods for home con- sumption, when this purchase is made with the produce of domestic industry, replaces, too, by every such operation, two distinct capi- 116 PROTECTION OS t'EEi! TIlAi)@. tals ; but one of them only is employed in supporting domestic industry. Tie capital which sends British goods to Portugal, and brings back Portuguese goods to Great Britain, replaces by every such operation only one British capital. The other is a Portuguese one. Though the returns, therefore, of the foreign trade of con- sumptiori should be as quick as those o£ the home trade, the capital employed in it will give but one-half the encouragement to the industry or productive labor of the country." This astonishing proposition, of which Adam Smith never seemed to see the significance,* is one of the in- consistencies into which he was led by his abandon- ment of the solid ground from which labor is regarded as the prime factor in production for that from which capital is so regarded — a confusion of thought which has ever since befogged political economy. This pass- age is quoted approvingly by protectionist writers, and rhade by them the basis of assertions even more absurd, if that be possible. Yet the fallacy ought to be seen at a glance. It is of the same nature as the Irishman's division, " Two for you two, and two for me, too," and de- pends upon the introduction of a term "British," which includes in its meaning two of the terms previously used, "English" and "Scotch." If we substitute for * In the next paragraph Adam Smith goes on to carry this propo- sition to an unconscious reductio ad absurdum. He says: "A capital therefore employed in the home trade will sometimes make twelve operations, or be sent out and returned twelve times, before a capital employed in the foreign trade of consumption has made one. If the capitals are equal, therefore, the one will give four-and-twenty times more encouragement and support to the in- dustry of the country than the other." This is just such a proposition as that an innkeeper who only permits his guests to stay with him one day can, with equal facili- ties, furnish twelve times as much entertainment to man and beast as can the innkeeper who permits each guest to stay with him twelve days. THE HOME MARKET AND HOME TRADE. 117 th® terms used by Adam Smith, other terms of the same relation we may obtain, with equal validity, such prop- ositions as this: If Episcopalians trade with Presby- terians, two profits are made by Protestants ; whereas when Presbyterians trade with Catholics only one profit goes to Protestants. Therefore, trade between Protes- tants is twice as profitable as trade between Protestants and Catholics. In Adam Smith's illustration there are two quantities of British goods, one in Edinburgh and one in London. In the domestic trade which he supposes, these two quantities of British goods are exchanged ; but if the Scotch goods be seiLt to Portugal instead of to England and Portuguese ^oods brought back, only one quantity of British goods is exchanged. There will be only one-half the replacement in Great Britain, but there has been only one-half the displacement. The Edinburgh goods which have been sent away have been replaced with Portuguese goods ; but the London goods have not been replaced with anything, because they are still there. In the one case twice the amount of British capital is employed as in the other, and consequently double returns show equal profitableness. The arguments by which it is attempted to prove that it is no hardship to a people to be forced to pay higher prices to home producers for goods they car. more cheaply obtain by importation are of no better consistency. The real cost of commodities, it is de- clared, is not to be measured by their price but by the labor needed, to produce them, and hence as it is put, thougb higher wages, interest, taxes, etc., may make it impossible to produce certain things for as low a price in one country as in another, their real cost is no lis PROTECTION OE FREE TRADE. greater, if bo greater amount of labor is needed for their production, and thus a nation loses nothing by shutting out the cheaper foreign products. The fallacy is in the assumption that equal amounts of labor always produce equal results. A first-class portrait painter may be able to do whitewashing with no more labor than a professional whitewasher, but it would nevertheless be a loss to him to take time in which he might earn the wages of a portrait painter in order to do whitewashing that he might get done for the wages of a whitewasher. Nor would his loss be the less real if he chose to average his income so as to credit himself with as much for whitewashing as for portrait painting. In the same way, it is not the amount of labor required to produce a thing here or there which determines whether it can be more profitably obtained by home production or by importation, but the relation between what the same labor could produce in that and in other employments. This is shown by price. Though as between different times and places the prices of things do not accurately indicate the relative quantity and quality of labor necessary to obtain them, they do in the same time and place. If at any given time, in any given place, a certain commodity cannot be pro- duced for as low a price as it can be imported for, this is not necessarily proof that it would take more labor to produce it in the given place, but it is proof that labor there and then can be more profitably employed. And when industry is diverted from more profitable to less profitable occupations, though the capital and labor so transferred may be compensated by duties or boun- ties, there must be a loss to the people as a whole. The argumeni; that the higher prices which the tarj# THE HOME MAEKET AND HOME TRADE. Hi enables certain liome producers to charge involves nc loss to those who pay them is thus put by Horace Greeley {Political Economy, p. 150) : " I never made any iron, nor had any other than a public, general interest in making any, while I have bought and used many thou- sands of dollars' worth, in the shape of power presses, engines, boilers, building plates, etc. It is my interest, you say, to have cheap iron. Certainly; but I buy iron, not (ultimately and really) with money, but with the product of my labor— that is, with newspapers; and I can better afford to pay $70 per ton for iron made by men who can and do buy American newspapers than take it for $50 of those who rarely see and never buy one of my products. The money price of the American iron may be Jiigher, but its real Bost to me is less than that of the British iron. And my case is that of the great body of American farmers and other producers 01 exchangeable wealth.'' The fallacy is in the assumption that the ability of certain persons to buy American newspapers depends upon their making of iron, whereas, it depends upon their making of something. Newspapers are not bought with iron, nor do newspaper publishers buy iron with newspapers. These transactions are effected with money, which represents no single form of wealth, but value in all forms. If, instead of making iron, the men to whom Mr. Greeley refers had made something else which was exchanged for British iron, Mr. Greeley's purchase of this foreign iron would have been just as truly an exchange of his products for theirs. The $20 per ton additional which the tariff compelled him to pay for iron represented a loss to him which was not a gain to any one else. For on Mr. Greeley's sup- position that the tariff was necessary to give American iron makers the same remuneration such labor could have obtained in other pursuits, its effect was simply to compel the expenditure of |70 worth of labor to obtaio 120 PROTECTIOIT OE FREE TRADE. what otherwise could have been obtained by $50 wortli of labor. To do this was necessarily to lessen the, wealth of the country as a whole, and to reduce the fund available for the purchase of newspapers and other articles. This loss is as certain and is of the same kind as if Mr. Greeley had been compelled to employ portrait painters to do whitewashing. The more popular forms of this argument that pro- tection costs nothing, hardly need analysis. If, as is asserted, consumers lose nothing in the higher prices the tariff compels them to pay, because these prices are paid to our own people, then producers would lose nothing if compelled to sell to their fellow-citizens below cost. If workmen are necessarily compensated for high priced goods by the increased demand for their labor, then manufacturers would be compensated for high priced labor by the increased demand for their goods. In short, on this reasoning it makes no dif- ference to anybody whether the price of anything is high or low. When farmers complain of the high charges of railroads, they are making much ado about nothing ; and workmen are taking needless trouble when they demand an increase of wages, while employers are auite as foolish when they try to cut wages down. CHAPTEE Xn. EXPORTS AND IMPOETS. The aim of protection is to diminish imports, never to diminish exports. On the contrary, the protection- ist hahit is to regard exports with favor, and to consider the country which exports most and imports least as doing the most profitable trade. When exports exceed imports there is said to be a favorable balance of trade. When imports exceed exports there is said to be an unfavorable balance of trade. In accordance with his idea all protectionist countries afford every facility for sending things away and fine men for bringing things in. If the things which we thus try to send away and prevent coming in were pests and vermin — things of which all men want as little as possible — this policy would conform to reason. But the things of which ex- ports and imports consist are not things that nature forces on us against our will, and that we have to struggle to rid ourselves of; but things that nature gives only in return for labor, things for which men make exertions and undergo privations. Him who has or can command much of these things we call rich ■ him who has little we call poor; and when we say that a country increases in wealth we mean that the amount of these things which it contains increases 11 122 PRO'rfiC'rto>f OR FREE TRADfi. faster than its population. What, then, is more repug- nant to reason than the notion that the way to increase the wealth of a country is to promote the sending of such things away and to prevent the bringing of them in? Could there be a queerer inversion of ideas? Should we not think even a dog had lost his senses that snapped and snarled when given a bone, and wagged his tail when a bone was taken from him ? Lawyers may profit by quarrels, doctors by diseases, rat-catchers by the prevalence of vermin, and so it may be to the interest of some of the individuals of a nation to have as much as possible of the good things which we call "goods" sent away, and as little as pos- sible brought in. But protectionists claim that it is for the benefit of a community, as a whole, of a nation considered as one man, to make it easy to send goods away and difficult to bring them in. Let us take a community which we must perforce consider as a whole — that country, with a population of one, which the genius of Defoe has made familiar not only to English readers but to the people of all European tongues. Robinson Crusoe, we will suppose, is still living alone on his island. Let us suppose an American pro- tectionist is the first to break his solitude with the long yearned-for music of human speech. Crusoe's delight we can well imagine. But now that he has been there so long he does not care to leave, the less since his visitor tells him that the island, having now been dis- covered, will often be visited by passing ships. Let us suppose that after having heard Crusoe's story, seen his island, enjoyed such hospitality as he could oifer, told iiim in return of the wonderful changes in the great EXPORTS AND Imports. 123 world, and left Mra books and papers, our protectionist prepares to depart, but before going seeks to offer some kindly warning of tbe danger Crusoe will be exposed to from the " deluge of cheap goods " that passing ships will seek to exchange for fruit and goats. Imagine him to tell Crusoe just what protectionists tell larger communities, and to warn him that, unless he takes measures to make it difficult to bring these goods ashore, his industry will be entirely ruined. "Tn fact," we may imagine the protectionist to say, " so cheaply can all the things you require be produced abroad that un- less you make it hard to land them I do not see how you will be able to employ your own industry at all." "Will they give me all these things?" Eobinson Crusoe would naturally exclaim. "Do you mean that I shall get all these things for nothing and bave no work at all to do ? That will suit me completely. I shall rest and read and go fishing for the fun of it. I am not anxious to work if without work I can get tbe things I want." " No, I don't quite mean that," the protectionist would be forced to explain. "They will not give you such things for nothing. They will, of course, want some- thing in return. But they will bring you so much and will take away so little that your imports will vastly exceed your exports, and it will soon be difficult for you to find employment for your labor." "But I don't want to find employment for my labor," Crusoe would naturally reply. " I did not spend months in digging out my canoe and weeks in tanning and sewing these goat-skins because I wanted employment for my labor, but because I wanted the things. If I 124 PROTEdTlON Ofi PUEE TRADE. can get what I want with less labor, so much t^ie bet- ter, and the more I get and the less I give in the trade youtell me I am to carry on — or, as you phrase it, the more my imports exceed my exports — ^the easier I can live and the richer I shall be. I am not afraid of being overwhelmed with goods. The more they bring the better it will suit me." And so the two might part, for it is certain that no matter how long our protectionist talked the notion that his industry would be ruined by getting things with less labor than before would never frighten Crusoe. Yet, are these arguments for protection a whit more absurd when addressed to one man living on an. island than when addressed to sixty millions living on a con- tinent? What would be true in the case of Eobinson Crusoe is true in the case of Brother Jonathan. If foreigners will bniig us goods cheaper than we can make them ourselves, we shall be the gainers. The more we get in imports as compared with what we have to give in exports, the better the trade for us. And since foreigners are not liberal enough to give us their productions, but will only let us have them in return for our own productions, how can they ruin our industry ? The only way they could ruin our industry would be by bringing us for nothing all we want, so as to save us the necessity for work. If this were possible, ought it seem very dreadful ? Consider this matter in another way: To impose taxes on exports in order that home consumers might get the advantage of lower prices would be quite as just as to impose taxes on imports in order that home producers may get the advantage of higher prices, and ESPORTS AND IMPORTS. 125 it would be far more conformable to tbe principle of "the greatest good of the greatest number," since all of us are consumers, while only a few of us are producers of the things that can be raised in price by taxes on imports. And since the wealthy country is the country that in proportion to its population contains the largest quantities of the things of which exports and imports consist, it would be a far more plausible method of national enrichment to keep such things from going out than to keep them from coming in. Now, supposing it were seriously proposed, as a means for enriching the United States, to put restrictive duties on the carrying out of wealth instead of the bringing in of wealth. It is certain that this would be opposed by protectionists. But what objection could they make? The objection they would make would be in sub- stance this : " The sending away of things in trade from one country to another does not involve a loss to the country from which they are sent, but a gain, since other things of more value are brought back in return for them. Therefore, to place any restriction upon the sending away of things would be to lessen instead of to increase the wealth of a country." This is true. But to say this, is to say that to restrict exports would be injurious because it would diminish imports? Yet, to diminish imports is the direct aim and effect of pro- tective tariffs. Exports and imports, so far as they are induced by trade, are correlative. Each is the cause and comple- ment of the other, and to impose any restrictions on the one is necessarily to lessen the other. And so far from its beiug the mark of a profitable commerce that 126 PKOTECTIOSr OEFREE TRADE. the value of a nation's exports exceeds her imports, the- reverse of this is true. In a profitable international trade the value of im- ports will always exceed 'the value -of the exports that pay for them, just as in a profitable trading voyage the return cargo must exceed in value the cargo carried out. This is possible to all the nations that are parties to commerce, for in a normal trade commodities are carried from places where they are relatively cheap to places where they are relatively dear, and their value is thus increased by the transportation, so that a cargo arrived at its destination has a higher value than on leaving the port of its exportation. But on the theory that a trade is profitable only when exports exceed im- ports, the only way for all countries to trade profitably with one another would be to carry commodities from places where they are relatively dear to places where they are relatively cheap. An international trade made up of such transactions as the exportation of manufactured ice from the "West Indies to New England, and the exportation of hot-house fruits from New England to the West Indies, would enable all countries to export much larger values than they imported. On the same theory the more ships sunk at sea the better for the commercial world. To have all the ships that left each country sunk before they could reach any other country would, upon protectionist principles, be the quickest means of enriching the whole world, since all countries could then enjoy the maximum of exports with the minimum of imports. It must, however, be borne in mind that all export- ing and importing are not the exchanging of products. .JJhis, however, is a, fact which puts in stiU stronger m tight, if that be pos3%i«, Ji^ absurdity \f the notion that an excess ol exp«?rt''oviPii^p!Bts sholvs increasing wealth. When T|j^^^ mistresf^Jittharw-orld, Sicily, Spain, Africa, Bgy^j^j|3k|,%g^^^i^ed to Italy far more than they importec^^JTBWTaty. But so far fi'om this excess of their exports over their imports indicating their enrichment, it indicated their impoverishment. It meant that the wealth produced in the provinces was being drained to Eome in taxes and tribute and rent, for which no return was made. The tribute exacted by Germany from France in 1871 caused a large ex- cess of French exports over imports. So in India the "home charges" of an alien government and the remit- tances of alien officials secure a permanent excess of exports over imports. So the foreign debt which has been fastened upon Egypt requires large amounts of the produce of that country to be sent away for which there is no return in imports. And so for many years the exports from Ireland have largely exceeded the imports into Ireland, owing to the rent drain of ab- sentee landlords. The Ii'ish landlords who live abroad do not directly draw produce for their rent, nor yet do they draw money. Irish cattle, hogs, sheep, butter, linen and other productions are exported as if in the regular course of trade, but their proceeds instead of coming back to Ireland as imports, are, through the medium of bank and mercantile exchanges, placed to the credit of the absent landlords, and used up by them. This drain of commodities in return for which no com- modities are imported, would be greater yet were it not for the fact that thousands of Irishmen cross the channel every summer to help get in the English harvests, and then return home, and that from those who have perma- 128 PROTECTION OR FREE TRADE. nently emigrated to other countries there is a constant stream of remittances to relatives left behind.* The last time I crossed to England I sat at the steamer table by two young Englishmen, who drank much champagne and in other ways showed they had plenty of money. As we became acquainted I learned that they were younger sons of English "county families," graduates of a sort of school which has been established in Iowa for wealthy young English- men who wish to become "gentlemen farmers" or " estate owners " in the United States. Each had got him a considerable tract of rew land, had cut it up into farms, erected on each farm a board house and barn, and then rented these farms to tenants for half the crops. They liked America, they said; it was a good country to have an estate in. The land laws were very good, and if a tenant did not pay promptly you could get rid of him without long formality. But they preferred to live in England, and were going back to enjoy their incomes there, having put their affairs in the hands of an agent, to whom the tenants were required to give notice when they wished to reap their * In Dublin in 1883 I several times met the secretary of one of the great banking institutions whose branches ramify through Ire- land. Each time he asked my opinion of the crop prospects in the United States, as though that were uppermost in his mind when- ever he met an American. Finally I said to him, " I suppose poor crops in the United States would be to your advantage, as it would increase the value of the agricultural products that Ireland ex- ports.'' " Oh, no ; " he replied, " we are greatly interested in hav- ing the American crops good. Good crops mean good times, and good times in the United States mean large remittances from the Irish in America to their families at home, and these remittances are more important to business here than the prices we get for our own products." EXPORTS AND IMPORTS. 129 crops, and who saw that the landlord's half was prop- erly rendered. Thus in this case half the crop (less commissions) of certain Iowa farmers must annually be exported without any return in imports. And this tide of exports for which no imports come back is only commencing to flow. Many Englishmen already own American land by the hundred thousand, and even by the millioti acres, and are only beginning to draw rent and royalties. Punch recently had a poaderous joke, the point of which was that the British House of Lords had much greater landed interests in the United States than in Great Britain. If not true already, it will not under present conditions be many years before the English aristocracy will draw far larger incomes from their American estates than from their home estates — incomes to supply which we must export without any return in imports.* * The Chicago Tribune of January 35, 1886, contains a long account of the American estates of an Irish landlord, William Scully. This Scully, who was one of the most notorious of the rack-renting and evicting Irish landlords, owns from 75,000 to 90,000 acres of the richest land in Illinois, besides large tracts in other States. His estates are cut up into farms and rented to ten- ants who are obliged to pay all taxes and make all improvements, and who are not permitted to sell their crops until the rent is paid. A "spy system" is maintained, aiid tenants are required to doff their hats when they enter the "estate office." The Tribune de- scribes them as reduced to a condition of absolute serfdom. The houses m which they live are the poorest shanties, consisting gen- erally of a room and a half, and the whole district is described as blighted Scully got most of his land at nominal prices, ranging as low as seventy -five cents per acre. He lives in London, and is said to draw from his American estates a net income of $400,000 a year, which means, of course, that American produce to that value is exported every year without any imports coming back. The Tribune closes its long account by saying : " Not content with acquiring land himself, Scully has induced a nuraber of his rela- 130 PROTECTION OR FREE TRADE. In the commerce which goes on between the United States and Europe there are thus other elements than the exchange of productions. The sums borrowed of Europe by the sale of railway and other bonds, tie sums paid by Europeans for land in the United States or invested in industrial enterprises here, capital brought by emigrants, what is spent by Europeans traveling here, and some small amounts of the nature of gifts, legacies, and successions tend to swell our imports or reduce our exports. On the other hand, not only do we pay in exports to Europe for our imports from Brazil, India, and such countries, but interest on bonds and other obligations, profits on capital invested here, rent for American land owned abroad, remittances from immigrants to relatives at home, property passing by will or inheritance to people abroad, payments for ocean transportation for- merly carried on by our own vessels but now carried on by foreign vessels, the sums spent by American tourists who every year visit Europe, and by the increas- ing number of rich Americans who live in Europe, all contribute to swell our exports and reduce our imports. The annual balance against us on these accounts is already very large and is steadily growing larger. Were we to prevent importations absolutely we should still have to export largely in order to pay our rents, to meet interest, and to provide for the increasing number of rich Americans who travel or reside abroad. But the fact that our exports must now thus exceed our imports instead of being what protectionists take it for, an evidence of increasing prosperity, is simply the evi- tives to become American landlords, and their system is patterned 08 bis Qwn." EXPORTS AND IMPORTS. 131 dence of a drain upon national wealth like that which has so impoverished Ireland. But this drain is not to be stopped by tariffs. It proceeds from a deeper cause than any tariff can touch, and is but part of a general drift. Our internal com- merce also involves the flow from country to city, and from West to East, of commodities for which there is no return. Our large mine owners, ranch owners, land speculators, and many of our large farmers, live in the great cities. Our small farmers have had in large part to buy their farms on mortgage of men who live in cities to the east of them; the bonds of the national, state, county, and municipal governments are largely so held, as are the stocks and bonds of railway and other com- panies — the result being that the country has to send to the cities, the West to the East, more than is re- turned. This flow is increasing, and, no matter what be our tariff legislation, must continue steadily to increase, for it springs from the most fundamental of our social adjustments, that which makes land private property. As the land in Illinois or Iowa, or Oregon, or New Mexico owned by a resident of New York or Boston increases in value, people who live in those States must send more and more of their produce to the New Yorker or Bostonian. They may work hard, but grow relatively poorer ; he may not work at all, but grow relatively richer, so that when they need capital for building railroads or any other purpose, they must borrow and pay interest, while he can lend and get interest. The tendency of the time is thus to the ownership of the whole country by residents of cities, and it makes no difference to the people of the country districts whether those cities are in America or Europe. CHAPTER Xin. CONFUSIONS ARISING FROM THE USE OF MONEY. There is no one who in exchanging his own pro- ductions for the productions of another would think that the more he gave and the less he got the bettei off he would be. Yet to many men nothing seems clearer than that the more of its own productions a nation sends away, and the less of the productions of other ■ nations it receives in return, the more profitable its trade. So widespread is this belief that to-day nearly all civilized nations endeavor to discourage the bring- ing in of the productions of other nations while re- garding with satisfaction the sending away of their own. What is the reason of this? Men are not apt to apply to the transactions of nations principles opposite to those they apply to individual transactions. On the contrary, the natural tendency is to personify nations, and to think and speak of them as actuated by the same motives and governed by the same laws as the human beings of whom they are made up. Nor have we to look far to see that the preposterous notion that a nation gains by exporting and loses by importing actually arises from the application to the commerce between nations of ideas to which individual transac- tions accustom civilized men. What men dispose of to others we term their sales; what they obtain from others we term their purchases, Hence we become eolJFUsIONS AEiSllfG FROM THE USE OF MONET. 13^ accustomed to think of exports as sales, and of imports as purchases. And as in daily life we habitually think that the greater the value of a man's sales and the less the value of his purchases the better his business ; so, if we do not stop to fix the meaning of the words we use, it seems a matter of course that the more a na- tion exports and the less it imports the richer it will become. It is significant of its origin that such a notion is unknown among savages. Nor could it have arisen among civilized men if they were accustomed to trade as savages do. Not long ago a class of traders called " soap-fat men " used to go from house to house exchang- ing soap for the refuse fat accumulated by housewives. In this petty commerce, carried on in this primitive manner, the habit of thinking that in a profitable trade the value of sales must exceed the value of purchases could never have arisen, it being clearly to the interest of each party that the value of what he sold (or ex- ported) should be as little as possible, and the value of what he bought (or imported) as great as possible. But in civilized society this is only the exceptional form of trade. Buying and selling, as our daily life familiarizes us with them, are not the exchange of commodities for commodities, but the exchange of money for commod- ities, or of commodities for money. It is to confusions of thought growing out of this use of money that we may trace the belief that a nation profits by exporting and loses by importing — ^a belief to which countless lives and incalculable wealth have been sacrificed in bloody wars, and which to-day moulds the policy of nearly all civilized nations and interposes artificial barriers to the commerce of the world. 13 The primary form of trade is barter — the exchange of commodities for commodities. But just as when we begin to think and speak of length, weight or bulk, it is necessary to adopt measures or standards by which these qualities can be expressed, so when trade begins there arises a need for some common standard by which the value of different articles can be apprehended. The difficulties attending barter soon lead, also, to the adop- tion by common consent of some commodity as a med- ium of exchange, by means of which he who wishes to exchange a thing for one or more other things is no longer obliged to find some one with exactly reciprocal desires, but is enabled to divide the complete exchange into stages or steps, which can be made with different persons, to the enormous saving of time and trouble. In primitive society, cattle, skins, shells, and many other things have in a rude way fulfilled these func- tions. But the precious metals are so peculiarly adapt- ed to this use that wherever they have become known mankind has been led to adopt them as money. They are at first used by weight, but a great step in advance is taken when they are coined into pieces of definite weight and purity, so that no one who receives them needs to take the trouble of weighing and testing them. As civilization advances, as society becomes more settled and orderly, and exchanges more numerous and regular, gold and silver are gradually superseded as mediums of exchange by credit in various forms. By means of accounts current, one purchase is made to balance another purchase and one debt to cancel an other debt. Individuals or associations of recognized solvency issue bills of exchange, letters of credit, notes 0,nd drafts, which largely take the place of coin ; banks eoifFUSlOiifS AlttStNG fftok 1'HE tSE OF MONEY. ISS transfer credits between individuals, and clearing-liouses transfer credits between banks, so that immense trans- actions are carried on with a very small actual use of money; and finally, credits of convenient denominations, printed upon paper, and adapted to transference from hand to hand without indorsement or formality, being cheaper and more convenient, take in part or in whole the place of gold or silver in the country where they are issued. This is, in brief, the history of that labor-saving in- strument which ranges in its forms from the cowries of the African or the wampum of the red Indian to the bank-note or greenback, and which does so much to facilitate trade that without it civilization would be im- possible. The part which it plays in social life and intercourse is so necessary, its use is so common in thought and speech and actual transaction, that cer- tain confusions with regard to it are apt to grow up. It is not needful to speak of the delusion that interest grows out of the use of money, or that increase of money is increase of wealth, or that paper money can- not properly fulfill its functions unless an equivalent of coin is buried somewhere, but only of such confusions of thought as have a relation to international trade. I was present yesterday when one farmer gave an- other farmer a horse and four pigs for a mare. Both seemed pleased with the transaction, but neither said, " Thank you." Yet when tjioney is given for any- thing else it is usual for the person who receives the money to say, " Thank you," or in some other way to indicate that he is more obliged in receiving the money than the other party is in receiving the thing the money is given tov. This custom is one of the 136 PROTECTION Ofi FREE tRADE. indications of a liabit of thought which (although it is clear that a dollar cannot be more valuable than a dollar's worth) attaches the idea of benefit more to the giving of money for commodities than to the giving of commodities for money. The main reason of this I take to be that difficulties of exchange are most felt on the side of reduction to the medium of exchange. To exchange anything for money it is necessary to find some one who wants that par- ticular thing, but, this exchange effected, the exchange of money for other things is generally easier, since all who have anything to exchange are willing to take money for it. This, and the fact that the value of money is more certain and definite than the value of things measured by it, and the further fact that the sale or conversion of commodities into money completes those transactions upon which we usually estimate profit, easily lead us to look upon the getting of money as the object and end of trade, and upon selling as more profitable than buying. Further than this, money, being the medium of ex- change — the thing that can be most quickly and easily exchanged for other things — ^is, therefore, the most convenient in contingencies. In ruder times, before the organization of credit ■ had reached such devel- opment as now, when the world was cut up into small states constantly W9,rring with each other, when order was less well preserved, property far more insecure and the exhibition of riches often led to extortion ; when pirates infested the sea and robbers the land ; when fires were frequent and insurance had not been devised; when prisoners were held to ransom and captured cities given up to sack, the contingencies in which it is im- CONTUSIONS ABISING FROM THE USE OF MONF-T. 137 portant to liave wealth in tlie form in which it can be most conveniently carried, readily concealed, and speed' ily exchanged, were far more numerous than now, and every one strove to keep some part of his wealth in the precious metals. The peasant buried his savings, the merchant kept his money in his strong box, the miser gloated over his golden hoard and the prince sought to lay up a great treasure for time of sudden need. Thus gold and silver were even more striking symbols of wealth than now, and the habit of thinking of them as the only real wealth was formed. This habit of thought gave ready support to the pro- tective policy. When the growth of commerce made it possible to raise large revenues by indirect taxation, kings and their ministers soon discovered how easily the people could thus be made to pay an amount of taxes that they would have resisted if levied directly. Import taxes were first levied to obtain revenue, but not only was it found to be exceedingly convenient to tax goods in the seaport towns from whence they were distributed through the country, but the taxation of im- ported goods met with the warm support of such home producers as were thus protected from competition. An interest was thus created in favor of "protection," which availed itself of national prejudices and popular habits of thought, and a system was by degrees elabo- rated, which for centuries swayed the policy of Euro- pean nations. This system, which Adam Smith attacked under the name of the mercantile system of political economy, regarded nations as merchants competing with each other for the money of the world, and aimed at en- riching a country by bringing into it a§ rouch gold and 138 PROTECTION OE PEEE TRADE. silver as possible, and permitting as little as possible to flow out. To do this it was sought not only to pro- hibit the carrying of precious metals out of the country, but to encourage the domestic production of goods that could be sold abroad, and to throw every obstacle in the way of similar foreign or colonial industries. Not only were heavy import duties or absolute prohibitions placed on such products of foreign industry as might come into competition with home industry, but the ex- ports of such raw materials as foreign industries might require were burdened with export duties or entirely prohibited under savage penalties of death or mutila- tion. Skilled workmen were forbidden to leave the country lest they might teach foreigners their art: do mestic industries were encouraged by bounties, by patents of monopoly and by the creation of artificial markets — sometimes by premiums paid on exports, and sometimes by laws which compelled the use of their products, One instance of this was the Act of Parliament which required every corpse to be buried in a woolen shroud, a piece of stupidity only paralleled by the laws under which the American people are taxed to bury in underground safes $2,000,000 of coined sUver every month, and keep a hundred millions of gold lying idle in the treasury. But to attempt to increase the supply of gold and silver by such methods is both foolish and useless. Though the value of the precious metals is high their utility is low ; their principal use, next to that of money, being in ostentation. And just as a farmer would become poorer, not richer, by selling his .breed- ing stock and seed grain to obtain gold to hoard and silver to put on his table, or as a manufacturer would CONFUSIONS AEISTNG FROM THE USE OF MONEY. 139 lessen bis income by selling a useful machine and keep- ing in his safe the money he got for it, so must a nation lessen its productive power by stimulating its exports or reducing its imports of things that could be pro- ductively used, in order to accumulate gold and silver for which it has no productive use. Such amounts of the precious metals as are needed for use as money will come to every nation that participates in the trade of the world, by virtue of a tendency that sets at naught all endeavors artiJicially to eahance supply, a tendency as constant as the tendency of water to seek a level. Wherever trade exists all commodities capable of trans- portation tend to flow from wherever their value is relatively low to wherever their value is relatively high. This tendency is checked by the difficulties of transportation, which vary with different things as their bulk, weight, and liability to injury com- pare with their value. The precious metals do not suffer from transportation, and having (especially gold) little weight and bulk as compared with their value, are so portable that a very slight change in their rela- tive value is sufficient to cause their flow. So easily can they be carried and concealed that legal restrictions, backed by coast guards and custom-house officials, have never been able to prevent them from finding their way out of a country where their value was rela- tively low and into a country where their value was relatively high. The attempts of her despotic monarcha to keep in Spain the precious metals she drew from America were like trying to hold water in a sieve. The effect of artificially increasing the supply of pi'eoious metals in any country must be to lower their vjilue as compare4 with that of other commodities. 140 I'SvTyWjWo:^ OR free trade. The moniv^at, thsrsfoi3, tbat restrictions by wMch it is atteicpted to aitraot aiid reiain the precious metals, begin so to operate as to insreasje the supply of those metals, a tendency to their outtlowing is set up, in- creasing in force as the effoj'ts to attract and retain them become more strenuous. Thus all efforts arti- ficially to increase the gold and silvti of a country have had no result save to hamper industiiy and to make the country that engaged in them poorei instead of richer. This, experience has taught oivili^od nations, and few of them now make any direct efforts to attract or retain the precious metals, save by us&lessly hoarding them in burglar-proof vaults as we do. Bat the notion that gold and silver a/e the only true money, and that as such they have a peculiar value, still underlies protectionist arguments,* and the habit of as- sociating incomes with sales, and expenditure with pur- chases, which is formed in the thought and speech of every-day life, still disposes men to accept a policy which aims at restricting imports by protective tariffs. Being accustomed to measure the profits of business men by the excess of their sales over their purchases, the as- sumption that the exports of a nation are equivalent to the sales of. a merchant, and its imports to his pur- * For instance, Professor Thompson writing where and when, save for subsidiary tokens, paper money was exclusively used, and so conscious of its ability to perform all the functions of money that he declares it to bo as much superior to coin as the railway is to the stage-coach (Political Economy, p. 152), goes on subsequently (p. 323) to contend that protective duties are necessary, to prevent the poorer country being drained of its money by the richer country, thus tacitly assuming that gold and silver alone are money — slnco neither he nor any one else would pretend that one country coiUd arain another of its paper money. CONFUSIONS AEISING FROM THE USE OP MONEY. 141 chases, leads easily to the conclusion that the greater the amount of exports and the less the amount of im- ports, the more profit a nation gets by its trade.* Yet it only needs attention to see that this assump- tion involves a confusion of ideas. When we say that a merchant is doing a profitable business because his sales exceed his purchases, what we are really thinking of as sales is not the goods he sends out, but the money that we infer he takes in in exchange for them ; what we are really thinking of as purchases is not the goods he takes in, but the money we infer he pays out. We mean, in short, that he is growing richer because his in- come exceeds his out-go. We become so used in ordi- nary affairs to this transposition of terms by inference, that when we think of a nation's exports as its sales and of its imports as its -purchases, habit leads us to at- tach to these words the sa;ne inferential meaning, and thus unconsciously to give to a word expressive of out- going, the significance of in-coming ; and to a word expressive of in-coming, the significance of out-going. But, manifestly, when we compare the trade of a mer- chant carried on in the usual way with the trade of a nation, it is not the goods that a merchant sells, but the money that he pays out, that is analogous to the ex- ports of a country ; not the goods that he b\iys, but the money he takes in, that is analogous to imports. It is only where the trade of a merchant is carried on by the * A conclusion frequently carried by protectionists to the most ridiculous lengths, as, for instance, in the recent declaration of a Protectionist Senator (Wm. M. Bvarts, of New York), that he would be ready for free trade "when protection had so far developed all orur industries that the Uuited States could sell in competition with all the world, and at the same time be free from the necessity of buying anything from all the world." 142 pROTEdTION OK FBEE TRADE. exchange of commodities for commodities, that the coiil- modities he sells are analogous to the exports, and the commodities he buys are analogous to the imports of a nation. And the village dealer -who exchanges grocer- ies and dry goods for eggs, poultry, and farm produce, or the Indian trader who exchanges manufactured goods for furs, is manifestly doing the more profitable business the more the value of the commodities he takes in (his imports) exceeds the value of the goods he gives out (his exports). The fact is, that all trade in the last analysis is sim- ply what it is in its primitive form of barter, the ex- change of commodities for commodities. The carrying on of trade by the use of money does not change its es- sential character, but merely permits the various ex- changes of which trade is made up to be divided into parts or steps, and thus more easily effected. When commodities are exchanged for money, but half a full exchange is completed. When a man sells a thing for money it is to use the 'money in buying some other thing — and it is only as money has this power that any- one wants or will take it. Our common use of the word " money " is largely metaphorical. We speak of a wealthy man as a moneyed man, and in talking of his wealth say that he has so much " money," whereas the fact probably is, that though he may be worth mil- lions, he never has at any one time more than a few dol- lars, or at most a few hundred dollars, in his possession. His possessions really consist of houses, lands, goods, stocks, or of bonds or other obligations to pay money. The possession of these things we speak of as the pos- session of money because we habitually estimate their yalue in money. If we habitually estimated value in CONFUSIONS ARISING FROM THE USE OF MONEY. 143 shells, sugar or cattle, we would speak of ricli men as having much of these, just as the use of postage stamps as currency at the beginning of our civil war led to speaking of rich men in the slang of the day, as those who had plenty of "stamps." And so, when a mer- chant is doing a profitable business, though we speak of him as making or accumulating money, the fact is, save in very rare cases, that he is putting out money as fast as he gets it in. The shrewd business man does not stow away money. On the contrary, with the money he obtains from his sales he hastens to make other pur- chases. If he does not buy commodities for use in his business, or commodities or services for personal gratifi- cation, he buys lands, houses, stocks, bonds, mort- gages, or other things from which he expects a profit- able return. The trade between nations, made up as it is of nu- merous individual transactions which separately are but parts or steps in a complete exchange, is in the aggregate, like the primitive form of trade, the ex- change of commodities for commodities. Money plays no part in international trade, and the world has yet to reach that stage of civilization which will give us in- ternational money. The paper currency which in all civilized nations now constitutes the larger part of their money, is never exported to settle balances, and when gold or silver coin is exported or imported it is as a commodity, and its value is estimated at that of the bullion contained. What each nation imports is paid for in the commodities which it exports, unless received as loans, or investments, or as interest, rent, or tribute. Before commerce had reached its present refinement of divisioji aod subdivision this was in many individual 144 PROTECTION OR FREE TRADE. cases clear enougli. A vessel sailed from New York, Philadelphia, or Boston carrying, on account of owner or shipper, a cargo of flour, lumber and staves to the West Indies, where it was sold, and the proceeds in- vested in sugar, rum and molasses, which were brought back, or which, perhaps, were carried to Europe, there sold, and the proceeds invested in European goods, which were brought home. At present the exporter and importer are usually different persons, but the bills of exchange drawn by the one against goods exported are bought by the other, and used to pay for goods im- ported. So far as the country is concerned, the trans- action is the same as though importers and exporters were the same persons, and that imports exceed exports in value is no more proof of a losing trade than that in the old times a trading ship brought home a cargo worth more than that she carried out was proof of an unprofit- able yoyage. CHAPTER XIV. DO HIGH WAGES NECESSITATE PEOTEOTION? In the United States, at present, protection derives strong support from the belief that the products of the lower paid labor of other countries could undersell the products of our higher paid labor if free competition were permitted. This belief not only leads working- men to imagine protection necessary to keep up wages — a matter of which I shall speak hereafter ; but it also induces the belief that protection is necessary to the interests-of the country at large^a matter which now falls in our way. And further than concerns the tariff this belief has important bearings. It enables employers to persuade themselves that they are serving general interests in re- ducing wages or resisting their increase, and greatly strengthens the opposition to the eiJorts of working- men to improve their condition, by setting against them a body of opinion that otherwise would be neutral, if not strongly in their favor. This is clearly seen in the case of the eight-hour system. Much of the opposition to this great reform arises from the be- lief that the increase of wages to which such a reduction of working hours would be equivalent, would place the United States at a great disadvantage in production as compared with other countries. It is evident that even those who most vociferously 13 146 PEOTECJTiON' oft FtlEE *RAl)E. assert that we need a protective tariff on account of our higher standard of wages do not really believe it them- selves. For if protection be needed against countries of lower wages, it must be most needed against coun- tries of lowest wages and least needed against countries of highest wages. Now, against what country is it that American protectionists most demand protection ? If wc could have a protective tariff against only one country in the whole world, what country is it that American protectionists would select to be protected against? Unquestionably it is Great Britain. But Great Britain, instead of being the country of lowest wages, is, next to the United States and the British colonies, - the country of highest wages. " It is a poor rule that will not work both ways." If we require a protective tariff because of our high wages, then countries of low wages require free trade — or, at the very least, have nothing to fear from free trade. How is it, then, that we find the protectionists of France, Germany, and other low wage countries pro- testing that their industries will be ruined by the free competition of the higher wage industries of Great Britain and the United States just as vehemently as our protectionists protest that our industries would be ruined if exposed to free competition with the products of the "pauper labor" of Europe? As popularly put, the argument that the country of high wages needs a protective tariff runs in this way : ""Wages are higher here than elsewhere; therefore, if the produce of cheaper foreign labor were freely ad- mitted it would drive the produce of our dearer domestic labor out of the market." But the conclusion does not follow from the premise. To make it valid two inter- 1)0 HIGH WAGES NECESSI'TAfE PROTECTION? 147 mediate propositions must be assumed : First that low wages mean low cost of production ; and second, that production is determined solely by cost — or, to put it in another way, that trade being free, everything will be produced where it can be produced at least cost. Let us examine these two propositions separately. If the country of low wages can undersell the coun- try of high wages, how is it that though the American farm hand receives double the wages of the English agricultural laborer, yet American grain undersells English grain? How is it that while the general level of wages is higher here than anywhere else in the world we nevertheless do export the products of oar high priced labor to coantries of lower priced labor ? The protectionist answer is that American grain i\n- dersells English grain, in spite of the difference of wages, because of our natural advantages for the pro- duction of grain ; and that the bulk of our exports con- sists of those crude productions in which wages are not so important an element of cost, since they do not em- body so much labor as the more elaborate productions called manufactures. But the first part of this answer is an admission that the rate of wages is not the determining element in the cost of production, and that the country of low wages does not necessarily produce more cheaply than the country of high wages; while, as for the distinction drawn between the cruder and the more elaborate pro- ductions, it is evident that this is founded on the com- parison of such things by bulk or weight, whereas the only measure of embodied labor is value. A pound of cloth embodies more labor than a pound of cotton, but this is not true of a dollar's worth. That a small 148 PROTECTION OR FREE TRACE. weight of cloth will exchange for a large weight of cot- ton, or a small bulk, of watches for a large bulk of wheat; means simply that equal amounts of labor will produce larger weights or bulks of the one thing than of the other ; and in the same way the exportation of a certain value of grain, ore, stone or timber means the exportation of exactly as much of the produce of laboi as would the exportation of the same value of lace or fancy goods. Looking further, we see in every direction that it is not the fact that low priced labor gives advantage in production. If this is the fact how was it that the development of industry in the slave States of the American Union was not more rapid than in the free States ? How is it that Mexico, where peon labor can be had for from four to six dollars a month, does not undersell the products of our more highly paid labor ? How is it that China and India and Japan are not "flooding the world " with the products of their cheap labor ? How is it that England, where labor is better paid than on the Continent, leads the whole of Europe in commerce and manufactures? The truth is, that a low rate of wages does not mean a low cost of pro- duction, but the reverse. The universal and obvious truth is, that the country where wages are highest can produce with the greatest economy, because workmen have there the most intelligence, the most spirit and the most ability ; because invention and discovery are there most quickly made and most readily utilized. The great inventions and discoveries which so enormously increase the power of human labor to produce wealth have all been made in countries where wages are com- paratively high. DO HIGH "WAGES NECESSITATE PROTECTtOi; ' 149 That low wages mean inefi&ciert labor may be seen wherever we look. Half a dozen Bengalese carpenters are needed to do a job that one American carpenter can do in less time. American residents in China get ser- vants for almost nothing, but find that so many are required that servants cost more than in the United States ; yet the Chinese who are largely employed in domestic service in California, and get wages that they would not have dreamed of in China, are efficient workers. Go to High Bridge, and you will see a great engine attended by a few men, exerting the power of thousands of horses in pumping up a small river for the supply of IsTew York city, while on the Nile you may see Egyptian fellahs raising water by buckets and tread wheels. In Mexico, with labor at four or five dollars a month, silver ore has for centuries been carried to the surface on the backs of men who climbed rude ladders, but when silver mining began in Nevada, where labor could not be had for less than five or six dollars a day, steam power was employed. In Eussia, where wages are very low, grain is still reaped by the sickle and threshed with the flail or by the hoofs of horses, while in our Western States, where labor is very high as compared with the Russian standard, grain is reaped, threshed and sacked by machinery. If it were true that equal amounts of labor always produced equal results, then cheap labor might mean cheap production. But this is obviously untrue. The power of human muscle is, indeed, much the same everywhere, and if his wages be sufficient to keep him in good bodily health the poorly paid laborer can, per- haps, exert as much physical force as the highly paid laborer. But the power of human muscles, though 150 PROTECTION OB FEEE TRADE. necessary to all production, is not the primary and ef- ficient ioTce in production. That force is human intel- ligence, and human muscles are merely the agency by which that intelligence makes connection with and takes hold of external things, so as to utilize natural forces and mould matter to conformity with its desires. A race of intelligent pygmies with muscles no stronger than those of the grasshopper could produce far more wealth than a race of stupid giants with muscles as strong as those of the elephant. Now, intelligence varies with the standard of comfort, and the standard of comfort varies with wages. Wherever men are con- demned to a poor, hard and precarious living their mental qualities sink toward the level of the brute. Wherever easier conditions prevail the qualities that raise man above the brute and give him power to mas- ter and compel external nature develope and expand. And so it is that the efficiency of labor is greatest where laborers get the best living and have the most leisure — that is to say, where wages are highest. How then, in the face of these obvious facts, can we account for the prevalence of the belief that the low wage country has an advantage in production over the high wage country ? It cannot be charged to the teach- ing of protection. This is one of the fallacies which protectionism avails itself of, rather than one for which it is responsible. Men do not hold it because they are protectionists, but become protectionists because they hold it. And it seems to be as firmly held, and on occasion as energetically preached by so-called free traders as by protectionists. Witness the predictions of free trade economists that trades unions, if successful in raising wages and shortening hours, would (iestroy DO HIGH WAGES NECESSITATE PROTECTION? 151 England's ability to sell her goods to other nations, and the similar objections by so-called free traders to similar movements on the part of workingmen in the United States. The truth is that the notion that low wages give a country an advantage in production is a careless infer- ence from the every -day fact that it is an advantage to an individiial producer to obtain labor at low wages. It is true that an individual producer gains an ad vantage when he can force down the wages of his em- ployees below the ordinary level, or can import laborers who will work for him for less, and that he may by this means be enabled to undersell his competitors, while the employer who continues to pay higher wages than other employers about him will, before long, be driven out of business. But it by no means follows that the country where wages are low can undersell the country where wages are high. For the efficiency of labor, though it may somewhat vary with the particular wages paid, is in greater degree determined by the general standard of comfort and intelligence, and the prevailing habits and methods which grow out of them. When a single employer manages to get labor for less than the rate of wages prevailing around him, the effi- ciency of the labor he gets is still largely fixed by that rate. But a country where the general rate of wages is low does not have a similar advantage over other coun- tries, because there the general efficiency of labor must also be low. The contention that industry can be more largely carried on where wages are low than where wages are high, another form of the same fallacy, may readily be geen , to spring from a cpnfusipn of thought. Fpr v^- 152 PKOTECTIOlir OR FREE TRADE. stance, in the earlier days of California it was often said that the lowering of wages would be a great benefit to the State, as lower wages would enable capitalists to work deposits of low grade quartz that it would not pay to work at the then existing rate of wages. But it is evident that a mere reduction of wages would not have resulted in the working of poorer mines, since it could not have increased the amount of labor or capital available for the working of mines, and what existed would still have been devoted to the working of the richer m preference to the poorer mines, no matter how much wages were reduced. It might, however, have been said that the effect would be to increase the profits of capital and thus bring in more capital. But, to say nothing of the deterrent effect upon the coming in of labor, a moment's reflection will show that such a re- duction of wages would not add to the profits of capital It would add to the profits of mine owners, and mines would bring higher prices. Eliminating improvements in methods, or changes in the value of the product, lower wages and the working of poorer mines come, of course, together, but this is not because the lower wages cause the working of poorer mines, but the reverse. As the richer natural opportunities are taken up and pro- duction is forced to devote itself to natiiral opportuni- ties that will yield less to the same exertion, wages fall. There is, however, no gain to capital ; and under such circumstances we do not see interest increase. The gain accrues to those who have possessed themselves of natural opportunities, and what we see is that the value of land increases. The immediate effect of a general reduction of wages in any country would be merely to alter the distribution of weSilth. Of the amount produced less would go to thg DO IinH WAGES NECESSITATE PROTECTION? lo3 laborers and more to those who share in the results of production without contributing to it. Some changes in exports and imports would probably follow a general reduction of wages, owing to changes in relative de- mand. The working classes, getting less than before, would have to reduce their luxuries, and perhaps live on cheaper food. Other classes, finding their incomes increased, might use m.ore costly food and demand more of the costlier luxuries, and larger numbers of them might go abroad and use up in foreign countries the produce of exports, by which, of course, imports would be diminished. But except as to such changes the foreign commerce of a country would be unaffected. The country as a whole would have no more to sell and could buy no more than before. And in a little while the inevitable effect of the degradation of labor involved in the reduction of wages would begin to tell in the re- duced power of production, and both exports and im- ports would fall off. So if in any country there were a general increase of wages, the immediate effect would only be so to alter the distribution of wealth that more of the aggregate product would go to the laboring classes and less to those who live on the labor of others. The result would be that more of the cheaper luxuries would be called for and less of the more costly luxuries. But pro- duqtive power would in nowise be lessened ; there would be no less to export than before and no less ability to pay for imports. On the contrary, some of the idle classes would find their incomes so reduced that they would have to go to work and thus increase production, while as soon as an increase in wages began to tell on the habits of the people and on industrial methods productive power would increasa CHAPTEE XV. OF ADVANTAGES AND DISADVANTAGES AS REASONS FOR PROTECTION. We have seen that low wages do not mean low cost of production, and that a high standard of wages, in- stead of putting a country at a disadvantage in produc- tion, is really an advantage. This disposes of the claim that protection is rendered necessary by high wages, by showing the invalidity of the first assumption upon which it is based. But it is worth while to examine the second assumption in this claim — that production is determined by cost, so that a country of less advan- tages cannot produce if the free competition of a coun- try of greater advantages be permitted. For while we are sometimes told that a country needs protection be- cause of great natural advantages that ought to be de- veloped, we are at other times told that protection is needed because of the sparseness of population, the want of capital or machinery or skill, or because of high taxes or a high rate of interest,* or other conditions which, it may be, involve real disadvantage. * The higher rate of interest in the United States than in Great Britain has until recently been one of the stock reasons of American protectionists for demanding a high tariff. We do not hear so much of this now that the rate in New York is as low as in London, if not lower, but we hear no less of the need for protection. It is hardly necessary in this discussion to treat of the nature and law of interest, a subject which I hare gone over in Progress and Poverty. It may, ADVANTAGES AljD DISADVANTAGES. l5o But without reference to the reality of the alleged ad- vantage or disadvantage, all these special pleas for pro- tection are inet when it is shown, as it can be shown, that whatever be its advantages or disadvantages for production a country can always increase its wealth by foreign trade. If we suppose two countries each of which is, for any reason, at a decided disadvantage in some branch of production in which the other has a decided advantage, it is evident that the free exchange of commodities be- tween them will be mutually beneficial, by enabling each to make up for its own disadvantage by availing itself of the advantage of the other, just as the blind man and the lame man did in the familiar story. Trade between them will give to each country a greater amount of all things than it could otherwise obtain with the same quantity of labor. Sach a case re- sembles that of two workmen, each having as to some things skill superior to the other, and who, by working together, each devoting himself to that part for which he is the better fitted, can accomplish more than twice as much as if each worked separately. But let us suppose two countries, one of which has advantages superior to the other for all the produc- tions of which both are capable. Trade between them being free, would one country do all the exporting and the other all the importing? That, of course, however, bs worth while to say that a high rate of interest where it does not proceed from insecurity, is not to be regarded as a disad' vantage, but rather as evidence of the large returns to the activ* factors of production, labor and capital — returns which diminish aj rent rises and the land owner gets a larger share of their produce foj permitting labor and capital to work. 156 PROTECTION OR FREE TRADE. would be preposterous. Would trade, then, be im- possible? Certainly not. Unless tbe people of the country of less advantages transferred themselves bod- ily to the country of greater advantages, trade would go on with mutual benefit. The people of the coun- try of greater advantages would import from the coun- try of less advantages those products as to which the difference of advantage between the two countries was least, and would export in return those products as to which the difference was greatest. By this exchange both peoples would gSin. The people of the country of poorest advantages would gain by it some part of the advantages of the other country, and the people of the country of greatest advantages would also gain, sines, by being saved the necessity of producing the things as to which their advantage was least, they could concentrate their energies upon the production of things in which their advantage was greatest. This case would resemble that of two workmen of different degrees of skill in all parts of their trade, or that of a skilled workman and an unskilled helper. Though the workman might be able to perform all parts of the work in less time than the helper, yet there would be some parts in which the advantage of his superior skill would be less than in others ; and as by leaving these to the helper he could devote more time to those parts in which superior skill would be most effective, there would be, as in the former case, a mutual gain in their working together. Thus it is that neither advantages nor disadvantages afford any reason for restraining trade.* Trade is al- * In point of fact there is no country which as to all branches of production can be said to have superior advantages. The con- ADVANTAGES AND DISADVANTAGES. 157 ways to the benefit of both parties. If it were not there would be no disposition to carry it on. And thus we see again the fallacy of the protectionist contention that if it takes no more labor to produce a thing in our country than elsewhere, we shall lose nothing by shutting out the foreign product, even though we have to pay a higher price for the home product. The interchange of the products of labor does not depend upon differences of absolute cost, but of comparative cost. Goods may profitably be sent from places where they cost more labor to places where they cost less labor, provided (and this is the only case in which they ever will be so sent) that a still greater difference in labor-cost exists as to other things which the first coun- try desires to obtain. Thus tea, which Horace Greeley was fond of referring to as a production that might advantageously be naturalized in the United States by a heavy duty, could undoubtedly be produced in the United States at less cost of labor than in China, for in transportation to the seaboard, packing, etc., we could save upon Chinese methods. But there are other things, ditions which make one part of the habitable globe better fitted for some productions, unfit it for others, and what is disadvantage for some kinds of production, is generally advantage for other kinds. Even the lack of rain which makes some parts of the globe useless to man, may, if invention ever succeeds in directly utilizing the power of the sun's rays, be found to be especially advantageous for certain parts of production. The advantages and disadvantages that come from the varying density of population, the special de- velopment of certain forms of industry, etc., are also largely rela- tive. The most positive of all advantages in production — that which most certainly gives superiority in all branches, is that which arises from that general intelligence which increases with the in- crease of the comfort and leisure of the masses of the people, that is to say, with the increase of wages. 158 PROTECTION OR FREE TRADE. STich as the mining of silver, the refining of oil, the weaving of cloth, the making oi clocks and watches, as to which OUT advantage over the Chinese is enormously greater than in the growing of tea. Hence, by pro- ducing these things and exchanging them directly or indirectly for Chinese tea, we obtain, in spite of the long carriage, more tea for the same labor than we could get by growing our own tea. Consider how this principle, that the interchange of commodities is governed by the comparative, not the absolute, cost of production, applies to the plea that protective duties are required on account of heme tax- ation. It is of course true that a special tax placed upon any branch of production puts it at a disadvan- tage unless a like tax is placed upon the importation of similar productions. But this is not true of such general taxation as falls on all branches of industry alike. As such taxation does not alter the comparative profitableness of industries it does not diminish the relative inducement to carry any of them on, and to protect any particular industry from foreign competi- tion on account of such general taxation is simply to enable those engaged in it to throw off their share of a general burden. , A favorite assumption of American protectionists is, or rather has been (for we once heard much more of it than now), that free trade is a good thing for rich coun- tries but a bad thing for poor countries — that it enables a country of better developed industries to prevent the development of industry in other countries, and to make such countries tributary to itself. But it follows from the principle which, as we have seen, causes and governs international exchanges, that for any country to ADVaNtagIeS And dIsadvAn'Pages. 159 impose restrictions on its foreign commerce on account of its own disadvantages in production is to prevent such amelioration of those disadvantages as foreign trade would bring. Free trade is voluntary trade. It can- not go on unless to tlie advantage of both parties, and, as between the two, free trade is relatively more advan- tageous to the poor and undeveloped country than to the rich and prosperous country. The opening up of trade between a Robinson Crusoe and the rest of the world woald be to the advantage of both parties. But relatively the advantage would be far greater to Robin- son Crusoe than to the rest of the world. There is a certain class of American protectionists who concede that free trade is good in itself, but who ■ say that we cannot safely adopt it until all other nations have adopted it, or until all other nations have come up to our standard of civilization; or, as it is sometimes phrased, until the millennium has come and men have ceased to struggle for their own interests as opposed to the interests of others. And so British protectionists have now assumed the name of "Fair Traders." They have ceased to deny the essential goodness of free trade, but contend that so long as other countries maintain protective tariffs Great Britain, in self-defence, should maintain a protective tariff too, at least against countries that refuse to admit British productions free. The fallacy underlying most of these American ex- cuses for protection is that considered in the previous chapter — the fallacy that the country of low wages can undersell the country of high wages ; but there is also mixed with this the notion to which the British fair traders appeal — the notion that the abolition of duties by any country is to the advantage, not of the people 160 PROTECflOlT OE FREE TRADE. ■of that country, but of the people of the other coun- tries that are thus given free access to its markets. " Is not the fact that British manufacturers desire the abo- lition of our protective tariff a proof that we ought to continue it ? " ask American protectionists. " Is it not a suicidal poldcy to give foreigners free access to our markets while they refuse us access to theirs ? " cry British fair traders. All these notions are forms of the delusion that to export is more profitable than to import, but so wide- spread and influential are they that it may be well to devote a few words to them. The direct effect of a tariff is to restrain the people of the country that im- poses it. It curtails the freedom of foreigners to trade only through its operation in curtailing the freedom of citizens to trade. So far as foreigners are concerned it only indirectly affects their freedom to trade with that particular country, while to citizens of that country it is a direct curtailment of the freedom to trade with all the world. Since trade involves mutual benefit, it is true that any restriction that prevents one party from trading must operate in some degree to the injury of another party. But the indirect injury which a pro- tective tariff inflicts upon other countries is diffused and slight, as compared with the injury it inflicts di- rectly upon the nation that imposes it. To illustrate: The tariff which we have so long maintained upon iron to prevent our people from ex- changing their products for British iron has unques- tionably lessened our trade with Great Britain. But the effect upon the United States has been very much more injurious than the effect upon Great Britain. While it has lessened our trade absolutely, it has ADVANTAGES AND DISADVANTAGES. 161 lessened tlie trade of Great Britain only with us. "What Great Britain has lost in this curtailment of her trade with us she has largely made up in the consequent ex- tension of her trade elsewhere. For the effect of duties on iron and iron ore, and of the system of which they are part, has been so to increase the cost of American productions as to give to Great Britain the greater part of the carrying trade of the world, for which we were her principal competitor, and to hand over to her the trade of South America and of other countries, of which, but for this, we should have had the largest share. And in the same way, for any nation to restrict the freedom of its own citizens to trade, because other nations so restrict the freedom of their citizens, is a policy of the " biting off one's nose to spite one's face " order. Other nations may injure us by the imposition of taxes which tend to impoverish their own citizens, for as denizens of the world it is to our real interest that all other denizens of the world should be prosper- ous. But no other nation can thus injure us so much as we shall injure ourselves if we impose similar taxes upon our own citizens by way of retaliation. Suppose that a farmer who has an improved variety of potatoes learns that a neighbor has wheat of such, su- perior kind that it will yield many more bushels to the acre than that he has been sowing. He might naturally go to his neighbor and offer to exchange seed potatoes for seed wheat. But if the neighbor while willing to sell the wheat should refuse to buy the potatoes, would not our farmer be a fool to declare, " Since you will not buy my superior potatoes I will not buy your superior wheat ! " WquM it wt be very stupid 162 PROTECTION OB FREE TRADE. retaliation for him to go on planting poorer seed and getting poorer crops ? Or, suppose, isolated from the rest of mankind, half a dozen men so situated and so engaged that mutual convenience constantly prompts them to exchaDge pro- ductions with one another. Suppose five of these six to bo under the dominion of some curious superstition which leads them when they receive anything in ex- change to burn one-half of it up' before carrying home the other half. This would indirectly be to the injury of the sixth, man, because by thus lessening their own wealth his five neighbors would lessen their ability to exchange with him. But, would he better himself if he were to say : " Since these fools will insist upon burning half of all they get in exchange I must, in self- defense, follow their example and burn half of all I get?" The constitution and scheme of things in this world in which we find ourselves for a few years is such that no one can do either good or evil for himself alone. No one can release himself from the influence of his sur- roundings, and say, "What others do is nothing to me ; " nor yet can any one say, " What I do is nothing to others." Nevertheless it is in the tendency of things that he who does good most profits by it, and he who does evil injures, most of all, himself. And those who say that a nation should adopt a policy essentially bad because other nations have embraced it are as unwise as those wlio say. Lie, because others are. false ; Be idle, because others are lazy ; Refuse knowledge, because others are ignorant. CHAPTER XTI. / THE DEVELOPMENT OF MANUFACTURES. English protectionists, during the present century at least, struggled for tbe protection of agriculture, and the repeal of the corn laws in 1846 was their Waterloo. On the continent, also, it is largely agriculture that is held to need protection, and special efforts have been made to protect the German hog, even to the extent of shutting out its American competitor. But in the United States the favorite plea for protection has been that it is necessary to the establishment of manufactures ; and the prevalent American idea of protection is that it is a scheme for fostering manufactures. As a matter of fact, American protection has not been confined to manufactures, nor has there been any hesitation in imposing duties which by raising the cost of materials are the very reverse of encouraging to manufactures. In the scramble which the protective system has induced, every interest capable of being protected and powerful enough to compel consideration in congressional log-rolling has secured a greater or less share of protection — a share not based upon any standard of needs or merits, but upon the number of votes it could command. Thus wool, the production of which is one of the most primitive of industries, pre- ceding even the tilling of the soil, has been protected by high duties, although certain grades of foreign wool 164 PROTECTION OE FREE TRADE. are necessary to American woolen manufacturers, wlio have by these duties been put at a disadvantage in competing with foreign manufacturers. Thus iron ore has been protected despite the fact that American steel makers need foreign ore to mix with American ore, and are obliged to import it even under the high duty. Thus copper ore has been protected, to the disadvan- tage of American smelters, as well as of all the many branches of manufacture into which copper enters. Thus salt has been protected, though it is an article of prime necessity, used in large quantities in such im- portant industries as the curing of meats and fish, and entering into many branches of manufacture. Thus lumber has been protected in spite of its importance in manufacturing as well as of the protests of all who have inquired into the consequences of the rapid clear- ing of our natural woodlands. Thus coal has been protected, though to many branches of manufacturing cheap fuel is of iirst '"np.portance. And so on, through the list. Protection of this kind is direct discouragement of manufactures. Nor yet is it encouragement of any in- dustry, since its effect is, not to make production of any kind more profitable, but to raise the price of lands or mines from which these crude products are obtained. Yet in spite of all this discouragement of manu- factures, of which the instances I have given are but samples, protection is stiU advocated as necessary to manufactures, and the growth of American manufactures is claimed as its result. So long and so loudly has this claim been made that to-day many of our people believe, what protectionist Wviti^r^ md speakers constantly assume, that but for 'ffiE DEVELOPMENT OF MANUFACTURES. 165 protection there would not now be a manufacture of any importance carried on in the United States, and that were protection abolished the sole industry that this great country could carry on would be the raising of agricultural products for exportation to Europe. That so many believe this is a striking instance of our readiness to accept anything that is persistently dinned into our ears. For that manufactures grow up without protection, and that the effect of our protective tariff is to stunt and injure thera, can be conclusively shown from general principles and from common facts. But first, let me call attention to a confusion of thought which gives plausibility to the notion that manufactures should be " encouraged." Manufactures grow up as population increases and capital accumu- lates, and, in the natural order of industry, are best de- veloped in countries of dense population and accumu- lated wealth. Seeing this connection, it is easy to mis- take for cause what is really effect, and to imagine that manufacturing brings population and wealth. Here, in substance, is the argument which has been addressed to the people of the United States from the time when we became a nation to the present day : Manufacturing countries are aliuays rich countries. Countries that produce only raw materials are always poor. Therefore, if we would be rich we 'must have manufac- tures, and in order to get manufactures we must encourage them. To many this argument seems plausible, especially as the taxes for the " encouragement " of the protected in- dustries are levied in such a way that their payment is not realized. But I could make as good an argument to the people of the little town of Jamaica, near whicli l6t) ' PfidTficSlOlt OR FEEE TRADS. I am now living, in support of a subsidy to a tlieatres I could say to them : " All large cities have theatres, and the more theatres it has, the larger the city. Look at New York ! New York has more theatres than any other city in Amer- ica, and is consequently the greatest city in America. Philadelphia ranks next to New York in the number and size of its theatres, and therefore comes next to New York in population and wealth. So, throughout the country, wherever you find large, well-appointed theatres, you will find large and prosperous towns, while where there are no theatres the towns are small. Is it any wonder that Jamaica is so small and grows so slowly when it has no theatres at all ? People do not like to settle in a place where they cannot occasionally go to the theatre. If you want Jamaica to thrive you must take steps to build a fine theatre, which will at- tract a large population. Look at Brooklyn ! Brook- lyn was only a small riverside village before its people had the enterprise to start a theatre, and see now, since they began to build theatres, how large a city Brooklyn has become." Modeling my argument on that addressed to Amer- ican voters by the Presidential candidate of the Eepub- lican party in 1884, 1 might then drop into " statistics " and point to the fact that when theatrical represen- tations first began in this country its population did not amount to a million; that it was totally destitute of railroads and without a single mile of telegraph wire. Such.has been our progress since theatres were intro- duced that the census of 1880 showed that we had 50,- 155,783 people, 97,907 miles of railroad and 291,212 ^V miles of telegraph wires. Or I might go into greater TOE bEtEtOPMBK* OP MANUf'ACTURESr 167 detail, as some protectionist " statisticians " are accus- tomed to do. I might taike tlie date of the building of each of the New York theatres, give the population and wealth of the city at that time, and then, by present- ing the statistics of population and wealth a few years later, show that the building of each theatre had been followed by a marked increase in population and wealth. I might point out that San Francisco had not a theatre until the Americans came there, and was consequently but a straggling village; that the new comers imme- diately set up theatres and maintained them more gen- erously than any other similar population in the world, and that the consequence was the marvelous growth of San Francisco. I might show that Chicago and Denver and Kansas City, all remarkably good theatre towns, have also been remarkable for their rapid growth, and, as in the case of New York, prove statis- tically that the building of each theatre these cities contain has been followed by an increase of population and wealth. Then, stretching out after protectionist fashion into the historical argument, I might refer to the fact that Nineveh and Babylon had no theatres that we know of, and so went to utter ruin ; dilate upon the fondness of the ancient Greeks for theatrical entertainments con- ducted at public expense, and their consequent great ness in arts and arms ; point out how the Eomans went even further than the Greeks in their encouragement of the theatre, and built at public cost the largest theatre in the world, and how Rome became the mistress of the nations. And, to embellish and give point to the argument, I might perhaps drop into poetry, recalling Byron's lines : 168 • PROTECTION OR j'REE TRADE. " When falls the Coliseum, Rome shall fall ; And when Rome falls— the world ! " Recovering from this, I might cite the fact that in every province they conquered the Romans established theatres, as explaining the remarkable facility with which they extended their civilization and made the conquered provinces integral parts of their great em- pire ; point out that the dechne of these theatres and the decay of Roman power and civilization went on to- gether; and that the extinction of the theatre brought on the night of the Dark Ages. Dwelling then a mo- ment upon the' rudeness and ignorance of that time when there were no theatres, I might triumphantly point to the beginning of modern civilization as con- temporaneous with the revival of theatrical entertain- ments in miracle plays and court masques. And show- ing how these plays and masques were always support, ed by monasteries, municipalities or princes, and how places where they began became sites of great cities, I could laud the wisdom of " encouraging infant theat- ricals." Then, in the fact that English actors, until re- cently, styled themselves her Majesty's servants and that the Lord Chamberlain still has authority over the English boards and must license plays before they can be acted, I could trace to a national system of subsidiz- ing infant theatricals the foundation of England's great- ness. Coming back to our own times, I could call at tention to the fact that Paris, where theatres are still subsidized and actors still dr^w their salaries from the public treasury, is the world's metropolis of fashion and art, steadily growing in population and wealth, though other parts of the same country which do not enjoy subsidized theatres are either at a stand- THE DEVELOPMENT OF MAKUFAOTUEES. ■ 169 still or declining. And finally I could point to the astuteness of tlie Mormon leaders, who early in the settlement of Salt Lake built a spacious theatre, and whose little village in the sage brush, then hardly as large as Jamaica, has since the building of this theatre grown to be a populous and beautiful city, and indig- nantly ast whether the virtuous people of Jamaica should allow themselves to be outdone by wicked polygamists. If such an argument would not induce the Jamai- cans to tax themselves to "encourage" a theatre, would it not at least be as logical as arguments that have induced the American people to tax themselves to encourage manufactures? The truth is that manufactures, like theatres, are the result, not the cause, of the growth of population and wealth. If we take a watch, a book, a steam engine, a piece of dry goods, or the product of any of the industries which we class as manufactures, and trace the steps by which the material of which it is composed has been brought from the condition in which it is afford- ed by nature into finished form, we will see that to the carrying on of any manufacturing industry many other industries are necessary. That an industry of this kind shall be able to avail itself freely of the prod- ucts of other industries is a prime condition of its suc- cessful prosecution. Hardly less important is the ex istence of related industries, which aid in economizing material and utilizing waste, or make easier the pro- curement of supplies or services, or the sale and dis- tribution of products. This is the reason why the more elaborate industries tend within certain limits to localization, so thg,t we find a particular district, with' 170 PROTECTION OS FREE TRADE. out any assignable reason of soil, climate, material pro- ductions, or character of the people, become noted for a particular manufacture, while different places with- in that district become noted for different brancbes. Thus, in those parts of Massachusetts where the manu- facture of boots and shoes is largely carried on, distinc- tions such as those between pegged and sewed goods, men's and women's wear, coarse and fine, will be found to characterize the industry of different towns. And in any considerable city we may see the disposition of various industries, with their related industries, to cluster together. But with this tendency to localization there is also a tendency which causes industries to arise in their order wherever population increases. This tendency is due not only to the difficulty and cost of transportation, but to differences in taste and to the individuality of demands. For instance, it will be much more convenient and satis- factory to me, if I wish to have a boat built, to have it built where I can talk with the builder and watch its construction ; or to have a coat made where I can try it on ; or to have a book printed where I can readily read the proofs and consult with the printer. Further than this, that relation of industries which makes the exist- ence of certain industries conduce to the economy with which others can be carried on, not merely causes the growth of one industry to prepare the way for others, but to promote their establishment. Thus the development of industry is of the nature of an evolution, which goes on with the increase of popu- lation and the progress of society, the simpler industries coming first and forming a basis for the more elaborate ones. THE DEVELOPMENT OF MANUFACTURES. 171 The reason that newly settled countries do not man- ufacture is that they can get manufactured goods cheaper — that is to say, with less expenditure of labor — than by manufacturing them. Just as the farmer, though he may have ash and hickory growing on his place, finds it cheaper to buy a wagon than to make one, or to take his wagon to the wheelwright's when it wants repairing, rather than attempt the job himself, so in a new and sparsely settled country it may take less labor to obtain goods from long distances than to man- ufacture them, even when every natural condition for their manufacture exists. The conditions for profitably carrying on any manufacturing industry are not merely natural conditions. Even moi-e important than climate, soil, and mineral deposits are the existence of subsidi- ary industries and of a large demand. Manufacturing involves the production of large quantities of the same thing. The development of skill, the use of machinery and of improved processes, only become possible as large quantities of the same product are required. If the small quantities of all the various things needed must be produced for itself by each small community, they can only be produced by rude and wasteful methods. But if trade permits these things to be produced in large quantities the same labor becomes much more effective, and all the various wants can be much better supplied. The rude methods of savages are due less to igno- rance than to isolation. A gun and ammunition will enable a man to kill more game than a bow and arrows, but a man who had to make his own weapons from the materials furnished by nature, could hardly make him- self a gun in a lifetime, even if he understood gun making. Unless there is a large number of men to be 172 PEOTECTION OR FREE TRADE. supplied with guns and ammunitiou, and the materials of which these are made can be produced with the economy that comes with the production of large quan- tities, the most effective weapons, taking into account the labor of producing them, are bows and arrows, not fire-arms. With a steel axe a tree may be felled with much less labor than with a stone axe. But a man who must make his own axe would be able to fell many trees with a stone axe in the time he would spend trying to make a steel axe from the ore. We smile at the savages who for a sheath knife or copper kettle gladly give many rich furs. Such articles are with us of little value, because being made in large quantities the expenditure of labor required for each is very small, but if made in small quantities, as the savage would have to make them, the expenditure of labor would far exceed that needed to obtain the furs. Even if they had the fullest knowledge of the tools and methods of civilized industry, men isolated as savages are isolated, would be forced to resort to the rude tools and methods of savages. The great advantage which civilized men have over savages in settling among them, is in the possession of tools and weapons made in that state of society in which alone it is possible to manufacture them, and that by keeping up communi- cation with the denser populations they have left behind them, the settlers are able by means of trade to avail themselves of the manufacturing advantages of a more fully developed society. If the first American colonists had been unable to import from Europe the goods they required, and thus to avail themselves of the fuller development of European industry, they must soon have been reduced to savage tools and weapons, And THE DEVELOPMEITT OF MANUFACTURES. 173 tliis would have happened to all new settlements in the westward march of our people had they been cut ofE from trade with larger populations. In new countries the industries that yield the largest comparative returns are the primary or extractive in- dustries which obtain food and the raw materials of manufacture from nature. The reason of this is that in these primary industries there are not required such costly tools and appliances, nor the co-operation of so many other industries, nor yet is production in large quantities so important. The people of new countries can therefore get the largest return for their labor by applying it to the primary or extractive industries, and exchanging their products for tbose of the more elabo- rate industries that can best be carried on where popu- lation is denser. As population increases, the conditions under which the secondary or any more elaborate industries can be carried on gradually arise, and such industries will be established — those for which natural conditions are pe- culiarly favorable, and those whose products are in most general demand and will least bear transportation, coming first. Thus in a country having fine forests, manufactures of wood. will arise before manufactures for which there is no special advantage. The making of bricks will precede the making of china, the manu- facture of plowshares that of cutlery, window glass will be made before telescope lenses, and the coarser grades of clotb before the finer. But while we may describe in a general way the con- ditions whicb determine the natural order of industry, yet so many are these conditions and so complex are their actions and reactions upon one another that no 174 PROTfiCWON Ofi i"RBii TfeADE. one can predict with any exactness what in any given community this natural order of development will be, or say when it becomes more profitable to manufacture a thing than to import it. Legislative interference, therefore, is sure to prove hurtful, and such questions should be left to the unfettered play of individual en- terprise, which is to the community what the uncon- scious vital activities are to the man. If the time has come for the establishment of an industry for which proper natural conditions exist, restrictions upon impor- tation in order to promote its establishment are needless. If the time has not come, such restrictions can only di- vert labor and capital from industries in which the return is greater, to others in which it must be less, and thus reduce the -aggregate production of wealth. Just as it is evident that to prevent the people of a new colony from importing from countries of fuller indus- trial development would deprive them of many things they could not possibly make for themselves, so it is evi- dent that to restrict importations must retard the sym- metrical development of domestic industries. It may be that protection applied to one or to a few industries may sometimes hasten their development at the expense of the general industrial growth ; but when protection is indiscriminately given to every industry capable of pro- tection, as it is in the United States, and as is the inevitable tendency wherever protection is begun, the result must be to check not merely the general devel- opment of industry, but even the development of the very industries for whose benefit the system of protec- tion is most advocated, by making more costly the prod- ucts which they must use and repressing the correl- ative industries with which they interlace. THE DEVELOPMENT OF MANUFACTURES. 175 To assume, as protectionists do, that economy must necessarily result from bringing producer and consumer together in point of space,* is to assume that things can be produced as well in one place as in another, and that difficulties in exchange are to be measured solely by distance. The truth is, that commodities can often be produced in one place with so much greater facility than in another that it involves a less expenditure of labor to bring them long distances than to produce them on the spot, while two points a hundred miles apart may be commercially nearer each other than two points ten miles apart. To bring the producer to the consumer in point of distance, is, if it increases the cost of production, not economy but waste. Bat this is not to deny that trade as it is carried on to-day does involve much unnecessary transportation, and that producer and consumer are in many cases needlessly separated. Protectionists are right when they point to the wholesale exportation of the elements of fertility of our soil, in the great stream of breadstufEs and meats which pours across the Atlantic, as reckless profligacy, and fair traders are right when they deplore the waste involved in English importations of food while English fields are going out of cultivation. Both are right in saying that one country ought not to be made a " draw farm " for another, and that a true econ- omy of the powers of nature would bring factory and field closer together. But they are wrong in attributing these evils to the freedom of trade, or in supposing * Protectionist arguments frequently involve the additional assumption that the "home producer" and "home consumer" are necessarily close together in point of space, whereas, as in thp yjjjted States, they majr be thousands pf miles aparf. 176 PROTECTION OR FREE TRADE. tbat tHe remedy lies in protection. That tariffs are powerless to remedy these evils may be seen in the fact that this exhausting exportation goes on in spite of our high protective tariff, and that internal trade exhibits the same features. Everywhere that modern civiliza- tion extends, and with greatest rapidity where its influ- ences are most strongly felt, population and wealth are concentrating in huge towns and an exhausting com- merce flows from country to city. But this ominous tendency is not natural, and does not arise from too much freedom ; it is unnatural, and arises from restric- tions. It may be clearly traced to monopolies, of which the monopoly of material opportunities is the first and most important. In a word, the Roman system of land ownership, which in our modern civilization has dis- placed that of our Celtic and Teutonic ancestors, is pro- ducing the same effect that it did in the Eoman world — the engorgement of the centres and the impoverish- ment of- the extremities. While London and New York grow faster than Rome ever did, English fields are passing out of cultivation as .did the fields of Latium, and in Iowa and Dakota goes on the exhausting culture that impoverished the provinces of Africa. The same disease which rotted the old civilization is exhibiting its symptoms in the new. That disease cannot be cured by protective tariffs. CHAPTER XVII PROTECTION AND PEODUCEES. The primary purpose of protection is to encourage producers * — that is to say, to increase the profits of capital engaged in certain branches of industry. The protective theory is that the increase a protect- ive duty causes in the price at which an imported com- modity can be sold within the country, protects the home producer (i. e., the man on whose accoimt com- modities are produced for sale) from foreign competi- tion, so as to encourage him by larger profits than he could otherwise get to engage in or increase production. All the beneficial effects claimed for protection depend upon its effect in thus encouraging the employing pro- ducer, just as all the effects produced by the motion of an engine upon the complicated machinery of a factory are dependent upon its effect in turning the main driv- ing wheel. The main driving wheel (so to speak) of the protective theory is that protection increases the profits of the protected producer. But when, assuming this, the opponents of protec- tion represent the whole class of protected producers * For want of a better term I have here used the word " pro- ducers " in that limited sense in which it is applied to those who control capital and employ labor engaged in production. The industries protected by our tariff are (with perhaps some nominal exceptions) of the kind carried on in this way. 17S PROTECTION Oft fftEE fllAfifi!. as growing rich at the expense of their fellow-citizena, they are contradicted by obvious facts. Business men well know that in our long-protected industries the margin of profit is as small and the chances of failure as great as in any others— if, in fact, those protected industries are not harder to win success in by reason of the more trying fluctuations to which they are subject. The reason why protection in most cases thus fails to encourage is not difficult to see. The cost of any protective duty to the people at large is (1), the tax collected upon imported goods, plus the profits upon the tax, plus the expense and profits of smuggling in all its forms ; plus the expense of sometimes trying smugglers of the coarser sort, and occasionally sending a poor and friendless one to the penitentiary ; plus bribes and moieties received by gov- ernment officers; and (2), the additional prices that must be paid for the products of the protected home industry. It is from this second part alone that the protected industry can get its encouragement. But only a part of this part of what the people at large pay is real en- couragement. In the first place, it is true of protective duties, as it is true of direct subsidies, that they cannot be had for nothing. Just as the Pacific Mail Steam- ship Company and the various land and bond grant railways had to expend large sums to secure representa- tion at Washington, and had to divide handsomely with the Washington lobby, so the cost of securing Congressional "recognition" for an infant industry, or fighting off threatened reductions in its " encourage- ment," and looking after every new tariff bill, is a considerable item. But still more important is the PROTECTION Al^D tftObUCERS. 179 absolute loss in carrying on industries so unprofitable in tbemselves that they can be maintained only by sub- sidies. And to this loss must be added the waste that seems inseparable from governmental fosterage, for just in proportion as industries are sheltered from competi- tion are they slow to avail themselves of improvements in machinery and methods.* Oat of the encourage- ment which the tariff beneficiaries receive in higher prices, much must thus be consumed, so that the net encouragement is only a small fraction of what con- sumers pay. Taking encouraged producers and taxed consumers together there is an enormous loss. Hence in all cases in which duties are imposed for the benefit of any particular industry the discouragement to indus- try in general must be greater than the encouragement of the particular industry. So long, however, as the one is spread over a large surface and the other over a small surface, the encouragement is more marked than the discouragement, and the disadvantage imposed on all industry does not much affect the few subsidized industries. But to introduce a tariff bill into a congress or par- * This disposition is, of course, largely augmented by the greater cost of machinery under our protective tariff, which not only in- creases the capital required to begin, but makes the constant dis- carding of old machinery and purchase of new, required to keep up with the march of invention, a much more serious matter. Cases have occurred in which British manufacturers, compelled by com- petition to adopt the latest improvements, have actually sold their discarded machinery to be shipped to the United States and used by protected Americans. It was his coming across a ease of this kind that led David A. Wells, when he visited Europe as Special Commissioner of Revenue, to begin to question the usefulness of our tarifE in promoting American industry. 180 PROTECTlOlT OR FREK TRADE. liament is like throwing a banana into a cage of mon- keys. No sooner is it proposed to protect one industry than all the industries that are capable of protection begin to screech and scramble for it. They are, in fact, forced to do so, for to be left out of the encour- aged ring is necessarily to be discouraged. The result is, as we see in the United States, that they all get protected, some more and some less, according to the money they can spend and the political influence they can exert. Now every tax that raises prices for the encouragement of one industry must operate to discour- age all other industries into which the products of that industry enter. Thus a duty that raises the price of lumber necessarily discourages the industries which make use of lumber, from those connected with the building of houses and ships to those engaged in the making of matches and wooden toothpicks ; a duty that raises the price of iron discourages the innumerable industries into which iron enters ; a duty that raises the price of salt discourages the dairyman and the fisher- man ; a duty that raises the price of sugar discourages the fruit preserver, the maker of sirups and cordials, and so on. Thus it is evident that every additional in- dustry protected lessens the encouragement of those al- ready protected. And since the net encouragement that tariff beneficiaries can receive as a whole is very much less than the aggregate addition to prices required to secure it, it is evident that the point at which protec- tion will cease to give any advantage to the protected must be much short of that at which every one is protected. To illustrate : Say that the total number of industries is one hundred, of which one-half are capable of protection. Let us say that of what the protection PROTECTION AND PBODUCERS. 181 costs, one-fourth is realized by the protected industries. Then (presuming equality), as soon as twenty-five in- dustries obtain protection, the protection can be of no benefit even to them, while, of course, involving a heavy discouragement to all the rest. I use this illustration merely to show that there is a point at which protection must cease to benefit even the industries it strives to encourage, not that I think it possible to give numerical exactness to such matters. But that there is such a point is certain, and that in the United States it has been reached and passed is also certain. That is to say, not only is our protective tariff a dead weight upon industry generally, but it is a dead weight upon the very industries it is intended to stimu- late. If there are producers who permanently profit by protective duties, it is only because they are in some other way protected from domestic competition, and hence the profit which comes to them by reason of the duties does not come to them as producers but as monopolists. That is to say, the only cases in which protection can more than temporarily benefit any class of producers are cases in which it cannot stimulate industry. For that neither duties nor subsidies can give any permanent advantage in any business open to home competition results from the tendency of profits to a common level. The risk to which protected industries are exposed from changes in the tariff may at times keep profits in them somewhat above the ordinary rate ; but this represents not advantage, but the neces- sity for increased insurance, and though it may consti- tute a tax upon consumers does not operate to extend the industry. This element of insurance eliminated 16 iS2 PEOTEOTION OR FREE TRADE. profits in protected industries can only be kept above those of unprotected ipdustries by some sort of mon- opoly which shields them from home competition as the tariff does from foreign competition. The first effect of a protective duty is to increase profits in the protected industry. But unless that industry be in some way protected from the influx of competitors whicb such in- creased profits must attract, this influx must soon bring these profits to the general level. A monopoly, more or less complete, whicb may thus enable certain pro- ducers to retain for themselves the increased profits which it is the first effect of a protective duty to give, may arise from the possession of advantages of different kinds. It may arise, in the first place, from the possession of some peculiar natural advantage. For instance, the only cbrome mines yet discovered in the United States, belonging to a single family, that family bave been much encouraged by the higber prices whicb the pro- tective duty on chrome has enabled them to charge home consumers. In the same way, until the discovery of new and rich copper deposits in Arizona and Mon- tana the owners of the Lake Superior copper mines were enabled to make enormous dividends by the pro- tective duty on copper, which, so long as home compe- tition was impossible, shut out the only competition that could reduce their profits, and enabled them to get three or four cents more per pound for the copper they sold in the United States than for the copper they sbipped to Europe. Or a similar monopoly may be obtained by the pos- session of exclusive privileges given by the patent Jaw?, For ipstance^ the conabipation based on patent? PROTECTION AND PRODUCERS. 183 for maldng steel have, since home competition with them was thus shut out, been enabled, .bj the enormous duty on imported steel, to add most encouragingly to their dividends, and the owners of the patented process used in making paper from wood have been similarly encouraged by the duty on wood pulp. Or again, a similar monopoly may be secured by the concentration of a business requiring large capital and special knowledge, or by the combination of producers in a "ring" or "pool" so as to limit home production and crush home competition. For instance, the pro- tective duty on quinine, until its abolition in 1879, resulted to the sole benefit of three houses, while a combination of quarry owners — the Producers Marble Company — have succeeded in preventing any home competition in the production of marble, and are thus enabled to retain to themselves the higher profits which the protective duty on foreign marble makes possible, and to largely concentrate in their own hands the busi- ness of working up marble. But the higher profits thus obtained in no way en- courage the extension (.f such industries. On the con- trary, they result from the very conditions natural or artificial which prevent the extension of these indus- tries. They are, in fact, not the profits of capital en- gaged in industry, but the profits of ownership of natural opportunities, of patent rights, or of organiza- tion or combination, and they increase the value of ownership in these opportunities, rights, and monopo- listic combinations, not the returns of capital engaged in production. Though they may go to individuals or companies who are producers, they do not go to them f^ producers ; though they may increase the inpoiop iff 184 PROTECTION OE FREE TRADE. persons who are capitalists, they do not go to thsm by virtue of their employment of capital, but by virtue of their ownership of special privileges. Of the monopolies which thus get the benefit of profits erroneously supposed to go to producers, the most important are those arising from the private ownership of land. That what goes to the land-owner in nowise benefits the producer we may readily see. The two primary factors of production, without which nothing whatever can be produced, are land and labor. To these essential factors is added, when production passes beyond primitive forms, a third factor, capital- - which consists of the product of land and labor (wealth) used for the purpose of facilitating the production of more wealth. Thus to production as it goes on in civilized societies the three factors are land, labor, and capital, and since land is in modern civilization made a subject of private ownership, the proceeds of production are divided between the land-owner, the labor-owner, and the capital-owner. But between these factors of production there exists an essential difference. Land is the purely passive factor; labor and capital are the active factors — the factors by whose application and according to whose application wealth is brought forth. Therefore, it is only that part of the produce which goes to labor and capital that constitutes the reward of producers and stimulates production. The land-owner is in no sense a producer — he adds nothing whatever to the sum of productive forces, and that portion of the proceeds of production which he receives for the use of natural op- portunities no more rewards and stimulates production than does that portion of their crops which superstitious PaOTEdTlON AND PRODUCES^. l85 savages might burn up before an idol in thank-offering for the sunlight that had ripened them. There can b« no labor until there is a man ; there can be no capita] until man has worked and saved ; but land was hera before man cpme. To the production of commodities the laborer fuinishes human exertion; the capitalist furnishes the results of human exertion embodied in forms that may be used to aid further exertion; but the land-owner furnishes — what? The superficies of the earth ? the latent powers of the soil ? the ores be- neath it? the rain? the sunshine? gravitation? tha chemical affinities? What does the land-owner furnish that involves any contribution yro?w Mm to the exertion required in production ? The answer must be, nothing 1 And hence it is that what goes to the land-owner out of the results of production is not the reward of producers and does not stimulate production, but is merely a toll which producers are compelled to pay to one whom our laws permit to treat as his own what Nature furnishes. Now, keeping these principles in mind, let us turn to the effects of protection. Let us suppose that Eng- land were to do as the English agriculturist landlords are very anxious to have her do — go back to the pro- tective policy and impose a high duty on grain. This would much increase the price of grain in England, and its first effect would be, while seriously injuring other industries, to give much larger profits to English farm- ers. This increase of profits would cause a rush into the business of farming, and the increased competition for the use of agricultural land would raise agricultural rents, so that the result would be, when industry had readjusted itself, that though the people of England would have to pay more for grain, the profits of grain 186 PROTECTION OR FREE TRAM. producing would not be larger than profits in any other occupation. The only class that would derive any ben- efit from the increased price that the people of England would have to pay for their food would be the agricult- ural land-owners, who are not producers at all. Protection cannot add to the value of the land of a country as a whole, any more than it can stimulate in- dustry as a whole ; on the contrary, its tendency is to check the general increase of land values by checking the production of wealth; but by stimulating a par- ticular form of industry it may increase the value of a particular kind of land. And it is instructive to ob- serve this, for it largely explains the motive in urging protection, and where its benefits go. For instance, the duty on lumber has not been asked for and lobbied for by the producers of lumber — that is to say, the men engaged in cutting down and sawing up trees, and who derive their .profits solely from that source — nor has it added to their profits. The parties who have really lobbied and log-rolled for the imposi- tion and maintenance of the lumber duty are the owners of timber lands, and its effect has been to increase the price of "stumpage," the royalty which the producer of lumber must pay to the owner of timber land for the privilege of cutting down trees. A certain class of forestallers have made a business of getting possession of timber lands by all the various " land-grabbing" de- vices as, soon as the progress of population promised to make them available. Constituting a compact and therefore powerful interest (three parties in Detroit, for instance, afe said to own ^^ of the timber lands in the great timber State of Michigan), they have been able to secure a duty on lumber, which, nominally imposed ?BOTECTION AND PRODUCERS. 18T for the encouragement of tlie lumber producer, haa really encouraged only the timber land forestaller, who, instead of being a producer at all, is merely a black- mailer of production.* So it is with many other duties. The effect of the sugar duty, for instance, is to increase the value of sugar lands in Louisiana, and our treaty with the Hawaiian Islands, by which Hawaiian sugar is admit- ted free of this duty, being equivalent (since the pro- duction of Hawaiian sugar is not sufficient to supply the United States) to the payment of a heavy bounty to Hawaiian sugar growers, has enormously increased the value of sugar lands in the Hawaiian Islands. So with the duty on copper and copper ore, which for a long time enabled American copper companies to keep up the price of copper in the United States while they were shipping copper to Europe and selling it there at a considerably lower price.f The benefits of these duties * When, after the great fire in Chicago a bill was introduced in Congress permitting the importation free of duty of materials in- tended for use in the rebuilding of that city, the Michigan timber land barons went to Washington In a special oar and induced the committee to omit lumber from the bill. f A striking illustration of the way American industry has been encouraged by a duty which enabled the stockholders in a couple of copper mines to pay dividends of over a hundred per cent, is afforded by the following case : Some years ago a Dutch ship arrived at Boston having in her hold a quantity of copper with which her master proposed to have her resheathed in Boston. But learning that in this " land of liberty" he would not be permitted to take the copper from the inside of his ship and employ American mechanics to nail it on the outside, without paying a duty of forty- five per cent, on the new copper put on, as well as a duty of four cents per pound on the old copper taken off, he found it cheaper to sail in ballast to Halifax, get his ship re-coppered by Canadian workmen, and then come back to Boston for his return cargo. 18S PROTECTION OR FREE TRADE. went to companies engaged in producing copper, but it went to tliem not as producers of copper but as owners of copper mines. If, as is largely the case in coal and iron mining, the work had been carried on by operators who paid a royalty to the mine owners, the enormous dividends would have gone to the mine owners and not to the operators. Horace Greeley used to think that he conclusively disproved the assertion that the duties on iron were enriching a few at the expense of the many, when he declared that our laws gave to no one any special privilege of making iron, and asked why, if the tariff gave such enofmous profits to iron producers as the free traders said it did, these free traders did not go to work and make iron. So far as concerned those pro- ducers who derived no special advantage from patent rights or combinations, Mr. Greeley was right enough — the fact that there was no special rush to get into the business proving that iron producers as producers were making on the average no more than ordinary profits. And could iron be made from air, this fact would have shown what Mr. Greeley seems to have imagined it did, though it would not have shown that the nation was not losing greatly by the duty. But iron cannot be made from air ; it can only be made from iron ore. And though Nature, especially in the United States, has provided abundant supplies of iron ore, she has not distributed them equally, but has stored them in large deposits in particular places. If inclined to take Hor- ace Greeley's advice to go and make iron, should I think its price too high, I must obtain access to one of these deposits, and that a deposit sufficiently near to other materials and to centres of population. I may PEOTECTION AND PRODUCEES. 189 find plenty of such deposits which no one is using, but ■where can I find such a deposit that is free to be used by me? The laws of my country do not forbid me from mak- ing iron, but they do allow individuals to forbid me from making use of the natural material from which alone iron can be made — they do allow individuals to take possession of these deposits of ore which Nature has provided for the making of iron, and to treat and hold them as though they were their own private prop- erty, placed there by themselves and not by God. Con- sequently these deposits of iron ore are appropriated as soon as there is any prospect that any one will want to use them, and when I find one that will suit my pur- pose I find that it is in the possession of some owner who will not let me use it until I pay him down in a purchase price, or agree to pay him in a royalty of so much per ton, nearly, if not quite, all I can make above the ordinary return to capital in producing iron. Thus, while the duty which raises the price of iron may not benefit producers, it does benefit the dogs-in- the-manger whom our laws permit to claim as their own the stores which aeons before man appeared were accumulated by Nature for the use of the millions who would one day be called into being — enabling the mo- nopolists of our iron laud to levy heavy taxes on their fellow-citizens long before they could otherwise have done so.* So with the duty on coal. It adds nothing * The royalty paid by iron miners for the privilege of taking the ore out of the earth in many cases equals and in some cases exceeds the cost of mining it. The royalties of the Pratt Iron and Coal Company of Alabama are said to run as high as $10,000 per acre. Ijj the Chicago Jnter-Ocean, a staunch protectionist paper, of Op 190 PROTECTION OR FREE TRADE. to tke profits of the ccal operator who buys the right to take coal out of the earth, but it does enable a ring of coal-land and railway owners to levy in many places an additional black mail upon the use of Nature's bounty. The motive and effect of many of our duties are weU tober 11, 1885, I find a description of the Colby Iron Mine at Besse- mer, Michigan. This mine, it is said, is owned by parties who got it for $1.35 per acre. They lease the privilege of taking out ore on a royalty of 40 cents per ton to the Colbys, who sub-lease it to Morse & Co. for 53^ cents per ton royalty, who have a contract with Captain Sellwood to put the ore on the cars for 87^ cents per ton. Sell wood sub-lets this contract for 13} cents per ton, and the sub- contractors are said to make a profit of 3} cents per ton, as the work is done by a steam shovel. Deducting transportation, etc., the ore brings |3.80 per ton, as mined, of which onlylS} cents goes- to the firm who do the actual work of production. The output is 1 ,200 tons per day, which, according to the Inter-Ocean correspondent, gives to the owners a net profit of $480 per day ; to the Colbys, $150 per day ; Morse & Co.; $1 ,680 ; Captain Sellwood, $90 per day; and the sub-contractors who do the work of mining $30 per day, "a total net profit from the mine, over and above what profit there may be in the labor, of $3,340 per day." The account concludes by say- ing : " As the product will be at least doubled during the coming year, you see there will be some fortunes made out of the Colby mine " To these fortunes our protective duty on foreign ore un- doubtedly contributes, but how much does it in this case encourage production? In Lebanon County, Pennsylvania, is a hill of magnetic iron ore nearly pure, which has merely to be quarried out. It is owned by the Coleman heirs, and has made them so enormously wealthy that these are said by some to be the richest people in the United States. They are producers of iron, smelting their own ore, as well as rail- way owners and farmers, owning and cultivating by superintendents great tracts of valuable land. They, doubtless, have been much encouraged by the duty on iron which we have maintained for " the protection of American labor," but this encouragement comes to them as owners of this rich gift of Nature to — Mr. Coleman's heirs. The deposit of iron oire -would be worked were there no duty, and yfUS yfprked^ I believe^ before an^ dutjr on iron was imposed. Protection and producers. l9l illustrated by the import duty we levy on borax and boracic acid. We had no duties on borax an.d boracic acid (which have important uses in many branches of manufacture) until it was discovered that ii> the State of Nevada nature had provided a deposit of nearly pure borax for the use of the people of this continent. This free gift of the Almighty having been reducoi to private ownership, in accordance with the laws of the United States for such cases made and provided, the enterpris- ing forestallers at once applied to Congress for (and of course secured) the imposition of a duty which would make borax artificially dear and increase the profits of this monopoly of a natural advantage. While our manufacturers and other producers have been caught readily enough with the delusive promise that protection would increase their profits, and have used their influence to institute and maintain protective duties, I am inclined to think that the most efficient interest on the side of protection in the United States has been that of those who have possessed themselves of lands or other natural advantages which they hoped protection would make more valuable. For it has been not merely the owners of coal, iron, timber, sugar, orange, or wine lands, of salt springs, borax lakes, or copper deposits, who have seen in the shutting out of foreign competition a quicker demand and higher value for their lands, but the same feeling has had its influ- ence upon the holders of city and village real estate, who, realizing that the establishment of factories or the working of mines in their vicinity would give value to their lots, have been disposed to support a policy which had for its avowed object the transfer of such industries from other countries to our own. 192 PROTECTION OR FREE TRADE. To repeat : It is only at first that a protective duty- can stimulate an industry. Wlien the forces of produc- tion have had time to readjust themselves, profits in the protected industry, unless kept up by obstacles which prevent further extension of the industry, must sink to the ordinary level, and the duty losing its power of further stimulation ceases to yield any advantage to producers unprotected against home competition. This is the situation of the greater part of "protected" American producers. They feel the general injury of , the system without really participating in its special benefits. How, then, it may be asked, is it that even these pro- ducers who are not sheltered by any home protection are in general so strongly in favor of a protective tariS? The true reason is to be found in the causes I will hereafter speak of, which predispose the common mind to an acceptance of protective ideas. And, while keen enough as to their individual interests, these producers are as blind to social interests as any other class. They have so long heard and been accustomed to repeat, that free trade would ruin American industry, that it never occurs to them to doubt it; and the effect of duties upon so many other products being to enhance the cost of their own productions, they see, without apprehend- ing the cause, that were it not for the particular duty that protects them they could be undersold by foreign products, and so they cling to the system. Protection is necessary to them in many cases, because of the pro- tection of other industries. But were the whole system abolished there can be no doubt that American industry would spring forward with new vigor. CHAPTER XVIII. EFFECTS OF PROTECTION ON AMERICAN INDUSTRY If there is one country in the world where the as- sumption that protection is necessary to the develop- ment of manufactures and the "diversification of in- dustry " is conclusively disproved by the most obvious facts, that country is the United States. The first set- tlers in America devoted themselves to trade with the Indians and to those extractive industries which a sparse population always finds most profitable, the produce of the forest, of the soil, and of the fisheries, constituting their staples, while even bricks and tiles were at first imported from the mother country. But without any protection and in spite of British regulations intended to prevent the growth of manufactures in the colonies, one industry after another took root, as population in- creased, until at the time of the first Tariff Act, in 1789, all the more important manufactures, including those of iron and textiles, had become firmly established. As up to this time they had grown without any tariff, so must they have continued to grow with the increase of population, even if we had never had a tariff. But the American who contends that protection is necessary to the diversification of industry must not merely ignore the history of his country during that long period before the first tariff of any kind -was in§ti- 17 194 PEOTEOTION OR FREE TRADE. tuted, but he must ignore what has been going on evei since, and is still going on under his eyes. We need look no further back than the formation of the Union to see that if it were true that manufacturing could not grow up in new countries without the pro- tection of tariffs the manufacturing industries of the United States would to-day be confined to a narrow belt along the Atlantic sea-board. Philadelphia, New York, and Boston were considerable cities, and manu- factures had taken a firm root along the Atlantic, when "Western New York and Western Pennsylvania were covered with forests, when Indiana and Illinois were buffalo ranges, when Detroit and St. Louis were trad- ing posts, Chicago undreamed of, and the continent beyond the Mississippi as little known as the interior of Africa is now. In the United States, the East has had over the West all the advantages which protection- ists say make it impossible for a new country to build up its manufacturing industries against the competition of an older country — larger capital, longer experience, and cheaper labor. Yet without any protective tariff between the West and the East, manufacturing has steadily moved westward with the movement of popu- lation, and is moving westward still. This is a fact that of itself conclusively disproves the protective theory. The protectionist assumption thai manufactures have increased in the United States because of protective tariffs is even more unfounded than the assumption that the growth of New York after the building of each new theatre was because of the building of the theatre. It is as if one should tow a bucket behind a bo^t a.nd insist that it helped the bo^t along because EFFECTS OF PROTECTION ON AMEBICAN INDUSTRY. 195 she still moved forward. Manufacturing has increased in. the United States because of the growth of popula- tion and the development of the country ; not because of tariffs, but in spite of them. That protective tariffs have injured instead of helped American manufactures is shown by the fact that our manufactures are much less than they ought to be, considering our population and development — much less relatively than they were in the beginning of the century. Had we continued the policy of free trade our manufactures would have grown up in natural hardihood and vigor, and we should now not only be exporting manufactured goods to Mexico and the West Indies, South America and Australia, as Ohio is ex- porting manufactured goods to Kansas, Nebraska, Colo- rado and Dakota, but we should be exporting manu- factured goods to Grreat Britain, just as Ohio is to-day exporting manufactured goods to Pennsylvania and New York, where manufactures began before Ohio was settled. But so heavily are our manufactures weighted by a tariff which increases the cost of all their mate- rials and appliances, that, in spite of our natural ad- vantages and the inventiveness of our people, our sales are confined to our protected market, and we can nowhere compete with the manufactures of other coun- tries. In spite of the increase of duties with which we have attempted to keep out foreign importations and build up our own manufacturing industries, the great bulk of our importations to-day are of manufactured goods, while all but a trivial percentage of our exports consist of raw materials. Even where we import largely from such countries as Brazil, which have almost no manufactures of their own, we cannot send 196 PEOTECTION OE FREE TRADE. them in return the manufactured goods they want, but to pay for what we buy of them must send our raw materials to Europe. This is not a natural condition of trade. The United States have long passed the stage of growth in which raw materials constitute the only natural exports. "We have now a population of nearly sixty millions, and con- sume more manufactured goods than any other nation. "We possess unrivaled advantages for manufacturing. In extent and accessibility our coal deposits far surpass those of any other civilized country, while we have reservoirs of natural gas that supply fuel almost with- out labor. Moreover, we are the first of civilized nations in the invention and use of machinery, and in the economy of material and labor. But all these advantages are neutralized by the wall of protection we have built along our coasts. For as long as I can remember, the protectionist press has been from time to time chronicling the fact that considerable orders for this, that or the other American manufacture had been received from abroad, as proving that protection was at last beginning to bring about the results promised for it, and that American manu- facturing industry, so safely guarded during its infancy by a protective tariff, was now about to enter the mar- kets of the world. The statements that have been made the basis of these congratulations have generally oeen true, but the predictions founded upon them have never been verified, and, while our population has doubled, our exports of manufactured articles have rel- atively declined. The explanation is this : The higher rates of wages that have prevailed in the United States, and the consequent higher standard of general iiiteHi- EFFECTS OF ?ROf ECTION ON AMERICAN INDUSTRY 197 gence, have stimulated American invention, and we are constantly making improvemeats upon the tools, meth- ods, and patterns elsewhere in use. These improvements are constantly starting a foreign demand for American manufactures which seems to promise large increase. But before this increase takes place the improvements are adopted in countries where manufacturing is not so heavily burdened by taxes on material, and what should have been peculiarly an American manufacture is transferred to a foreign country. Every American who has visited London has doubt- less noticed, opposite the Parliament House at "West- minster, a shop devoted to the sale of " American notions." There are a number of such shops in Lon- don, and they are also to be found in every town of any size in the three kingdoms. These shops must sell in the aggregate quite an amount of American tools and contrivances, which in part accounts for the fact that we still export some manufactures. But the American will be deluded who from the number of these shops and the interest taken by the people who are constantly looking in the windows or examining the goods, im- agines that American manufactures are beginning to gain a foothold in the Old World. These shops are in fact curiosity shops, just as are the Chinese and Japan- ese shops that we find in the larger American cities, and people go to them to see the ingenious things the Americans are getting up. But no sooner do these shops so far popularize an "American notion" that a considerable demand for it arises, than some English manufacturer at once begins to make it, or the Ameri- can inventor, if he holds an English patent, finds more profit in manufacturing it abroad. Not having the dis- 1^8 PB0TEC5'I0N 6e FEEE TB.A.M. couragements of American protection to contend with, he can make it in Great Britain cheaper than in the United States, and the consequence of the introduction of an American " notion " is that, instead of its importa- tion from America increasing, it comes to an end. This illustrEites the history of American manufactures abroad. One article after another which has been in- vented or improved in the United States has seemed to get a foothold in foreign markets only to lose it when fairly introduced. "We have sent locomotives to Eussia, arms to Turkey and Germany, agricultural implements to England, river steamers to China, sewing machines to all parts of the world, but have never been able to hold the trade our inventiveness should have secured. But it is on the high seas and in an industry in which we once led the world that the effect of our protective policy can be most clearly seen. Thirty years ago ship-building had reached such a pitch of excellence in this country that we built not only for ourselves but for other nations. American ships were the fastest sailers, the largest carriers, and everywhere got the quickest dispatch and the highest freights. The registered tonnage of the United States almost equaled that of Great Britain, and a few years promised to give us the unquestionable supremacy of the ocean. The abolition of the more important British pro- tective duties in 1846 was followed in 18fi4 by the re- peal of the navigation laws, and from thenceforth not only were British subjects free to buy or build ships wherever they pleased, but the coasting trade of the British Isles was thrown open to foreigners. Dire were the predictions of British protectionists as to the SFI'ECTS Of PRO'tECTlON ON AMEBiCAN iNDtJSTEf. 199 utter ruin that was tlius prepared for British com- merce. The Yankees were to sweep the ocean, and "half-starved Swedes and Norwegians" were to drive the " ruddy, beef-eating English tar " from his own seas and channels. While one great commercial nation thus abandoned protection, the other redoubled it. The breaking out of our civil war was the golden opportunity of protec- tion, and the unselfish ardor of a people ready to make any sacrifice to prevent the dismemberment of their country was taken advantage of to pile protective taxes ■upon them. The ravages of Confederate cruisers and the conseq^uent high rate of insurance on American ships would under any circumstances have diminished our deep-sea commerce ; yet this effect was only tem- porary, and but for our protective policy we should at the end of the war have quickly resumed our place in the carrying trade of the world and moved forward to the lead with more vigor than ever. But crushed by a policy which prevents Americans from building, and forbids them to buy ships, our com- merce, ever since the war, has steadily shrunk, until American ships which, when we were a nation of twenty-five millions, ploughed every sea of the globe, are now, when we number nearly sixty millions, seldom seen on blue water. In Liverpool docks, where once it seemed as if every other vessel was American, you must search the forests of masts to find one. In San Fran- cisco Bay you may count English ship, and English ship, and English ship, before you come to an Ameri- can, while five-sixths of the foreign commerce of New York is carried on in foreign bottoms. Once no Amer- ican dreamed of crossing the Atlantic save on an 200 PEOTECTION Ofi ¥tim tEAfiH. American ship ; to-daj no one thinks of taking onft It is the French and the Germans who compete with the British in carrying Americans to Europe and bring- ing them back. Once our ships were the finest on the ocean. To-day there is not a first-class ocean carrier under the American flag, and but for the fact that foreign vessels are absolutely prohibited from carrying between American ports, ship- building, in which we once led the world, would now be with us a lost art. As it is, we have utterly lost our place. When I was a boy we confidently believed that American war ships could outsail, when they could not outfight, anything that floated, and in the event of war with a commercial nation we knew that every sea of the globe would swarm with swift American privateers. To-day, the ships on which we have wasted millions are, for pur- poses of modern warfare, as antiquated as Eoman gal- leys. Compared with the vessels of other nations they can neither fight nor run ; while, as for privateers or chartered vessels, Great Britain could take from those greyhounds of the sea which American travel and trade support, enough fleet ships to snap up any vessel that ventured out of an American port. I do not complain of the inefficiency of our navy. The maintenance of a navy in time of peace is un- worthy of the dignity of the Great Republic and of the place she should aspire to among the nations, and to my mind the hundreds of millions that during the last twenty years we have spent upon our navy would have been as truly wasted had they secured us good ships But I do complain of the decadence in oUr ability to build ships. Our misfortune is not that we have no navy, but that we lack the swift merchant fleet, tne EFFECTS OF PROTECTION ON AMERICAN INDUSTRY. 201 great founderies and shipyards, the skilled engineers and seamen and mechanics, in which, and not in navies, true power upon the seas consists. A people in whose veins runs the blood of Vikings have been driven ofE the ocean by — themselves. Of course the selfish interests that profit, or imagine they profit by the policy which has swept the Ameri- can flag from the ocean as no foreign enemy could have done, ascribe this effect to every cause but the right one. They say, for instance, that we cannot compete with other nations in ocean commerce, because they have an advantage in lower wages and cheaper capital, in willful disregard of the fact that when the difference in wages and interest between the two sides of the Atlantic was far greater than now we not only carried for ourselves but for other nations, and were rapidly rising to the position of the greatest of ocean carriers. The truth is, that if wages are higher with us this is really to our advantage, while not only can capital now be had as cheaply in New York as in London, but American capital is actually being used to run vessels under foreign flags, because of the taxes which make it unprofitable to build or run American vessels. De Tocqueville, fifty years ago, was struck with the fact that nine-tenths of the commerce between the United States and Europe and three-fourths of the com- merce of the New World with Europe was carried in American ships; that these ships filled the docks of Havre and Liverpool, while but few English and French vessels were to be seen at New York. This, he saw, could only be explained by the fact that '' vessels of the United States can cross the seas at a cheaper rate than any other vessels in the world." But, he continues: 202 PROTECTION OE FREE TRADE. " It is difficult to say for what reason the American can trade at a lower rate than other nations; and one is at first sight led to attribute this circumstance to the physical or natural advantages which are within their reach; but this supposition is erroneous. The American vessels cost almost as much as our own; they are not. better built, and they generally last for a shorter time, while the pay of the American sailor is more considerable than the pay on board European ships. I am of opinion that the true cause of their superiority must not be sought for in physical advantages but that it is wholly attributable to their moral and intellectual qualities. << * *■* ;jnjg European sailor navigates with pnidcnce; he only sets sail when the weather is favorable ; if an unforeseen acci- dent befalls him, he p'lts into port; at night he furls a portion of his canvas; and when the whitening billows intimate the vicinity of land, he checks his way and takes an observation of the sea. But the American neglects these precautions, and, braves these dangers. He weighs anchor in the midst of tempestuous gales ; by night and by day he spreads his sheets to the wind; he repairs as he goes along such damages as his vessel may have sustained from the storm; and when at last he approaches the term of his voyage he darts onward to the shore as if he ah-eady descried a port. The Americans are often- shipwrecked, but no ti'ader crosses the sea so rapidly, and, as they perform the same distance in a shorter time, they can perform it at a cheaper rate. " I cannot better explain my meaning than by saying that the American affects a sort of heroism in his manner of trading, in which he follows not only a calculation of his gain, but an impulse of his nature." What the observant Frenchman describes in some what extravagant language was a real advantage — an advantage that attached not merely to the sailing of ships, but to their designing, their building, and every- thing connected with them. And what gave this ad- vantage was not anything in American nature tbat differed from other human nature, but the fact that higher wages and the resulting higher standard of com- fort and better opportunities developed a greater power of adapting means tO ends, In short, the secret of out EFFECTS OF PROTECTION ON AMERICAN INDUSTRY. 203 success upon the ocean (as of all our other successes) lay in the very things that according to the exponents of protectionism now shut us out from the ocean.* * By way of consolation for the manner in wliich protectionism, has driven American ships from the ocean, Professor Thompson (Po- lilical Economy, p. 316) says : "If there were no other reason for the policy that seeks to reduce foreign commerce to a minimum, a sufficient one would be found in its effect upon the human material it employs. Bentham thought the worst possible use that could be made of a man was to hang him ; .i worse still is to make a common sailor of him. The life and the manly character of the sailor has been so admired in song and prose, and the real excellences of individuals of the profession have been made so prominent that we forget what the mass of this' class of men are, and what representatives of our civilization and Christianity wo send out to all lands in the tenants of the fore- castle." There is some truth in this, but what there is is due to protection- ism in its broader sense. There is no reason in the nature of his vocation why the sailor should not be as well fed, well paid and well treated, as intelligent and self-respecting, as any mechanic. That he is not is at bottom due to the paternal interference of maritime law with the relations of employer and employed. The law does not specifically enforce contracts for services on shore, and for any breach of contract by an employee the employer has only a civil rem- edy. He cannot restrain the employed of his liberty; coerce him by violence or duress, or, should he quit work, call on the law to bring him back, and thus the personal relations of employer and employed are left to the free play of mutual interest. For services requiring vigilance and sobriety, and where great loss or danger would result from a sudden refusal to go on with the work, the employer must look to the character of the men he employs, and must so pay and treat them that there will be no danger of their wishing to leave him. But what on shore is thus left to the self-regulative principle of freedom is, as to services to be performed on shipboard, attempted to be regulated on the paternal principle of protectionism. Here the law steps in to compel the specific performance of contracts, and not only gives the employer or his representative the right to restrain the employed of his personal liberty, and by violence oi dwegg tROTECTIOK AKD WAGES. ^17 trades-unions and the Knights of Labor. Break np these organizations and what wonld the tariff do to pre- vent the forcing down of wages in all the now organized trades ? A scheme really intended for the protection of work- ing-men from the competition of cheap labor would not merely prohibit the importation of cheap labor under contract, but would prohibit the landing of any laborer who had not sufficient means to raise him above the necessity of competing for wages, or who did not give bonds to join some trades-union and abide by its rules. And if, under such a scheme, any duties on commodi- ties were imposed, they would be imposed, in preference, on such commodities as could be produced with small capital, not on those which require large capital — that is to say, the effort would be to protect industries in which workmen can readily engage on their own ac- count, rather than those in which the mere workman can never hope to become his own employer. Our tariff, like all protective tariffs, aims at nothing of this kind. It shields the employing producer from competition, but in no way attempts to lessen competi- tion, among those who must sell him their labor ; and the industries it aims to protect are those in which the mere workman, or even the workman with a small capital, is helpless — those which cannot be carried on without large establishments, costly machinery, great amounts of capital, or the ownership of natural oppor- tunities which bear a high price. It is manifest that the aim of protection is to lessen competition in the selling of commodities, not in the selling of labor. In no case, save in the peculiar and exceptional cases I shall hereafter speak of, can a tariff 2lS PSOtEdTiON oil FREE TBAl)fi. on commodities benefit those who have labor, not com modities, to sell. Nor is there in our tariff any pro- vision that aims at compelling such employers as ii; benefits to share their benefits with their workmen. While it gives these employers protection in the goods market it leaves them free trade in the labor market, and for any protection they need workmen have to or- ganize. I am not saying that any tariff could raise wages. I am merely pointing out that in our protective tariff there is no attempt, however inefiicient, to do this — that the whole aim and spirit of protection is not the pro- tection of the sellers of labor but the protection of the buyers of labor, not the maintaining of wages but the maintaining of profits. The very class that profess anx- iety to protect American labor by raising the price of what they themselves have to sell, notoriously buy labor as cheap as they can and fiercely oppose any combina- tion of workmen to raise wages. The cry of " protection for American labor " comes most vociferously from news- papers that lie under the ban of the printers' unions ; from coal and iron lords who, importing " pauper la- bor " by wholesale, have bitterly fought every effort of their men to claim anything like decent wages; and from factory owners who claim the right to dictate the votes of men. The whole spirit of protection is against the rights of labor. This is so obvious as hardly to need illustration, but there is a case in which it is so clearly to be seen as to tempt me to reference. There is one kind of labor in which capital has no advantage, and that a kind which has been held from remote antiquity to redound to the trae greatness and S'KOl'ECtlOlf ANi) WAGES. 2l9 glory of a country — the labor of the author, a species of labor hard in itself, requiring long preparation, and in the vast majority of cases extremely meagre in its pecu- niary returns. What protection have the protectionist majorities that have so long held sway in Congress given to this kind of labor ? While the American manufac- turer of books — the employing capitalist who puts them on the market — has been carefully protected from the competition of foreign manufacturers, the American author has not only not been protected from the com- petition of foreign authors, but has been exposed to the competition of labor for which nothing whatever is paid. He has never asked for any protection save that of common justice, but this has been steadily refused, Foreign-made books have been saddled with a high pro- tective duty, a force of customs examiners is maintained in the post-office, and an American is not even allowed to accept the present of a book from a friend abroad without paying a tax for it* But this is not to protect the American author, who as an author is a mere la- borer, but to protect the American publisher, who is a capitalist. And this capitalist, so carefully protected * Although a great sum is raised in the United States every year to send the Bible to the heathen in foreign parts, we impose lor the protection of the home "Bible manufacturer" a heayy tax upon the bringing of Bibles into our country. There have recently been complaints of the smuggling of Bibles across our northern frontier, which have doubtless inspired our custom-house officers to renewed vigilance, since, according to an official advertisement, the following property seized for violation of the United States revenue laws was sold at public auction in front of the Custom House, Detroit, on Saturday, February 6, 1886, at 12 o'clock noon: 1 set silver jew- elry, 3 bottles of brandy, 7 yards astraohan, 1 silk tidy, 7 books, 1 shawl, 1 sealskin cloak, 4 rosaries, 1 woolen shirt, 2 pairs of mit- tens, 1 pair of stockings, 1 bottle of gin, 1 Bible, 220 Protection 6r fbEe trade. as to what he has to sell, has been permitted to compel the American author to compete with stolen labor. Congress, which year after year has been maintaining a heavy tariff, on the hypocritical plea of protecting American labor, has steadily refused the bare justice of acceding to an international copyright which would prevent American publishers from stealing the work of foreign authors, and enable American authors not only to meet foreign authors on fair terras at home, but to get payment for their books when reprinted in foreign countries. An international copyright, demand- ed as it is by honor, by morals and by every dictate of patriotic policy, has always been opposed by the pro- tective interest.* Could anything more clearly show that the real motive of protection is always the profit of the employing capitalist, never the benefit of labor ? What would be thought of the Congressman who should propose, as a " working-man's measure," to di- vide the surplus in the treasury between two or three railway kings, and who should gravely argue that to do this would be to raise wages in all occupations, since the railway kings, finding themselves so much richer, would at once raise the wages of their employees ; which would lead to the raising of wages on all railways, and tnis again to thi- uiising of wages in all occupations. Yet the contention that protective duties on goods raise wages involves just such assumptions. It "is claimed that protection raises the wages of labor — that is to say, of labor generally. It is not merely contended that it raises wages in the special industries protected by the tariff. That would be to confess that * An exception is to be made in favor of Horace Greeley, whq thougii a protectionist, did advocate an international copyright. PROTECTION AND WAGES. 221 the benefits of protection are distributed with partiality, a thing which its advocates are ever anxious to deny. It is always assumed by protectionists that the benefits of protection are felt in all industries, and even the wages of farm laborers (in an industry which in the United States is not and cannot be protected by the tariff) are pointed to as showing the results of protec- tioru The scheme of protection is, by checking importation to increase the price of protected comiaodities so as to enable the home producers of these commodities to make larger profits. It is only as it does this, and so long as it does this, that protection can have any en- couraging effect at all, and whatever effect it has upon wages must be derived from this. I have already shown that protection cannot, except temporarily, increase the profits of producers as pro- ducers, but -without regard to this it is clear that the contention that protection raises wages involves two assumptions : (1) that increase in the profits of em- ployers means increase in the wages of their workmen ; and (2) that increase of wages in the protected occu- pations involves increase of wages in all occupations. To state these assumptions is to show their absurdity. Is there anyone who really supposes that because an employer makes larger profits he therefore pays higher wages ? I rode not long since on the platform of a Brooklyn horse-car and talked with the driver. He told me, bitterly and despairingly, of his long hours, hard work and poor pay — how he was chained to that car, a verier slave than the horses he drove; and how by turning him^^lf intio this kind of a horse-driving machine he 222 PROTECTION OR FREE TRADE. conld barely keep wife and children, laying by nothing for a " rainy day." I said to him, "Would it not be a good thing if the Legislature were to pass a law allowing the com- panies to raise the fare from iive to six cents, so as to enable them to raise the wages of their drivers and conductors ? " The driver measured me with a quick glance, and then exclaimed: "They give us more, because they made more ! You might raise the fare to six cents or to sixty cents, and they would not pay us a penny more. No matter how much they made, we would get no more, so long as there are hundreds of men waiting and anxious to take our places. The company would pay higher dividends or water the stock ; not raise our pay." Was not the driver right? Buyers of labor, like buyers of other things, pay, not according to what they can, but according to what they must. There are oc- casional exceptions, it is true ; but these exceptions are referable to motives of benevolence, which the shrewd business man keeps out of his business, no matter how much he may otherwise indulge them. Whether you raise the profits of a horse-car company or of a manu- facturer, neither will on that account pay any higher wages. Employers never give the increase of their profits as a reason for raising the wages of their work- men, though they frequently assign decreased profits as a reason for reducing wages. But this is an excuse, not a reason. The true reason is that the dull times which diminish their profits increase the competition of work- men for employment. Such excuses are given only when employers feel that if the^ reduce wages their PliOTECTioisr And WAdES. 223 employees will be compelled to submit to the reduc- tion, siuce others will be glad to step into their places. And where trades-unions succeed in checking this com- petition they are enabled to raise wages. Since my talk with the driver, the horse-car employees of New York and Brooklyn, organized into assemblies of the Knights of Labor and supported by that association, have succeeded in somewhat raising their pay and shortening their hours, thus gaining what no increase in the profits of the companies would have had the slightest tendency to give them. No matter how much a protective duty may increase the profits of employers, it will have no effect in raising wages unless it so acts upon competition as to give workmen power to compel an increase of wages. There are cases in which a protective duty may have this effect, but only to a small extent and for a short time. When a duty, by increasing the demand for a certain domestic production, suddenly increases the de- mand for a certain kind of skilled labor, the wages of such labor may be temporarily increased, to an extent and for a time determined by the difficulties of obtaining skilled laborers from other countries or of the acquire- ment by new laborers of the needed skill. But in any industry it is only the few workmen of peculiar skill who can thus be affected, and even when by these few such an advantage is gained, it can only be maintained by trades-unions that limit entrance to the craft. The cases are, I think, few indeed in which any increase of wages has thus been gained by even that small class of workmen who in any protected industry require such exceptional skill that their ranks cannot easily be swelled ; and the cases are fewer still, if thej 224 PROTEdflON OE f'EEE TRADE. exist at all. in which the difficulties of bringing work- men from abroad, or of teaching new workmen, have long sufficed to maintain such increase. As for the great mass of those engaged in the protected industries, their labor can hardly be called skilled. Much of it can be performed by ordinary unskilled laborers, and much of it does not even need the physical strength of the adult man, but consists of the mere tending of ma- chinery, or of manipulations which can be learned by boys and girls in a few weeks, a few days, or even a few hours. As to all this labor, which constitutes by far the greater part of the labor required in the industries we most carefully protect, any temporary effect which a tariff might have to increase wages in the way pointed out would be so quickly lost that it could hardly be said to come into operation. For an increase in the wages of sach occupations would at once be counter- acted by the flow of labor from other occupations. And it rnust be remembered that the effect of " encour- aging " any industry by taxation is necessarily to dis- courage other industries, and thus to force labor into the protected industries by driving it out of others. Nor could wages be raised if the bounty which the tariff aims to give employing producers were given directly fco their workmen. If, instead of laws intended to add to the profits of the employing producers in certain industries, we were to make laws by which so much should be added to the wages of the workmen, the increased competition which the bounty would cause would soon bring wages plus the bounty to the rate at which wages stood without the bounty. The result would be what it was in England when, during the early part of this century, it was attempted to im- PROTECTION AND WAGES. 225 prove tte miserable condition of agricultural laborers bj " grants in aid of wages " from parish rates. Just as these grants were made, so did the wages paid by the farmers sink. The car-driver was right. Nothing could raise his wages that did not lessen the competition of those who stood ready to take his place for the wages he was get- ting. If we were to enact that every car-driver should be paid a dollar a day additional from public funds, the result would simply be that the men who are anxious to get places as car-drivers for the wages now paid would be as anxious to get them at one dollar less. If we were to give every car-driver two dollars a day, the companies would be able to get men without pay- ing them anything, just as where restaurant waiters are customarily feed by the patrons, they get little or no wages, and in some cases even pay a bonus for their places. But if it be preposterous to imagine that any effect a tariff may have to raise profits in the protected in- dustries can raise wages in those industries, what shall we say of the notion that such raising of wages in the protected industries would raise wages in all industries ? This is like saying that to dam the Hudson Eiver Avould raise the level of New York Harbor and conse- quently that of the Atlantic Ocean. Wages, like water, tend to a level, and unless raised in the lowest and widest occupations can be raised in any particular oc- cupation only as it is walled in from competition. The general rate of wages in every country is mani- festly determined by the rate in the occupations which require least special skill, and to which the man who has nothing but his labor ®^OwroVjg^|L might enabla these mere labor^rto live more cheapjy tSduM simply increase the tribme t^^thggcoul^pay aid that he could exact. ^ ^^ i Of course, no n^^^^i^^jj^g^^lj^^jr like this to its full extent or forlhi^^^|^^^^^Bingle landlord in the midst of ten thousand'poor tenants, like a single master amid ten thousand slaves, would be as lonely as was Eobinson Crusoe before Friday came. The human being is by nature a social animal, and no matter how selfish such a man might be, /he would desire com- panions nearer his own condition. Natural impulse would prompt him to reward those who pleased him, prudence would urge him to interest the more influen- tial among his ten thousand Fridays in the maintenance of his ownership, while experience would show him if calculation did not, that a larger income could be ob- tained by leaving to superior energy, skill and thrift some part of what their efforts secured. But while the single owner of such an island would thus be in- duced to share his privileges by means of grants, leases, exemptions or stipends, with a class more or less nu- merous, who would thus partake with him in the advan- tages of any improvement that increased the power of producing wealth, there would yet remain a class, the mere laborers of only ordinary ability, to whom such improvement could bring no benefit. And it would only be necessary to be a little chary in granting per mission to work upon the island, so as to keep a small percentage of the population constantly on the verge of starvation and begging to be permitted to use their power to labor, to create a competition in which, bidding against each other, men would of themselves offer all 280 PEOTECTION OR FREE TRADE. that their labor could procure save a bare living, for tile privilege of getting that. We can sometimes see principles all the clearer if we imagine them brought out under circumstances to which, we are not habituated ; bat, as a matter of fact, the social adjustment which in modern civilization creates a class who can neither labor nor live save by permis- sion of others, never could have arisen in this way. The reader of The Further Adventures of Robinson Crusoe^ as related by De Foe, will remember that during Crusoe's long absence, the three English rogues, led by Will Atkins, set up a claim to the ownership of the island, declaring that it had been given to them by Eobinson Crusoe, and demanding that the rest of the inhabitants should work for them by way of rent. Though used in their own countries to the acknowledg- ment of just such claims, set up in the name of men gone, not to other lands, but to another world, the Spaniards, as well as the peaceable Englishmen, laughed at this demand, and, when it was insisted on, laid Will Atkins and his companions by the heels until they had got over the notion that other people should do their work for them. But if the three English rogues had got possession of all the fire-arms before asserting their claim to own the island, the rest of its population might have been compelled to acknowledge it. Thus a class of land-owners and a class of non-land-owners would have been established, to which arrangement the whole population might in a few generations have become so habituated as to think it the natural order, and when they had begun, in course of time, to colonize other islands, they would have established the same institu- tion there, I^ow, what might thus have happened ojj THE PARADOX 281 Crusoe's island, had the three English rogues got posses- sion of a]l the fire-arms, is precisely what on a larger scale, did happen in the development of European civilization, and what is happening in its extension to other parts of the world. Thus it is that we find in civilized countries a large class who, while they have power to labor, are denied any right to the use of the elements necessary to make that power available, and who, to obtain the use of those elements, must either give up in rent a part of the produce of their labor, or take in wages less than their labor yields. A class thus helpless can gain nothing from advance in productive power. Where such a class exists, increase in the general wealth can only mean increased inequality in distribution. And though this tendency may be a little checked as to some of them by trades-unions or similar combinations which artifically lessen competi- tion, it will operate to the full upon those outside of such combinations. And, let me repeat it, this increased inequality in distribution does not mean merely that the mass of those who have nothing but the power to labor do not proportionately share in the increase of wealth. It means that their condition must become absolutely, as well as relatively, worse. It is in the nature of industi ial advance — it is of the very essence of those prodigious forces which modern invention and discovery are un- loosing, that they must injure where they do not benefit These forces are not in themselves either good or evil They bring good or evil according to the conditions under which they are exerted. In a state of society in which all men stood upon an equalitji with relation to the use of the material universe their effects could be 282 PROTECTION OR J'REE TRADE. only beneficent. But in a state of society in wbich some men are held to be the absolute owners of the material universe, while other men cannot use it without paying tribute, the blessing these forces might bring is changed into a curse — their tendency is to destroy independence, to dispense with skill and convert the artisan into a " hand," to concentrate all business and make it harder for an employee to become his own em- ployer, and to compel women and children to injurious and stunting toil. The change industrial progress is now working in the conditions of the mere laborer, and which is only somewhat held in check by the opera' tions of trades-unions, is that change which would convert a slave who shared the varied occupations and rude comforts of his goatskin-clothed master into a slave held as a mere instrument of factory production. Compare the skilled craftsman of the old order with the operative of the new order, the mere feeder of a machine. Compare the American farm " help " of an earlier state, the social equal of his employer, with the cowboy, whose dreary life is enlivened only by a " round up " or " drunk," or with the harvest hand of the "wheat fac- tory," who sleeps in barracks or barns, and after a few months of employment goes on a tramp. Or compare the poverty of Connemara or Skye with the infinitely more degraded poverty of Belfast or Glasgow. Do this, and then say if to those who can only hope to sell their labor for a subsistence, our very industrial progress has not a dark side. And that this must be the tendency of labor-saving invention or reform in a society where the planet is held to be private property, and the children that come into life upon it are denied all right to its use except THE PARADOX. 285 as they, buy or inherit the title of some dead man, we may see plainly if we imagine labor saving inven- tion carried to its farthest imaginable extent. When we consider that the object of work is to aatisfy want, the idea that labor-saving invention can ever cause want by making work more productive seems preposterous. Yet, could invention go so far as to make it possible to produce wealth without labor, what would be the effect upon a class who can call nothing their own, save the power to labor, and who, let wealth be never so abundant, can get no share of it except by selling this power ? Would it not be to reduce to naught the value of what this class have to sell ; to make them paupers in the midst of all possible wealth — to deprive them of the means of earning even a poor livelihood, and to compel them to beg or starve, if they could not steal? Such a point it may be impossible for invention ever to reach, but it is a point toward which modern invention drives. And is there not in this some explanation of the vast army of tramps and paupers, and of deaths by want and starvation in the very midst of plenty ? The abolition of protection would tend to increase the production of wealth — that is sure. But under conditions that exist, increase in the production of wealth may itself become a curse — first to the laboring- class, and ultimately to society at large. Is it not true, then, it may be asked, that protection, for the reason at least that it does check that freedom and extension of trade which are essential to the full play of modern industrial tendencies, is favorable to the working-classes ? Much of the strength of protec- tion among workingmen comes, I think, from vague feelings of this kind. 284 PEOTECiiON OH t'ftEfi TRAfifi. My reply would be negative. Not only has proteo tion — wliicli is merely the protection of producing cap- italists against foreign competition in the home market — tendencies in itself toward monopoly and inequality, but it is impotent to check the concentrating tenden- cies of modern inventions and processes. ■ To do this by " protection '' we must not only forbid foreign commerce, but restrain internal commerce. We must not only prohibit any new applications of labor-saving inven- tion, but must prevent the use of the most important of those already adopted. "We must tear up the rail- way and go back to the canal boat and freight wagon ; cut down the telegraph wire and rely upon the post horse ; substitute the scythe for the reaper, the needle for the sewing-machine, the hand loom for the factory ; in short, discard all that a century of invention has given us, and return to the industrial processes of a hundred years ago. This is as impossible as for the chicken to go back to the egg. A man may become decrepit and childish, but once manhood is reached he cannot again become a child. No ; it is not in going backward, it is in going for- ward, that the hope of social improvement lies. CHAPTEE XXV. ■THE ROBBER THAT TAKES ALL THAT IS LEFT. In itself the abolition of protection is like tlie driving off of a robber. But it will not help a man to drive off one robber, if another, still stronger and more rapacious, be left to plunder him. Labor may be likened to a man who as he carries home his earnings is waylaid by a series of robbers. One demands this much, and another that much, but last of all stands one who demands all that is left, save Just enough to enable the victim to maintain life and come forth next day to work. So long as this last robber remains, what will it benefit such a man to drive off any or all of the other robbers ? Such IS the situation of labor to-day throughout the civilized world. And the robber that takes all that is left, is private property in land. Improvement, no matter how great, and reform, no matter now beneficial in itself, cannot help that class who deprived of all right to the use of the material elements, have only the power to labor — a power as useless in itself as a sail without wind, a pump without water, or a saddle without a horse. I have likened labor to a man beset by a series of robbers, because there are in every country other things than private property in land which tend to diminish 286 PROTECTION OE FREE TEADE. national prosperity and divert the wealth earned by labor into the hands of non-producers. This is the tendency of monopoly of the 'processes and machinery of production and exchange, the tendency of protect- ive tariffs, of bad systems of currency and finance, of corrupt government, of public debts, of standing ar- mies, and of wars and preparations for war. But these things, some of which are conspicuous in one country and some in another, cannot account for that impover- ishment of labor which is to be seen everywhere. They are the lesser robbers, and to drive them off is only tc- leave more for the great robber to take. If the all-sufficient cause of the impoverishment o' labor were abolished, then reform in any of these direc tions would improve the condition of labor; but so long as that cause exists, no reform can effect any per- manent improvement. Public debts might be abolish- ed, standing armies disbanded, war and the thought of war forgotten, protective tariffs everywhere dis- carded, government administered with the greatest purity and economy, and all monopolies, save the monopoly of land, destroyed, without any permanent improvement in the condition of the laboring-class. For the economic effect of all these reforms would simply be to diminish the waste or increase the production of wealth, and so long as competition for employment on the part of men who are powerless to employ them- selves tends steadily to force wages to the minimum that gives the laborer but a bare living, this is all the ordinary laborer can get. So long as this tendency exists — and it must continue to exist so long as private property in land exists — improvement (even if possible) in the personal (qualities of the laboring masses^ sucl^ •ffiE ROiBBEK THAT TAKES ALL THAT IS LEFT. 287 as improvement in skill, in intelligence, in temperance or in thrift, cannot improve their material condition. Improvement of this kind can only benefit the individ- ual while it is confined to the individual, and thus gives him an advantage over the body of ordinary labor' ers whose wages form the regulative basis of all other wages. If such personal improvements become general the effect can only be to enable competition to force wages to a lower level. Where few can read and write, the ability to do so confers a special advantage and raises the individual who possesses it above the level of ordinary labor, enabling him to command the wages of special skill. But where all can read and write, the mere possession of this ability cannot save ordinary laborers from being forced to as low a position as though they could not read and write. And so, where thriftlessness or intemperance pre- vails, the thrifty or temperate have a special advantage which niay raise them above the conditions of ordinary labor; but should these virtues become general that advantage would cease. Let the great body of working- men so reform or so degrade their habits that it would become possible to live on one-half the lowest wages now paid, and that competition for employment which drives men to work for a bare living must proportion- ately reduce the level of wages. I do not say that reforms that increase the intelli- gence or improve the habits of the masses are even in this view useless. The difiiusion of intelligence tends to make men discontented with a life of poverty in the midst of wealth, and the diminution of intem- perance better fits them to revolt against such a lot. Public schools and temperance societies are thus pre- 288 PfeOTECTlOM OR FREE TRADE. revolutionary agencies. But they can never abolish poverty so long as land continues to be treated as pri- vate property. The worthy people who imagine that compulsory education or the prohibition of the drink traffic can abolish poverty are making the same mis- take that the Anti-Corn Law reformers made when they imagined that the abolition of protection would make hunger impossible. Such reforms are in their own nature good and beneficial, but in a world like this, tenanted by beings like ourselves, and treated by them as the exclusive property of a part of their number, there must, under any conceivable conditions, be a class on the verge of starvation. This necessity inheres in the nature of things; it arises from the relation between man and the external universe. Land is the superficies of the globe — that bottom of the ocean of air to which our physical structure confines us. It is our only possible standing place, our only possible workshop, the only reservoir from which we can draw material for the supply of our needs. Considering land in its narrow sense, as distinguished from water and air, it is still the element necessary to our use of the other elements. Without land man could not even avail himself of the light and heat of the sun or utilize the forces that pulse through matter. And whatever be his essence, man, in his physical constitution, is but a changing form of matter, a passing mode of motion, constantly drawn from na- ture's reservoirs and as constantly returning to them again. In physical structure and powers he is related to land as the fountain jet is related to the stream, or the flame of a gas burner to the gas that feeds it. Hence, let other conditions be what they may, tha THE ROBBER THAT TAKES ALL THAT IS LEFT. 289 man who, if he lives and works at all, must live and work on land belonging to another, is necessarily a slave or a pauper. There are two forms of slavery — that which Friday accepted when he placed Crusoe's foot upon his head, and that which Will Atkins and his comrades attempted to establish when they set up a cMm to the ownership of the island and called on its other inhabitants to do all the work. The one, which consists in making prop- erty of man, is only resorted to when population is too sparse to make practicable the other, which consists in making property of land. For while population is sparse and unoccupied land is plenty, laborers are able to escape the necessity of buying the use of land, or can obtain it on nominal terms. Hence to obtain slaves — people who will work for you without your working for them in return — it is necessary to make property of their bodies or to resort to predial slavery or serfdom, whioh is an artificial anticipation of the power that comes to the land-owner with denser population, and which consists in confin- ing laborers to land on which it is desired to utilize their labor. But as population becomes denser and land more full}' occupied, the competition of non-land- owners for the use of land obviates the necessity of making property of their bodies or of confining them to an estate in order to obtain their labor without return. They themselves will beg the privilege of giving their labor in return for being permitted what must be yield- ed to the slave — a spot to live on and enough of the produce of their own labor to maintain life. This, for the owner, is much the more convenient form of slavery. H