large market, though nothing in size to the market of the world. The home market becomes readily glutted, while the conditions of protection shut out producers from exporting their manufactures with profit to foreign markets. The exports of the United States amount to a large sum--703 millions of dollars, but 550 millions of the amount consist of food, cotton, tobacco, and petroleum, leaving only 153 million dollars or 31 millions sterling for every other export, including manufactures. As the real value of the latter is estimated by Atkinson at 410 millions sterling, the amount exported is altogether insignificant. A domestic market assures the conditions for national existence, while an export trade is necessary for industrial prosperity. A nation cannot buy without selling, or sell without buying. The glut of commodities produced by the limitation of markets causes a stoppage of many of the factories for three or four months in the year, because they produce in seven or eight months as much produce as is required for the consumption of twelve. The working men have been inclined to attribute this cutting down of their employment not to its true cause, but to connect it with the importation of cheap foreign labour, which competes with the dearer native labour. In one sense they are right, for the protected industries substitute native by cheaper foreign labour in many instances. Even in the census of 1880, there was much evidence of the need of foreigners to carry on the industries of the country. Of the 169,000 cotton operatives enumerated in the census, 94,000 were of American origin. In the woollen industries there were 53,000 natives and 35,000 foreigners; in carpet mills the natives and foreigners were nearly equal, while in iron works there were 72,000 natives to 52,000 foreigners. Since 1880 the proportion of the latter to the former has vastly increased, and a Committee of Congress was appointed to investigate the causes of the increase. This Committee, under the chairmanship of Mr. Ford, lately took evidence at Boston as to the foreign labour employed in various industries. The conclusion is expressed in the words of the chairman: The evidence taken by the committee in Boston shows that in all industries throughout New England almost no American workmen are left. In the fishing industry they are pretty nearly all gone.' One large mill in New Hampshire employs 6,000 hands, and of these only 230 are American, the rest chiefly consisting of French Canadians and Irish. It is no wonder that a cry against emigration has arisen, or that both political parties have pledged themselves to deal with the question. The cry is chiefly from workers in factories and mines, though in the case of Chinese it has extended to other industries. The new railways in the West were built by Chinese labourers, who were also much employed in the great fruit and vineyard industries of California. As domestics and laundrymen the Chinese outnumbered all others. For some time the Chinese were regarded with favour, and almost with admiration, for their working ability; but now their immigration is excluded by law, on the justification that they are a race which cannot be assimilated by the American people. The cry is now directed against Italians and Wallachians, and, before long, it may be extended to French Canadians and Irish. Further restrictions of emigration will no doubt raise the rate of wages, which will not be an unmixed good to the manufactures of the United States. In its bearing on England new restrictions will simply divert the tide of emigration to our own colonies. Legislation on this subject is full of difficulties. The time has not yet arrived when the United States can claim a homogeneous nationality: 'Great Empire of the West, Another subject, upon which both political parties have promised legislation, is the regulation or repression of manufacturing combinations called trusts.' Cleveland calls them not combinations but conspiracies. They are a natural product of protection, inasmuch as their purpose is to limit the supply of commodities and thus to raise their price. Trusts are not unknown in England, as we have lately seen in the formation of the Salt Trust, which is a monopoly disgraceful to a free-trade country. In America, tariff trusts are right, if protection is right, because they are simply efforts to obtain for the capitalist the full benefits of the tax which over-production takes away from him. The difference between the reduced price when there is a glut of commodities, and that encouraged by the custom duties, is the margin on which trusts thrive. It is true that they defraud the consumer by limiting production, as they take away from him the effects of competition; but they also attack labour by lessening its employment. When too much of a commodity is produced, the Trust closes particular factories, paying the owners for doing so, but giving nothing to the labourer who is discharged from them. Protection, by its high tariff, is necessarily the biggest of Trusts, because its effect is to keep the labourer poor, in order to make the rich capitalist richer. Trusts now cover many, and may soon be expected to include most, of the protected industries in the United States.1 Let us now pass to the great subject of reform in the tariff which was the leading issue in the presidential campaign. Its discussion has been a great economic education to the people. The existence of the surplus gave point to Cleveland's aphorism: Unnecessary taxation is unjust taxation.' Harrison replied to this by another: 6 'The following are some of the principal Trusts : salt, sugar, standard oil, Bessemer steel, plough steel, general steel, copper, nail, general iron, zinc, lead, glass, soap, linseed oil, rubber shoe, envelope, paper, paper bag, cotton packing, cordage, textile association. 'Free-traders are students of maxims, not of markets;' while Depew, an able politician of the Republicans, supports Harrison with the astounding assertion: The protective tariff does not tax; it distributes.' This is exactly what it does not do. Protection lowers wages and concentrates profits among a few monopolists. The working men on their banners declare: Protection is the source of high wages.' These election cries sufficiently mark the attitude of the contending parties, and they have received definite expression in two Bills, one of which, introduced by Mr. Mills, has passed the House of Representatives, though it has been rejected by the Senate, which drafted another Bill for the Republican party. The Bill of Mills, proposed by an able Committee of the House, is founded on the famous classification of Joseph Hume in 1840. It will be remembered that he divided commodities into five classes:I. Articles of food, and animals. II. Articles in a crude condition, which enter into the various processes of manufacture. III. Articles wholly or partially manufactured for use as the materials for completed manufactures or for the mechanical arts. IV. Manufactured articles ready for consumption. V. Articles of voluntary use or luxuries. Upon this classification Sir Robert Peel based his Act of 1842, when he tentatively made free many commodities, leaving others under taxation. He followed up his reforms by the Acts of 1845– 1846, and Gladstone capped the edifice of free trade in 1853. Mills's Bill does not go beyond Peel's first effort of 1842; that is, the measure acts boldly on the first three classes, either by abolishing or modifying duties, and treats very tenderly the last two. In regard to manufactures Mills makes one useful reform by converting all duties to an ad valorem scale, with the removal of the perplexing specific duties. The latter represent the duty on the raw material contained in the manufacture, while the former refer to taxes on the finished product. This is like erecting duties upon piles, and raising them in the air upon stilts. It is absurd to call the Bill of Mills a free-trade measure, for it simply reduces the average tariff of 47 per cent. to one of 42. If a man took 47 drinks daily and reduced them to 42, no one would call him a teetotaler. It is as an indication of further reform that the Republicans reject the Bill. Mills asserts that, by freeing many of the raw materials from taxation, he will give additional work to one hundred thousand labourers. The Republicans object that, as there is already a glut in domestic markets, this new employment will increase the evil. The Bill of Mills is not thorough in its own conception. Sugar, an article of food, now pays a duty of 83 per cent. and is only reduced to 64. Rice, which now pays, in its cleaned state, the exorbitant duty of 113 per cent., is only lowered to 100. The reply of Mills, in the case of sugar, is that it is an easy commodity to tax for revenue purposes, in the same way as the English tax tea. At present the tax on sugar furnishes 27 per cent. of the whole amount got from dutiable articles. With all its faults the Bill of Mills, as modified and accepted by the Democrats, is on the right lines, and by it he hopes to diminish the surplus to the extent of seventy-five million dollars. This is doubtful, as lower duties always increase consumption. The Bill of the Senate is not founded on the platform of the Republican party, which recommended free whiskey, rather than any tampering with the sacred principle of protection. There is, however, a large temperance party which considers that cheap whiskey means cheap drunkards, and they opposed the abolition of the duty, Blaine joining in the opposition. The Bill of the Senate therefore frees whiskey when used in the arts, but not when drunk as potations. It takes the duty off manufactured tobacco, and reduces that on sugar to one-half. On the other hand, wool, which was rendered free by the Democratic Bill, is increased in duty by that of the Senate, and so are the manufactures made from it. The total reduction of the surplus by the Senate Bill is estimated at 70 million dollars, of which 24 millions come from tobacco, 27 from sugar, while only 5 millions of reduction are due to the free list. In the operation of the Bill of the Democrats, a sum of 193 millions of dollars disappeared by additions to the free list of raw and other materials. The Republican party, as I have stated, now adopt the banner of protection, and have carried out the campaign under it. It is true. that some Republicans are uneasy, because, while they contend that protection is necessary for infant industries, it is no longer needful when they have reached maturity. It may be likened to a tow-horse required to pull a tramway car up a hill. Then it may be necessary, though it is too costly to keep the additional horse at work when the car reaches a level. Protection is also like an inflated currency, for it capitalises everything on an inflated basis. When protection was first contemplated in the United States, its proportions were modest, and its demands were temporary. I am in favour of a judicious tariff,' said John Quincy Adams in conversation with Henry Clay; and I,' said Clay, 'am in favour of a tariff judicious or not.' The latter policy has prevailed, though in periods of varying intensity. A comparison of three decades, from 1850 to 1880, is interesting as showing the effects of high and low tariffs. The first decade, ending in 1860, was a period of low tariff, and the whole of it exhibited remarkable prosperity, not only as regards the accumulation of national wealth, but also for the even distribution of progress in agriculture, manufactures, and commerce. The following decade, ending in 1870, included the period of the great civil war, when duties were enormously increased both in customs and excise. The maintenance 794 of large armies caused a great consumption of commodities, so that manufactures were abnormally stimulated, and wages, as well as profits, rose. In the next decade, ending 1880, the war tariff was continued, and thus we have the opportunity of studying a high and low tariff during two decades of peace, as well as in a decade of war. During the decade of low tariff, all kinds of wealth show a greater rate of increase than in the last ten years of high tariff. The lines of progress of the nation are shown in an interesting table by Mr. Philpot published in leading works of political economy. Average increase per cent. under high tariff for each ten years. 1860 to 1870 and 1870 to 1880 35.5 26.2 126.6 61.0 Foreign commerce, aggregate 131.0 45.6 Miles of railroad, aggregate per capita per capita Capital in manufactures. Wages in manufactures, aggregate Products of manufactures Value of farms Value of farm tools and machinery. There is one important industry not contained in that table, that of shipping. This melancholy absence is accounted for because there has been no increase, but a large decrease, since protection was established. The carrying trade between the Old World and the New is now in the hands of Europeans. Formerly American clippers were the pride of the sea, and their mercantile marine was supreme among nations. In 1826, when the decline began, 921 per cent. of the foreign trade was conducted by native ships. Thirty years ago 75 per cent. still went in American bottoms. In 1887, less than 14 per cent. of the foreign trade was carried in native vessels. Protection has produced a destruction of American shipping greater than the worst enemy of the United States could have. effected by a prolonged war. In answer to all these startling facts, the protectionists give vague generalities of the gigantic progress of America under its fiscal system. No doubt, it has had a marvellous development by the modern advances in applied science. Vast in its territory, rich beyond conception in the raw materials of industry, and in the virgin character of its soil and varieties in climate, America was ready to respond to a touch from the wand of the scientific enchanter. In former times, when it took Jefferson eight or ten days' hard riding to go from his estate in Virginia to the Congress at Philadelphia, the distances were too great for the exchange of commodities. All this |
