UNIVERSITY OF CALIFORNIA. SAN DIEGO 
 
 3 1822 00340 9869 
 
 
 HF 
 
 /7-'r 
 
 ins
 
 LECTURES 
 
 History of Protection 
 
 IN THE UNITED STATES 
 
 Delivered before the International Free-Trade Alliance 
 
 A 
 '^ 
 W. G. S U M^S"-^^^' 
 
 PROFESSOR IN YAL' 
 
 ALETCOKLIOflti 
 
 
 NEW YORK 
 PUBLISHED FOR THE 
 
 NEW YORK FREE TRADE CLUB 
 
 By G. p. PUTNAM'S SONS 
 
 27 4 29 WEST 23D STREET 
 1883
 
 Press of 
 G. P. Putnam's Sons 
 
 New York
 
 PREFACE 
 
 The following lectures were delivered by me before the International 
 Free Trade Alliance, in New York, in the spring of 1876. They are here 
 republished exactly as delivered, although there are certain points which 
 I should like to elaborate, if the opportunity were offered. I have 
 endeavored here to combine two things : 1st, the history of our own tariff 
 legislation, showing its weakness, ignorance, confusion, and oscillation ; 
 and, 2d, a discussion of the arguments for and against free trade, as they 
 have presented themselves in the industrial and legislative history of the 
 country. I have summed up in the last lecture the convictions to which 
 such a study of the subject must lead. Suffice it here to say, that when one 
 clears one's head of all the sophistries and special pleas by which protec- 
 tion is usually defended, and looks at the matter as a simple matter of 
 common sense, one must be convinced that an industrious people on a 
 fertile soil, so abundant in extent that population is inadequate to the 
 highest organization of labor, must enjoy advancing wealth and prosper- 
 ity. They will owe this to a diligent use of their natural advantages. 
 They will reach the maximum of production when they produce and ex- 
 change most freely. Certainly no application of taxation can possibly 
 increase their production • that is their national wealth. Every tax or 
 other interference with the freedom of production or exchange produces 
 restraint, confusion, delay, change, risk and vexation, and these, as every 
 one knows, cause loss of time, labor, and capital, that is, diminish the pro- 
 duct which may be obtained from a given amount of labor. The amount 
 of this loss can never be measured in figures, because we can never get 
 statistics of " what might have been •" but when it is shown here that the 
 legislation of the United States has been constantly vacillating, not only in 
 its policy, but also in the degree to which its policy has been pursued ; that 
 it has laid burdens on production and exchange in a clumsy, Lrutal, and 
 ignorant disregard of possible effects on the delicate network of modern 
 industry; that it has had in view, from point to point, only a single 
 interest, and has had no national stand-point or conception of the public 
 interest (much as it boasts to the contrary) ; then, I think, any one must 
 see that such legislation has lamed the national productive power, wasted 
 the natural advantages which the nation enjoys, diminished its wealth, 
 and contracted the general status of comfort for the whole people.
 
 4 LECTURES ON PROTECTION. 
 
 Adam Smith laid down four rules by which all taxes ought to be 
 tested. Experience has ratified them so thoroughly that they are no 
 longer questioned by anybody. They ought to be known by everybody. 
 
 1. Taxes should be, as far as practicable, equal. 
 
 2. They should be definite in amount (not uncertain or variable). 
 
 3. They should be collected, so far as possible, at the time most con- 
 venient to the payer, so as not to cripple the process of production. 
 
 4. They should be so arranged as to give the maximum revenue to 
 the government at the minimum cost to the people, i. e., they should cost 
 as little as possible to collect ; and they should keep capital out of the 
 hands of the people as short time as possible. 
 
 Protective taxes are hostile to revenue, because the purpose of a pro- 
 tective tax is to prevent importations. The moment, however, that a tax 
 begins to have this effect it prevents revenue. Hence, where protection 
 hegms, there revenue ends. 
 
 There is no conceivable ground of right by which the legislature 
 may decide what things ought to be produced, and in what measure, and 
 then use its taxing power to carry out its notions. Every tax is an evil, 
 and it is on the defensive. Its need must be shown, and no tax can le 
 defended which is laid for anything but revenue to defray the legitimate 
 and necessary cost of public peace, order, and security. 
 
 For taxes laid to this end, some further rules can now be laid down 
 as established by long experience. 
 
 1. No such taxes should be allowed to act protectively to any degree. 
 They should be offset by excise taxes of equivalent amount. 
 
 2. They should be laid on as few articles as possible, and in the sim- 
 plest way possible (to avoid expense in collection). 
 
 3. The legislator should try to find the maximum revenue point on 
 each article {i. e., If there were no tax there would be no revenue. If 
 there were a prohibitory tax there would be no revenue. There is a point 
 between, at which the highest revenue can be obtained with the least cost 
 and the least fraud). 
 
 4. Raw materials should not be taxed. (It is not easy to define "raw 
 materials," but the rule has value as a practical rule. Taxes on raw ma- 
 terials strangle industry at its birth.) 
 
 These rules are only practical rules, derived from experience. There 
 are no scientific laws of taxation, because there are no natural laws of 
 taxation. Nature has not provided for taxation, as she has for produc- 
 tion, exchange, distribution, and consumption. Taxation is part of the 
 co-operation of society for its own defense against the evil and destructive 
 forces within itself. Any state which lays protective taxes misuses the 
 means of defense to increase the evils. 
 
 W. G. S.
 
 CONTENTS. 
 Lecture I. 
 
 The i'^ATiONAL Idea and the Ajuebican Ststem, - . .- •••? 
 
 Lecture II. 
 
 Bboad Principles TJNDBiUiTiNG the Tariff Conteovbrsy, . - • - • 11 
 
 Lecture III. 
 The Okioin op Protection in this Country, . . . ....17 
 
 Lecture IV. 
 The Establishment of Protection in this Country, ...... 84 
 
 Lecture V. 
 
 Vacillation of the Protective Polict in this Country — Conclttsio:?, - • • 49
 
 LECTURE I. 
 
 The Natioital Idea and the American" System. 
 
 It is a sign of a dogma in dissolution to change its form and to yielil 
 points of detail, while striving to guard its vested interests and tradi- 
 tional advantages. Just now the dogma of protection is striving to find 
 standing ground, after a partial retreat, for a new defense, in the doctrine 
 of nationality. TVe are told that there is only a " national " and not a 
 *' political" economy, that there are no universal laws of exchange, con- 
 sequently no science of political economy; that it is only an art, and has 
 only an empirical foundation, and that it varies with national circum- 
 stances to such a degree as to be controlled by nothing higher than 
 traditional policy or dogmatic assumption. Great comfort is found for 
 this position in the assertion that the German economists have discovered 
 or adopted its truth. How utterly unjust and untrue this is as a matter 
 of fact, those who have read the works of the German economists must 
 know. It is untrue, in the first place, that they are unanimously of the 
 school of the socialistes en chaire, and, in the second place, it is untrue 
 that the socialistes e7i chaire are clear and unanimous in their position. 
 They occupy every variety of position, from extreme willingness to entrust 
 the state with judgment in the application of economical prescriptions, 
 to the greatest conservatism in that regard. Finally, it is not true that 
 any of them are protectionists. 
 
 "We do not intend, however, to discuss the opinion or authority of 
 the schools in question. If it should be claimed that the extreme 
 admission made by some of the Germans of this school, that protection 
 may be beneficial to a nation at a certain stage of development, is 
 applicable to the United States to-day, we should desire no better footing 
 for the controversy. 
 
 It is more directly interesting, however, to examine the doctrine of 
 nationality on its merits. It will appear upon even a cursory examination 
 of this kind, that existing nations are arbitrary and traditional divisions. 
 There was published in Europe, in 1863, when the Emperor Napoleon 
 was urging on an attempt to secure stable equilibrium in European 
 politics by adjusting political divisions according to race and language 
 divisions, a map of Europe thus rationally constructed. The effort, 
 however, offered the most striking proof of the impossibility of recon- 
 structing, on any such rationalistic or logical basis, political circumstances
 
 8 PROTECTION IN THE UNITED STATES. 
 
 Which are the historical outgrowth of political struggles and political 
 accidents. The nations which must be made the subject of discussion 
 are, therefore, such as exist, and of them it is true that their boundaries 
 coincide witli no lines of race, language, culture, industry, commerce, or 
 anything else which would give tlie basis of scientific classification, so that 
 different principles could be consistently applied in each. There was a 
 time, indeed, when the civil subdivisions were small and numerous — when 
 manners, customs, costumes and language varied over every hundred 
 square miles of Europe — but the whole tendency of the great inventions 
 of modern times is to obliterate these boundary lines for purposes of 
 industry and trade. 
 
 It is not necessary to go into the history of Europe for proofs and 
 illustrations. The very best are furnished by our own continent and our 
 own nation. The geograpliical area known to-day as the United States 
 is the result of discovery, conquest and purchase. It would have been 
 impossible a century ago to constitute an empire of such extent, and to 
 govern it according to the requirements of modern life. The improve- 
 ments in transportation and the transmission of intelligence have made 
 it physically possible, and the combination of local institutions with a 
 centralized organization has made it politically possible. 
 
 When we turn to inquire, however, why it has been limited just as 
 it has, why Canada and Mexico are outside, and why Texas, California 
 and Alaska are within, we come at once to the historical antecedents 
 which are partly accidents and partly ancient struggles and hostilities. 
 Canada was never made thoroughly English before the revolutionary 
 war; while it was French it was always hostile to the English colonies. 
 This hostility was traditional, and there was no sympathy with the 
 revolution. New Brunswick and Nova Scotia were largely peopled by 
 the Tory refugees, whom the unwise severity of the Whigs forced to 
 emigrate during and after the war. Texas was won from Mexico in war. 
 California and the other Pacific States were obtained partly by conquest 
 and partly by purchase. A few years ago we discussed a plan for pur- 
 chasing San Domingo. Out of these historical movements, part of which 
 fell out one way and part the other, the actual geographical limits of the 
 United States result. 
 
 Now, according to the Constitution of the United States, no one of 
 these States can make any laws restricting commerce between itself and 
 any of the others. If it be asserted that states which pursue different 
 industries cannot afford to trade fi-eely with one another, here we have 
 them — New York and Pennsylvania, Massachusetts and Minnesota, Maine 
 and Louisana. If it be asserted that states with like industries cannot 
 afford to trade freely with one another, here we have tliem — Indiana and 
 Illinois, Iowa and Minnesota, Massachusetts and Rhode Island, Alabama
 
 PROTECTION m THE UlflTED STATES. 9 
 
 and Mississippi. If it be said that small States cannot afford to trade 
 freely with great empires, here are New York and Connecticut, Pennsyl- 
 vania and Delaware. Why do not the great states suck the life out of the 
 small ones? If it be said that new states with little capital, and on the 
 first stage of culture, cannot afford to exchange freely with old states 
 'having large capital and advanced social organization, here are New 
 'York and Oregon, Massachusetts and Idaho. How can any territories 
 ever grow into states under the pressure ? If it be said that a state which 
 relies on one industry cannot afford to exchange freely with one which 
 has a diversified industry, here are Pennsylvania and Colorado, California 
 and Nevada, any of the cotton states and any of the north-eastern states. 
 No such strong illustrations are furnished by any states in the world 
 which are sovereign and independent of each other. The Constitution 
 of the Union enforces absolute freedom of exchanges, and each state pays 
 its own taxes and supports its own government. The traveler rarely 
 knows when he passes from one state to another. As to what he buys or 
 where he buys, what he sells or where he sells, it Avould be considered an 
 unwarrantable impertinence for any public official to inquire. Yet no 
 man has ever been known, so far as we are aware, to complain of tliis as 
 a hardship, or as imposing a loss upon him, and no such complaint has 
 arisen from any state as a state, nor has any one been heard to claim that 
 there was here an actual loss, which must be endured for the sake of the 
 great benefits which come from Union. On the contrary, it is universally 
 and tacitly agreed that this is one of the great benefits of the Union. 
 
 Here, however, comes in another phase of the matter. If a man 
 lives in Vermont he must trade freely with New Hampshire, Massa- 
 chusetts and New York, but if he wants to trade northward to Canada, 
 it is regarded as fatal to him and to his country, that he should do so 
 freely. As we won Texas from Mexico, we enter into absolute free trade 
 with her, but we think that it would be ruinous to trade freely with the 
 rest of the ancient state of Mexico. If we had got the political jurisdic- 
 tion of San Domingo, we should have entered into free exchanges with 
 her, but the difficulty of the political jurisdiction was the main ground 
 of the wise decision of the nation not to buy that island. If, however, 
 we cannot have the trouble of the political jurisdiction, we think it would 
 be calamitous to have the free exchanges. Free exchanges with Cuba 
 are not to be thought of on our part, even if they would be granted on 
 hers. 
 
 Here, then, the refutation of the " nationality " notion is right before 
 us, and it is at the same time the condemnation of our policy in regard 
 to foreign commerce. If there be any such thing as an "American 
 system" — a system which we can claim to illustrate and advocate before 
 the civilized world, it must be that of absolute free trade, each state or
 
 10 PROTECTION IN THE UNITED STATES. 
 
 nation providing for its own needs and expenses, each state freely open 
 to all comers, securing peace and safety to persons and projierty while 
 within its borders. 
 
 The "British system" is different, and is distinctly defined. It is 
 to raise revenue by customs for convenience, and to lay excises to coun- 
 teract " incidental protection." "We would be very glad to see the British 
 system introduced into this country, but if the protectionists taunt free- 
 traders with flinching from the consequences of their doctrine, we accept 
 the challenge. AYe are convinced by the experience of the United States, 
 that the best system would be to have absolutely free exchanges, and 
 to leave each nation to pay the expense of maintaining the organization 
 of society within its own borders. 
 
 Another application of the facts here discussed which is put to us, is 
 deserving of far less respectful treatment. It is said that we have free 
 trade already within the Union, and that we are discontented and un- 
 reasonable, because we demand more. It would be difficult to show why 
 a man who has ten thousand dollars should not sue for ten thousand 
 more which are due him, or why a man who enjoys the right of locomo- 
 tion is unreasonable in demanding the right of association. 
 
 There is in all that we have said no infringement upon the true idea 
 of the " nation," and no derogation from its value and dignity. It 
 exists historically and traditionally, and we take it as it is handed down 
 to us. It is an organized human society, whose limits are given histori- 
 cally, and are maintained for convenience, because they allow play to 
 certain local interests, jjrejudices, traditions, habits and customs. Whether 
 it is formed by accident and immemorial tradition, or by colonization 
 and legislative act, it develops an organic life. The society as such 
 develops functions. Its harmonious action emanates from its individual 
 members and reacts upon them. Its government is the machinery by 
 which harmony, co-operation and unity are brought about. It would 
 seem, however, that America had done its greatest service to the world 
 by showing that states did not exist for the sake of bringing men into 
 convenient groups for making either commercial or military war upon 
 each other, but that they might more easily embrace the earth in a family 
 of harmonious communities.
 
 LECTURE II. 
 
 Broad Phinciples Underlying the Tariff Controversy. 
 
 The world has heard a great deal about liberty for the last century. 
 That period has been marked by great struggles on the part of nations 
 to secure independence, and on the part of classes and individuals to 
 secure freedom from old traditional restraints. The world has struggled 
 towards "freedom" and "liberty" as if these were the first considera- 
 tions of peace, justice, prosperity and happiness, aud the result has been 
 to produce, in the forefront of modern civilization, states whose funda- 
 mental principle is to give the freest scope to individual energy and effort. 
 
 We in the United States nipke it our greatest boast that Ave have 
 accepted this broad principle absolutely, and applied it fearlessly ; never- 
 theless, we, who are met here to-night, are associated to demand more 
 liberty. There is no body ox our fellow-citizeus worth mentioning 
 who deny the right and the expediency of private property. What we 
 have to demand, and what the majority of our fellow-citizens — so far as 
 their will has yet been vjonstitutionally expressed — deny us, is the 
 privilege of using our property as we like, that is, of exchanging it when 
 and where and with whomsoever we will. When we demand this privi- 
 lege, which belongs to us on the simplest principles of right reason and 
 common sense, we are met by a speculative theory based on artificial 
 assumptions, put forward sometimes on bare considerations of selfish 
 interest, and sometimes with no little parade of abstract philosophizing. 
 We are told, " Oh, no! It is not best for the state that you should do as 
 you like about making your exchanges. Tho legislature must consider 
 the question, and prescribe for you Avith whom and for Avhat you shall 
 exchange. If you deal with the designated persons, your countrymen, 
 they will gain, the Avealth of the community will increase, and you, as a 
 member of the community, Avill participate, and be better off in the end 
 than if you had been let alone." 
 
 Now, Ave dispute this theory at every stage. We deny that the 
 state, i. e., the legislature, can make any such provision for us better than 
 we can make for ourselves, and Ave appeal to experience of everything it 
 tries to do; Ave deny that it has any business to theorize for us in the 
 premises ; we deny that the designated persons Avill gain — at least, that 
 they Avill gain as much as they Avould if they were left to deal with us on 
 their own footing ; we deny that they can gain anything from us, on
 
 j^2 PROTECTION IN THE UNITED STATES. 
 
 accoimt of the law, but wliat we lose; we deny that the total gains to one 
 part of society by this process can ever exceed the total losses of another 
 part, i. e., that the process can increase the Avealth of the community; 
 we deny, finally, that our share of these hypothetical gains can ever be 
 redistributed to us so as to brmg back our first loss. We have never seen 
 money go through such a process, passing througli many hands, and 
 come back whole, to say nothing of loss and waste. 
 
 Thus the issue is joined. On the one side are broad and simple 
 principles, so elementary that they are mere truisms, and on the other 
 side are special pleas of various kinds set up to befog men's judgment, 
 and prevent them from drawing the inferences which follow inevitably. 
 
 Let me suggest to you two or three ot tiie "broadest and most com- 
 manding principles which really decide this question : 
 
 1. We, Americans, have made it tlie first principle of our society 
 that no man shall obtain by law any advantage in the race of life on 
 account of birth or rank, or any traditional or fictitious privilege of any 
 kind whatsoever, and on the other hand, we have removed, so far as the 
 Jaw can remove, all the hindrances and stumbling blocks which come 
 from circumstances of birth and family. Society gives no aid, but it 
 removes all obstacles of social prejudice and tradition. There is not a 
 man in the country who does not resi)ond with a full heart to the Avisdom 
 and truth of this relation of society to the individual. Now, on what 
 principle is this relation based? It is on the belief that society makes 
 the most of its members in that way. Some men have more in them 
 than others. We do not know which is which until they show it; but 
 we believe that the way to let each one come to nis best, is for society to 
 set them all on their feet, and then let them run each for himself. We 
 believe that the best powers of the community are brought out in that 
 way. 
 
 It does not follow that men so treated never make mistakes, and 
 never ruin themselves. We see them do tliis every day; but if it Avere 
 proposed that the state should interfere, fcAv Avould be led astray by the 
 proposition. 
 
 The same principle applies to trade directly and completely. The 
 productive poAVcrs of men and communities difler, but Avhatever they are, 
 more or less, they reach their maximum under liberty. The total of 
 national Avealth is greatest Avhere each disposes of his own energy in pro- 
 duction and exchange Avith the least interference. This is not saying 
 that none Avill make mistakes, or that free trade will eliminate all ills 
 from human life. Free trade Avill not make the idle enjoy the fruits of 
 industry, nor the thriftless possess the reAvards of economy. Poverty, 
 pain, disease, misery will remain as long as idleness and vice remain. 
 Free trade Avill only act in its own measure and Avay, to leave men face to
 
 PROTECTION m THE UNITED STATES. 13 
 
 face with these things, with a somewhat better chance to conquer them. 
 It is one of the great vices of protection that it makes the industrious 
 suffer for the idle, and the energetic and enterprising bear the losses of 
 the stupid. 
 
 2. If,*now, you examine the opposite theory you will find that it assumes' 
 that Ave or our ancestors all made a great mistake in coming to this 
 country and trying to live here. We are told that a tariff is necessary to 
 ^ make a market" for our farmers, that a tariff is necessary to keep our 
 manufactures from dsstruction, that navigation laws arc necessary to 
 preserve our shipping. Some of the old countries support a population 
 twenty or thirty times as dense as ours with little or nothing of this 
 artiQcial system. If, then, we are not able to live here Avithout this aid, 
 we must have left a part of the world where life is easier for one where it 
 is harder. This brings me, then, 
 
 3. To the great fundamental error of the theory, viz. : That taxation 
 is a productive force. No emigrants go to the desert of Sahara. None 
 would go to New York if it were sand and rocks. If, however, New 
 York is a part of the earth's surface, consisting of arable land fit to pro- 
 duce food for man ; if it is intersected by mountains, covered by forests, 
 and containing iron and coal, and if it possesses great rivers and a 
 splendid harbor, then the conditions of supporting human life are ful- 
 filled. It requires only labor and capital to build up there a great and 
 prosperous community. It is plain that some parts of the earth's surface 
 contain more materials for man's use than others, and the fact as to New 
 York will affect the wealth of its inhabitants. It is plain that it makes 
 a diffei'f^nce Avhether the people are idle or industrious, listless or ener- 
 getic, sluggish or enterprising. It is plain that it makes a difference how 
 much capital they have, or whether there are enough of them for the 
 best distribution of labor. It is plain that it makes a difierence what is 
 the state of the arts and sciences, and what are the facilities of transpor- 
 tation. 
 
 The wealth of New York at any given time must depend on the way 
 in which these factors are combined. Now the question arises: How can 
 taxation possibly increase the product ^ Which one of the factors does 
 it act upon ? 
 
 Just consider what taxation is. We pay taxes, in the first place, to 
 pay for the necessary organization of society, in order that we may act 
 together, and not at cross purposes like a mob ; but if that were all the 
 state had to do taxes would be very small. We must support courts and 
 police, and army and navy. These we need for peace, and justice, and 
 security. But suppose that there were none who had the will to rob, or to 
 swindle, or to cheat, or to do violence, the expenditures under this head 
 would dwindle to nothing. It follows that taxes are the tribute we pay
 
 14 PROTECTION IN THE UNITED iSTATES. 
 
 to avarice, and violence, and rapine, and all the other vices which dis- 
 figure human nature. Taxes are only those evils translated into money 
 and spread over the community. They are so much taken Irom tijo 
 strength of the laborer, or tne fertility of the soil, or the benefit cf the 
 slimate. They are loss and waste to almost their entire extent. 
 
 This is the function of government then, which it is proposed to 
 use to create value, to do what men can do only by applying labor and 
 capital to laud. Let us take a case to test it. Let us suppose that no 
 woolen cloth is made in New York, but that a New York farmer, at the 
 end of a certain time, has ten bushels of wheat, of which one bushel will 
 buy a yard of imported cloth. After the exchange then he has nine 
 bushels of wheat and one yard of cloth. If any one could make cloth in 
 New York as easily as he could raise a bushel of wheat, some one would 
 do it as soon as there was unemployed labor and capital, and that would 
 be the end of the matter; but if no one undertakes the business it must 
 be because labor and capital are all employed, or because it takes more 
 labor and capital to produce a yard of cloth than a bushel of wheat. Let 
 us suppose that it would take as much as a bushel and a half of Avheat. 
 Now, a protectionist proposes to the state to tax imported cloth one-half 
 bushel of wheat per yard. If his plan is carried out the difficulty of 
 obtaining imported cloth is raised to one bushel and a half of wheat per 
 yard, which is the rate of difficulty at which it can be produced in New 
 York. The protectionist then begins and offers his cloth at a bushel 
 and a half per yard. The farmer who, as before, has produced ten 
 bushels, now buys at the new rate, and after the exchange stands [)os- 
 sessed of eight and a half bushels of wheat and one yard of cloth. 
 Whither has the other half bushel gone ? It has gone to make up a fund 
 to hire some men to make life in New York harder than God and nature 
 made it. From time to time we are told how much " our industries, have 
 increased." So far as their increase is in fact due to this arrangement, it 
 is only a proof how much mischief has been done. This application of 
 taxation does not alter the nature of taxation, it only extends its 
 effects arbitrarily and needlessly, and inflicts upon the people a greater 
 measure than they need otherwise bear of the burden which is due to 
 robbery, injustice, war, famine and the other social ills. 
 
 4. Protection is, moreover, hostile to improvements. AVe are always 
 eager to devise improved methods and to invent machinery to "save 
 labor," but cverj such improvement which we introduce involves the 
 waste and destruction of a great deal of capital. Old machinery must be 
 discarded, although it is not worn out. This loss is not incurred by any- 
 body willingly ; it is enforced by competition. When, therefore, competi- 
 tion IS withdrawn or limited the iiieentivo to improvement is lessened or 
 destroyed. This applies especially in mauufaclures where the interna-
 
 PROTECTION IN THE UNITED STATES. 15 
 
 tional competition is cut off by protective duties. The Scame principle 
 that protection resists improvement applies even more distinctly to those 
 improvements which are made in transportation. In spite of their theories 
 men rejoice in all the improved means of communication which brini; 
 nations nearer together. A new railroad or an improved steamsliip i 
 regarded as a step gained in civilization. Such improvements are realized 
 in diminished freights and diminished prices of imported goods. No 
 sooner is this realized, however, than "foreign competition" is found to 
 be worse than ever. An outcry goes up for " more protection," and a new 
 tax IS put on to-day to counteract what wc rejoiced over yesterday as :in 
 immense gain. We spend millions to dredge out onr harbors, to remove 
 rocks and cut channels through sandbars, as if it Avere a gain to liave 
 communication inward and outward as free as possible, and as soon as we 
 experience the effects in reduced cost of goods we lay a new tax, like re- 
 storing the sandbars, in order to undo our work. Indeed, to build sand- 
 bars across our harbors would be a far cheaper means of reaching the 
 same end. Next, we find that the numerous and complicated taxes have 
 made it impossible for us to build ships to sail across the ocean where 
 they must come in competition with foreign ships; so we make navigation 
 acts and forbid the purchase of ships, exclude foreigners from our coasting^ 
 trade, and finally, propose bounties and subsidies, all of which must come 
 at last out of the products of our labor, in order to try to get ships once 
 more. It is like the man who cut a piece from his coat to mend his 
 trowsers, a piece from his vest to replace the hole in his coat, a piece from 
 his trowsers to restore his vest, and so on over again. Did he ever get a 
 whole suit? He found in a little Avhile that he had only a rag left. 
 
 We are told, however, that if we do not do all this we shall be "inun- 
 dated" with foreign goods. The word is appalling, and carries with it a 
 fallacy which often seems to have great poAver. On what terms shall we 
 get this flood of good things ? Will they be given to us ? If so, Avhat can 
 we do better than to stop work and live on this generosity? Why are we, 
 however, selected as the especial objects of this bounty, if bounty it is? 
 Why do not England and France and Belgium and Germany pour out 
 their inundations on Patagonia and Iceland ? The answer is plain enough. 
 The goods are not gifts, they arc offered for exchange. Nothing can force 
 us to buy or dictate terms of exchange ; and the inundation comes to us 
 because we are known to be rich and able, and because we inhabit a conti4 
 nent prolific in some of the chief objects of human desire. It is not the 
 beggar who, Avhen he goes down the street, is "inundated" with wares 
 from the various stores. If it were he Avould probably stem the tide with 
 joy. It is the rich man only to whom good things are freely offered Avith 
 a well understood condition; few. rich men have ever been heard to com- 
 plain of it. If, then, the Americans have these good things offered them.
 
 IQ PROTECTION IN THE UNITED iSTATES 
 
 in exchange and they allow themselveti to be worsted in the bargain, they 
 sadly belie their reputation. 
 
 These few observations which I have now presented as bearing on tliis 
 k'^ubject are very broad and comprehensive, and very sweeping m their 
 reffc'ct. Tiiey appeal directly to common sense and right reason. They 
 give us the correct point of view, and dispel some of the fog which has 
 collected from habit and prejudice around this subject. They lead us 
 right up to the doctrine which the United States have put m practice in 
 their own internal trade — absolute freedom of exchange and local or 
 internal taxation. We have proved the practical value of that system 
 here over a continent. I cannot see why the same system would not be 
 a great gain if extended over Canada, Mexico and the West Indies. I 
 cannot see why it would not be a great gain if all South America Avere 
 embraced in a confederation exactly like ours as far as this point is con- 
 cerned, with absolute free trade between the states. I cannot see why all 
 Europe would not gain by similar relations, as far as trade is concerned; 
 and I see no reason why it should not be equally beneficent if extended 
 to the whole civilized globe. 
 
 The objections come in the shape of stubborn prejudices and old 
 errors attaching to narrow and special considerations. Some people dread 
 the sweep of a great general principle, however clear and certain and 
 scientific it may be. They dispose of it as a *' theory." "Well, I am a theorist. 
 I accept the disabilities and demand the advantages of my position; and 
 when I find a great principle founded in an observation of facts and ex- 
 perience, I am not afraid to follow it up to its last corollary. The states- 
 man must do what he can in the face ot tracUHon and prejudice and vested 
 interests, and I presume that i^ will be iong before the public will be so 
 enlightened as to demand to tee^ every cent that it pays in taxes for the 
 very sake of knowing the amount, but 1 am clear in regard to the wisdom 
 of such an arrangement. 
 
 In the further lectures which I am to give I propose to treat the 
 subject historically for I believe that the tariff history of the United 
 States shows most clearly some of the worst of the evils of the system, 
 and I think that every one ought to know liow this system has grown up 
 and been fastened upon us.
 
 LECTURE III 
 
 The Origii? of Peotectiois" ik this Oountrt. 
 
 The war oi American Independence was a revolt against unjust 
 taxation. In tlie same year tlie Declaration of Independence was adopted, 
 and Adam Smith published his " Wealth of Nations." They were two 
 revolts, one political, the other scientific, against the prevailing dogmas 
 of the mercantile system of political economy. They were twin inci- 
 dents in the revolt of modern life against the traditions of the middle 
 age. It is at once a pity and a surprise that the last century has seen 
 their developments diverge instead of combining. 
 
 The revolt of the American colonies was against the " colonial 
 system," which was itself only a part of a grand theory about the rela- 
 tions of nations as regards trade. According to this theory, nations were 
 to be isolated from each other. They were not regarded as merely groups 
 in the body of mankind, having common interests, but as distinct and 
 separate bodies, having hostile interests, and ruled in their relations to one 
 another by jealousy, suspicion and desire for plunder. Civilization had 
 advanced so far that these motives were regarded inside the nation as 
 barbarous and injurious, but they still prevailed in international rela- 
 tions. In regard to trade, it was believed that its object was to get pos- 
 session of money — precious metals — that this was wealth, and that only 
 one party to an exchange could gain by it. It naturally followed 
 that complicated laws were made to control trade and drive it into the 
 forms which men thought wiser and better than those of nature. 
 Export duties were laid on raw materials to make them cheap ; bounties 
 were laid on exports of manufactured goods in order to increase exports; 
 duties were laid on imports to diminish them; prohibitions were laid on 
 the exportation of specie, or on the exportation of machinery, or on the 
 emigration of laborers. Navigation laws, including discriminating 
 duties and tonnage taxes were passed. All this belonged to the great 
 system: the elfoct was to isolate nations, to rob them of each other's 
 gains in literature and the arts and scienceV and to cut off all that 
 highest development which comes from the action of states on states. 
 
 When this system was complete and the barriers were established, 
 nations began to put in special gates, well defended, at which they agreed 
 to let each other in and out for special forms of trade, at particular times 
 and under strict regulations. We ask, in astonishment, if this was trade ;
 
 18 PROTECTION m THE UNITED STATES. 
 
 if men really believed that trade ranst be watched and restrained in this 
 way. We see that the private trader cannot make his place of business 
 too attractive, nor set the door too wide open, nor make the approach too 
 easy, nor be too indifferent as to who comes, or how, i:)rovideG. he comes 
 for honest trade. But the method we here find in use suggests only 
 dread, suspicion and war. The machinery is tliat of a fortress, not that 
 of a market. 
 
 The colonial system was only a part of this system. When the old 
 States had all been thus isolated they began to seek possessions in the 
 new world, with which each for itself could hold free trade but exclude 
 all others. That is, foreign commerce was, after all, a good thing, and 
 free trade was a good thing, if you could hold the foreign nation in sub- 
 jection and coerce all its relations. If the colony could be used for the 
 interest of the mother country, freedom, on this theory, became a good 
 thing for trade. This theory liadan obvious weakness, that if the colony 
 ever got strong enough it would not endure this warping of all its ener- 
 gies in one direction, but would get independence in order to come into 
 free relations with other nations besides its mother country. Such is 
 the actual meaning of the American war of independence. 
 
 It would seem natural that the emancipated colonies would seek free 
 intercourse with all nations, and it is a very curious study to see how this 
 logical tendency conflicted for years after the revolution with inherited 
 traditions and prejudices. On the 6th February, 1778, Gerard, Franklin, 
 Deane and Lee made a treaty of alliance and also a treaty of commerce 
 between France and the United States. In the latter treaty it was agreed 
 to avoid " all those burthensome prejudices which are usually sources of 
 debate, embarrassment and discontent," and to take as the " basis of their 
 agreement the most perfect equality and reciprocity,' They further re- 
 fer to the general principle by which they were guided as that of " found- 
 ing the advantage of commerce solely upon reciprocal utility and the just 
 rules of free intercourse." Up to this time the principle of treaties of 
 commerce had been that two nations made an agreement to give each 
 other special and exclusive privileges. The Americans introduced this 
 much of a new principle, that they Avould not enter into those compli- 
 cated relations by which Europe, after having cut off all natural relations, 
 had set up special, narroAv, arbitrary and artificial relations between 
 nations, but that they would hold themselves open to the freest relations 
 they could establish with all parts of the old world. 
 
 Hence we find their representatives abroad eagerly pushing, at every 
 opportunity, for chances to establish commercial relations. They met 
 with all kinds of obstacles. Old habit had accustomed nations to deal 
 with their OAvn colonies only. They had no idea what good things the 
 North American colonies could offer. The habit of suspicion was strong.
 
 PROTECTION IN THE UNITED STATES. ly 
 
 and the prevailing notions of trade led them to apprehend dangers rather 
 than advantages from trade. On the other hand, as it had generally been 
 believed that England had gaiaed great advantages from her colonies, 
 there was great eagerness to get a share in those advantages now that they 
 were free and open, if only the aspirants had been able to find out what 
 those advantages were and how to obtain them. 
 
 It is strange to read the correspondence of the American agents 
 abroad, and to see how they argued and discussed with grave ambassa- 
 dors about the "loss" which one nation would suffer in trading with 
 another, any shipment of specie one way or the other being regarded as 
 an infallible sign of loss. The Americans were by no means clear in 
 their ideas, and did not combat these notions on principb, but apparently 
 conicided in them. They sought equality and reciprocity, but they never 
 rose to the height of the only true doctrine. In an exchange both parties 
 win, or else obviously one would refuse to trade. ' If then one party 
 puts obstacles in tlie way, the total gain is diminished, the diminution 
 probably being divided. If the ether party creates an obstacle, the gain 
 is still further diminished or destroyed. It is a matter of regret there- 
 fore when .one party is guilty of this folly, but it only doubles the mis- 
 chief, and still further injures the other, if he likewise perpetrates the 
 same folly. This is the answer to the well worn and stubborn notion 
 that free trade must be reciprocal, or would be good if all nations would 
 adopt it. One nation which adopts free trade gets more than it would if 
 it put on restraints, even though all other nations may have restraints. 
 It will share the gain if they follow its example, for the gain is multi- 
 plied at every step, but, even while they hold back, it gains as much as 
 it can and makes the best of a bad state of things, while waiting for 
 them to come to a better mind, if it adopts freedom. What would be 
 thought of a grocer who refused to trade with the hatter who would sell 
 him the best hats at the lowest price, because the hatter did not buy flour 
 and sugar of him ? 
 
 The American ministers had little success in their efforts to make 
 treaties such as I have described. The one with England was the one 
 most eagerly desired. Under the prevailing notions the English had ex- 
 pected to suffer immense losses by the separation, but habit and the 
 excellence of English goods revived trade immediately after the war, and 
 the trade was found as good as ever. A treaty which would have been 
 eagerly seized in 1782 was refused in 1785. They did not care for any 
 treaty. 
 
 Here we come to the first case in which currency errors became in- 
 tertwined with errors as to foreign trade, a junction which has run 
 through all our history to the present moment and which has been pro- 
 of mischief. In 1781, after the downfall of the continental currency.
 
 ;;0 PROTECTION IN TEE UNITED STATES. 
 
 specie "became very abundant here, being bought by both French and 
 English. The States, however, still had vast quantities of paper afloat. 
 As soon as the war ended this specie waa all exported and expended in 
 the purchase of goods long missed. The export of specie in 1783 was 
 ten millions. The import of goods from England in 1785 was 10 
 millions, and the exports 3.9 millions. In 1770 the imports were 8.5 
 millions, and the exports 4.5 millions. This explains why the English 
 were so well satisfied with the revival of trade. 
 
 During the war many industries liad sprung up to supply the wants 
 of the people for manufactures formerly imported. At the return of 
 peace these industries were prostrated, and a cry began to be made at that 
 time that the country could not stand free trade, and that it must do as 
 England had always done, that is, imitate the old restrictive system. The 
 real demand was that some way should be found by law to continue upon 
 the American people, by their own act, the evils which the war had in- 
 flicted on them. We shall see more of this when we come to the tariff 
 of 1816. Whatever may have been the effect of peace to destroy the war 
 mushrooms, we find that there were, in 1789, manufactures of iron, glass, 
 paper and cloth here, which were boasted of as strong and prosperous, 
 and propositions were made by competent capitalists for mining iron 
 on a large scale in Pennsylvania, which fell only on account of the tur- 
 bulency of the inhabitants and the insecurity of titles. 
 
 While things were in this state, Adams wrote from England in great 
 disgust at the rejection of his treaty, and urged reprisals. He declared 
 that we could get no treaty until we should set up restrictions, that is, 
 we were to put a hindrance in the way in order to make a bargain for 
 getting English obstacles removed by promising to remove ours. Mas- 
 sachusetts took this advice, but found that it drove trade away to JSlew- 
 port and Portsmouth. Virginia did the same, and found that she had 
 likewise benefited Maryland and North Carolina. 
 
 Meanwhile the government of the Confederation was falling to 
 pieces, and was a pity and a laughing stock. It had no revenues and 
 could not pay instalments on its loans as they fell due, nor even the 
 interest on its debt. Misery was great throughout the country, owing 
 to paper money and debt and the losses of war. The people were dis- 
 contented and rebellious, actual disorder occurring in Massacliusetts, 
 Pennsylvania and North Carolina. The Congress was begging the States 
 to lay a uniform five per cent, duty to provide a revenue for the Confed- 
 eration. The question of import tax was, therefore, bound up with the 
 question of civil order, protection to manufactures, foreign commercial 
 relations, and the misery arising from bad currency at home. Virginia 
 having tried to come to an agreement with Maryland to enforce a com- 
 nion revenue system on the great waters of those States, this was found
 
 PROTECTION IN THE UNITED 8TATES 21 
 
 to be impracticable without the cooperation of other States. This led 
 to the Congress of Annapolis in 1786, which was only a commercial con- 
 vention, and which found no better way to discharge the task it had 
 undertaken than to recommend Congress to call another convention in 
 the following year to revise the Articles of Confederation ; that is, to 
 provide lor a common revenue system, and for " the regulation of com- 
 merce," by giving the general government permanent power for those 
 purposes. The Convention, when it met, made a complete reconstruction 
 of the Articles of Confederation and gave us the present Constitution. 
 You see, then, just how much truth there is in the assertion that the 
 country was ruined by free trade during the Confederation, and that the 
 Constitution was made to give protection. 
 
 In the Constitutional Convention, the question of free trade came 
 tip under the form of a desire for a navigation law, and it at once took 
 a sectional form. The Eastern States wanted the Constitution chiefly in 
 order \n get such a law. The Southernmost States wanted free trade. 
 The positions of the two sections were inverted in regard to slavery, 
 while some of the Middle States wanted neither navigation laws nor 
 slavery. It was one of the compromises of the Constitution that the 
 power to regulate commerce was inserted, together with the allowance 
 of the slave trade until 1808 (under the permission to tax slaves not over 
 ten dollars per head), and the prohibition of export duties. 
 
 No sooner did the House of Eepresentatives get a quorum than the 
 subject of revenue came up, and no sooner was the subject of revenue 
 taken up than the question of protection was raised. 
 
 In the debate, Madison said : 
 ■ * " I own myself the friendof a very free system of commerce. If industry 
 aild labor are left to take their own course they will generally be directed 
 to those objects which are most productive, and that in a manner more 
 certain and direct than the wisdom of the most enlightened legislature 
 could point out. Nor do I believe that the national interest is more pro- 
 moted by such legislative directions than the interest of the individuals 
 concerjped. Yet I concede that exceptions exist to this general rule, 
 important in themselves, and claiming the particular attention of this 
 committee. If America were to leave her ports perfectly free, and to make 
 no discrimination between vessels owned by citizens and those owned by 
 foreigners, while other nations make such discrimination, such a policy 
 would go to exclude American shipping from foreign ports, and we should 
 be materially affected in one of our most important interests." 
 
 Again, in reply to Fitzsimmons, of Pennsylvania, who wanted more 
 protection, and wanted to discourage luxury, and made certain proposi- 
 tions to that end, he said : " Some of the propositions may be productive 
 of revenue, and some may protect our domestic manufactures, though the
 
 22 PROTECTION IN THE UNITED STATES. 
 
 latter subject, which involves some intricate questions, ought not to be 
 too confusedly blended with the former." 
 
 That is to say, he was one of those who believe that a doctrine can be 
 true and its application unwise, and he thought that the coercion to be 
 exercised on somebody else by doing one's self a a injury was sufficient 
 cause for submitting to suflfoinng. He also tried very hard, on this and 
 subsequent occasions, but fortunately in vain, to introduce discriminating 
 duties as between the nations with which we had treaties and those with 
 which we had none. 
 
 Perhaps the most remarkable utterance which has ever been made in 
 the discussion of this tariff question was made by Fisher Ames in this 
 debate of 1789. He said: "From the different situation of the manu- 
 facturers in Europe and America, encouragement is necessary. In Europe 
 the artisan is driven to labor for his bread. Stern necessity, witli her 
 iron rod, compels his exertion. In America, invitation and encourage- 
 ment are needed. Without them the infant manufacture droops, and 
 those who might be employed in it seek with success a competency from 
 our cheap and fertile soil." For a man to adduce the facts which are the 
 grandest argument on one side of the question as an argument on the 
 other is not common, and that a man like Fisher Ames could 
 do it is a proof of the depth to which long rooted notions 
 can affect a man's mind. The argument amounts to saying 
 that it is so easy for laborers to get a living in America, 
 that we must make it hard to get a living here in order that work may 
 be done. It states the protectionist position in America, however, with 
 great exactness. The cheap and fertile soil, by nature, holds out to men 
 of the artisan class a competency in return for moderate and easy labor. 
 In order that they might be forced to work at manufactures, which were, 
 in the nature of things, less remunerative in a new country with bound- 
 less fertile soil, it was necessary to curtail by artificial and legal arrange- 
 ments the profits of agriculture. This is just what the tariff has done 
 from 1789 until this day. We are more familiar with the argument 
 under tlie form of the comparative rates of wages here and abroad, but it 
 comes back to just what Ames so simply stated. The competition which 
 the protectionist employer has had to contend against here has never 
 been the cheapness of foreign labor ; it has been the greater return which 
 his men could get by putting the same labor on the soil. That is the 
 only meaning of the high wages in this country. What makes Avages 
 high ? Where do they come from ? Or why is it that artisans are told 
 that protection makes wages high ? How are these things reconcilable ? 
 Or how is it that the foreign labor with Avhicli we are told that we can- 
 not compete is especially that of England, where wages are higher than 
 anywhere else in Europe ? Or why is it that high-priced labor can com-
 
 PROTECTION IN THE UNITED STATES. ^3 
 
 pete here in agriculture and stand three or four thousand miles of trans- 
 portation ? Wages are high here because men of the wages class can get 
 all the fertile land they can till by going to it ; because the capital re- 
 quired is very small, and because the returns are almost pure reward of 
 labor. Hence they will not go into the wages class unless the induce- 
 ment is equal. It is the great form in which the new country holds out 
 grand opportunities to the man who has nothing but his manual labor to 
 depend upon, and the protective system does, and always has taken away 
 from the farmer, laborer and artisan, the advantages which nature offered 
 him in the new country. 
 
 To return to the tariff debate of 1789. The character of all tariff legis- 
 lation in this country, as a grand grab struggle between interests and 
 sections, was illustrated then. 
 
 The South, except Georgia, wanted a high tariff duty on rum, for reve- 
 nue ; the Middle States, in the interest of temi^erance, the Eastern States, 
 for protection to their rum distilleries. Georgia opposed this tax because 
 she used a great deal of rum, and bought it in the West Indies with her 
 lumber. The Southern and Middle States wanted a tax also on molasses, 
 but this the Eastern States vigorously opposed. Molasses was the raw 
 material of rum. It was bought with salt fish, lumber and staves sent to 
 the West Indies. Eum was itself an export to Africa. Both the Eastern 
 States, in this case, and Georgia, in the preceding, felt and urged the 
 truth which the South urged in 1832, but which the manufacturers 
 scouted, that the tariff on imports would diminish the trade and lessen 
 the exports ; that is, cripple the " home industry." Our present tariff 
 is unquestionably acting in the same way on all the great staple agri- 
 cultural industries of the country which export tlieir product. 
 
 The South opposed the tax on iron and steel, as all agricultural inter- 
 ests must. The Pennsylvanians replied that the manufecture was already 
 established in their State, and that a slight duty would, " in a little while," 
 lead to a great production. 
 
 The South wanted a protective tax on hemp, claiming that rice and 
 indigo were unprofitable. Pennsylvania opposed any tax on hemp as a 
 raw material of cordage, but wanted a tax on that. New England op- 
 posed the tax on cordage as a raw material of ships, but wanted protec- 
 tion on the latter. In the midst of this wrangling effort to invent some way 
 by law to enable people to get rich in the country, it is interesting to notice 
 that cotton was only incidentally alluded to. A tax of three '--nts a 
 pound was put upon it, on the chances that it might come to something. 
 Tliis well illustrates the amount of foresight that statesmen can ever ex- 
 ercise in these matters. They passed over an article, destined by natural 
 circumstances to become one of the great staples of the country, wliile 
 they were looking for something t.) cjieourage, and when tliey found such
 
 24, PROTECTION IN THE UNITED STATES. 
 
 au article, whose value lay in nature and fact, it was totally beyond their 
 puny systems of artificial aid. 
 
 The South opposed any duty on spikes or nails. Goodhue replied for 
 New England, that they were already exported, and that a tax would soon 
 produce enough for all North America. It was a " domestic manufacture" 
 in chimney corners. " Domestic manufactures " was a term then used for 
 household manufactures, which were regarded with great favor as a de- 
 sirable thing. 
 
 For twenty-five years after this time protectionist journals gathered in- 
 stances of farmers whose wives or daughters spun and wove, and whose 
 sons spent the evening in making nails at the chimney corner, and such 
 journals paraded these cases as glorious instances of industry. This went 
 on long after machinery liad so cheapened these manufactures that an 
 hour's farm work would pay for more goods of this kind than people 
 could make by hand in a day, but the old people who clung to the method 
 were pointed to as models, and the young people who preferred printed 
 calicoes to homespun and leisure to nail-making, were scolded for their 
 extravagance. This opinion had no necessary connection with protec- 
 tion, but it sprang from the general erroneous point of view that we 
 want work for the sake of work, and not for the sake of results ; that in- 
 dustry is a good thing, not because it produces more goods, but because 
 it is work ; that the ideal of life is not abundance with leisure, but scarc- 
 ity with toil. Hence it seems wise to refuse the benefits of machinery 
 owned by foreigners in the first place, and before they know it, those who 
 advocate protection to bring factories into being are applauding those 
 who refuse to profit by the machinery when established. 
 
 New England and Virginia, which latter then expected to become a 
 ship-building State, favored navigation acts as protection to shipping. 
 The other States, as freight-payers and not ship owners, objected. A dis- 
 criminating tonnage duty was laid, and ten per cent, was reduced from 
 duties on goods imported in American ships. A special discriminating 
 duty was laid on tea, because the tea trade could only be carried on by 
 "a drain of specie." The wars in Europe and the increased trade of neu- 
 trals during the next twenty-five years led to an immense increase of 
 American shipping independent of protection, but it became an im- 
 portant precedent, as I shall show, in the tariff debate of 1816. 
 
 The tariff of 1789 avowedly adopted the principle of protection. The 
 preamble read as follows : " Whereas, it is necessary for the support of 
 the Government, for the discharge of the debts of the United States, and 
 the encouragement and protection of manufactures, that duties be laid, 
 &c." It was declared to be only temporary in order to give infant indus- 
 tries a start, and was limited to 17!»(J. The duties levied under it were 
 equivalent to an ad valorem rate of 8^ per cent. During the debate some
 
 PROTECTION m THE UNITED STATES. 25 
 
 fears were expressed that the duties might be so high as to encourage 
 smuggling. To tliis Mr. Madison replied that he " would not believe that 
 the virtue of our citizens was so weak as not to resist that temptation to 
 smuggling which a seeming interest might create. Their conduct under 
 the British Government was no proof of a disposition to evade a just tax. 
 At that time they conceived themselves oppressed by a nation in whose 
 councils they had no share, and on that principle resistance was justified 
 to their consciences. The case was now altered ; all had a voice in every 
 regulation, and he did not despair of a great revolution in sentiment when 
 it came to be understood that the man who wounds the honor of his 
 country by a baseness in defrauding the revenue, at the same time exposes 
 his neighbors to further impositions." 
 
 This tariff, then, was the thin edge of the wedge. The duties were 
 raised the next year so as to equal an 11 per cent, ad valorem rate, and in 
 1792 they were raised to equal Vi\ per cent. Between the tariff of 1789 
 and that of 1816, a period of twenty-six years, seventeen acts were passed 
 affecting duties, generally and steadily raising them. 
 
 The most important incident in this early tariff history was Hamil- 
 ton's report on the manufactures, December 5, 1791. It came from a 
 man who held and deserved high authority as a statesman, and it dealt 
 with the subject in a comprehensive manner. It has been the arsenal 
 from which our popular school of protectionists have borrowed ever 
 since. Its political economy, however, is very erroneous, and defective in 
 many fundamental respects. It is erroneous as to wages, and it confuses 
 credit, capital and money. It is marked throughout by the errors of the 
 old mercantile system, hinging all its views of foreign trade on the im- 
 port or export of specie to be occasioned. Thus Hamilton says: "The 
 West India Islands, the soils of Avhich are the most fertile, and the nation 
 which in the greatest degree supplies the rest of the world with the pre- 
 cious metals, exchange to a loss with almost every other country." 
 
 He admits the force of the broad free trade arguments, but thinks 
 that while other nations follow the restrictive system, the United States 
 must do so. He speaks of the hindrances met with in attempting to 
 export American products, which would seem to point to a general con- 
 viction of the mischief of the entire restrictive system, and not to the 
 conclusion that the United States ought to adopt the same policy. 
 Though led to advocate protection on this special plea, he goes on to try 
 to give it a theoretical justification. We shall have occasion to notice 
 this again; but I beg you here to observe the difference. If the argument 
 was made, as it often was for our first half century, that free trade was 
 good, but that we must restrict because others did, it would follow that 
 we ought to abandon restriction as fast and as far as others did. If the 
 argument was based on principle and theory, it would be good any time..
 
 Mg PROTECTION IN THE UNITED STATES. 
 
 for all nations, and forever. The argument of expediency was used, how- 
 ever, as in this report of Hamilton, to break the force of the common 
 sense free trade view, and the theoretical argument was smuggled in be- 
 hind it. He distinguishes seven particulars in which he thinks protec- 
 tion is theoretically advantageous. Of these, three, ''the division of 
 labor," "aflFording greater scope for the diversity of talents," and "afford- 
 in o- a more ample and various field for enterprise," are only subdivisions 
 of the o-reat doctrine of the "diversification of industry," and may be 
 noticed under that head. The issue here between the free trader and the 
 protectionist depends on radically different views of human society. The 
 question is whether industry diversifies itself as chances arise under the 
 ' operation of natural forces, so that man can neither hasten the process 
 nor retard it without doing injury ; or whether the legislature must be 
 always on the watch to discharge a heavy responsibility resting upon it, 
 viz., to tell society w^hen and how to adjust itself into groups for in- 
 dustrial purposes. The industrial history of the American colonies 
 offers the best proof in the world of the truth of the former view. There 
 w^e see communities growing from the simplest germ, isolated to a certain 
 extent. We see that the development of society is as regular and as 
 natural as that of a plant, and there is no more need of human interfer- 
 ence than there is to make a bud burst into a blossom at the proper 
 moment. It is a development, moreover, which cannot be hastened 
 without injury. A new country cannot have the higher social develop- 
 ments until its population begins to grow dense. It is so with us yet 
 "We have not the literature or the science or the fine arts of the old 
 countries, but we have not their poverty and misery. We must take our 
 advantages and disadvantages together. 
 
 Now the diversification of industry comes, so far as it is desirable or 
 advantageous, of itself. We must wait for it till it comes, and we must 
 take it when it comes. The South will rind its interest in cotton culture 
 as a great prevailing industry for a long time to come. The same is true 
 of the wheat of the West. No preaching cau induce men to abandon the 
 industry Avhich is the most lucrative, and no law can make them do it 
 without injuring their interest. As for the scope for varied talents, per- 
 sons go to the places Avhich offer an arena for their talents. They do 
 not sit still and say: "Let us make an arena here." The tendency ot 
 man, as transportation is made easier and emigration freer, is to stop trying 
 to coerce nature, and to put himself where nature spontaneously aids 
 liim. As for the division of labor, it is just as great and just as advan- 
 tageous, now that transportation is easy, if the laborers are locally dis- 
 trilnited as if they are industrially distributed. Look at the distribution 
 in our own country. The South raises raw materials, the West raises
 
 PROTECTION m TEE UNITED STATES. 27 
 
 food, and the East manufactures. As for the varied field of enterprise, 
 the world opens that, and our enterprises seek the place of advantage. 
 
 Hamilton next says that protection extends the use of machinery. 
 He means that if there are manufactures, there is more use for machinery 
 than there is in agriculture. On this view you do the business to use 
 the machinery, you do not use machinery to do the business. 
 
 JSText he argues that protection furnishes additional employment to 
 classes not formerly engaged in the business. This is the argument that 
 protection makes work. It is very true that protection makes work, but 
 that it makes more work without making more product. It increases the 
 human exertion necessary to gain the same amount of good. 
 
 He had in view domestic work auxiliary to adjacent manufactories. 
 He thinks that the factories offer employment to the wives and children 
 of farmers, in work which they can do at home. He refers to the chil- 
 dren employed in factories in England, and he thinks that the farmer's 
 income might be enlarged by this aid. Let us realize the facts. An 
 American farmer could, by virtue of the advantages of the new country, 
 if untrammeled by interference, support himself and a family by his own 
 labor, Earm work furnishes opportunity for the participation of all the 
 family to a certain degree. Beyond that the farmer could give his Avife 
 leisure for the culture and accomplishments of life. He could also sup^iort 
 his children up to maturity, giving them a long and complete education. 
 Now adopt the protective system and put up a fostered industry by the 
 side of his farm. I think it very likely that you would soon find his wife 
 spending her time over work from the factory, and his children curtailed 
 of their time of education and sent to work in it. It would be found 
 necessary to take some such step to keep up the fam%" income to the old 
 figure. Work would be made for the wife and children, and the amount 
 of that work which they would be obliged to do would be no unfair 
 measure of the harm the restrictive system had inflicted on the farmer. 
 The protective system simply lowers the social attainments of farmers 
 and fiirmers' wives, and lessens the degree of education to which farmers' 
 children can aspire. 
 
 The next object which Hamilton thought that a protective system 
 could attain was the promotion of immigration. Tho best examination 
 of this claim is to look at the f\ict as to what immigration has taken 
 place. Of course protection cannot be credited with any other immigra- 
 tion than that which has taken place amongst workmen in the protected 
 industries. The total immigration for fifty-one years, from 1820 to 1870, 
 was 7,800,000. Of these 4,800,000, or 61 per cent., had no occupa- 
 tion or stated none. They were mostly women and children and laborers, 
 supplying manual labor, which the new country demanded in large quan- 
 tities. The next largest number was of laborers so reported, 1,300,000-
 
 28 PROTECTION IN THE UNITED STATE 8. 
 
 The next number was of farmers, 900,000, bearing witness to the 
 attractions of the natural advantages of the country simply. The next 
 number was of mechanics, not specified, 500,000. Of the others, the 
 only ones possibly included in protected industries were, miners, 92,181 ; 
 weavers and spinners, 14,790 (of whom nearly half came between 1830 
 and 1840, when, as is well known, large numbers of persons in these 
 trades came from England on account of the introduction of machinery, 
 and sought other employment here) ; manufacturers, 4,520. Now, if we 
 look at the half million mechanics, we find that very few of them belong 
 to industries which are protected. For the sake of a closer examination, 
 take a year of high protection and very large immigration, 1870. The 
 total immigration was 387,203. Of these, those classified as " skilled 
 workmen," numbered 31,964. Of these, 8,061 were " mechanics not 
 stated," leaving say 24,000. The largest numbers amongst these were, 
 blacksmiths, 2,378; carpenters, 4,421 ; masons, 2,190 ; shoemakers, 1,557 ; 
 tailors, 1,660 (none of whom certainly profited by protection) ; miners, 
 4,763; weavers, 1,178 (who came into more or less protection). The 
 others who belonged to protected industries were, brewers, 362 ; cutlers, 
 5 ; distillers, 2; file-makers, 2 ; gunsmiths, 2; hatters, 58 ; hoemaker, 1 ; 
 instrument maker, 1 ; iron workers, 3; jewelers, 409; nailmakers, 19; 
 potters, 8; printers, 180; puddlers, 2; rope-makers, 3; saddlers, 167; 
 shipwrights, 9; soap-makers, 2 ; spinners, 7; tanners, 102; wool-sorter, 
 1 ; operatives, 23 ; shepherds, 23. Out of a total of 387,203 immigrants, 
 the number who came to make articles which either could be or were 
 protected was 6,960, or less than two per cent. It appears that protec- 
 tion has not drawn immigrants, as a matter of fact. 
 
 Hamilton's next point is that protection secures a more certain, and 
 steady market for the products of the soil. This is the notion of the 
 " home market." Hamilton urged it on the ground that foreign restric- 
 tions hindered the exportation of an agricultural surplus. He thought it 
 necessary for government to take the matter in hand and provide or 
 secure a home market. Obviously it is an advantage to any new country 
 to increase its inhabitants. If such increase took place anywhere there 
 must follow an increased production. 
 
 Now, for the sake of brevity, I will state in general terms what hap- 
 pens, although every proposition might be illustrated abundantly from 
 our own colonial liistory. The industries which begin first in a new 
 country are those which the economists call "extractive industries." 
 They require little capital, and admit of little division of labor. They 
 are agriculture, lumbering, hunting or trapping, fishing and mining. 
 Some mechanics are needed in the building trades. In regard to these 
 persons, one principle I have already stated was illustrated in the early 
 history of Massachusetts. They would not work except at wages which.
 
 PROTECTION IN THE UNITED STATES. 29 
 
 would equal the remuneration which they could get in the industries 
 mentioned. The way the Puritans tried to deal with the problem was to 
 fix wages by law, but the men either took to agriculture, or went on to 
 other settlements where there was no such law. At first, every farmer is 
 his own wheelwright and blacksmith and carpenter. As the population 
 increases there is a surplus of agricultural products. Some who have 
 greater skill or taste for the mechanical arts work in those occupations 
 for others until the division of labor becomes established gradually and 
 naturally. Some products are exported, being raw materials of great 
 demand. Manufactured goods, cloth, tools, books, paper, and all the 
 comforts and conveniences of the old life of the colonists are imported in 
 exchange. Some become merchants to carry on this exchange, and build 
 a town at the seaport. At first, clergymen and schoolmasters may be the 
 only professional men, and they act as lawyers and doctors. All ]3artici- 
 pate in legislation ; merchants do all the banking. As the population 
 increases and the country fills up the extractive industries become less 
 lucrative. The sources for some of them become exhausted, the supplies 
 of others become superabundant. Farming itself undergoes subdivisions 
 and refinements. Orchards are planted for fruit, and gardens for 
 vegetables. Stock raising becomes profitable, and dairy farming is ex- 
 tended. Simultaneously with this, without any dividing line, or any 
 exertion whatever, the simple mechanic arts which existed at the outset 
 grow into independent manufactures, according to the circumstances of 
 the case. It depends on the distance of the colony, the facility of trans- 
 portation, the market for its surplus abroad, the amount of land open, 
 how soon or how rapidly this social organization will be developed. If 
 foreign nations all had severe restrictions upon the entrance of the goods 
 this country wanted to export, they would put just so much premium on 
 the early development of manufactures there. The whole tendency of a 
 surplus supply of food would be to force some of the producers of 
 it to seek some other employment, in which they would produce 
 other things to exchange with their neighbors for food. Every refusal of 
 a foreign country to take the only things the new country could ofier 
 in exchange for its goods would throw the inhabitants back on their 
 neighbors to supply the want by such exchange. Every such act would, 
 moreover, diminish the value of the surplus, that is, would increase the 
 amount which the farmer could afford to give his neighbor for making his 
 cloth and iron for him. The "home market" would thus "provide'* 
 itself, if it was wanted, and the want itself would be the result of foreign 
 errors, injuring in just so far the community in question. If one of 
 their own statesmen took it into his head that it was his business to pro- 
 vide a home market, he could only do it by adopting the restrictive sys-
 
 3C FROTEVTION IN THE UNITED STATEti. 
 
 tern, and still further depressing the profits of agriculture, and thus accel- 
 lerating the mischievous process already at work. 
 
 The repeal of the corn laws in England was accordingly a great blow 
 to American manufactures, because it allowed American agriculture to 
 come to a part of its natural rights, and we have been trying, ever since 
 1861, to neutralize this by heavier pressure of taxation. That same re- 
 peal, however, took away all Hamilton's argument, and the general argu- 
 ment has since been altered. We have been told lately that protection is 
 to bring the manufacturer and the farmer near together ; to give the far- 
 mer a market near his own door, and in various Avays the export of agri- 
 cultural produce has been represented as an evil. But when we talk of 
 " bringing " the manufacturer and farmer together, it may fairly be asked : 
 Who is to " bring ?"' This is language for an Assyrian king, deporting 
 inhabitants from one part of a country to anotber. If the manufacturer 
 finds the conditions of successful industry lead him to a certain spot, well 
 and good. That spot will enjoy the benefit of its peculiar advantages. 
 But if it has no such advantages, and Ave plant a factory there, sball we 
 thereby give them to it ? Shall we ever get back the expended force ? 
 Shall we not rather sufier loss so long as the artificial creation stands where 
 it ought not to be ? Will not that loss come out of the legitimate, sound 
 and healthy industries "<* The error is in thinking that we ever can get 
 out of an artificial creation any more than we put into it; it is only when 
 we get nature to work with us and for us, that we can get anything gra- 
 tuitously. The American farmer has long ago found that there cannot Le 
 two prices in the same market ; that he does not get any different price 
 for his wheat if consumed next door from that which he gets if it is con- 
 sumed in Manchester. He rarely kncTC where it is consumed and never 
 cares. ^ 
 
 The wTiole idea of advantage in bringing farmer and manufacturer to- 
 gether is a delusion. It is much more important to bring the various 
 manufacturers together, because they form groups which assist and sus- 
 tain each other, and it is important to bring them to the country or place 
 where the conditions of success exist. This place Avill not be where the 
 profits of capital and the wages of labor in either agriculture or commerce 
 are exceptionally high. Hence to carry a factory by force into an agricul- 
 tural district will be to ruin the factory and not help the farmer. Where 
 the profits of one industry far exceed those of all others, we have thai one 
 only. Wbere the profits of several are equal, we have them all. The ad- 
 vantages and disadvantages of either state of things are about equal. 
 
 Hamilton next proceeds to consider the objection to manufactures, 
 that they are impossible here on account of the dearness of labor and the 
 scarcity of capital. He reduces both these objections to a minimum, but 
 shows thereby that protection was not necessary, and proves finally that
 
 FEOTECTION IN THE UNITED STATES. yi 
 
 manufactures were possible by enumerating many which were already 
 thriving. In fact the country became very prosperous in 1789 and 1790 
 so soon as civil order was secured. 
 
 Further on again lie urges an argument which is especially interest- 
 ing because at a later time it became very popular: that protection 
 lowers prices through the home competition. One is impelled to ask 
 why, then, those interested desire it. Who would urge Government in- 
 terference to lower the price of his goods ? If the Government should so 
 act, who would not cry out to be " let alone " ? jSTevertheless, the asser- 
 tion is not without truth, only it is not all the truth. The first effect 
 of a tariff is to draw many persons into the protected industries who 
 believe that the tariff gives them full margin, and that special knowl- 
 edge, or business care, or sagacity in choice of situation are not neces- 
 sary. Factories are built extravagantly, or in bad situations. There 
 follows large production, a glut, a fall in prices, perhaps even below foreign 
 prices. Then come failures of those who have been most reckless. Then 
 the remaining strong firms continue and adopt rules to "'limit produc- 
 tion," the necessary manipulation of any monopoly. Prices rise again on 
 a limited supply, and the operation is repeated unless the combination 
 is really strong enough to keep others out. These fluctuations are the 
 real character of a tariff system, not either high prices or low prices, and 
 they are one great reason why protection does not protect. 
 
 Hamilton next considers the means of protection^ of which he 
 enumerates eleven. These are import duties, prohibition on imports, 
 prohibitions on exports, bounties, premiums, drawbacks, patents, inspec- 
 tion laws, facilitation of remittances, and improvements in transporta- 
 tion. 
 
 It is worth while to notice and pay tribute to the good faith of this 
 statesman, who, however mistaken, believed that he was working for his 
 country's good. He was not an advocate of a special interest, and he, at 
 any rate, treated his subject philosophically. You have here the whole 
 system of interference logically carried out. Bounties, patents, premiums, 
 inspection laws, Government banking, and subsidies to transportation — 
 all belong to one consistent theory, and you are dealing with a man who, 
 at any rate, could seize a principle and either pursue it as true or abandon 
 it as false. The issue comes squarely before you. Either it is the busi- 
 ness of Government to do all these things or none. You either want a 
 paternal Government or you want a Government which is merely a 
 reserved force in behalf of peace, justice and security, and which is at its 
 best when it has the least occasion to act. Hamilton's scheme has 
 been very unequally carried out. Export duties are forbidden in the 
 Constitution. Bounties on exports we have never directly employed. 
 Drawbacks are substantially the same thing, although they are professedly
 
 ^^ PROTECTION IN THE UNITED STATES. 
 
 intended to counterbalance duties on raw materials. Direct bounties 
 aiid premiums we have not used, because the loss would be too distinctly 
 seen. For that reason, however, they would be the best arrangement of 
 all if we were to go into the system at aJh By the census of 1870, the 
 laborers engaged in manufacturing pig-iron numbered altogether 27,554, 
 and their wages amounted to $12,400,000. The capital employed is re- 
 turned at $56,100,000. We are pointed to this as a great industry — a 
 grand thing to have. The duty was, when the census was taken, $9 per 
 ton, and the market price of American over imported iron showed that 
 this sum was directly added to tlie cost of ail Ave used. Tlie product of 
 the home manufacture was 2,000,000 tons, on which the tariff cost us 
 $18,000,000, of which the public treasury got not one cent. Seven per 
 cent, on the capital in pig-iron manufacture would be $3,900,000, which, 
 with the wages paid to laborers in that trade, would make $16,000,000. 
 If, therefore, we had mf!,de a bargain with the fig-iron manufacturers to 
 let their cajaital decay, paying them seven per cent, on it, and with the peo- 
 ple employed to stay idle while we paid them their full wages, provided 
 that we might have our iron free, we should have made $3,000,000 per 
 annum, to say nothing of the fact that, at the lower price, we might have 
 afforded a much larger consumption of iron. We should, moreover, have 
 liad 509 steam engines to apply to other work. We should have saved 
 $18,000,000 worth of coal, charcoal and coke for other uses, and we should 
 have loft 4,000,000 tons of iron ore in the ground for those who come 
 after us to use when they can do it profitably. All this is on the jiro- 
 tectionist hypothesis that this industry would not have existed but for 
 tlie tarifi, a hypothesis which I by no means admit. Now, if we had 
 had a bounty on iron, instead of a tariff, these fiicts would be far more 
 generally known than they are. Inspection laws have been gradually 
 laid aside, because they interfere with trade. They are ostensibly in 
 the public interest, and far less objectionable than the other means men- 
 tioned; but here the cry has been raised to be "let alone." Patents 
 we have extended more and more, until any plea which may be made 
 for them is overwhelmed under their abuse. The other devices. Govern- 
 ment banking and subsidies, we are still struggling with. 
 
 I have spent so much time and attention on this paper of Hamilton, 
 because it has been historically of very great miportaiice. It is the best 
 statement of the protectionist argument ever made, and demands this 
 much attention in any general discussion of the question. In the ten 
 years following its preparation, during which Hamilton, either directly or 
 indirectly, controlled the financial policy of the Government, it was 
 found necessary to raise greater and greater revenue. Hamilton had, in 
 presenting lii:. plan, been very careful to delino the limits within which 
 he thought that the means he proposed might be safely and wisely em-
 
 PROTECTION IN THE UNITED STATES. 33 
 
 ployed. ,In his further financial steps he by no means extended and ad- 
 vanced the import duties with a view either to revenue or protection. 
 He introduced internal and direct taxes for the avowed purpose of estab- 
 lishing a well balanced system of taxation. These taxes were all repealed, 
 on Jefferson's accession in 1803. Hamilton also prepared the system for 
 assessinor and collectins: internal taxes which was revived in the second 
 war with England, and again during the late war. Its reintroduc- 
 tion on each of these occasions took time, involved great delay and incon- 
 venience, and caused expense which would have gone far to pay for keep- 
 ing it up during the interval.
 
 LECTURE IV. 
 
 The Establishment of Peotection" in" this CotiNTET. 
 
 In my last lecture I sketched the origin of the protective system in 
 this country. I now proceed to describe its growth and establishment. 
 This was brought about by incidents connected with the Napoleonic wars. 
 The wars of the French revolution, and those which followed, produced 
 great effects upon the trade of the civilized world. The United States, as 
 the chief neutral carrier, saw its shipping multiplied and its mercantile 
 interests enriched. The belligerents, in their struggles to injure each 
 other, endeavored to put a stop to this neutral traffic, and inflicted great 
 injury on the neutral who was carrying it on. Nevertheless, the profits 
 were so great that the Americans continued it, in spite of losses. When 
 war broke out again in 1803, the indignation here at the collisions which 
 took place was so great, that measures of resistance and retaliation were 
 sought. The federalists wanted to put the country in a state of defence 
 and build a navy to protect commerce. They represented the North- 
 eastern States and the shipping interests. The administration, however, 
 with the great majority from the Middle and Southern States, demanded 
 a navy, sought to reduce expenditures, and turned its attention to meas- 
 ures of coercion by commercial war. These measures had been tried with 
 sad results during the revolution, Mr. Madison had urged discriminat- 
 ing duties in the first tariff as a means of forcing foreign nations to grant 
 reciprocity, and he had urged coercive and retaliatory measures of that 
 kind during Washington's administration when hostilities in Europe first 
 broke out. It is astonishing what faith was entertained in such measures. 
 You see it still strong in the Soutli when the civil wai- broke out, when 
 it was believed that withholding cotton would force European nations to 
 intervene. 
 
 In 1805 an act was passed for prohibiting the importation of English 
 manufactures in order to force England to give up impressment, and in 
 order to support Pinkney and Munroc in their efforts to make a treaty. 
 In 1806 England blockaded the northern coast of Europe from Brest to 
 the Elbe. Napoleon retaliated by the Berlin Decree. In the next year 
 England replied by the orders in council ; Napoleon rejoined by the Milan 
 Decree, and England returned once more by more stringent prohibitions. 
 The tenor of these decrees on the one side and on the other was to pro- 
 hibit neutrals fron; iraJing with the enemy, or to put such trade under
 
 PROTECTION IN THE UNITED STATES. 35 
 
 heavy restraints. Napoleon was trying to shut the continent against 
 English manufactures, and England was trying to keep out of the conti- 
 nent provisions and colonial supplies. Between the two, neutral com- 
 merce suffered the greatest loss and vexation. The American shipowners 
 complained and called on their government for protection. The meas- 
 ure adopted was the embargo of 1807, by which the shipowners were pro- 
 tected against foreign aggressors by being shut up at home. They had 
 before incurred heavy risks, now their own government imposed certain 
 ruin. It was necessary to pass one act after another, making the embar- 
 go more stringent and tyrannical in order to check evasions of it. It was 
 repealed in a little over a year, but non-intercourse and non-importation 
 acts were substituted for it until war grew out of it in 1812. 
 
 We are concerned with this commercial war here, not on account of 
 its folly or imbecility, although it well represents the folly of all restric- 
 tion, but on account of its connection with the strand of history which 
 we are following. Embargo, non-intercourse, and war, lasting from 
 1807 to 1815, created an entirely artificial state of things here, or, per- 
 haps I should say, the United States was drawn into the distortion and 
 perversion of industry and commerce which the great wars were produc- 
 ing in Europe. Manufactories of various kinds sprang up here to supply 
 the wants of the people when cut off from the usual sources of supply by 
 foreign exchange. They produced articles of inferior quality or design, 
 generally speaking, but people had to be satisfied with them. In many 
 cases also the products were dearer than those normally obtainable abroad. 
 They were sustained by the artificial diflBculties in foreign exchange, and 
 by the diminished profits of other industries which would have been more 
 profitable here. In 1810, Gallatin, Secretary of the Treasury, made a re- 
 port in which he stated that manufactures of wood and leather, amongst 
 other things, were exported beyond the imports, that the following indus- 
 tries were " firmly established," iron and manufactures of iron, manufac- 
 tures of cotton, wool and flax, paper, printing types, books, several man- 
 ufactures of hemp, and a few others. In that year (1810) some effort 
 was made to get more protection through duties, but nothing came of it. 
 The same effort played some share in bringing about the war, which was 
 a product of intrigue, and as needless as it was fruitless. One of the first 
 war measures was to double all duties and prohibit the import of English 
 prodiicts. During the war the prices of manufactured articles were very 
 high. Manufacturers made great profits and factories were built in large 
 numbers. In 1814 all the banks suspended specie payments, and then 
 followed a reckless paper money period which has never been equalled 
 since. Prices rose higher than ever, and here we have again an illustra- 
 tion of the observation previously made that our currency and tariff errors 
 have been intertwined throughout our history.
 
 36 PROTECTION IN TEE UNITED STATES. 
 
 Observe now the outcome of all tliis for the matter of our investiga- 
 tion. Embargo and war had created a false and artificial state cf 
 things in wliich much capital had been invested in manufactures, and 
 " industry " had been " encouraged." Under the false light in which they 
 were viewed, embargo and war, therefore, seemed to be beneficial forces. 
 The return of jieace, if it reopened trade and let things return to their 
 normal condition, would be a calamity. It was necessary to secure a con- 
 tinuance of the circumstances which had brought these industries into 
 existence, in order to secure them from destruction. Such continuance 
 could not be brought about without perpetuating for the great body of 
 consumers the scarcity, loss and distress of war, so far as war afiected 
 their power to procure and enjoy industrial products. This then is exacuy 
 what the tariflT, which was adopted in 1816, did do. It saved a part of the 
 capital involved in manufactures, although most of it was swept away in 
 the financial crisis which ensued in 1819, on the collapse of the paper 
 system, but it burdened the nation with the same trammels which em- 
 bargo and war had laid upon it. 
 
 The act of May 3d, 1815, repealed all discriminating duties and ton- 
 nage taxes in favor of any nation which should take similar action with 
 regard to American vessels and cargoes. Here we have a fact of interest 
 to the general history which we are pursuing. This was what was known 
 as the '^ American system," at this time. We saw how, in the treaty with 
 France in 1778, the Americans set out to gain general reciprocity. That 
 came to be called the "American system," viz., general reciprocity 
 instead of the old commercial treaties. Now the plan of laying counter- 
 vailing duties to enforce reciprocity came to be called the " American 
 system," and was so called until 1824, when, by a still further perversion, 
 that name was applied to the system of protective duties. Daniel Webster, 
 at that time, well said of it: "This favorite American policy is what 
 America has never tried ; and this odious foreign policy is what, as we 
 are told, foreign states have never pursued." 
 
 The act of February 5th, 1816, continued the double war duties 
 until July 1, but the general tariff act was approved April 27th, 1816. 
 The tariff was not at this time, or for sixteen years after, a political ques- 
 tion, but it is noteworthy that tariffs were passed in every presidential 
 year until 1832, except in 1820. All parties agreed, however reluctantly, 
 in passing the increased duties, for fear of alienating the votes of the pro- 
 tected interests. In 1820 a tariff was proposed, but failed, because Mr. 
 Monroe was to be re-elected without a contest. As yet, however, in 1816, 
 the question was neither political nor sectional. New England generally 
 opposed the tariff, but not universally. The South acceded to it for the 
 sake of cotton. This article was then heavily taxed abroad, and some 
 very cheap manufactures of it from China and India were largely imported.
 
 PROTECTION IN THE UNITED STATES. 37 
 
 It was believed that the development of cotton manufactures here was 
 the best way to make cotton culture lucrative. Lowndes, of South Caro- 
 lina, reported the bill, and Calhoun made a speech in favor of it. It was 
 based on a report by Dallas, Secretary of the Treasury, in which he 
 divided the articles subject to duty into three classes: (1) those of which 
 the home supply was adequate to the demand ; (2) those of which the 
 supply was partial ; (3) those of which the supply was small or nothing. 
 He proposed graduated duties on these three classes, the highest duty 
 falling on the first class. You observe at once the incongruity. On the 
 plan of fostering infant industries, duties would evidently be highest on 
 articles producible but not produced, or only slightly produced ; but here 
 we find the market closed when the supply is adequate, and only a 
 revenue tax laid on those articles which were least produced, and a 
 medium tax on those which were in the heat of the struggle. It is the 
 best possible test of a theory to see whether it admits of two contra- 
 dictory applications in practice, for between theory and practice there can 
 be no inconsistency. If any appears, it is proof positive that either the 
 theory or the practice needs revision and correction. To say that a thing 
 is true in theory but bad in practice is a radical absurdity. Theory is the 
 attempt of man to learn general principles for guidance in his practical 
 tasks. Practice is the test of theory, and shows that the general princi- 
 ples have been either correctly or incorrectly apprehended. When, there- 
 fore, a theory admits of two opposite applications in practice, one of 
 which fits it as well as the other, it proves conclusively that the theory 
 embraces a contradiction, and we see why protection of infant industries 
 never leads to their independence and to free trade. The advocates of 
 protection use the first form of the theory to secure its adoption and the 
 second to secure its perpetuation. 
 
 Calhoun's chief argument for protection was the need of the pro- 
 posed manufactures in case of war. This argument had considerable 
 force at the end of a war in which foreign supplies had been cut off, but, 
 on the other hand, the exactions of the manufacturers during the war 
 led many to resent any attemj^t now to favor them. 
 
 The argument for protection to provide against the contingency of 
 war has great popular weight. The policy and history of the United 
 States since 1816, however, afford a striking commentary on it. We 
 have always kept our army down a little below the point of efficiency. 
 We have grudged the education of a few officers. We have reduced our 
 navy so low that we hardly do our share in the police of the ocean. We 
 pay little heed to our fortifications.' "Yet we voluntarily expose ourselves 
 to a loss far greater than the cost of any armament, out of obedience to 
 this notion of providing for a possible war by industrial restraints. Our 
 popular orators formerly made much capital by comparing our expendi-
 
 38 PROTEUTION IN THE UNITED STATEH. 
 
 tures for army, navy and fortifications, with those of the old countries; 
 but they said nothing of this industrial loss incurred to the same end. 
 
 Furthermore, is it not a satire on this notion to remember that the 
 only wars in which we have been engaged since 1816 have been that 
 •with Mexico and the civil war, in neither of which our cherished indus- 
 trial independence was of any use to us ? 
 
 I am not arguing for expenditures on armies and navies. Far from it. 
 We are happy in not needing them. Any one who has to come three 
 thousand miles to fight us will think well of it first. I only point out 
 the grotesque contrast between our preparations for war of the one kind 
 and of the other. 
 
 In fact, however, the independence which we seek must be sought in 
 another direction. Independe]it men are those who have wealth, not 
 those whose houses are stored for a siege. Independent nations are those 
 which are wealthy, because they can command what they want when they 
 want it. Those will be wealthiest which give industry its freest course in 
 time of peace. 
 
 The case of the South during the late war is a most striking proof of 
 the fallacy of the " independence" doctrine. The South had less of this 
 artificial independence than any country in the world. It was blockaded 
 and inclosed by an immensely superior force, and what happened ? 
 First, people found that when they had put their last stake on war, they 
 could do without thousands of things which had seemed essential; 
 second, they found substitutes and makeshifts to take the place of real 
 essentials; third, they found that, so long as they had commodities to 
 exchange which the rest of the world wanted, no power could prevent 
 the exchange from going on. It does not become those who needed four 
 years to subdue the South to argue that it was weak for lack of indus- 
 trial independence. Indeed, the argument is incomplete in two or three 
 important points. Suppose that the South had not been weakened by 
 slavery ; suj^pose that it had been an independent nation before and had 
 enjoyed free trade, so that its people had possessed all the wealth they might 
 have accumulated ; suppose that its enemy had been obliged to seek it 
 over the ocean, and by sea attack only ; on such a hypothesis who can 
 believe that the South would have suffered because it had not ''enjoyed 
 protection," and who can urge us, on the chances of ever finding our- 
 selves in the position of the South, to go on creating an artificial inde- 
 pendence? Our independence lies in union, good government, and free 
 industry. 
 
 The tariff of 1816 was not carried against the instincts of the American 
 people towards freedom without strong opposition. The great majority 
 adhered to the old Jeffersonian doctrines and policy. They wanted to 
 get rid of the army and navy, to reduce taxes and expenditures, to re-
 
 PROTECTION IN THE UNITED STATES. 39 
 
 duce the number of office-holders, and to " let things alone." The pre- 
 Yailing argument was the interest of the existing investments, which, of 
 course, no one desired to destroy. It soon appeared, however, that the 
 harrier of taxation was no equivalent for embargo and war. 
 
 The return of peace in Europe allowed industry and finance to return 
 to the operations of natural laws and to escape from the constraints of 
 twenty-five years of war. The shock was terrible, and it took ten years 
 for its effects to subside. In 1816, the English exported immense quan- 
 tities of manufactured goods to the Continent and to the United States. 
 The results of these transactions were disastrous. Our paper money here 
 also exercised its influence to encourage overtrading and overimportation. 
 In 1817, the manufacturers were in distress. Cries were heard against 
 the inundations of foreign goods, against the drain of specie and against 
 the balance of trade. Evidently we cannot understand these things with- 
 out taking into account the movements which were going on in the other 
 industrial nations, but the popular opinion here was that the English 
 had set out, by a sacrifice of some millions worth of goods, to destroy 
 American manufactures. This belief had deep root and perhaps has 
 only lately died out, since we have ceased to hear cries of " British gold" 
 whenever any one spoke of free trade. The notion I have referred to re- 
 ceived strong re-enforcement from a remark of Brougham's which you 
 may find quoted in the first popular protectionist work you choose to 
 take up, in which he recommended his countrymen to reconquer tha 
 American market. If he meant to propose to them to sacrifice their capital 
 in giving several millions' worth of goods to the Americans in order to de- 
 stroy factories which would spring up again the moment they tried to 
 reimburse themselves, they would have been the first to laugh at him. 
 
 An eager effort, however, in favor of protection was now commenced, 
 and it was kept up for fifteen years. Ifc had an organ in Niles' Eegister, 
 the editor of which was a fanatical protectionist. He filled his paper, 
 week after week, with essays, items, statistics, and arguments in favor of 
 " home industry." No such effort has ever been made on the other side, 
 and I believe that one can understand tlie means by which the natural 
 tendency of the American people to freedom, and their early bias that 
 way, was perverted, only by observing the zeal and industry with which 
 protectionism was inculcated. 
 
 The tariff of 181G had provided for a gradual decline of the tax on 
 cotton and woolen goods, and Congress had refused to include, as was de- 
 sired, a prohibition of nankeens, but the time at which the reduction on 
 woolens and cottons was to take place was deferred until 1826, by an Act 
 of April, 20, 1818, and the duty on bar iron was raised from $9 to $15 
 per ton. 
 
 The tariff of 1816 had also adopted the principle of the minimum on
 
 40 PROTECTION IN THE UNITED STATES. 
 
 cotton cloth, and cotton yarn, none of the former being rated at less than 
 25 cents per square yard, whatever its cost at the place of exportation. 
 This, of course, cut off the American people from any advantage by the 
 great factory system of England, or from the introduction of machinery 
 in England, so far as these improvements tended to cheapen cotton cloth. 
 It ought to be added that the incorrect valuation of the pound sterling, 
 the inaccuracy of the weights and measures used at this time, and the 
 long credit given by the government for duties, to some extent neutral- 
 ized the duties. 
 
 In 1820, Mr. Baldwin, of Pittsburgh, introduced three bills, one for 
 increased duties, one for taxes on auction sales, and one for cash payment 
 of duties, which all failed to pass. In 1822 and 1823, other bills were in- 
 troduced for increasing duties, which failed to pass. It was not until the 
 great presidential struggle of 1824 that another tariff crowned the seven 
 years' struggle. Before taking that up I desire to present to you some of 
 the chief doctrines which were believed and taught at this time, as we 
 learn them from the congressional debates and Niles' Eegister. 
 
 It was argued that wages were not higher here than in England when 
 properly measured. This was in answer to the free trade argument as 
 then put, that it was useless to try to develop manufactures here because 
 of this disadvantage. Of course, if it is true that wages are higher here, 
 that would be the true inference. 
 
 It was also agreed, on behalf of protection, that protection and revenue 
 were antagonistic to each other, and that the government ought to be 
 supported by " direct " taxation, while duties on imports should be re- 
 served entirely for purposes of protection. Niles published long articles 
 in which he urged this view of the subject, and he brought forward many 
 and strong considerations in favor of what he called direct taxation. He 
 showed what the tariff really cost each consumer, he opposed a revenue 
 from import duties as uncertain, and all this in favor of prohibitory duties 
 for the purpose of protection. 
 
 Another feature of the controversy was that the shipping interest was 
 blamed in no measured terms for opposing protection to manufactures. 
 The growth of shipping was pointed out and traced back to the discrimi- 
 nating and tonnage duties of 1789, and tlie shipping interest was charged 
 with selfishness in resisting the application of the same means to other 
 industries. In this connection we meet with the best instance of the 
 fallacy which inheres in the word " protection '' itself. In inaking up 
 the account against the shipping interest for the protection which had 
 been accorded to it, the war undertaken for its defence, but against its 
 will, was charged Lo it, and also the entire expense of the navy. The 
 navy "protected" the merchant ships from unlawful attacks or inter- 
 ference, that is, it gave them the security wliich it is the business of gov-
 
 PROTECTION m THE UNITED STATES. 41 
 
 ernment to provide, and which is analogous to the office of courts and 
 police on land, but this protection was made a basis of argument, that the 
 government ought to interfere likewise to " protect " producers against 
 industrial competition. 
 
 A similar charge of selfishness was brought against the cotton manu- 
 facturers of New England, who, after 1820, o^Dposed any further protec- 
 tion. Their industry was firmly established and very remunerative, and 
 they found that the effect of protection was simply to disturb their busi- 
 ness by tempting great numbers into it, and by exposing it to great fluc- 
 tuations. It was argued against them that the system ought to be ex- 
 tended to wool and iron, until they reached the same point. This is 
 logical and correct, but, as has often been shown, it reduces the system to 
 an absurdity. After taxing the community to foster one industry, it is 
 proposed to tax that one, with others, to foster a second, then all the pre- 
 ceding to encourage a third. It follows that the first and second lose 
 their advantage, and that the result is a series of weak fosterlings sup- 
 ported by weakened legitimate industries. 
 
 The same criticism applies to any system of " incidental protection." 
 The claim is put in to widen the system and do " justice" by favoring 
 all, which is impossible. The only real justice is to favor none. 
 
 The great argument of this period, however, was " hard times." There 
 was a commercial crisis in 1819, which has not, perhaps, been equalled 
 since. The complaints were kept up for five years, although the only 
 ground for them, if any, was the comparison with the flush times of specu- 
 lation and paper money, and they were just such times of distress as the 
 whole commercial world was enduring. The complaints ceased when the 
 tariff of 1824 was passed. 
 
 Those who argued most strenuously on this ground, found themselves 
 putting propositions together which made a strange combination when com- 
 pared. Thus: (1.) The United States is the richest country in the world 
 in point of natural resources, and has only a sparse population. (2.) This 
 favored country is in great distress. (3.) What it needs is more taxation 
 to enable its people to get a living in it. 
 
 We not unfrequently find arguments used during this period which 
 show that the speakers or writers believed that a girl in a Manchester 
 factory, who, with a loom, could produce as much cloth as several men 
 could make by hand in the same time, was therefore able to exchange her 
 product for the product of the labor of that number of American farmers. 
 Of course all the notions about the balance of trade, and draining specie, 
 and making money scarce are met with continually. 
 
 The duties collected under the tariff of 1816, during the last three 
 years of its operation, were equal to a rate of 30 per cent, on dutiable im-
 
 42 PROTECTION IN THE UNITED STATES. 
 
 ports. You see that there had been great progress since Hamilton's 
 day. 
 
 I come no"W to the tariif of 1824. That act would not have been 
 passed if it had not been for the political contest which was impending. 
 Here we meet with the new factor of political intrigue, and also with 
 those phenomena which arise from the extension and complexity of the 
 system. This bill was dexterously combined to embrace strength enough 
 to carry it. "We also now find the South opposed to protection ; as indeed 
 she had been since 1820. The arguments employed were not new, but 
 the issue was clearer and the debate was far better sustained from the 
 free trade side. "We have an argument by Mr. "Webster, in which several 
 of the issues which continually arise in this controversy are handled in 
 a masterly manner. He argued them on a plane entirely above the 
 wretched patch-work of which the discussion otherwise consisted. I have 
 already quoted his crushing criticism of the notion of protection as an 
 "American system," under the application of that title which now became 
 current. He showed the advance of opinion on this matter abroad, and 
 showed that we were taking on our young shoulders a load which the 
 older nations would be glad to throw off, if they were not clogged by so 
 many vested interests. He also showed that the distress complained of, 
 so far as it had existed in the last few years, had been due to currency 
 troubles here and abroad, and gave a correct explanation, which few 
 seemed able to understand, of the phenomena of the exchanges here in 
 1820 and 1821. In regard to the comparative rates of wages, he said'. 
 The chairman of the committee "says it would cost the nation nothing, 
 as a nation, to make our ore into iron. Now, I think it would cost us 
 precisely that which we can worst afford; that is, great labor. * * * 
 "We have been asked * * in a tone of some pathos, whether we will 
 allow to the serfs of Kussia and Sweden the benefit of making our iron 
 for us. Let me inform the gentleman that those same serfs do not earn 
 more than seven cents a day, and that they work in these mines, for that 
 comjiensation, because they are serfs. And, let me ask the gentleman 
 further, luhether we have any labor in this country that cannot be better 
 employed than in a business which does not yield the laborer more than 
 seven cents a dayf * * * The true reason why it is not our policy 
 to comjiel our citizens to manufacture our own iron is, that they are far 
 6etter emjoloyed. It is an unproductive business, and they are not poor 
 enough to be obliged to follow it. If we had more of poverty, more of 
 misery and something of servitude ; if we had an ignorant, idle, starving 
 population, we might set up for iron makers against the world. * * * 
 The freight of iron has been afforded from Sweden to the United States 
 as low as eight dollars per ton. This is not more than the price of fifty 
 miles' land carriage. Stockholm, therefore, for the purpose of this argu-
 
 PROTECTION m THE UNITED STATES. 43 
 
 ment, may be considered as within fifty miles of Philadelphia. Now it 
 is at once a strong and just view of this case, to consider that there are 
 within fifty miles of our market, vast multitudes of persons who are 
 willing to labor in the production of this article for us at the rate of 
 seven cents per day, while we have no labor which will not command, 
 upon the average, at least five or six times that amount. The question is 
 then, shall we buy this article of these manufacturers and sufl"er our own 
 labor to earn its greater reward, or shall we employ our own labor in a 
 similar manufacture, and make up to it, by a tax on consumers, the loss 
 which it must necessarily sustain." 
 
 Unfortunately, Mr. Webster was bound by local interests to sustain 
 the protection to shipping, and this was fatal to his opposition. Massa- 
 chusetts wanted protection on ships, but not on hemp or iron or molasses. 
 A small Massachusetts interest joined with Rhode Island and Connecticut 
 in favor of an increased tax on woolens, but not on wool. The tarifl" of 
 1816, it was said, had not sufficiently j)rotected woolens, and had made 
 the tax, such as it was, diminish at intervals. The English bounty on 
 exported woolens was a damage which, it was claimed, ought to be coun- 
 teracted. Observe the antagonism here established : England, pursuing 
 the old restrictive system by these bounties, made a present to foreign 
 nations at the expense of her own taxpayers. The foreign nations re- 
 garded this gift as an injury, and set up barriers against its acceptance, 
 at the expense of their taxpayers. Could anything more conclusively 
 condemn the whole system ? 
 
 Then look at the internal conflict of interest. Kentucky wanted a 
 tax on hemp to encourage her production, although her dew-rotted hemp 
 was so inferior to the Russian water-rotted hemp that it never competed. 
 She also wanted a tax on molasses to make rum dear in the interest of 
 whiskey. Lousiana wanted a tax on molasses for protection to her suo-ar 
 planters. The Middle States and Ohio wanted protection on raw wool ; 
 and Pennsylvania, of course, wanted protection on iron. In the conflict 
 of interests New England was defeated, having less political power, and 
 hemp, whiskey, iron, and raw wool, uniting the Middle and Western 
 States, carried the day. The minimum on cottons was raised to 30 cts. 
 A minimum for woolens was established at 33| cts., and the duty Avas 
 put at 30 per cent., to be advanced to 33^ per cent, in a year. Raw wool, 
 costing less than 10 cts. per lb., was to pay 15 per cent. Other wool was 
 to pay 20 per cent, for a year, 25 per cent, the second year, and 30 per 
 cent, afterwards. Bar iron was raised to $18 per ton if forged, and stood 
 at $30 if rolled. This was to ofi"-set the cheapness of the new process 
 chiefly used in England. 
 
 This tariflf passed the House by 107 to 102. New England gave 15 
 votes for it, and 23 against it. Tli'^ Southern and Southwestern States
 
 44 PROTECTION IN THE UNITED STATES. 
 
 gave two votes for it. The duties collected under it were, on an average, 
 equal to a rate of 37 per cent. 
 
 One expects now, in reading the contemporaneous records, to be rid 
 of the subject for a time. The reader naturally says : " The tariff has 
 been raised ; the protection has been granted. The question is disposed 
 of." Nothing of this kind, however, took place. The high-tariff in- 
 terest was by no means satisfied with the result, especially as regarded 
 woolens. The agitation recommenced the next year, with a reiteration 
 of the old arguments, condemnation of " our present ruinous system," 
 and demand for protection, as if there had been no concessions in that 
 direction. This calls our attention to certain features inherent in the 
 protective system, and shows us how erroneous in practice, as well as in 
 theory, is the notion that we can proceed through protection to free trade. 
 Protection nourishes dependence, not independence. It is a system in 
 which all the parts hang together, and protection for some cannot be 
 united with freedom for others. If one industry should be set out 
 in free competition, while the rest were protected, it would be found 
 that they are interdependent ; that machinery, raw materials and labor 
 supplies would be so dear that the exposed industry would have no 
 fair chance in competition with foreigners. Hence one long protected 
 industry, if it became independent by natural causes, could not be left 
 free unless the whole system were abandoned. But then the cry goes up 
 from those nurslings of recent beginning, that they are not yet ready. 
 If you defer the introduction of freedom for ten years longer on their 
 account, a new company of infants is meantime brought into being, and 
 the plea for further delay comes from them. Thus you go on forever, 
 and the theory is reduced to an absurdity. 
 
 During the period from 1824 to 1828 the political factor in the tariff 
 controversy rose to chief importance. The administration of J. Q. Adams 
 was exposed to the most vigorous and relentless opposition from the 
 party which had formed around Andrew Jackson. After the Democratic 
 convention of Harrisburg in 1824 it was certain that Pennsylvania was 
 enthusiastic for Jackson. The rural population of that State cared more 
 for Jackson than for tariff. This was a fact which the politicians had 
 simply to accept as a fact. The composition of the Jackson party, there- 
 fore, coincided to a certain extent with the coalition which had passed 
 the tariff of 1824. New England as the Adams section was, both politic- 
 ally and on the tariff, still more in a position to be neglected than it was 
 in 1847. The South found its political combinations and its tariff inter- 
 ests inconsistent. 
 
 England still furnished a convenient and popular object of attack. 
 She now showed her perfidy and desire to ruin American manufactures by 
 reducing her own duties on raw wool to one penny per lb. This enabled
 
 PROTECTION IN THE UNITED STATES. 45 
 
 her manufacturers to manufacture so cheaply as to pay our import duties 
 and yet compete with success. According to the tlieory which we are 
 studying, this was a serious reason for "protecting" ourselves against the 
 good this might have brought to us. The woolen manufacturers of Bos- 
 ton accordingly sent a petition to Congress in 1826 asking for more pro- 
 tection. Jan. 10th, 1827, a bill was introduced for raising the duties 
 on wool and woolens. It was tabled in the Senate by the casting vote of 
 Calhoun. It was in the New England interest, and, as Niles said, politics 
 were in the way. 
 
 In July, 1827, a national convention met at Harrisburg, called by the 
 Pennsylvania Society for the Promotion of Manufactures and Mechanic 
 . Acts to consider measures for promoting manufactures. It was the most 
 energetic attempt ever made to organize and give symmetry to the protec- 
 tionist movement. It adopted resolutions in favor of more protection for 
 iron, steel, glass, wool, woolens and hemp. It proposed a duty of 20 cents 
 a pound on wool costing 8 cents or more, to advance 2^ cents per annum 
 until it should be 50 cents. It adopted four minima for woolens, 50 
 cents, $2.50, $4.00, $6.00. The duty was to be 40 per cent, for a year, 45 
 per cent, the next year, and 50 per cent, afterwards. 
 
 The committee on manufactures at the next session of Congress recom- 
 mended that evidence should be taken as to the state of manufactures. 
 This was a new departure, for hitherto all tariff legislation had been made 
 blindly and ignorantly. The Northern protectionists opposed the propo- 
 sition ; the South favored and carried it. The evidence all went to show 
 deplorable distress in all manufacturing industry, although the country 
 generally was enjoying great prosperity. The argument necessarily was 
 tangled and contradictory. It was urged, and really was the greatest 
 popular argument, that the country owed its prosperity to the tariff, but 
 here were the manufacturers claiming to be in distress. The truth was 
 that the country possessed such means of producing wealth that the tariff 
 could not crush them. Then again the distress was needed as an argu- 
 ment for more protection, but what light did it throw back on the pre- 
 vious attempts in that direction ? 
 
 Many of the peculiar doctrines I have mentioned as advocated at an 
 earlier period were now heard no longer, but a new one was brought ' 
 forward and repeated again and again, viz., that protection, by domestic 
 competition, lowers prices. I have already, in my former lecture, dis- 
 cussed this doctrine. 
 
 The new tariff bill was introduced in February, 1828. It was based 
 upon the recommendations of the Harrisburg convention. Its central 
 feature was wool and woolens. Hemp, iron and molasses figured as be- 
 fore. It came forward, therefore, as a New England or Adams measure, 
 and the Jackson coalition opposed it, but under the necessity of satisfy-
 
 46 PROTECTION^ IN THE UNITED STATES. 
 
 ing the Middle and Western States. The feeling in the South was al- 
 ready very bitter about the tariff legislation, and this new effort to push 
 on the system, reckless of Southern protests, still further embittered the 
 South. The West also took the position that they had as yet had noth- 
 ing of this good, which it was assumed that the Government had to dis- 
 tribute, and they demanded that, if the system was to go on, they should 
 have their share. Mr. Webster took the position for Massachusetts, that 
 she had been forced into manufactures by the policy adopted in 1824, in 
 spite of her protests, and she now protested that the investments into which 
 she had been drawn should not be sacrificed. 
 
 You look in vain through the discussion of this bill for any broad 
 principles. Much was said indeed about a national policy, but it all 
 referred to this system which, at the first approach to actual discussion, 
 resolved itself into political intrigue, a strife of sections, and a struggle 
 between *' interests." Much was said about broad principles, but all refer- 
 red to the notion that by robbing all for the benefit of the few it was pos- 
 sible in some way, which never was explained, to gain great benefit to all. 
 The South adopted the policy of trying to make the bill as bad as possi- 
 ble. They proposed and advocated absurd and extravagant exaggerations, 
 in the hojae, apparently, that they could thus make apparent to the pro- 
 tectionists the enormity of their proj)ositions and the absurdity of their 
 demands. This policy did not work. The belief in the great protection- 
 ist dogmas had now become strong. Political exigencies were great, and 
 the Northern protectionistseither rejected the exaggerated propositions, or 
 accepted them in good faith. This tariif came to be known as the " tariff 
 of abominations," but its worst abominations were forced into it by the 
 perverse policy of the Southern men. What it concerns us to observe 
 is, the evil effects of mixing up jDolitics and president-making with fiscal 
 legislation, and the exaggerations to which the protective system leads. 
 
 The result of this struggle was that the tax on molasses was raised to 
 10 cents per gallon. The tax on wool was put at 4 cents per pound and 
 40 per cent., to increase by 5 per cent, annually until it was 50 per cent. 
 A $1.00 minimum was inserted in the scheme proposed at Harrisburgh, 
 and a tax of 40 cents a square yard was laid. This combination 
 of taxes, resulting from political motives only, to favor the avooI 
 growers of the Middle and Ohio States and not to make woolens dear to 
 consumers in the same districts and in the South, was exceedingly in- 
 jurious to woolen manufacturers. You observe that it is not inhuman 
 ingenuity to interpose in the delicate relations of trade by arbitrary enact- 
 ments without doing damage. On account of these features of the tariff 
 in regard to molasses and woolens it got only IG votes from New Eng- 
 land (in the House) to 23 against it. 
 
 The tax on bar iron, not rolled, was raised to $23.40 per ton ; if rolled.
 
 PROTECTION IN THE UNITED STATES. 47 
 
 $37 per ton. Hemp was raised to $45 per ton. These features, •with, the 
 tax on "Wool, gained the force which carried the bill in the house, 105 to 94. 
 On the final vote, there were in the affirmative Gl Adams and 44 Jackson 
 votes ; in the negative, 35 Adams and 59 Jackson votes. The South, 
 after putting the ''abominations" in the bill, voted against it, except 
 three votes. To show the want of good faith, it is significant to 
 notice that, on the motion for the previous question, 11 Adams and 99 
 Jackson men voted in the affirmative, and 80 Adams and 11 Jackson 
 men in the negative. 
 
 All the New England men, and all the bona fide tariff men like Niles 
 were disatisfied with this bill, and began at once to agitate for its amend- 
 ment. It has been customary for the tariff advocates to speak of it as a 
 good bill, which only needed some slight "adjustments." We see, I 
 think, if we look at it candidly, the very best proof that such adjust- 
 ments are required forever, that is, that they are impossible. It is a 
 specimen of the purest quackery in legislation. I think it shows also 
 that the only petition any sober business man can ever address to the 
 Legislature is to "^let him alone" and, if possible, not legislate about his 
 affairs at all. In this very debate of 1828, Mr. Stevenson, of Penn- 
 sylvania, arguing for the tariff, said : "If legislation were as intelligent as 
 commerce is vigilant, much national evil might be avoided. " I could 
 only improve this by saying : " If it were perceived that legislation never 
 can be as intelligent as commerce is vigilant, far more national evil would 
 be avoided." 
 
 The agitation of the Northern protectionists, for the amendment of 
 the tariff, sank into insignificance in comparison with the discontent 
 which the tariff caused in the South. The South was, of course, crippled 
 by slavery, but it is undeniable that the complaint the Southerners 
 made was just and well founded. They sold in a free market and bought 
 in a protected one. They claimed that they had inherited the grievances 
 of the colonies at the revolution, and that they stood just where the 
 colonists had stood at that time ; asking why they should maintain a 
 political connection in which the taxing power was abused for their op- 
 pression. When they were told that they must yield to the welfare of the 
 whole, they replied that this was England's old argument that the 
 colonies should bow to imperial considerations. Thus the tariff con- 
 troversy, pushed to extremes by the power of the majority, and in dis- 
 regard of the pleas of the minority for justice, assailed our political system 
 in its most delicate and most vital part — the integrity of the confedera- 
 tion. The attempt of South Carolina to nullify the tariff act was not open 
 disunion and secession. It was worse. It was an attempt to remain in 
 the Union and yet reduce the confederation to imbecility and contempt. 
 Thus forty years after the first tariff with its 8 per cent, import on duti-
 
 48 PBOTEQTION IN THE UNITED STATES-. 
 
 able, "we find that the system had steadily advanced, that the infant in- 
 dustries were as feeble and clamorous as ever, that the burden had been 
 increased until it was now equal to 41 per cent., that it had been elabor- 
 ated into a system in which the lobby had been trained and educated, 
 that it had corrupted politics and furnished capital for political schemes, 
 that it had, on the testimony of those interested, done them no good, and 
 that it had brought the confederation face to face with its greatest dan- 
 ger, that of disruption.
 
 LEOTTJEB V. 
 
 Vacillatioij" op the Protectioit Policy iit this Country. — 
 
 couclfsiois". 
 
 At the point which I have now reached, in my review of the history 
 of protection in the United States, it is necessary to observe that the 
 original prejudice of the Americans in favor of liberty of every kind had 
 been crushed out as regards trade. The frequent changes of the tariff had 
 educated the generation which had grown up since the second war to the 
 dogmas and fallacies of protection. These had been preached assiduously 
 by Niles and Carey, and being plausible and popular, and falling in with 
 national prejudices, they had gained great currency. There had, indeed, 
 been no argument for the other side. We are familiar with the fact that 
 a special interest finds ardent advocates and energetic workers, while the 
 public interest lacks defenders. 
 
 In 1829, Condy Raguet commenced the publication of the Free Trade 
 Advocate, in which he published some of the best writing on financial and 
 economic topics ever produced on this side the water. He wrote above 
 his readers, for whose minds Niles' style and arguments were much better 
 adapted, and his journal soon expired. He continued his work in another 
 journal, called the Banner of the Constitution, for some time longer. 
 
 Another fact, which it is important to observe for a correct under- 
 standing of the movement in this country towards protectionism, is the 
 great prosperity which was enjoyed here from the second war until 1837. 
 The advantages of the new country were, of course, enormous, and every 
 improvement in transportation and every new invention tended to bring 
 them within reach. The losses inflicted by a bad tariff belonged in the 
 great margin of what might have been. The people had not lost some- 
 thing which they once liad. They had fallen short of something which 
 they might have possessed for the labor they had expended. This is 
 something which people are slow to understand. Eob them of a good 
 which they liave possessed, or diminish comforts to which they have been 
 accustomed, and they feel it. They are slower to understand that a given 
 amount of labor might have produced, under a given condition of society, 
 a certain result, and that they have fallen short of it. Such, however, is 
 the correct statement of the effect of any tariff system, and the American 
 people have always been slow to understand it, because they have enjoyed 
 so much, and have been growing in comfort so steadily, that they could 
 almost afford to be indifferent to somethino^ still better.
 
 50 PROTECTION IN THE UNITED STATES. 
 
 In 1830, this prosperity was pointed to in yiudication of the tariff 
 system, and with great popular effect. The fact was that the cn-cum- 
 stances were so favorable that legislation could only lessen, not cripple, 
 the advantages, but it was said that the tariff had caused all the prosperity, 
 and hence the argument was: Let us have more. In the session of 
 1830-31 some efforts were made to strengthen the tariff of 1828. For 
 instance, it was proposed to repeal the provision that the tax on salt 
 should be reduced from 10 to 5 cents, January 1, 1832, and to raise it to 
 15 cents. 
 
 In the fall of 1831, two national conventions, one of protectionists 
 and one of free traders, were held. The free traders met at Philadelphia, 
 September 30, and published a clear and sound address, setting forth the 
 simple principles, which are all mere truisms, and must rely on common 
 sense for their effect. The effect seems to have been very slight. The 
 Tariff convention met at New York, Oct. 26. It published an address, 
 and appointed committees to collect and publish " reports " on various in- 
 dustries. The address consisted of bad political economy and the usual 
 special pleas to bar the common sense application of simple principles. 
 As a specimen, I quote a single sentence : " Nations are adversary to each 
 other. Their commercial intercourse is regulated by treaties always made 
 with a view to relative advantages, and to provide for those hostilities 
 which are of perpetual occurrence." The "reports" offered jumbled 
 and immaterial statistics about amounts produced and amounts imported, 
 and had their corner-stone in one on " the balance of trade" view of the 
 currency. They all talk of the calamity of buying without selling, an 
 operation which we are accustomed to call, in the rare cases when we ex- 
 perience it, receiving presents, and they go into hysterics about the dam- 
 age endured from foreigners who send their surplus stocks here and sacri- 
 fice them at auction, which is only declaiming against cheapness. 
 
 In the session of 1831-2, a presidential election approaching, the 
 whole subject came up again. The Committee on AVays and Means pre- 
 sented a majority and minority report, with bills. The Committee on 
 Manufactures proposed a high tariff revision. The Secretary of the 
 Treasury reported a more moderate bill. The Senate also had a bill. 
 There were also numerous amendments. The result was a remodeled 
 tariff adjusted to suit the protective policy, signed July 14, 1832. 
 
 This, then, was the answer to Southern protests. The Southern 
 position was doubly unfortunate. In the first place, they insisted on the 
 unconstitutionality of the tariff, and sought nullification as a remedy. 
 This complicated their position with the most difficult and vital constitu- 
 tional questions. In the second place, they did not fight intelligently for 
 free trade, nor yet for a revenue tariff. They wanted a " horizontal tariff," 
 and (id valonuii duties. South Carolina called a convention in Novem-
 
 PROTEUTION IN THE UNITED STATES. 51 
 
 ber, 1832, and persisted in movements towards nullifying the tariff. The 
 President met them with a proclamation setting forth his duty and inten- 
 tions. Congress met again in that year with the question of tariff in the 
 first place of interest. A bill introduced by Mr. Yerplanck was intended 
 to conciliate. Many and serious amendments altering its character were 
 introduced, and the whole winter was spent in struggles over them. Sud- 
 denly, near the end of the session, Mr. Clay proposed another bill to 
 supersede them all. Mr. Calhoun had quarreled with the President, 
 and had been thrown into opposition, and he and Mr. Clay arranged the 
 compromise under circumstances which are differently stated by different 
 authorities. The day Ijefore that on which the Act of July was to go into 
 operation, March 2, 1833, this compromise tariff was signed by the Presi- 
 dent. It provided that the taxes fixed by the tariff of 1832, so fiir as the 
 ad valorem rates exceeded twenty j)er cent., should be reduced by one- 
 tenth of the excess over twenty per cent, on the first of January in each 
 alternate year until 1841. In that year they were to be .reduced one-half 
 of the remaining excess, and in 1842, were to be reduced to twenty per 
 cent. This would issue, of course, in a horizontal tariff at that rate. This 
 bill also shortened the period of credits on imports, and raised the cus- 
 tom house valuation of the sovereign to $4.80. The reduction operated 
 only slowly. It started from the stringent high tariff of 1832, and the 
 " horizontal" tariff had no principle of protection, or free trade, or revenue 
 in it. The compromise was a pure political makeshift, in which the 
 public and private interests had no consideration. 
 
 Now, one looks with great interest through the history of the subse- 
 quent years to see if manufactures died out. One expects lugubrious 
 descriptions of disasters from the protectionist journals. Nothing of this 
 kind, however, is to be found. Niles drops his long essays. The subject 
 disappears from his columns. No disasters take place. The woes of the 
 woollen men are forgotten. The simple fact is that when Congress had 
 put the question aside, the manufacturers ceased to carry on their business 
 in the lobby, but attended to it at home. They probably found this more 
 profitable. At any rate they prospered, and the whole country prospered 
 steadily until the currency errors came in once more to produce disaster. 
 
 The panic of 1837, and the bank crash of 1839, spread ruin through- 
 out the country. This is not the place to speak of the causes or relations 
 of this disaster. Suffice it to say, that great amoimts of caj^ital had been 
 invested here by Europeans during the last decade, and that a vast indebt- 
 edness had been incurred on a bank inflation. The capital had been largely 
 invested in internal improvements carried on by a kind of mania. These 
 works were often unwisely undertaken and extravagantly conducted. 
 They offered no promise of profit. Correctly regarded, however, this 
 disaster was the result of rash and ignorant abuse of exuberant natural
 
 52 PROTECTION IN THE UNITED STATES. 
 
 advantages, but the abuse had been so excessive that the revulsion was 
 terrible, and the country did not recover for five years. 
 
 I take no account here of the various attempts which were made 
 during the period of the compromise to alter the duties, either directly 
 or under the form of bills to secure the collection of the revenue. It is 
 sufficient to say that there were several such attempts, and that the com- 
 promise did not run its course without signs of the old longing to legis- 
 late on this subject. The last years of the period, when the duties 
 were lowest, fell in with the distress of 1837 to 1842. The old argument 
 of " hard times," therefore came up with renewed force in favor of more 
 protection. People did not see that when a country like this, enjoying 
 the greatest natural advantages, suffers distress, it is proof positive that 
 artificial and legislative arrangements must have interfered injuriously 
 with the play of natural laws. I cannot too strenuously insist upon this, 
 in view of present circumstances. The soil of the earth furnishes the 
 necessaries and comforts of life when man applies labor and capital to get 
 tliem out of it. If one man has much land at his disposal, he can get 
 abundance with little labor. He pays all the persons engaged in manu- 
 factures, trade, transportation and personal services out of his abundance, 
 for saving him from loss, or doing part of his work for him, or contribut- 
 ing to his comfort and advantage. This is a simple statement of the eco- 
 nomic organization of modern society. It regulates itself perfectly. The 
 natural laws, the law of value, the law of exchange, the principle of free 
 contract, are sufficient to keep the whole system in harmonious operation. 
 If the resources of the soil are inadequate to the demands, either because 
 population is excessive or the soil poor, the way of escape is by emigration 
 or an improvement in the arts ; but if the soil is rich, and the population 
 meager, and yet there is distress, the place to look for the causes is in the 
 artificial arrangements of man. We must have misapprehended the laws 
 of nature which govern economic circumstances, and put our legislative 
 enactments out of joint with them. The way out of trouble lies in a 
 closer study of the science of economy, and a more correct adjustment of 
 our arrangements to the laws which it teaches. The general custom of 
 man is, however, to try to correct one bad arrangement by another, to 
 put another cog, or another lever, or another sjn-ing, into the machine, 
 never remembering that he thus simply increases the friction, and lessens 
 the force which he had before. It has long been generally known that 
 we cannot invent a perpetual motion, because it is making something 
 out of nothing, but in social and economic arrangements, analogous eflforts 
 are still continually made. So it was in 1842. Distress prevailing, it was 
 supposed to be the business of government to remove distress. What else, 
 it Avas asked, did government exist for ? It was a paternal, fostering in- 
 stitution. To be sure, the persons who composed it as individuals, en-
 
 PROTECTION IN THE UNITED STATES. 53 
 
 joyed, with a few exceptions, but little respect. The functions whicli 
 legitimately belonged to government were notoriously ill-performed. It 
 did worse, and at far greater expense, whatever it tried to do, than any 
 person or corporation in the country. If it possessed any occult force, or 
 any superior intelligence, or any improved machinery for getting what 
 men want in this world, it certainly kept it secret and produced no 
 proofs of it. Yet the superstition of government, then and still strong 
 amongst us, led people to look to government to do for them what they 
 could only do for themselves by industr}' and economy. 
 
 The whigs entertained the general conception that government de- 
 meaned itself when it narrowed its own functions. They believed in the 
 paternal theory. They scorned all the notions which had prevailed in 
 the government for twelve years, and, having won a victory in 1840, they 
 were eager to put their own theory in practice. They passed a bill for 
 distributing the proceeds of the public lands amongst the States, thus 
 stripping the government of a legitimate source of revenue; but it was 
 provided that this distribution should not take pJace when duties were 
 above twenty per cent. At the next session (1842) they passed a pro- 
 visional tariff with a clause repealing the limitation on distribution, but 
 it was vetoed by Mr. Tyler. They then passed a permanent tariff, which 
 he also vetoed; both on account of the repeal of the limitation on distri- 
 bution. They ther^ passed the tariff of August 30th, 1842, raising duties 
 and cutting off distribution. This act turned back to protection. It 
 was based on the tariff of 1832, but the duties were lower. The reviving 
 industries of the country, consequent on the destruction of the bad cur- 
 rency, and the restoration of sound values, were pointed at as proofs of 
 the success of this policy. 
 
 The arguments employed at this period offer nothing new. The 
 notion, so prevalent in 1832, that high tariffs lower prices, and which was 
 then afiirmed as a broad and general truth, was little heard in 1842. 
 The grounds put forward at the latter date were the old and Avorn out 
 fallacies about imports and exports, balance of trad«, drain of specie, &c., 
 &c. A specimen from the report of the Committee on Manufactures 
 may suffice : " There are several causes for the present depression of prop- 
 erty and general stagnation of business, one of which will be admitted 
 to be the large amount of our importations over the amount of exports. 
 This depresses our home industry and draws from the country annually 
 large balances in specie, crippling our banks and depriving them of the 
 power to grant necessary facilities." A great part of the public docu- 
 ments of the United States consist in a reiteration and expansion of this 
 paragraph, every clause of which contains errors which are refuted in any 
 standard elementary text book on political economy. The importations 
 cannot exceed the exportations over any period of time. If they do for a
 
 ^ 
 
 54 PROTECTION IN THE UNITED STATES. 
 
 time, it is proof that they ought to, and it cannot produce any stagnation 
 in business. If imported articles drive home mannfactiires out of the mar- 
 ket, it only proves that the pcojile are getting their supplies cheaper, and 
 that that particular form of home industry is falling behind in the indus- 
 trial race. We have only the alternative of letting the persons interested 
 do as we all have to do, emjoloy energy and skill to sustain themselves, or 
 else rob ourselves to protect them in inferiority — that is to subsidize 
 negligence, inefficiency and want of skill. The importations cannot 
 "draw away specie" unless we part with it willingly; and if we do, we 
 give up what is worth less for what is worth more. "We cannot be robbed 
 of specie except by an invading army, and if we give it up in trade, |ve 
 give it up for a profit. No sound bank, which has not by its excessive 
 issues injured commerce and industry, can be "crippled " by an export of 
 specie, and such an export is the proper protection of the public against 
 the injury which excessive bank issues are doing. As for lessening the 
 power of the banks to "grant necessary facilities," the committee are un- 
 der that notion of banks which regards them as beneficent institutions 
 whose function is to create capital for people Aviio want it. 
 
 By the election of Polk in 1844 the South gained control of the 
 government. In 1845 the cry was raised that the tariff was in danger. 
 Meetings were held to protest against any change. The project of Mr. 
 Walker, Secretary of the Treasury, was the old soutl:\prn plan of horizon- 
 tal rates and ad valorem duties. He divided nearly all imports into eight 
 schedules with duties at 100, 40, 30, 25, 30, 15, 10 and 5 per cent, ad val- 
 orem. This bill passed the House 114 to 94, and the Senate 28 to 27, 
 after a debate and a public excitement, different in kind but scarcely less 
 in degree than that of 1832. The average rate of duty under it was 25^ 
 per cent, on dutiable, until 1857. By the Act of March 3, 1857, the 
 duties were lowered to an average rate of 20|^ per cent on dutiable. 
 
 The period from 1846 to 1860 was our period of comparative free 
 trade. The Sub-Treasury Act of 1846 removed subjects of currency and 
 banking from national legislation. Thus these two topics were for a 
 time laid aside. For an industrial history of the United States, no period 
 presents greater interest than this. It was a period of very great and very 
 solid prosperity. The tariff was bad and vexatious in many ways, if we 
 regard it from the standpoint either of free trade or revenue tariff, but its 
 rates were low and its effects limited. It was called " a revenue tariff with 
 incidental protection." The manufactures which, it had been said, would 
 perish, did not perish, and did not gain sudden and exorbitant profits. 
 They made steady and genuine progress. The repeal of the English corn 
 laws in 1846 opened a large market for American agricultural products, 
 and took away the old argument which Niles and Carey had used with 
 such force, that England wanted other countries to have free trade, but
 
 PROTECTION m THE UNITED STATES. 55 
 
 ..ould not take their products. THe effect on both countries was most 
 happy. It seemed as if the old system was gone forever, and that these 
 two great nations, with free industry and free trade, were to pour in- 
 creased wealth upon each other. The fierce dogmatism of protection and 
 its deeply-rooted prejudices seemed to have undergone a fatal bloAv. Out- 
 shipping rapidly increased. Our cotton crop grew larger and larger. The 
 discovery of gold in California added mightily to the expansion of pros- 
 perity. The states indeed repeated our old currency follies, and the panic 
 of 1857 resulted, hut it was only a stumble in a career of headlong pros- 
 perity. We recovered from it in a twelvemonth. Slavery agitation 
 mj|rked this period politically, and if people look back to it now they 
 think most of that ; but industrially and economically, and I will add 
 also, in the administration of the government, the period from the Mex- 
 ican to the civil war is our golden age, if we have any. There was sim- 
 plicity, even to dullness, in national affairs. It was one of those happy 
 periods when a nation has little history. As far as the balance of trade 
 is concerned, it never was more regular and equal than in this period. 
 
 The Act of March 3, 1857, was called for, because the revenue had 
 risen beyond the necessities of the government, and the debt had been 
 reduced to an insignificant sum. The bill lowered duties about one 
 quarter, and applied especially to raw materials of manufiicture. In the 
 debate, however, strong opposition to it was aroused, and no little old 
 protectionism was called out. The West objected to the reduction on raw 
 materials, especially wool, hemp and lead, which they produced, and 
 threatened to resist the incidental protection to Eastern manufactures. 
 This brought out the weakness and error of incidental protection in 
 strong light. So long as there is any protection the argument is sure to 
 arise under this form. Those who are not protected demand that rev- 
 enue be raised from products similar to theirs in order to give them a 
 share in the incidental benefit. In short we are forced either to protect 
 all or to protect none, and we see distinctly that there is no safe position to 
 take except that of total opposition to all protection. If we lay any duties 
 which act protectively, we must offset them by excise taxes, that no bene- 
 fit may accrue. 
 
 Congress was divided in 1857 between two policies for the reduction 
 of revenue, and was embarrassed by a novel difficulty in legislation, that 
 of getting rid of a surplus which threatened worse demoralization than 
 any public debt. It was then fully perceived that by reducing taxes rev- 
 enue was increased. The tariff of '46 had been estimated to yield about 
 twenty millions. The receipts from it in 1856 were over sixty millions. 
 It was therefore urged that, to reduce revenue, duties ought to be raised 
 and used for protection. 
 
 The panic of 1857, of course, reduced imports and lessened revenue.
 
 56 PROTECTIOX IX THE UNITED STATES. 
 
 In 1858 there "was a recovery, which was still greater in 1859. In 1860 
 political troubles produced another reduction. The expenses of the gov- 
 ernment in the meantime increased and a deficit arose. This formed the 
 basis for the new effort to increase duties. The real motive, however, 
 was political. The Republican party wanted to make sure of Pennsyl- 
 vania. That state was aware of its value to tlie Union and to the party 
 in question. As a member of the Confederation, no one would have 
 esteemed it less than any other, but it was still in the position of a mem- 
 ber of the family who wants to live on the contributions of the others- 
 It added to the incongruity of the situation that this member claimed to 
 be possessed of means of wealth surpassing all the others, but he could 
 not get a living out of them. He would not be idle either, but insisted 
 on sinking capital in unproductive enterprises and calling on his breth- 
 ren to make up his losses. 
 
 The Eepublican party made the bargain. Mr. Morrill introduced his 
 tariff in the House, March 12th, 1860, and it was passed. The Senate 
 postjDoned it to the next session. In June, the Chicago Convention 
 adopted a tariff plank. The bill came up at the next session and passed 
 the Senate February 20th, 1861, by a vote of 25 to 14, seven Southern 
 States having, up to that time, seceded. The bill passed the House 
 promptly by a large vote, and was signed March 2d, 1861. It went into 
 operation April 1st. It raised duties from the tariff of 1857 about one- 
 third. The debate hinged upon revenue almost entirely and showed the 
 result of fourteen years' education in comparative free trade. 
 
 This fact is well worth observing. Ten to fifteen years suffice to 
 change the voting pojiulation and to educate a generation in one set of 
 ideas or another. Thus the traditions of one policy secure a certain sta- 
 bility within that period and men lose memory of any other. It is 
 always difficult for men to realize in imagination, or by description, a 
 social condition other than that they have experienced. The power to 
 do this is only acquired by study and travel. Hence it is to-day that 
 most people acquiesce in the paper money and protectionist fallacies to 
 which we have, as a generation, become accustomed. 
 
 The Morrill tariff does not call for any extended notice, because it 
 only lasted four months. A new act became a law on August 5th, 18G1, 
 which raised duties from the date of its passage. It was a revenue act, 
 jbut contained many protectionist jobs. Tlie immediate result was that 
 it produced effects on trade which legislators, inexperienced in this de- 
 partment and ignorant of the laws of taxation, did not foresee, and it stim- 
 ulated numberless efforts to secure for other "interests" similar ad- 
 vantages. Another act of December 24th, 1861, increased the taxes on 
 tea, coffee and sugar. 
 
 In 1862 tlie internal taxes were laid. They were extended from time
 
 PROTECTION IN THE UNITED STATES. 57 
 
 to time without method or intelligence, bnt they proved conclusirely 
 enough that that system of taxation is perfectly feasible in this country, 
 and that, on a system adjusted to the best modern principles of taxation, 
 it could be used here as well or better than anywhere else in the world. 
 It was unpopular and produced grumbling, which is one of its cliiif 
 recommendations, because people kneAV what they were paying, and they 
 were guarded against the :!pathy which characterizes them in regard to 
 import duties. The latter are far more mischievous, but are paid uncon- 
 sciously. The time will come, in the advance of enlightenment, when men 
 will demand to be allowed to conduct their business in entire freedom, so 
 as to make as much as they can, and then pay taxes which they must pay 
 out of the net proceeds, and when they would as soon let the grocer and 
 butcher draw on their bank accounts without presenting a bill, as let the 
 government put its hands in their pockets for taxes when they do not 
 know it. It would be an amusing experiment if this government should 
 for a year exact by internal taxes without duties the same sum which the 
 tariff now costs us, and then pay in bounties to the protected interests 
 the sum which they now get. 
 
 The Act of July 14, 1862, raised duties "temporarily." The joint 
 resolution of April 29th, 1864, raised all duties fifty per cent, for sixty days, 
 afterwards extended to ninety. The Act of June 30th, 1864, was a 
 general revision for revenue and protection. It was represented as 'a 
 necessary offset to the internal duties and as a temporary war tariff. The 
 Act of March 3d, 1865, again extended and complicated the system by 
 more minute subdivisions and classifications and by enhanced rates. It 
 involved a number of tricks and devices intended to have an effect which 
 could not be foreseen, and was a reckless exertion of the poAvers which had 
 been rediscovered as latent in this kind of legislation. The Act of 
 July 28th, 1866, revised and strenghtened the last act, by various pro- 
 visions intended to clinch its operation. 
 
 Tliese are the acts which belong directly to the war period. The 
 people were busy in war making; their attention was absorbed in that 
 direction. Congress itself was so absorbed in this business that the ques- 
 tions involved in tariff did not obtain consideration. The necessity of 
 getting revenue was paramount, and there was no scientific knowledge 
 of the principles of taxation to govern the attempt. The only system 
 employed was to tax everything, and if more revenue was wanted, to tax 
 more heavily. The people submitted patriotically, because they thought 
 it necessary. The abundance of paper money, with rising prices and 
 great speculation, created enormous fortunes and produced a semblance of 
 prosperity. People thought that millions of men could leave industry and 
 go to destroying capital, and yet the nation get rich. Under such circum- 
 stances the natural consequence was that the social parasites found a grand
 
 53 PROTECTION IN THE UNITED STATES. 
 
 -opportunit}-. AVe must distinguish here two kinds of protection; the 
 doctrinaire protection of Clay, Niles, Carey and Greeley, which was hona 
 fide belief in the doctrine as a theory of national wealth, and the in- 
 terested protection of cliques and individuals, who employ the system 
 only for selfish ends. The latter was the kind which arose here ten years 
 ago and under which we are now living. We enjoyed the services, as 
 national legislators, of Mr. Morrell and Mr. Stevens, Pennsylvania iron 
 masters ; Mr. McCarthy, for the New York Salt Works ; Mr. Morrill, for 
 the Vermont sheep raisers. Our Congress was beset by lobbyists, who 
 found it easier to speculate by moviug legislation than by cornering the 
 market ; and to look at our legislation it seemed that we were a confedera- 
 tion only for the sake of holding a grand scramble at Washington to see 
 which section and which interest should worst plunder the rest. 
 
 The system was elaborated as a " temporary " system — as a war mea- 
 sure — like the pajser money, and we have been living under it ever since. 
 Too many people find their interest in sustaining it to let it fall without 
 a struggle, on behalf of the great public which elects all the Congress- 
 men, but finds few representatives. The internal taxes, which formed 
 the excuse for a large part of tlio advance in duties have been gradually 
 abolished, and the whole weight of destructive restraint is left to fall on 
 the industries of the country. Evidently the whole policy was erroneous 
 and false, even from tlie point of view adopted. In going into a great 
 war, the nation wanted its powers free. It wanted cheapness and abund- 
 ance then, if ever. It wanted tlije maximum of revenue according to the 
 most approved methods of obtaining it. It was no time to re-undertake 
 the task of encouraging industries, even if that ever was wise, and I be- 
 lieve that the historian, when he comes to criticise this period in our 
 history, will say that the welfare of a great nation never was so recklessly 
 sacrificed by ignorant empiricism in legislation, nor the patriotism of a 
 great people ever so wantonly abused, as in the tariff legislation of our 
 war. Our position then and since as to tariff" and paper money always 
 reminds me of one of the blessings of Jacob : " Issachar is a strong ass, 
 bowed down between two burdens. And he saw that rest was good, and 
 the land that it was pleasant, and bowed his shoulders to bear, and be- 
 came a servant unto tribute." 
 
 I come now, however, to the most shameful chapter in the whole 
 { irv. In 18G7, the woolen manufacturers being dissatisfied with the 
 protection they enjoyed, held a convention at Syracuse to exert the in- 
 fluence which was due to the importance of their industry on legislation. 
 Upon their arrival, they met with an unexpected obstacle. Lo ! there 
 were also the representatives of the wool-growers. These latter had come 
 to Avatch and to say that tliey must be counted in. Obviously, tlic patli 
 i r^-"i'sdom lay in an alliance. An adjustment to satisfy the wool-grower.>
 
 PROTECTION m THE UNITED STATES. 59 
 
 was made, and the tax on woolens was put enough higher to allow for 
 this. The tariff there concocted was enacted into a law March 2d, 1867. 
 It consisted of a minute classification, and a complicated graduated rate 
 which has tormented the woolen industry ever since. In 1868 and 1869, 
 we saw mutton a drug on the market at 8 and 9 cts., when beef was 20.j 
 The farmers who had been deluded into relying on tariffs to produce 
 wealth, found that they had to send their sheep to slaughter. 
 
 The woolen interest profited no better. They had to import dirt 
 from Australia when they wanted wool. If the price advanced, or any 
 turn of exchange or item of cost carried the total cost over 12 cts., they 
 found a higher rate of duty exacted, and the importation unprofitable. 
 When they turned to the home supply they found that it was all on one 
 grade, and that they were deprived of the advantage of mixing wools to 
 make various fabrics. Mills were started by ignorant and inexperienced 
 persons in improper places, and the svipply of cloth, all on one grade, 
 glutted the market. In 1869 a crisis in the industry occurred, with 
 numerous failures. Mills were sold out for a fraction of their cost. New 
 proprietors started, with a smaller capital account, and there has since 
 been nothing but a struggling and unremunerative existence for this in- 
 dustry. 
 
 In 1870 the first reduction of duties took place, and it was on the debate 
 of this bill that the old divergence as to the principle of protection reap- 
 peared. The sections and interests were so completely included in the sys- 
 tem that there was little clear, complete and outspoken advocacy of free trade, 
 such as the South used to offer. Almost every member had a reservation 
 in favor of the interest of his own district. It only proves again that the 
 system must be assailed as a whole. Pig iron was reduced from $9 to $7 
 per ton. The other reductions were chiefly on tea, coffee, sugar, spices, wines 
 and fruits, things which ought to bear taxes if anything does. In 1872, 
 10 per cent, was taken from the duty on some of the most important arti- 
 cles in the tariff, but the amount was restored in the session of 1874-5, 
 by what was called the " little tariff" bill. The tariff now contains 1,500 
 articles and specifications. In 1874 the average rate was equivalent to 
 38-2- per cent, on dutiable imports. 
 
 In the mean time American shipping had ceased to be. Other na- 
 tions bought shipping and sailed it at a profit, if they could not build it. 
 We prohibited this. Nevertheless, under even this utmost exertion of 
 the restrictive system, the revival of our shipping, longingly looked for 
 and often promised, never came. Our flag is kept afloat by one or two 
 subsidized lines, and by one on a course which other shipow^ners have 
 abandoned as unprofitable. Perhaps the Pacific Mail Line enlists the 
 pride of Americans. From time to time it is proposed to go on and sub- 
 sidize ships, in order to force the long-desired revival. This is consistent
 
 60 PROTECTION IN THE UNITED STATES. 
 
 at least. Having taxed tonnage in foreign trade out of existence, and 
 forbidden the transfer of foreign built ships to American registers in 
 order to spite the shipowners who abandoned our flag during the war, we 
 now propose to tax agriculture and commerce back again to provide a 
 fund for subsidizing ships. 
 
 Our exports have likewise been killed by the inevitable operation of 
 the tariff. We no longer offer a market and cannot attract miscellaneous 
 orders. We cannot export to countries whose products we do not take. 
 We cannot trade directly with South America, the East Indies, or Aus- 
 tralia, even for the exports in which we could doubtless compete in those 
 markets, because we refuse to take their products. We cannot make 
 roimd voyages because no one could tell what would be done with the 
 tariff at home during the interval which must elapse. Our manufacturers 
 having secured the home market, find that the home market becomes a 
 restraint, not an advantage, and they move out of the co'untry in order to 
 get rid of the ti'ammels of the tariff while working for export. Our own 
 sewing machines are jirovided for foreign nations cheaper than we can get 
 them ourselves. The system has been pushed so far, and its complicated 
 developments have become so interlocked with each other that the protec- 
 tive system is to-day a dead weight on all the production of the country 
 of every kind. Its complete overthrow would be a grand emancipation 
 for manufactures as well as for everything else. 
 
 How far we yet are from anything like this movement was shown a 
 few weeks ago by the proposition gravely made, and, it appears, gravely 
 entertained at Washington, to lay discriminating duties so as to bear on 
 the civil war in the Island of Cuba. The taxing power is the greatest 
 engine controlled by governments, and it has been used or abused to aid 
 temperance, to restrain luxury, to put down slavery (the English discrim- 
 inating duties on slave-grown sugar), to coerce belligerents in favor of 
 neutrals, and, in this last case, is proposed to accomplish an interference 
 in a foreign struggle with which we could not interfere justifiably in any 
 way. 
 
 This completes the hasty review which I have been able, under the 
 circumstances, to give of the history of our tariff legislation. Some 
 things seem to follow from it so evidently that no one can contradict 
 them. 
 
 In the first place tliis notion that there is some means to increase, by 
 an adjustment of taxes, the Avealth of a country has had a very full trial 
 amongst us. It was inherited by us from older countries, in which the 
 pressure of population on the means of subsistence was great, and the 
 idea of the functions of government wide. It was hostile to all the be- 
 liefs and habits of thought of the American people. It was totally in-
 
 PROTECTION m THE UNITED STATES. 61 
 
 congruous with the social and political system which they established. It 
 was reluctantly admitted under the idea that a new country may need 
 some stimulus and assistance at the outset. In this view it is forgotten 
 that the stimulus must come from without to be of any use, and that, if 
 it is sought within, it can only be obtained by depressing one part to 
 develop another. Nothing is created by the system, nor ever can be. It 
 is only another instance of the folly which we continually commit of try- 
 ing to make something out of nothing, or to lift ourselves by our boot- 
 straps. As I have shown, the curtailment and depression fell in the United 
 States on agriculture. In England it fell on manufactures for the benefit 
 of agriculture, and in any country, old or new, the doctrine holds abso- 
 lutely, that whatever means of wealth it has, and whatever the kind may 
 be, they work up to their maximum when they work freely. 
 
 The Americans adopted the notion, however, that they could, by a 
 few years of self-denial, get certain industries started, which would then 
 '*go alone " and become independent sources of wealth. I not only affirm 
 on the grounds of reason and science that such a theory is absurd and 
 fallacious, but I now appeal to the century of history as a complete proof 
 that there is something wrong and false about this theory. Where are the 
 results? Instead of strong, independent industries, we have to-day only 
 a hungry and clamorous crowd of "infants." We are told that our 
 country is rich in everything good for man, and every new discovery of 
 natural sources of wealth is made the ground, not of greater abundance 
 and less labor, but of greater scarcity and greater labor. Find a mine of 
 copper in the United States, and it is an argument for making it harder 
 for the people of the United States to get copper than before. We used to 
 get emery to supply all our wants by giving wheat and cotton for it ; we 
 did not know we had any. At length a bed of ore was found in Massa- 
 chusetts, and the first step was to get legislation to make the American 
 people give more wheat and tobacco for emery than before. The same 
 applies to all our great resources, until it might be worth while to calcu- 
 late how much more iron, coal, copper and lead the people of the United 
 States would have to-day, if there was not a particle of either under their 
 soil, than they now possess. There is immense force, apparently, in the 
 fallacy that we want " industries," when in fact we want goods to supply 
 our needs; in the idea that we want work, when in fact we want leisure. 
 We are trying to sustain life on the face of the earth, and we find it hard 
 work. All our discoveries and inventions have for their object to make 
 it easier ; that is, to get more goods for the same labor, and to sustain 
 more, or more highly developed, men. For this we want leisure from 
 drndgery, as the first and most imperative requisite. Therefore, every- 
 thing which gets the goods and lessens the labor is an advance in civiliza- 
 tion ; and everything which makes more labor necessary to get the goods
 
 63 PBOTEGTION IN THE UNITED STATES. 
 
 tends to barbarism. Labor for material good is simply a gross necessity, 
 wliich we are all the time trying to conquer in order to get leisure for 
 pleasanter and higher occupation, and, above all else, it follows that those 
 whose lives are all spent in drudgery over material needs are most clogged 
 in their efforts for emancipation by everything which increases labor. 
 Hence this aim with which the early American statesmen set out has 
 proved a chimera. The further we follow it, the further it leads us. We 
 get more industry and less good. 
 
 It follows, secondly, from this history that this continual law-making 
 about industry has been prolific of industrial and political mischief. It 
 has tainted our political life with log-rolling, presidential wire-pulling, 
 lobbying and custom house politics. It has been intertwined with cur- 
 rency errors all the way along. It has created privileged classes in the 
 free Americaa community, who were saved from the risks and dangers of 
 business to which the rest of us are liable. It has controlled the election 
 of Congressmen, and put inferior men in office, whose inferiority has 
 reacted upon the nation in worse and worse legislation. Just now we are 
 undergoing a spasm of indignation at official corruption, and we want to 
 reform the civil service, but there is only one way to accomplish that, and 
 that is to cut up the whole system which has made the civil service what 
 it is. It is of little use to cut off the tops of the weeds and leave the 
 roots in the ground. When the shower passes over they will grow up 
 stouter than ever. 
 
 I have presented the subject to you historically, because it is the 
 method of treatment in which I have the most confidence. It is to his- 
 tory that we must look for the facts which teach us social and economic 
 laws, and form the basis of any positive treatment of social questions^ 
 For a full exposition it would be necessary to follow the industrial history 
 of the country, but the materials for such a history of this country are 
 not in a shape to be available, if indeed they exist. We have enough, 
 however, to show us that we are living here under immutable and inexor- 
 able laws of the social organization. We cannot cheat those laws, nor 
 evade them. If we try to escape their operation in one point, they avenge 
 themselves in another. We cannot manipulate the law of value, so as to 
 make things exchange otherwise than in the ratio of supply and demand, 
 without losing more one. way than we gain another. We cannot legalize 
 plunder under any guise whatever, without surely wasting wealth and 
 impoverishing robbers and robbed together. We cannot arrange any sys- 
 tem of gambling which will increase wealth, since wealth comes only- 
 from labor properly applied. We cannot employ the taxing power of the 
 government to increase wealth, but only to diminish it. This is the world 
 and human life as they are. The whole protectionist school, in its various 
 grades, starts out with discontent with this world, and with a 2'>riori
 
 PROTECTION IN THE UNITED STATES. 63 
 
 assumption in regard to the kind of world they would like to make. 
 They are not contented to see what the natural chances of the country 
 are and then to go to work to develop them. They make up their minds 
 first what, in their wisdom, the country ought to be, and then they set to 
 work to force it, with nature or against nature, into that form. They are 
 not contented to see that the country affords by nature unexampled oppor- 
 tunities for man in agriculture and commerce. That is all as nothing if 
 it cannot be one other thing also. They are not satisfied that it shall 
 evidently be able to obtain all good things which the whole world produces 
 by exchange, if not by production. They form to themselves dogmas about 
 exchange, and will have nothing but by direct production, even though on 
 the whole they have less. So they set to work to devise means to make the 
 sort of country which they picture to themselves. We all sometimes grum- 
 ble at the ills of life, I suppose ; but I, for one, turn back from the study 
 of all these propositions with devout thankfulness that we live in a world 
 which God has made, and that these gentlemen may mar, but they cannot 
 greatly alter it; and, looking back on our experience of what they have 
 done for us, I think we may all submit gladly to things as they are in pref- 
 erence to the notions of Niles and Carey as to what they ought to be. This 
 is a world in which toil is the road to wealth. It is a world in which in- 
 dustry, economy, prudence, temperance, are sure roads to health, wealth, 
 comfort and happiness, if men will only Jeave those virtues to operate 
 freely under the laws which are set for human life. It is a world in which 
 idleness, extravagance, dissipation and want of thrift are sternly and 
 piteously punished ; unless men, by their laws, rob virtue of its rewards 
 to transfer them to vice. That is all which any " protection " ever can 
 do, and it is the worst injustice which law can perpetrate. It is the in- 
 justice of the old despotisms and caste aristocracies, and of all systems of 
 class legislation and privilege, an injustice which has made history one 
 long record of revolutions and social wars and broils and tumults. We 
 may perpetrate it over again in the name of democracy, but we may be 
 sure we shall only produce the same results. What is lacking in it is 
 liberty, and in spite of the boasts of men about liberty, we are very far yet 
 from understanding what it it. It is nothing but the removal of all 
 restraints which hinder any individual from exercising all his powers 
 under the best intelligence, to go towards happiness by the path of virtue 
 which is laid down for us, but we may as well understand that it brings 
 with it the chance that he may, blindly and ignorantly, choose the path of 
 vice, which leads to ruin. When we plead for liberty we plead only that 
 those of us who want to choose the course of prosperity and solid security 
 may be left free to do so, or at least, that we may not be burdened in the 
 attempt. When we ask for the liberty to exchange our j^roducts as we 
 will, we ask only that, in that one particular, our efforts to advance our 
 selves may be left free to exert their full effect.
 
 64 PROTECTION IN THE UNITED STATES. 
 
 This brings us then face to face with the task which is at present in- 
 cumbent upon us. "We must have recourse to the means which are 
 familiar to the habits of our people. We must organize societies and dif- 
 fuse information. We must meet and discuss, and seek to gain and to 
 propagate sound ideas. Our own welfare and that of our children de- 
 pends upon it. If we are to have a fight, and we may expect that the 
 whole cohort of selfish interests will make a strong stand for the control 
 they have gained, we must meet it. The appeal lies to the great agricul- 
 tural interest, which is the chief sufferer, and which numbers one -half of 
 all the population of the country engaged in any occupation. The begin- 
 nings may be small and not very encouraging, but there is immense faith 
 to be placed in sound and true doctrine when it is fairly and plainly 
 taught, and it is impossible that a system of legislation so shameful and 
 ignorant as our present tariff legislation can long disgrace a free country.
 
 w. G. &UMXER.] ^ PROTECTIVE TAXES AND WAGES, 
 
 THE MERMAN FREE TRADER-SUPPLEMENT. 
 
 W. G. SUMNEfe. 
 
 Philadelphia, Pa., October 14, 1882. 
 
 G. SuMNEE, of New Haven, Conn., addressed the Commis- 
 follows : 
 
 N/ rhave noticed tbat in the discussions which have taken place before 
 this Commission there has been a constant reiteration of some false doc- 
 trines of theoretical political economy about wages. If there is to be 
 any theoretical political economy admitted, it is worthwhile to have it 
 correct. I have therefore thought that it might be proper for me, as a 
 professional student of political economy, to appear here and read a 
 paper setting forth the true relations between protective taxes and wages. 
 I learn from the reports of the proceedings before this Commission that 
 some people believe that protective taxes make wages high, and at the 
 same time that high wages make protective taxes necessarj^. If the 
 Commission should act on these two doctrines it would first raise taxes 
 in order to raise wages in obedience to a delegation of workmen, and 
 then raise taxes again in order to offset the previous increase, in the 
 interest of a delegation of employers, and so on forever. These two 
 notions, therefore, contradict each other, and produce an absurdity. 
 They are both fsilse. Protective taxes lower wages, and high wages 
 are a reason for free trade, not for protection. These two i)ropositions 
 confirm and sustain each other, and so ratify the truth of each. 
 
 The interests of the man who pays wages and those of the man who 
 receives wages are antagonistic. The one wants wages low and the other 
 wants wages high. The protectionist legislator pretends to step in be- 
 tween them and satisfy both at once. He pretends to make both 
 parties happy at once. "I am going to make your wages high," says 
 he to the wage receiver. "What, then, will become of me?" says the 
 wage payer. "I will make wages low for you," he replies. "How is 
 that," cry the laborers and all their friends, " you are going to make 
 wages low ? " " No," replies the legislator, " I mean tbat 1 will make the 
 l^rice of the products high, which will have the same effect for the em- 
 ployer." "But how is that," cry the consumers, "you mean to make 
 prices high by law .' " " No," replies the legislator, " I do not really make 
 prices high; it only looks so. My measures really make prices low." 
 We have here, then, the greatest miracle that has ever been accom- 
 l)lished. We have heard of making something out of nothing, but here 
 we have creation and destruction in one and the same act. Certainly 
 the problem of universal happiness is solved if we have found out how 
 those who buy need pay little, and those who sell may at the same time 
 receive much; how prices may be raised for the producer and lowered 
 for the consumer both at the same time. As we are all i)roducers and 
 all consumers, we may all sell at the high prices, and all buy at the low 
 ones, and all get rich together. This is why it is that the i)rotected 
 numufacturers are found bulling what they are short of (that is, labor) 
 and bearing what they are long of (that is, products). They have dis- 
 covered this wonderful system by which all are to bull everything and 
 bear everything at the sanu; time, aiul win a big difference out of noth- 
 ing. No wonder the protectionists are enraged at the economists who 
 are still stupidly teaching that we can produce nothing except by ap- 
 plying labor and capital to land. 
 1 su
 
 2 TARIFF COMMISSION. Iw. <•.. sumnek. 
 
 Who is tlie beneficent genie, now, who works all the inagic of the 
 protectionist system! It is tax. If taxes are only rightly adjusted, 
 says the protectionist, they make wages high and low and ])rices high 
 and low both at the same time. When one hears this kind of nonsense 
 one is forced to believe that the sum of sui)erstitiou in the world is a 
 constant quantity. Superstition is a defective sense of causation. The 
 savage who wears a bone tied to his arm as a fetich to ward off misfor- 
 tune, believes that there is a connection of cause and effect where there 
 is none. The astrologer thought that the relations of the i)lanets to 
 each other affected the fate of persons horn at a certain time. He saw 
 a connection of cause and effect where there is none. The protectiouist 
 legislator lays a tax and goes home secure in the faith that wages will 
 be high, prices low, and prosperity stable, as if there were a fixed, 
 direct, and inevitable law of nature connecting taxes with social welfare 
 and nothing else. This superstition is more wild than fetichism or as- 
 trology. 
 
 In discussing the effects of taxation ambiguity is often introduced by 
 not distinguishing carefully the alternatives which may be imagined. 
 If we could imagine a state of society in which vice, passion, and other 
 destructive forces no longer existed, government could be dispensed 
 with, or it would sink into some low form of co-operation for common 
 purposes. Taxes could then be dispensed with. If we compare our 
 present condition with any such ideal state of things, all taxes are 
 minus quantities, reducing by so much the available wealth and attain- 
 able comfort of the community. But such an ideal is a mere poetic " 
 dream. If we had no government we should have vice and passion 
 running triumphantly through society, wasting and destroying on every 
 side. Comparing our present condition with that state of things, the 
 taxes which we i^ay for security, peace, and order as products of civil 
 government are a small loss incurred to prevent a great one. Such is 
 the only sensible and correct \iew of taxes. They are never anything 
 but loss and diminution of wealth, and it is as impossible to convert them 
 into productive forces as it would be to make destruction create, or waste 
 save. Every tax is on the defensive, so to speak. It is necessary to justify 
 every cent which is drawn from the community by taxes and to sliow that 
 all the capital thus consumed is necessary, under the existing order of 
 things, to secure the protection of society, on the cheapest terms, against 
 the forces which would disturb security, peace, and order. If the taxes 
 were large enough, they might, as in Kgypt or Turkey, almost take the 
 place of the evils against which governments pretend to guard society. 
 Every unnecessary cent of taxation is, therefore, a pure evil. Go\'ern- 
 ment in Egypt and Turkey, and in much of Asia, is not an organization 
 to defend society against evils. It is only an organixation by which 
 some plunder all the rest, and taxes are the means l)y which they do it. 
 Wherever any taxes are laid for any other pui])ose than to juovide 
 civil order, peace, and security, government ai)proaches by just so much 
 towards the Turkish ])attern. Such is the case whenever protective 
 taxes are laid. 
 
 Taxes wliich ward otf greater evils at th(^ lowest practicable cost are 
 economical. They do not lessen the average comfort of the people. 
 Taxes which do not conform to this descrii)tion <lo lower the average 
 comfort of all classes of the ])eo])le. The wages class has no separate 
 interest in the matter which cither can be or ought to be considered by 
 itself. It is pure demagogism to say that it is th(^ business of the 
 government to make wages high. If I discuss the effect of taxes on 
 wages, it is only by way of meeting the (piestion in tiie form in which
 
 w. G. suMNEH.l PROTECTIVE TAXES AND WAGES. 3 
 
 it is raised. Protective taxes do not aim to produce good government, 
 or to accomplish any civil purpose at all. Their aim is industrial. They 
 are planned to help some people to get a living. They interfere, on be- 
 half of certain i)ersons, with the conditions of production and the rela- 
 tions of competition. A man who engages in a i^rotected industry has 
 some other reliance in his business than his own capital, energy, enter- 
 piise, i)rudence, «S:c. The man who is in an unprotected industry has 
 something more to guard against and contend with than the problems 
 of his industry and the difticulties of the market. One of these parties 
 has a special advantage created by law at the expense of the other 
 party, who is therefore under a special disadvantage. These protective 
 taxes, therefore, cannot be defended or Justified under a sound view of 
 the function and justifiability of taxation. They waste labor and capi- 
 tal, and keep the wealth of the country less than it might be for the 
 labor and capital which have been expended. Let us examine in par- 
 ticular their effect on wages. 
 
 Anything which lessens the number of persons competing for wages, 
 or which increases the amount of capital which may be divided in 
 wages, increases wages. In a new country in which there is an im- 
 mense amount of unoccupied laud, and in which the amount of cipital 
 required for tilling the soil is snuill, any man who has a pair of stout 
 hands, although he has no skill and very little capital, may become a 
 land owner and agriculturist. He is then withdrawn from the wages 
 class; he lessens the supply of labor in the labor market; and, as an 
 independent producer, he contributes all the time to the capital of the 
 country. Every man of the unskilled labor class, therefore, has an 
 alternative oftennl to him. He is never driven l)y starvation into a 
 desperate competition with others in the same predicament to work for 
 low wages. He is on the right side of the nmrket. Supply and de- 
 mand are in his favor. He owns a thing for which there is a high de- 
 mand in the market. The comfort he could win on the land fixes a 
 minimum below which wages cannot fall. If they do temporarily fall 
 below that minimum, the laborers take to the land, as they did in the 
 hard times a few years ago. Since the comfort obtaiimble from an 
 abundance of cheap and fertile land is high, the minimum of wages is 
 high. This makes the average wages of the country high. High wages, 
 therefore, simply mean that the soil of this continent is rich, the climate 
 is excellent and well varied, the rivers are large and convenient, the 
 mountains are full of metal and coal, the people are industrious and 
 energetic and are eager to accumulate, the i)ublic order is fairly secure, 
 and the general intelligence is good. The conditions of production are, 
 therefore, good, and we i)rodnce a great deal. We accumulate capital 
 far more rapidly than any other people in the world. 
 
 It is one of the humorsof the tariff that the politician appears at this 
 stage and says, "Oh, no! you are quite wrong in attributing the pros- 
 l)erity of the country to those causes. It was I who did it, with my lit- 
 tle taxes. The country has prosi)ered because I taxed it vigorously. 
 If 1 had not i)ut on my taxes the country would have been "ruined." 
 He aigues that an industrious people on a fertile soil could not have got 
 food and clothing out of it if they had not had the right taxes. A 
 further toucn of the ridiculous, however, is added by those politicians 
 who dechiim about the dignity of the American labortM-. To listen 
 to the speeches and read the editorials, one would think ixditicians 
 fornuMl a standard of comfort which they tliought suitable for the Amer- 
 ican laborer and then Just passe<l tile right laws to get it for him. It 
 is said that (>i(r lalxners ougiit not to be on the standard of comfort
 
 4 TARIFF COMMISSION. [w c. sumnek. 
 
 of European paupers. It must be, then, that the American sovereign 
 can formuhite his demands on nature. He makes up his mind what is 
 suitable to his owu majesty, and serves notice on nature to provide it. 
 His attorney, the politician, justly indignant that nature does not re- 
 spond, passes a law to secure the becoming thing for his noble client, 
 the American laborer. In this view of the matter, certain persons are 
 " nature's noblemen" in a sense not heretofore used. A little examina- 
 tion shows us, however, that we are only dealing with an old fraud un- 
 der a new face. The old-fashioned nobleman drew his drafts not on 
 nature but on his fellow-citizens, and, as his friends were in control of 
 the government, they got payment for him. The American sovereign 
 can get nothing from nature which he does not earn. If the politician 
 meddles in the matter he can only rob one sovereign to favor another. 
 That is all that he ever has done. That process has never made us any 
 richer, but only poorer. 
 
 Under the conditions of the United States, a tax on immigrants would 
 probably lower wages, not raise them. The country is underpopulated. 
 So long as there is an immense amount of unoccupied laud the immi- 
 grants do not go to swell the wages class ; they go upon the land, they 
 open it uj), win wealth from it, and contribute to the capital of the 
 country. Each newcomer who is industrious, counts more as a pair of 
 new hands to produce, than as another mouth to consume, and he may 
 well add to the average wealth j^erhead. Taxation has not even, there- 
 fore, in this country, the field which it might have in some countries, 
 if it were used to keep competitors out of the labor market. 
 
 If a tax on laborers could not raise wages, certainly no tax on com- 
 modities can do so. Protective taxes aim to keep certain foreign commodi- 
 ties out of the country. An army of custom-house officers must therefore 
 be supported, not to collect revenue, but to prevent rev^enuefrom being 
 collected. This device is kept up in order to secure the home market 
 to the home producer. The home producer carries on his business at a 
 loss. He says that he would lose capital if it were not for the tariff. 
 His industry, he says, would not exist if it were not for the tariff. It 
 is therefore conducted at a loss all the time, only that the loss is not 
 borne by the persons carrying on the business, but by the consumers 
 of the goods. The protective system, therefore, involves the following 
 expenditures : The pay of all the custom-house expenditures to keep up 
 the system ; wages and profits to all those who are carrying on the pro- 
 ductive industries; the losses incurred by the protected industries. All 
 these outgoes must be borne by the non-protected in order that there may 
 be less goods of all kinds in the country than there might be under 
 free trade. How, then, can protection increase wages, or the average 
 amount of these goods which can be obtained by each laborer in the 
 country? There could not be a more flagrant error. If there is any- 
 thing cheap anywhere the protectionists spring into activity to keep 
 the Am('ri(.'an people from getting it. If there is an abundance of 
 food, clothing, furniture, and other supplies which is offered to the 
 American people on easy terms, the protectionists call it an "inun- 
 dation," and run to set a barrier against it. A few weeks ago I saw 
 a hundred women waiting for hours on the sidcMalk for the opening 
 of a store at which some fire-damaged goods Mere to be sold (;heap. 
 A ])r()tectionist must hold that those women were insane, or that they 
 Avere selfishly ruining the country. It is impossible to raise wages by 
 o]>])osing cliea])ii('.ss and abundance. The ])rot«'ctive system hssseus 
 wealth and until somebody invents an arithuietic according to which 10 
 will go in 70 more times than it will in 100, it is certatain that smaller
 
 w.fl. SUMNER.] PROTECTIVE TAXES AND WAGES. 5 
 
 (liviileud will give a smaller share to each person. The protective sys- 
 tem, therefore, lowers wages. 
 
 Let us next look at the efteet of i)rotective taxes on the alternative 
 which is open to the American laborer to go upon the laud. The pro- 
 tective taxes enhance the cost of all articles of clothing, furniture, 
 crockery, utensils, tools, and machinery. They also increase the cost of 
 fuel and transportation. They therefore reduce the amount of all the 
 commodities mentioned which a farmer can get for a certain amount of 
 farm products. They therefore lessen the profits of agriculture in all 
 its forms, and lessen the attractiveness of the laud. Whatever lessens 
 the attractiveness of the land lowers the minimum gain of all manual 
 laborers, increases the number of competitors in the labor market, and 
 reduces the amount which the employer needs to bid in order to coun- 
 teract the advantages of the land. Protective taxes, therefore, take away 
 from the laborer the advantage which he has by nature in this country; 
 that is to say, tliey take away from him part of his advantage in the 
 labor market. Consequently, they lower wages. 
 
 It has been affirmed by protectionists that their system increases 
 capital. Two ways have been alleged in which it does this, (1) by im- 
 proving the organization of labor, (2) by bringing capital into use which 
 would otherwise be idle. 
 
 1. The people of this country are all the time exercising their utmost 
 ingenuity to organize their industry to the highest advantage. Partly 
 they do this by instinct. Plenty of people never heard of the "organ- 
 ization of industry,'' but they are constantly arranging their business 
 to save labor and so gain time and prevent waste. They are also con- 
 stantly laboring intelligently to secure a better organization of industry. 
 But, after they have exhausted their ingenuity, the protective system 
 assumes that some other persons, viz, politicians and legislators, can 
 see some better organization than the persons engaged in industry have 
 themselves been able to devise. If one part of the American people 
 have not invented the best organization of labor, we have no one else to 
 call upon than some other portion of the American people, and we must 
 appeal from the men of business to the politicians. The politicians, then, 
 as an incident to their own occupations, rectify the errors and short- 
 comings of the business men. The mode they employ is taxes. It is 
 the same old magic. But the business men have to bring intelligence 
 to bear on the organization of labor, while the protectionist legislator 
 never has brought any intelligence at all to bear on the i^roblem, and he 
 never can. Protective taxes have never been laid in view of any true 
 knowledge of the industrial circumstances, and they never can be. A 
 thousand commissions, sitting for ten years, and actually engaging in a 
 real study of the industries of this country, could not win a knowledge 
 of our industrial system, aiul if they could acquire such knowledge of 
 the industrial system as it exists on a given day, their knowledge would 
 not be good for anything the day after, on account of the new inventions, 
 discoveries, processes, lines of transportation, tinancial arrangements, 
 and so on. 
 
 We have here now tifty millions of people spread over a continent 
 with great varieties of climate and soil, and we constitute the most en- 
 ergetic, restless, and indefatigable nation which has ever existed. To 
 try to plan a system of artificial relations of industry for such a nation is 
 the most ridiculous undertaking that could be proposed. Any one who 
 talks of reaching a permanent adjustment of the tariff to tit the needs 
 of all interests and do injustice to none is talking the wildest nonsense. 
 Nothing less than the jmpersonal forces of nature can adjust interests
 
 6 TARIFF COMMISSION. (w. g. sumnek. 
 
 under such conditions, and there is only one thing which can be predi- 
 cated of any steps taken by the statesman, that is, that he will make 
 mischief. A man who is running- a railroad easily sees what crude 
 nonsense people talk abont railroading when they know nothing of the 
 business. A banker makes the same observation. So does every other 
 man in his own line. What chance is there, then, that politicians can 
 deal wisely with the thousands of industries and interests in this coun- 
 try in all their manifold and complex relations to eacli other. We might 
 as well try to establish, by legislation, a system of health which would 
 prevent the peoi)le of the United States from ever being sick any more. 
 
 Furthermore, the politicians never try to deal with the whole com- 
 bination of industrial interests. They listen only to the most clam- 
 orous. They heed only those who win influence and so secure the po- 
 sition of favorites. They never bring any intelligence to bear on the 
 question. How much assistance is needed ? There never is any ad- 
 justment of means to ends. No tests are ever applied; no guarantees 
 are ever given ; no subsequent reports are ever made by the recipients 
 of favor to show results for the expenditure. Each interest comes for- 
 ward and asks for lavor and gets it for no reason save because it asked 
 for it. The petitioner thinks that about so much per cent, will do and 
 does not himself know or ever try to calculate what will be the effect 
 of that much protection to him when offset by all the taxes to which 
 he must submit in behalf of others in order that the system may be 
 completed. Mr. Peter Cooper says that the tarift' ought to just about 
 offset the difierence between American and European wages. If that 
 could be done and were done, it would just take away from the Amer- 
 ican laborer those superior advantages which made him or his ancestors 
 come across the ocean. Now, from this tangle of absurdities and con- 
 tradictious, and ignorances, and guesses, it is expected that guidance 
 will come which shall lead the American producer to a better organi- 
 zation of industry than he could arrive at if left alone, so that greater 
 accommodation of capital and larger wages would follow. From such 
 causes no result, save waste and loss, can ensue with reduction of cap- 
 ital and lowering of wages. 
 
 2. It is alleged, in the second place, that protection brings capital 
 into use which would otherwise be idle. Every one of us who has any 
 capital is anxious to put it to productive use without delay. It is im- 
 possible, in the nature of things, to keep all capital all the time em- 
 ployed. Improvements (such as a better credit system) which make 
 this more fully realizable are eagerly adopted. The argument I have 
 quoted means that in spite of this eagerness, and in spite of the chances 
 for employing capital on a new continent, some portion of the capital 
 now in protected industries would not be in use if it were not for pro- 
 tection. Such a notion is beneath discussion. 
 
 There is, then, no way in wliich ])rotective taxes can produce capital. 
 Every analysis shows that they waste it. Not a cent can come to A. by 
 the action of tha tariff which does not come from ]>. The consequence 
 of universal borrowing or stealing or gift-making, however, is not to in- 
 crease ca])ital but to waste it. IJence i)r<)tective taxes lower wages. 
 The laborers have been exhorted to vote for protection lest their wages 
 should V)e reduced to European rates. L have shown that the rate of 
 wages obtain(Hl here is due to the economic forces at work in this coun- 
 try. There is only one thing which could reduce American wages to 
 Euro])ean standards, and that is protective taxes applied long enough 
 and with suflicient weight. 
 
 There is, however, another argument which must be considered in
 
 w. G. SLMXER.] PROTECTIVE TAXES AND WAGES. 7 
 
 this connectiou. It is said that imder free trade all our i)opulation 
 would go iuto agriculture, aud that wages and all other remuneration 
 for labor would be reduced until we sliould all be in proverty together. 
 Hence the agriculturists, and the mechanical laborers, too, are exhorted 
 to support a wide protective system in order to diversify industry and 
 prevent ruinous competition. 
 
 We have seen above that the direct cost of keeping up the protective 
 system consists of three items : (1) payment of custom-house officers to 
 keej) §-oods out; (2) support of laborers and profit on capital in pro- 
 tected industries ; (3) the losses of the i^rotected industries. These costs 
 must be paid to buy oft' competition. 
 
 In the first place, it can pay no one to buy oft" competition unless he 
 has a monopoly. Protected industries have done it sometimes. Amer- 
 ican farmers share the world's market with a number of strong compet- 
 itors. If they buy oft" the comjietition of American manufacturers they 
 must bear all the cost of it, and they must share the gain, if any, with 
 all the agriculturists in the world. That means that if thej' try it 
 they will i)ut themselves at a great disadvantage with their own com- 
 petitors in the world's market. 
 
 In the second place, all the protected industries of this country are 
 now parasites on the naturally strong industries. Agriculture now suj)- 
 ports itself and all the rest and all their losses. Therefore, even if it 
 were true that all the poi)ulation would, under free trade, take to agri- 
 culture, it is mathematically certain that agriculture could support them 
 all better directly than under the present arrangement. 
 
 The farmers would indeed gain a great deal if the protected i)eople 
 would keep still and not do anything, for then they would at least 
 waste nothing. The earnings of farmers and the wages of laborers 
 would then not be reduced so much as they are now. The protectionist 
 theor}', however, is that it increases wages to keej) on an occupation 
 which wastes capital and lessens all the time the goods within reach 
 of the population. It is interesting to apply this theory to some other 
 cases. 
 
 On the protectionist theory it would be a means of raising wages to 
 keep up a big standing army. All the soldiers would be withdrawn 
 from competition in the labor market, and would consume while pro- 
 ducing nothing. In time of peace they would not be destroying any- 
 thing; but in time of war they would be just like a protected industry, 
 they would be wasting capital all the time. In that case, then, they 
 would raise wages all the more. 
 
 On the protectionist theory a leisure class of idle, rich people make 
 wages higher than they would be if the same people should go to work. 
 By the same reasoning women who now consume without producing 
 would lower wages if they should go to work, and while consuming, as 
 they now do, should compete in the labor market. Indeed this view of 
 the matter is very often taken, and perhaps the popular ^'iew is that 
 the rich make wages high, if they not only keep out of the labor market, 
 but also consume luxuriously, and do not save anything. 
 
 On the protectionist argument paupers living in an almshouse raise 
 wages as compared with what wages would be if the same persons 
 should no longer consume unproductively, but should come out and 
 compete in the labor market while consuming as before. On the same 
 argument paupers who produce something, though less than they con- 
 sume, lower wages compared with what Avould be the case if the paupers 
 did nothing ; still more as compared with the case in which the paupers 
 should destroy.
 
 8 TARIFF COMMISSION. [w. g. sumner. 
 
 On the protectionist argument, convicts in the State prison raise 
 wages by consuming the i)rodnct of taxation in idleness, and lower 
 wages if they go to work, and while consuming as before, produce 
 something, because in the latter case they compete in the labor market. 
 In fact, criminals out of State prison would satisfy the protectionist rea- 
 soning still better. They always destroy far more than they produce, and 
 they do not compete with laborers. They would, therefore, raise wages by 
 their operations. It would be a limitation of their beneficent action to 
 put them in jjrison as consumers in idleness, still more so to set them 
 to work at a useful industry. 
 
 On the protectionist view of the matter the trade-unionists are right 
 when they adopt wasteful i>rocesses, jiractice shiftlessness and neglect, 
 study not to be skillful or effective, and try to make work, as thej' call 
 it, believing that they thus raise wages. The protectionist and the 
 trades-unionist both mijitake toil for wages. They think that when they 
 increase the difliculties which intervene between us men and goods 
 they increase wages, and that to make goods abundant is to lower 
 wages. 
 
 On the protectionist theory those men in the riot at Pittsburgh, who 
 exulted in the destruction of the city because they thought that it 
 would make work, which they confused with making wages, were right 
 from their point of view, ISTo man wants work; that is, toil, or irksome 
 exertion. Least of all does the man who has no capital want toil. He 
 supplies toil. He cannot supply and demand the same thing. He de- 
 mands capital on which to live. When capital is destroyed and toil is 
 necessary to reproduce it, the ratio in which toil must be given for cap- 
 ital is rendered more unfavorable to the laborer; that is, wages fall. 
 If they do not fall on the spot where the destruction took place they 
 must fall elsewhere whence the capital is drawn to replace the capital 
 destroyed. If Pittsburgh had to be rebuilt other cities could be built 
 up just so much less. If Pittsburgh had not been burned up the capi- 
 tal which went to replace it would have been used to employ laborers 
 in adding so much more to the comfort and possessions of the country. 
 The country is i>oorer for all time by the capital there destroyed, with 
 all its accumulations. Just so every year that this nation, on account 
 of the protective system, attains to the possession of a less amount of 
 goods than it could have obtained under freedom, the effect is the same 
 as if we had produced a city and had seen it burn up; and anybody 
 who believes that the protective taxes raise wages must believe that 
 to burn up cities raises wages. All these notions are miserable falla- 
 cies, which sin against the first elements of common sense. He who 
 believes that the way to raise wages is to hinder people from getting at 
 things easily and cheaply or to refrain from the most profitable modes 
 of obtaining goods, must believe that workmen riiise wages when they 
 sto]) working and go out on strikes, and lower wages when they go to 
 work again. Trades-unionism and protectionism are falsehoods. The 
 way of prosperity for human society is by industry, economy, thrift, 
 skill, energy, painstaking, excellence, liberty, abundance, and not by 
 some crafty and artificial devices to produce scarcity and bad work. 
 The protectionist system requires a new set of proxerbs which have 
 never yet found their way into any poi)ular philosoi)hy, such as these: 
 Want makes wealth; destroy and ])r<Ksper; taxes are wages; to have 
 much produce little; blessed are the bad workman and the foolish cap- 
 italist, for they shall get abundance. 
 
 Let us now look at the other dogma: High wages make protective 
 taxes necessary. It is the very opposite of the truth. If wages are
 
 W.G.SUMNER.] PROTECTIVE TAXES AND WAGES. \) 
 
 high, that is the reason why no protective taxes are needed, even if they 
 might be in some other case. In Germany the protectionists generally 
 allege that lower wages in Germany than in England are a proof that 
 Germany is indnstrially inferior and needs protection against England. 
 The protectionist argument never flags on account of any little variation 
 in the facts. 
 
 In the arguments under this head of the subject it is constantly as- 
 sumed that wages are the controlling condition In production, orthat there 
 is some direct connection between the wages paid and the value of the 
 product or the profits of the capitalist employer. These assumptions 
 are false. Suppose that an individual comes forward and claims that 
 he cannot compete because he pays higher wages than a foreign pro- 
 ducer. When has any examiuation ever been made to find out whether 
 such person has an adequate capital, or has a competent knowledge of 
 the business, or diligently attends to his business, or has located his es- 
 tablishment wisely, or has organized his business economically, or has 
 boughthis raw material judiciously, or has kept up with improvements in 
 machinery, or has not speculated with his product unsuccessfully, or has 
 not violated some one of the other conditions of success ? The wages 
 paid are but one, and often one of the least important conditions of i)ro- 
 duction. If it is alleged, as it constantly is in this controversy, in a 
 sweeping way, that American industries need protection because Ameri- 
 can wages are higher than foreign wages, it is a case of joining a very 
 wide inference to very inadequate premises. What are the comparative 
 conditions of industry in America and elsewhere as regards convenience 
 and cost of raw materials, quality and cost of machinery, rent of land 
 used, character of the climate as affecting the requirements of various 
 industries, national character as respects industry, diligence, sobriety, 
 intelligence, &c., of labors, distance from the market or convenience and 
 cost of transportation, convenience and cost of natural agents (coal or 
 water), taxes and tax system, the security afforded by the excellence or 
 otherwise of the government, &c. "? Surely it is plain that these things 
 are the conditions of production and tlie comparative money rates of 
 wages, taken apart from the ])urchasing power of money, or the effi- 
 ciency of labor, to say nothing of all the other conditions enumerated, 
 are by no means a criterion for a decision whether an industry can be 
 carried on successfully or not. The lists of comparative wages which 
 have been made, and which are relied upon by x>rotectionists, and are 
 often accepted bj' free-traders as pertinent to the issue, and perhaps as 
 decisive of it, have no value at all for the purpose. Tbe employer al- 
 leges that he can make no profits because he pays high wages. He as- 
 sumes, apparently, that wages and profits displace each other. It is cer- 
 tain that they do nothing of the kind. There is no ascertainable relation 
 between wages and profits. Wages are paid out of the capital during 
 the period of production. The employer tries to keep wages down, just 
 as he tries to keep down cost and waste of raw material or wear of ma- 
 chinery, because he wants to economize on his outlay. He, of course, 
 tries to minimize every outlay, because that is the road to success in 
 the competition of the market, and to maximum profits. The price of 
 his product when he gets it done will be determined by supply and de- 
 mand on the market. He must replace his capital and then he will find 
 out what profit he has. i^o law whatever can be established between 
 this profit and the wages which were paid to the men while they were 
 making the article. Profits and wages nmy both be high or both low at 
 the same time, or one maybe higl; and the other low. The fact is, that
 
 10 TARIFF COMMISSION. [w.g. sumkek. 
 
 instead of one being- displaced by the other they most always go to - 
 gether, both high or both low at the same time. 
 
 It is much more to the point to notice that profits are higher in this 
 country than in Europe. We ought not to take too low views of human 
 nature, but when an employer pretends to bull wages, we shall not be- 
 lieve him without examination. When we notice that profits are high 
 in this country we can understand the applicants for tariff favors, with- 
 out assuming any disinterestedness. No capitalist will go into a busi- 
 ness which gives less profit than some other which is open to him. The 
 American i^roducer does not want to put up with the rates of profit 
 which his European competitor is satisfied with. He wants the rate 
 which he could get if he went into one of the industries which are 
 favored by nature in this country. Instead of going where he could 
 get it on a natural basis, he wants the law to tax his fellow-citizens to 
 give it to him. The talk about wages is all for effect. It is only so 
 much smoke and noise imported into the contest to obscure the issue. 
 It has had no little effect, because no one has taken the trouble to ex- 
 pose it in detail. The competitor whom we fear most is England, in 
 which country wages are higher than anywhere else in Europe. How 
 does England pay high wages and beat all the others, if high wages are 
 the controlling consideration "? And if she pays higher w^ ages than the 
 continental countries and beats them all, because other considerations 
 come in, why may we not pay higher wages than she and beat her, at 
 least in our home market, because other considerations come in ? The 
 nearest approach t<) pauper laborers in Europe are agricultural labor- 
 ers. Our farmers send their products, raised by men remunerated at 
 American rates, and i)ay transportation, and beat the pauper laborers 
 in their own home market. How can this be done if the criterion of 
 possible competition is the comparative rate of wages ? 
 
 If it is said that we cannot compete, what is meant f These phrases 
 are allowed to pass without due examination. I cannot compete with 
 my inferiors or with my sui)eriors. I cannot compete with an Irish 
 laborer at digging a ditch, and I could not compete with the late Mr. 
 Scott in running a railroad. Could any taxes enable me to run a rail- 
 road as Mr. Scott did, and to earn such remuneration as he earned? 
 Certainly not. No taxes can possibly enable a man to compete with a 
 superior. Could any taxes enable me to compete with an Irish laborer at 
 digging a ditch ? Indeed they could. They might interfere between me 
 and the laborer and prevent me from getting his services, and I might be 
 forced to dig my own ditch, turning away from other and better paid 
 occupations to give my time to an inferior occupation. That would im- 
 poverish me. Such is the only way in which protective taxes can make 
 competition x)ossible. They drive us down to compete with those who 
 are far worse off than we instead of allowing us the full use of our natural 
 advantages. 
 
 If we have high wages, then they are a proof of industrial superiority. 
 They prove that there are some lines of industry open to us, as a nation, 
 in which great returns for both labor and capital may be obtained. To 
 argue from high wages that we need i)rotection, is like arguing that a 
 man needs charity because ho is rich, or needs help because he is strong. 
 
 A true analysis of the facts therefore shows us that protective taxes 
 lower wages, and that high wages are not a reason why i)rotective taxes 
 are necessary. We get tlie remuneration of labor by using our natural 
 advantages. The remuneration of labor is higii because the advantages 
 are great. It will be highest if the laborer is let alone to use the ad- 
 vantages Avithoutany restraint or interference. If we get a high remu-
 
 w. c. suM.NF.u.] PROTECTIVE TAXES AND WAGES. 11 
 
 ueratiou by the use of our advantages, our strength in competition will 
 come from the very advantages of nature which gave the high rewards of 
 industry. Thus every aspect of the matter is consistent and straight- 
 forward, clear and natural. The more we study the case in all its aspects, 
 the more thoroughly is the free-trade solution of it confirmed, for, instead 
 of entangling ourselves in ridiculous absurdities, we find that all the 
 relations are simple and consistent. 
 
 The application of these ideas to the matter in hand is simple and 
 direct; I have spoken Asholly as a political economist whose business 
 it is to study theoretical questions. If it is proper to do anything about 
 wages, the right tiling to do is to abolish all protective taxes, and that 
 will let thein rise where they ought to be. 
 
 By Commissioner Kenner : 
 
 Question. Of course you do not object to our receiving your communi- 
 cation (which I will admit is a very strong one, and probably as forcible 
 as could be i)resented) under the well-known saying that "'granting a 
 logician his premises he can reach any conclusion he wishes "f — Answer. 
 Yes; I object to that very much. 
 
 Q. You object to our taking your paper Avith that understanding"?— 
 A. Yes; I do, very much. 
 
 Q. Of course your long residence in iSTew England has made you fa- 
 miliar with the soil and climate of that section of the country ? — A. Yes, 
 sir; I was brought up there 
 
 Q. You recognize the fact that Xew England has attained a high po- 
 sition morally, intellectually, and financially? — A. Yes, sir; it is so un- 
 derstood, I believe. 
 
 Q. You recognize the fact, also, that the soil of New England, in fer- 
 tility and in all other qualities which lead to great productiveness (I 
 mean in reference to climate, &c,) cannot compare with the prairies of 
 the West or the savannas of the South ? — A. Yes, sir. 
 
 Q. Well, do you suppose that this great eminence which New Eng- 
 land has attained, in its intellectual, moral, and financial condition, and 
 in its immense accumulation of surplus wealth, could have been attained 
 under a system of free trade ; in other words, if there had been no tariff 
 from the inception of the government down to the present day, do you 
 think that Xew England could have attained that eminence and those 
 qualities which constitute a great nation? — A. It is impossible to doubt 
 it. It would have been much greater than it is now, if there had not 
 been any tariff at all. The contrary hypothesis would force you to as- 
 sume that the people of Xew England had been getting rich at the ex- 
 pense of the rest of the country, which I do not admit. 
 
 Q. You admit that they have got rich ?— A. Yes, sir. 
 
 Q. And you admit the sj'stem under which they did get rich ? — A. 
 Yes, sir; they have borne up against obstacles. 
 
 Q. Have you visited the South during the last 25 years, or do you 
 know enough of the condition of the South to answer such a question 
 in regard to its jiresent condition ? — A. I have been in the South, but 
 have not acquired any particular knowledge of that section. 
 * Q. You have acquired such knowledge, I suppose, as you would get 
 hy looking at the landscape ? — A. I was there a few days once, on polit- 
 ical business; I did not go into the question of its industries at all, 
 
 Q. But you must have attained imi)ressions from looking at the build- 
 ings and the landscape as presented to any jierson who travels through 
 a country? — A. I had rather tell you just what was the fact. I went 
 down from Louisville by the Jackson road to Xew Orleans and right
 
 12 TARIFF COMMISSION. [vv. c slmner. 
 
 back again, on an express train. So much as a man can see out of a car 
 window in the daytime, I saw. 
 
 Q. Did you not see a directly opposite state of things from that which 
 you have observed in any of the New England States? — A. Yes, sir; 
 considerably. 
 
 Q. Did you not observe that the houses were in a dilapidated condi- 
 tion, and that the people were comparatively impoverished? — A. Yes, 
 sir; that was the general appearance. 
 
 Q. And it formed a great contrast to the appearance of thiugs in New 
 England?— A. Yes, sir. 
 
 Q. Are yon not aware that the system which you advocate has been 
 adopted in the South for 50 years or longer? — A. No doubt. When I 
 went down there they had just passed through a terrible war; their 
 capital had been used up, and they were in the midst of a most horrible 
 political muddle. 
 
 Q. I am glad to hear you admit the horrible politi<'-al muddle. . But 
 the system which has been adopted by the Southern people is the one 
 which you have been advocating here to-day; while the opposite sys- 
 tem has been adopted by the New England States, by Ohio, Pennsyl- 
 vania, and the Middle and Western States. They have taken advan- 
 tage of this system which you say is all nonsense — the sublimest non- 
 sense, utterly and ineffably ridiculous, and all that sort of thing. — A. 
 I prove that it is. 
 
 Q. And I started out by saying that if you grant a logician his prem- 
 ises he can prove anything. — A. But I do not admit that in regard to 
 my paper. We are not discussing logic. Besides, I do not think that 
 is a good proposition in logic. 
 
 Q. We are not discussing logic, but, as a professor in a college, you 
 cannot object to your statements being tested logically : as a matter of 
 course you cannot object to that? — A. I do not want any logical dog- 
 mas interposed in the matter. I have no objection to a logical exami- 
 nation of my paper. 
 
 Q. I understand perfectly well. Our purpose is to arrive at the truth. 
 We want to get at facts which will enable us to form some system of 
 revenue which will be of benefit to the country. You appear before us 
 to advocate a system, and I want to get at the bottom of that system 
 in order to determine how far it will stand the test of fact as well as of 
 theory. I suppose you will admit that it is the part of wise statesman- 
 ship to look at the results of a theory as well as to look at the theory 
 itself as expounded by a logician ? — A. No doubt you have to test theo- 
 ries; everybody admits that. 
 
 Q. Now we see one section of the country (and T have taken the South 
 ^s an illustration; I speak of it witliout hesitation because I am' a 
 Southerner by birth, and have lived in tlie South all my life, so that my 
 motives are not susceptible to being misinterpreted) in a very dilapi- 
 dated condition. We have turned our backs on manufactures of every 
 kind as a rule, and have adopted the theory i)roi)oun(led by Mr. Cal- 
 houn and other great men of the South, that we were tributary to the 
 North, and have carried that theory into practice. The result has been 
 that it has placed the South at the bottom of the hill, while New Eng- 
 land and the Middle and Western States, such as Missouri, Illinois, In- 
 diana, Kentucky, and Tennessee, wliich have adoi)ted tlie opposite 
 theory from the one adopted by the South, have reached, if not the top 
 of the hill, at leastai)lace very far up the slope. Now, as a commission 
 appointed to prepare a system of revenue, or to revise a system which 
 has been in existence for along time, do you not tliink it wise on our
 
 w. G. suMJfEK.] PROTECTIVE TAXES AND WAGES. 13 
 
 part to look at the results of the two systems, instead of considering ex- 
 clusively the theory of the one system or the other 1 — A. If you are go- 
 ing to discuss these results which you have alluded to, as shown by the 
 present condition of the one section or the other of this country, you 
 will have to go into the entire history of the country, not simply on the 
 tariff question, but also in regard to the slavery question, the effects of 
 the civil war, and everything else which has happened since the adop- 
 tion of the Federal Coustitution. Consequently, any deductions such 
 as you suggest taking into account, with respect to Mr. Calhoun's 
 theories of free trade, and the theory of protection, would certainly be 
 very fallacious. It would be necessary to go over a great deal of 
 ground to take the whole thing in. I have spent some time in the 
 study of these questions, and could go into that matter if we had time. 
 
 Commissioner Kenner. No, I do not care to do that ; that is not our 
 business. We are appointed to investigate the question of revenue. 
 If the question of slavery was before us 1 should be happy to hear you 
 on that subject, although, probably, you would not be so happy to hear 
 me. 
 
 The Witness. I should like to hear you on any subject. 
 
 Commissioner Kenner. If that question was before us, my views 
 would be as plain and as practical, I hope, as they may be in regard to 
 any other matter. 
 
 The Witness. I gave the only answer I could to your question, that 
 the whole history of the country would have to be gone into to get at 
 the causes of the results you speak of. But if you attribute the condi- 
 tion of the South solely to the effect of the tariff, you are wrong. 
 
 Q. But, as I have said, we have been appointed to prepare a system 
 of revenue, and for this purpose we are endeavoring to collect the 
 necessary information. You hav^e suggested objections to the present 
 tariff system. You have stated as facts certain things which other 
 people deny. Whether you are right or they are right is a question 
 for discussion between the two parties. But you have not yet told us 
 what system you would recommend in the place of the present tariff. 
 Suppose the present tariff was wiped out, and we were to follow your 
 theory of letting labor seek its own market, and letting the products 
 of labor be sold where they can be sold at the highest price, regardless 
 of a tariff or any other outside consideration, what system would you 
 advise us to adopt ? — A. I am not a statesman at all ; I cannot formu- 
 late a revenue system for the country. I have never taken such a mat- 
 ter ui^on me : it is quite out of my line. 
 
 Q. Our purpose is to get at the facts. I had supposed that when 
 you condemned one system, you would be prepared to offer another to 
 take its place. — A. I would say, give them all the free trade you can. 
 Eemove all protective taxes as fast as you can, or make them as low as 
 you can, if you cannot abolish them altogether. That is all I have to 
 say about it, speaking as a political ecoiiomist. All protective taxes 
 are mischievous, and you should get them out of the way if you can. 
 If anybody tells you that a protective tariff raises wages, I come here 
 to tell you that it does not, but that, on tlie contrary, it lowers wages. 
 
 Q. I do not think our purpose is to tind out the way either to raise 
 or to lower wages. Our object is to find out the best system of 
 revenue. — A. Then abolish all protective taxes. 
 
 Q. Without regard to the $L'r)0,O0O,000 or $300,000,000, that it is 
 necessary to raise for the support of the government ? What would 
 you recommend in the place of the present tariff system ? — A. Y'ou have 
 a large '.?umber of revenue taxes, and if you strike out half of them and
 
 14 ' TARIFF COMMISSION. [w. «. summer. 
 
 divide the rest by two you would double the revenue, if you want more 
 revenue. 
 
 Q. Divide which taxes by two ? — A. All yon have got — the whole 
 tariff system, the whole intricate import tariff" duties that we have. 
 Strike half of them off" the list and lower the rest to one half of what 
 they are now and you will double the revenue. 
 
 Q. I thought you said Just now that we should abolish all revenue 
 taxes'? — A. All protective taxes. 
 
 Q. All import duties? — A. I never said that; I said all protective 
 taxes. 
 
 Q. I understood you to say abolish all protective taxes, and I under- 
 stood you to mean by that all import duties. — A. Oh, no; I do not mean 
 that. 
 
 Q. I wish you would be more explicit then. — A. I am as explicit as 
 a man can be. 
 
 Q. 1 thought you Considered all those duties as protective? — A. If 
 you had a duty on tea, or on pepper, it would not be a protective tax; 
 neither would a duty on coffee be a x>rotective tax. If you have a duty 
 on wine, that might be protective. The tax on sugar is largely a reve- 
 nue tax, but it is also a protective tax on behalf of the Louisiana sugar 
 growers. If you ask me what I want done, I say I want an excise put 
 on Louisiana sugar men, in order to make them pay into the Treasury 
 an amount equal to the protective tax; so that when I buy sugar I 
 shall not pay any tax to the sugar grower at all. I want to pay taxes 
 to the United States Treasury, but not to the iron man, the sugar man, 
 the woolen man, or any other of my fellow citizens. 
 
 Q. I did not suppose that you proposed paying taxes to the United 
 States Government. I understood you to be oi)posed to the present 
 tariff system? — A. I oppose the protective system. Protective tariffs^ 
 are the onlj^ones I have discussed. I have not touched upon the reve- 
 nue system at all. The minute you touch protection you touch what I 
 am talking about. It is the business of Congressmen and statesmen to 
 provide for a revenue, not the business of professors. 
 
 Q. What do you mean by a protective tax? — A. I mean a tax laid 
 for the benefit of an industrial person in the country. 
 
 By Commissioner Oliver: 
 Q. You mean a tax laid on any article i)roduced in this country? — 
 A. Yes, sir. It may be partly for revenue, and partly protective. 
 
 By Commissioner Kenner : 
 
 Q. You advocate a protective duty on articles not made in this 
 country; and that the duty should be taken off all articles made in 
 this country, agricultural, mechanical, and commercial. 
 
 The Witness. Please repeat that. 
 
 Commissioner Kenner. I asked you to define what you call a pro- 
 tective duty, and you sa^^ a protective duty is a duty imposed on any 
 article grown or manufactured within the United States. 
 
 The Witness. No, sir; I did not say that. I said that a protective 
 tax is one which is paid, not into the Treasury, but to som<> industrial 
 person in the country. I would not obje(!T to paying a tax on iron, for 
 instance, if the amount which 1 paid would go into the Treasury; but I 
 do object to paying such a tax if it goes into the i)Ockets of tlie Pennsyl- 
 vania maiuifacturer. That is what I am oitposed to, and nothing else.. 
 Such a tax favors the manufa(;turer in his business, and is not paid 
 for revenue.
 
 w. D. suMNEK.] PROTECTIVE TAXES AND WAGES. 15 
 
 Q. Any duty which favors the business of the countrj'is a protective 
 tax wliich ought to be abolished; is that what you say ! — A. Yes; I will 
 say that, if it favors any particular business. It is not the object of 
 taxes to favor the business of a country, not in the least. . We must be 
 on the lookout all the time for ambiguous terms in this discussion. 
 
 Q. There is another question I will ask, not because it affects you par- 
 ticularl3', but because it attects everybody. I am an agriculturist by 
 profession, and have been all my life; 1 am not a lawyer; and there is 
 one point in this discussion wliich I do not understand. The manufact- 
 urer appears before us and seems to be enthusiastic in behalf of the in- 
 terests of the poor man, and tells us that he wants a protective duty 
 because it will jn-otect the poor man and enable him to receive better 
 wages. Now, on your part, are we to assume the same ground ; that 
 you want to protect the poor man ? — A. No, sir ; I do not make any 
 such claim. 
 
 Q. Who, then, do you profess to plead for, or in whose favor do you 
 make your statement if it is not in behalf of the mass of the comuuinity, 
 and of those particularly who are not able to help themselves? — A. I 
 speak for those who are now being oppressed and injured by existing- 
 legislation. 1 have stated the effect on them. As to favoring anybody, 
 or coming forward to do anything more than to help a man stand on his 
 own feet and look out for himself, I have not done it here, nor have I 
 ever done it. I disclaim all that in my paper and do not make any such 
 special plea. I think it is the business of demagogues to do that. It is 
 not the business of the government to make wages high or to favor the 
 poor laboring man, except to let him do the best he can for himself. I 
 make a plea against protective taxes because they keep these men down; 
 because those who receive small wages have to pay their share of the 
 public loss that the protective system inflicts on the country. 
 
 Q. As I have said, our object is to formulate a proi^er revenue sys- 
 tem ; that is our duty, and if you can suggest such a system we shall 
 be glad to receive such information. Have you done that in your i)a- 
 per '?— A. No, sir; I have not. I have only talked about the relation of 
 protective taxes to wages; I have not undertaken to talk about a rev- 
 enue system. 
 
 Commissioner Boteler. I have listened with great interest to your 
 paper and to your answers to Commissioner Kenner. You have 
 announced yourself as a political economist, as a theorist, and as we 
 are practical men with a practical object in view, I should be glad, for 
 my part, to have you answer the question, in the first place, whether 
 England is not confessedly more perfect in her industrial pursuits, and 
 has not made more industrial progress than any other nation of the 
 world f 
 
 The Witness. Yes, sir; in some lines. 
 
 Q. In all lines of manufacturing industry, I mean? — A. No, sir; not 
 in all lines. 
 
 Q. Well, except in those manufactures, .perhaps, that require nicer 
 manipulation with respect to some minor matter, such as the French 
 make a specialty of?— A. The (rermans are ahead of them, I think. 
 
 Q. Will yon ])lease tell me how you can reconcile your theory, as an- 
 nounced in your paper (which I consider as very forcibly expressed), with, 
 the fact of Kngland's progress; to what is her commercial pre-eminence 
 to be attributed ?— A. In the first place, to the fact that she had the 
 richest stores of coal and iron that existed anywhere in the world. 
 
 Q. How did she come to make tiiem valuable; did she not protect 
 her industries for more than two hundred years? — A. I was wonder-
 
 16 TARIFF COMMISSION. [w. g. sumner. 
 
 ing which particular erroneous view of English history you might have 
 in mind. 
 
 Q. Beginning with the time she introduced through the Flemings the 
 wool industries that have made her so great, has she not given the most 
 rigid protection to all her industries f — A. Yes, sir; for awhile she did, 
 very much to the injury of all her industries, and which has set her back 
 a century, perhaps. 
 
 Q. Inasmuch as she has commanded a great share of the commerce 
 of the world as an exporting nation, should we not in some degree at- 
 tribute her success to her protective system f — A. Not at all. The pro- 
 tective system was never anything but a great injury to her, and there 
 is hardly a writer now who does not take that view. 
 
 Q. To what is her great prosperity attributable, then ? — A. To the 
 extraordinary natural advantages which she possessed, especially in 
 having a great store of coal and iron available and close to each other, 
 and to the extraordinary energy and industry of her population. When 
 you consider these things you get at the secret of her success. 
 
 Q. We have as many natural advantages and resources as any coun- 
 try in the world. Do you think we should have attained any great de- 
 gree of eminence in the production of those manufactured articles that 
 have made us important in the world's history, if we had been kept in 
 subjection to England and received our supplies from the old country 
 instead of improving our natural advantages "? — A. The colonial system 
 was nothing in the world but a protective system. 
 
 Q. It was a protective system to England, but not to us. It did not 
 encourage manufactures here; on the contrary it restricted them. So 
 far as the protective system existed in the old country it had no appli- 
 cation to our country ? — A. Yes, it did. It was exactly the same as the 
 levying of taxes on the Western farmers to-day for the benefit of the 
 Eastern manufacturers — identically the same. The application of the 
 colonial system of Great Britain to the colonies did not differ by a hair 
 from the protective system of to-day. I am a i^retty careful student 
 of all these matters, and I think I speak with all the facts behind me. 
 If you gentlemen would learn the theory of the matter — 
 
 Commissioner Boteler. We are practical men, and want only facts. 
 
 The Witness. I suppose you understand that a man who speaks 
 where he knows his reputation is at stake has to have his proofs behind 
 him. The limitation on the industries of these colonies was a sacrifice 
 of their interests to the interests of Great Britain ; and the protective 
 system to-day as it exists in the United States is a sacrifice of the inter- 
 ests of the Western farmer to the interests of the Eastern manufacturer. 
 That is where the peril is. You can studj^ it as closely as you like and 
 look into the matter as far as you can, but you cannot get away from 
 that. 
 
 Commissioner Boteler. We have traveled many thousand miles 
 during the last few weeks, searching for facts, in the humble hope that 
 we might be able to send to Congress a record that would be consid- 
 ered as a mirror of tlie i)nl)lic sentiment of the country, and we have 
 never yet found in the neighborhood of any manufactiuing town wliere 
 the fanner finds a ready market for his perishable products, one single 
 person who did not rejoice in the establishment of such manufactories 
 and feel that the greatest encouragement tliat could be given to the 
 farming community was to vary the industries of his region of country 
 and develop a market for his products. 
 
 The Witness. That is the famous truck-farm argument. 
 
 Commissioner Boteleb. Still, I am happy to tell you that we find a
 
 w.G. SUMMER.] PROTECTIVE TAXES AND WAGES. 17 
 
 great many of those trnck-farins springing,' up in a section of country 
 wliich has 'heretofore neglected uiaunfactnres. AVe tind a great change 
 of public sentiment in those localities. While we may find free-trade 
 theories obtaining in New England, emanating fi"om the colleges ot Mas- 
 sachusetts and Connecticut, we were glad to tind that the ])eople are a 
 long way ahead of the politicians in the South, and are bringing these 
 matters home practically, and applying them to their own business, and 
 are proclaiming themselves as earnestly and houestly in favor of a pro- 
 tective tariff. 
 
 The Witness. I know these fallacies are very strong, indeed, and if 
 a man gets them into his head it takes a long time before he can get 
 them out. 
 
 The President. Whatever difference of opinion may exist between 
 Professor Sumner and myself, he has stated his case so clearly and with 
 such perfect distinctness that no question of mine could bring out his 
 views more comidetely ; and as I do uot regard it as our province to 
 talk, but simply to listen, I do not desire to put any questions to him. 
 
 By Commissioner McMahon : 
 
 Q. I understood Professor Sumner to rei>ly, in answer to a question, 
 that a tariff" for revenue would necessarily be, in some degree, a protect- 
 ive tariff". [To tlie witness :] Do I state your position correctly ? — A. Xo, 
 sir. Revenue and i)rotection are entirely exclusive of each other, and 
 never can overlai) one another at all. The minute you touch protection 
 you i)revent revenue, or, to put it in a simpler form, if I buy a ton of 
 im])orted iron, it comes though the custom-house and I pay an import 
 tax to the government for it. On the other hand, if I buy the iron in 
 this country I pay an equivalent tax to the iron producer here, but do 
 uot pay anything into the United States Treasury. 
 
 Q. ^understood that part of your answer, but there was another sub- 
 division of it whicli 1 did not understand. Do you mean to say that 
 where a tariff is placed upon an article that is not produced or manu- 
 factured in the United States (such as tea and coffee, for example), there 
 can be no protection ? — A. ]S^o, sir ; no protection on that. 
 
 Q. But whenever an import tax is placed upon an article which is 
 produced in the United States, that then it is protection ?— A. Yes, sir; 
 unless it is oft'set by an excise, as in the case of tobacco, wine, and 
 cigars. 
 
 Q. Then I understand that your theory results in this: that if an 
 article is produced or manufactured in the United States the producer 
 or manufacturer of that article is protected to the extent of that tax 
 unless that article is offset by an internal-revenue tax or excise? — A. 
 Yes, sir. 
 
 Q. Then I understand your second proposition to be that the agricul- 
 turists of the country— the farmers— have to pay this protective tax to 
 the manufacturers ? — A. Yes, sir. 
 
 Q. Do the manufacturers have to pay any protective tax to the 
 farmer? — A. No, sir; they pay to each other, all round, but not to the 
 farmer. 
 
 Q. You say that the agriculturist pays a tax to the manufacturer 
 whenever he buys a manufactured article ?— A. Yes, sir. 
 
 Q. But when the njanufacturer buys a produced article which is taxed 
 he does not pay anything to the farmer ? — A. On the agricultural pro- 
 duct ? -No, unless you call sugar an agricultural product (which, of course, 
 it is), or hemp, but not on wheat. 
 
 Q. Why not on wiieat ?— A. Because there is a tax on wheat in the 
 
 2 SU
 
 18 TARIFF COMMLSSIOX. [w. g. slmxer. 
 
 tariff. Of course it is ineffective, because the producers of tin's country 
 are exporters. I understand, however, they have been jjetting wheat 
 from Manitoba lately, and they have had to pay this tax. 
 
 Q. Then does not the manufacturer pay tliat tax 1' — A. The mill-owner 
 pays that, and then it comes to the maiuifacturer, who consumes it. 
 But when the wheat comes from Manitoba to this country, where the 
 production of wheat is oOO,0(>0,()(K) bushels, although technically it is a 
 protective tariff', it does not amount to much. 
 
 Q. It theoretically exists in the other case. Suppose we do not im- 
 port certain articles of manufacture, still we are i)ayiug- the tax on them 
 under your theory. The agriculturist is paying that tax to the nmuu- 
 facturer, although there is no importation of those articles ? — A. There 
 you would have to take each fact by itself. It would be a matter ot 
 statistical inquiry to see how mucJi there was imported and where it 
 goes. You could not generalize upon that. Take this matter of wheat 
 imported from Manitoba, and that is a protective tax for the agricultur- 
 ist right along there on the border. 
 
 Q. Here are some generally conceded facts, I believe. We do not im- 
 port any beef or pork. We do imi)ort ham and bacon. We imi)ort a 
 consideralde amonut of foreign ham because it is supposed to be l)etter 
 iu some respects than ours. Is not the duty on those articles a tax on 
 the manufacturer? We also have imported i)Otatoes and other vegeta- 
 bles of late, although we raise them in this country; is not the duty on 
 them a tax on the manufacturer ?— A. Yes, sir; that would be like sugar, 
 and there is unquestionably a protective tax ou rice— a very unjust one. 
 There are, of course, a number of agricultural products on the tariff 
 list. 
 
 Q. Au<l a considerable importation of them ? — A. There are importa- 
 tions under several heads unquestionably, and it makes it api)ear to the 
 agriculturist as though he was getting something back once in a while; 
 but he i)ays $100 and gets one cent in return. 
 
 Q. We have developed, iu the course of our investigations, the fact 
 that we have imported for some years more barley than we have ex- 
 ported ? — A. Yes, sir; a great deal of barley has come in from Canada. 
 
 Q. Was not that a large tax on the manufacturei' ? — A. No doubt that 
 would be a set-back towards the agriculturist, of that particular article. 
 
 Commissioner McMahon. That is all I desire to ask. You had spoken 
 particularly of the agriculturist as alone paying the tax. 
 
 The Witness. The agricultural interest of this country bears the 
 expenditure that is involved by the tariff iu regard to manufactures. 
 You cannot get something out of nothing. If you get a cent for a 
 manufacture, by means of the tariff, that you could get in no other 
 way, it has to come out of somebody, and in the end it is the agricultur- 
 ist who pays it, as he is engaged iu a fundanu*ntal industry. He is 
 strong and inde))cndent, and he has got to i)ay it all. As to the manu- 
 facturers themselves, they are all the time scalinng one another, and, 
 therefore, I do not believe they make anything out of it. I believe it is 
 all a great folly, from the standard of the manufacturer. If all the 
 manufacturers of this country could be droi)])ed right down on a free- 
 trade basis, with all their sui)pliesfree, and tlieir raw materials free, and 
 if their workmen could buy their shoes, hats, clothes, crockery, fur- 
 niture, stoves, bedding, and all the rest of it, on a free basis, they would 
 all find themselves far better off than they are today. If, instead of 
 trying to scalp each other, they would begin on a free-trade basis and 
 get down to hard pan they would be far better off, aiul there would be
 
 w. o.sLMXER.j PROTECTIVE TAXES AND WAGES. 19 
 
 an immense saving- of waste — the cost in keeping- np the system as it 
 exists to day. 
 
 Commissioner Kenner. That is the doctrine that has been advocated 
 in the South for the last fifty or sixty years. 
 
 The ^YITNESS. And I hope they will stick to it. 
 
 Commissioner Kenner. They will not stick to it; they have seen the 
 folly of it. 
 
 The AViTNESS. They are going to begin to manufacture there to their 
 ■very great loss. 
 
 Commissioner Oliver. To their loss, or New England's loss ! 
 
 The Witness. New England can stand it. I do not think it would 
 be any loss to the country if there was no ^S'ew England. 
 
 Commissioner Kenner. I agree with you in that last remark ; that it 
 would be no loss to the country. 
 
 The Witness. And it would be no harm to the country if there was 
 no Louisiana. 
 
 Commissioner Kenner. Yes; there would be. I wish you would 
 prove that proposition. We tried to leave the country and you would 
 not let us, and yet you say it would be no loss. That is a nou sequitur 
 wbich I do not understand. 
 
 The Witness. We should all live here and be happy and get our 
 living, even if there wasn't any Xew England, any Louisiana, or any 
 Pennsylvania, I suppose. 
 
 Commissioner Oliver. The Commission is composed of practical men, 
 and we have been endeavoring for the last three months to try and learn 
 as much about these matters as possible. We have visited all sections 
 of the country and have examined the subject in all its various forms. 
 The views of a gentleman of your standing', who occupies the position 
 which you do in one of the largest and best-known institutions of learn- 
 ing in the country, where we send our children to be educated, are en- 
 titled to respectful consideration ; but when you make such very radical 
 Siiggestions as you have made, we want to see how far you can sub- 
 stantiate them. 
 
 The Witness. By all means. 
 
 (). I have only a question or two to ask you. I suppose you will 
 a<lmit that large numbers of Irishmen come to this country every year 
 and are successful in business. Is there a more purely agricultural 
 country in the world than Ireland ? — A. ISTo, sir. 
 
 Q. Is there a country in the world, with the same poi)ulation, which 
 has fewer manufactories? — A. They manufacture but little in Ireland. 
 
 Q. I understand from your argument that you are opposed, for ex- 
 ample, to having help extended by the government, directly or indi- 
 rectly, in tUe establishmcdt of steel-rail factories. You think that iu- 
 tlustry should have waited its proper time of development and not have 
 received the benefit of a protective tax, or any help in the way of extra 
 l>rices ? — A. Y^es. 
 
 Q. Do you think that argument would apply to every industry, or to 
 every institution? — A. Do not let us use the word "institution"; let 
 us say "industry." 
 
 Q. Yery well; we will say industry. An institution may be connected 
 with an industry. Y^ou are connected with an institution which has at- 
 tained great eminence, aiul to which the sons of our leading men are 
 sent for instruction. Do you think your college would have attained 
 that position but for a protective tax, as it might be called ? I mean 
 tbe benefit it has received in the way of legacies left to it by rich men at 
 different times.
 
 20 TARIFF COMMISSION. [w. g.slmnbk. 
 
 The Witness. Is that a protective tax ? 
 
 Comniissiouer Oliver. I do not know. I just ask you the plain (jues- 
 tiou whether you woukl have attained the position which you have at- 
 tained as an industry, without such assistance ? 
 
 The Witness. We are not an industry. We are sinking capital all 
 the time. 
 
 Conmiissiouer Oliver. I know you are, and that is the reason why 
 I ask you the (luestion. 
 
 The Witness. Certainly, we have a small endowment, l)ut it is very 
 insignificant, and we really earn what we get. The endowments of Yale 
 College do not amount to more than fixed capital, and we have to earn 
 all we get; if we did not we should soon stop. But still, admitting that 
 an institution may be well endowed, it would not have any comparison 
 with a protective tax or anythiug of that sort, any more than an endow- 
 ment to an insane asylum would. 
 
 Q. Would it ever be able to stand on its own footing, without such 
 extra help ? — A. It does now, by earning what it si)ends. But, of course, 
 no educational institution in the world could support itself unless it was 
 a private school. 
 
 Commissioner Oliver. I was trying simply to call your attention to 
 the fact that while it is necessary to have colleges, yet they need pro- 
 tection. 
 
 The Witness. No, sir. In a sense, it was not necessary to have them 
 here ; they made themselves. I cannot admit that they have anything 
 at all to do with the protective theory we are talking about. I cannot 
 see the slightest or remotest connection. 
 
 By Commissioner McMahon : 
 
 Q. I understand you to say that you do not believe in favoring any 
 one person, or class of persons, at the expense of any other. — A. No; 
 not at all. 
 
 Q. Then, inasmuch as the present tariff admits free of duty for schools 
 and institutions of learning, like the one you are connected with, many 
 articles, such as books, maps, charts, i)hilosophical and scientific api)a- 
 ratus, and chemical apparatus, by special exemption, you would be in 
 fa \' or of an imjtosition of a duty on all such articles? — A. Not at all; 
 that only means that Congress has relieved the great institutions of the 
 country of a little bit of the iniquity involved in this system. They 
 have not relieved me of it personally. I have a great ])ersonal griev- 
 ance in regard to books. I am a })Oor man, living on a small salary, 
 and working hard for it. I want all the books I can get froui my toil ; 
 but when I go to buy them I find the law of my country has got in my 
 way and says that I cannot have those books until I pay an extra price 
 for tliem, which is not necessary. 1 ought to be able to get all the books 
 I need on the business basis of supply and demand, at a certain i)rice ; 
 but the law says I must spend a part of my snudl salary in order tluit 
 certain great American i)ublishers shall be protected. 
 
 Q. Do you think it is fair, then, for such an institution, which pays 
 you so snuill a salary, to get these articles in free of duty ' — A. I am 
 giad that they can get out of ]»aying it; that sonu'body can get out of 
 paying it. J do not want all the world crushed by such inicpiity, be- 
 cause I am exempted trom it. I am glad if there is any let uj) on it, and 
 1 wish there was more. 
 
 By Commissioner Oliver : 
 Q. Your argument, at the outset, was that protection does not benefit 
 the laborer. — A. That pr(»tection lowers wages.
 
 w.G.sLMXEK.l PROTECTIVE TAXES AND WAGES. 21 
 
 Q. Now I will take an illustration on tbat point, whioli lias occnrred 
 to me. The material to make a Ion of pig iron within 50 miles of this 
 citv is not worth over 50 cents or $1 a ton— I nvean the ore, coal, and 
 lim'estone in the hill. Everything else necessary to make that ton of 
 pig iron is the labor, is it nof?— A. Very likely; I do not know the de- 
 tails of the industry ; but I dare say it is. 
 
 Q. The cost is in the labor and transportation, and transportation is 
 labor. The price of a ton of pig iron of equal quality in England to- 
 dav would be about $11 or $12 a ton, while the price here would be 
 about $22 to $23 a ton. Kow, how can you maintain your argument, 
 when the same quantity and amount of labor in Eastern Pennsylvania 
 is worth $22, and in the Cleveland district in England it is only worth 
 ^11, one under free trade and the other under protection? — A. That is 
 exactly what is wrong about it. It does not make any difference what 
 the wages are over there. 
 
 Q. There the laborer gets 50 cents a day, and here lie gets $1.25 a 
 <Jayf — A. That does not make any difference. 
 
 Q. It makes a difference in his style of living, and a difference in the 
 condition of the man's ftimily who' receives $1.25 a day instead of 50 
 cents a day, doesn't it ? — A. Not at all ; the only difference is whether 
 he can make $1.25 in making iron easier than he can in tilling the land. 
 You cannot cut him down to 50 cents a day wages, because the laborer 
 in Europe receives that ; or to 10 cents a day wages, because the 
 laborer in China receives that. You cannot get the American laborer 
 down below the American rate. The iron manufacturer wants pro- 
 tection because he cannot get the American laborer to work below the 
 American rate, and he will not work in iron unless he can do better 
 than in something else. Because a man gets 50 cents a day in England 
 for doing that work does not affect the case. 
 
 Q. Is not that the reason why the laborers are leaving Ireland, Ger- 
 many, and other countries, and coming here ? — A. Certainly; they say, 
 " We will go to America and make iron and get as good wages as if we 
 were tilling the ground." But it does not come out of what they 
 make ; they do not produce it. It comes out of me and the othei* con- 
 sumers ; and that is what we are growling about. 
 By Commissioner McMahon : 
 
 Q. They would not come to this country except for the difference in 
 wages, would they ? — A. They would if they wanted to. They will 
 come if they can find profit in it ; if not, they will stay at home. They 
 are coming fast enough now, whether they find profit in it or not. Let 
 us stand off" and let them do as they like, if they are not living off of us. 
 If they are to live off' of our people, the more that come the worse for 
 us. When I see a ship-load of immigrants landed on our docks, I feel 
 anxiety, because I know that we shall have to pay more taxes to help 
 support them. 
 
 By Commissi oner Kenner : 
 
 Q. Thea you object to immigration ? — A. No, sir; not at all. 
 
 Q. I understood you to say so; it seems I cannot understand you at 
 all ? — A. The trouble is that you do not get my idea of labor ; that I 
 do not want to prescribe what any man under God's heaven shall do. 
 Let every man stand on his owu basis and help himself. I do not want 
 to be taxed to help support him. 
 
 Q. But you do not want him to remain in ignorance? — A. Every 
 man has to take care of himself and win his own way through the 
 world, as I have had to do and as all the rest of us have had to do.
 
 YALE COLLEGE 
 
 LOAN LIBRARY 
 of PollticaUEconomy.
 
 o O 
 
 >— ' o 
 5 ►-^ m 
 
 <i5 November, 1879. 
 
 BIMETALLISM. 
 
 IT has been made a ground of reproach against the pro- 
 fessional economists that they have not exerted themselves 
 sufificiently to expose the fallacies of bimetallism, but have been 
 contented to pass it by in contempt. Especial point has been 
 given to this reproach by the observation that a great many 
 persons have only resisted bimetallism by a kind of sound 
 instinct. This instinct does not furnish rational ground for con- 
 viction, and many such persons have therefore either wavered 
 or been disturbed in their allegiance to sound doctrine. It 
 belongs to the scientific economists, it is said, to show, upon 
 due analysis of the question, wherein the fallacy lies, and to 
 give rational grounds for sound doctrine. 
 
 It is not worth while to mention the reasons or the excuses 
 for the neglect to which this complaint refers. If an economist 
 should undertake to expose and combat all the fallacies which 
 gain more or less acceptance, he would not have time for any- 
 thing else. In the present instance there are more narrow and 
 peculiar difficulties. If one attempts to refute the whole silver 
 doctrine in all its forms, one must demonstrate a sweeping and 
 general negative. If one attempts to select and refute a single 
 form of the error, he will find that no writer on that side of the 
 subject has stated his opinions and doctrines in a form upon 
 which issues can be joined, and a scientific discussion carried on 
 with any prospect of satisfactory results. He will be compelled 
 to argue both sides at once, to put the adversary's case in shape 
 for him before discussing it, and, if he attempts this, he is sure 
 to be entangled in endless charges of misrepresentation and mis- 
 apprehension. For instance, one writer adopted the term " con- 
 current circulation," and gave it frequent and current use to
 
 BIMETALLISM. 
 
 547 
 
 express his doctrine and aim. I thought the term well chosen 
 to express the writer's idea as I understood it, and it seemed to 
 me that here was an idea so clear and precise that we could 
 join issue upon it, make an analysis, undertake verification, and 
 so refute or demonstrate, which is what I understand by discus- 
 sion, and not the heaping together of statistics, historical facts, 
 and authorities. In a later publication, however, the same 
 writer says : " The concurrent use of the two metals, side by 
 side, in the same market is a matter wholly of indifference." 
 We have then this proposition : The bimetallists want a con- 
 current circulation, but it is matter of indifference whether it be 
 concurrent. There is here, then, no proposition to discuss, but 
 only an illustration of the vague and loose thinking upon which 
 the whole notion of the bimetallists is constructed.' 
 
 I. What I propose now to treat is bimetallism as it is popu- 
 larly, however vaguely, believed in in the United States, as it is 
 partially adopted in our legislation, and as it was expressed in 
 the Act under which the Silver Commission was sent to Paris. 
 The appearance of the Report of this Commission'' furnishes 
 the occasion and the means for examining this notion. 
 
 It was provided in the Act known as the Silver Bill that the 
 President should invite the governments of other nations to join 
 in a conference " to adopt a common ratio between gold and 
 silver, for the purpose of establishing internationally the use of 
 bimetallic money, and securing a fixity of the relative value 
 between those metals." The legislators who enacted this as- 
 sumed and believed that there was no impossibility, in the 
 nature of things, in uniting two metals in the circulation at a 
 fixed ratio of value ; they believed that, this plan being debarred 
 by no natural impossibility or absurdity, its expediency could 
 be resolved upon in a conference, and that the means by which 
 it could be realized was an international agreement of the chief 
 commercial nations. I understand that these opinions are held 
 more or less distinctly by all those who are popularly called silver 
 men amongst us. I take issue upon both the points involved. 
 
 • Mr. Horton uses the term "concurrent circulation" constantly in his essay 
 jqjpended to the Report mentioned below. 
 
 * Senate Executive Document No. 58, Forty-fifth Congress, Third Session. 
 References to " Report" refer to this document.
 
 548 
 
 THE PRINCETON REVIEW. 
 
 I. The first raises a scientific question: Is the notion that 
 two metals can be joined in the coinage at a fixed ratio, by any 
 human device or artifice whatever, true in science ? I answer, 
 No ; it is just as false as the proposition, A perpetual motion is 
 possible, would be in mechanics. This is certainly the first 
 issue to be settled in regard to the silver controversy as between 
 educated men ; but the bimetallists have always slurred it over. 
 At Paris, Count Rusconi did indeed recognize the primary 
 importance of this question in the first session, but much con- 
 tempt was expressed for the *' academic" question, and there 
 was great eagerness to be " practical " and to go on to the 
 " practical " question. This is, indeed, the course of the " prac- 
 tical men," so called. They are impatient of the dogmatism of 
 the professors, who say a perpetual motion is impossible, and 
 insist on going on to consider the great practical advantages 
 which would accrue if a perpetual motion were possible, and 
 then, because they think they see such advantages, they go to 
 work to construct the machine. The answer is, that if a per- 
 petual motion, or a bimetallic circulation, were possible, this 
 would not be the same world it is now. It might be a better 
 one, but surely any practical man, in the correct sense of the 
 w^ord, will inquire whether there is any insuperable obstacle, in 
 the nature of things, to the object he wishes to accomplish, 
 before wasting his time upon it. If this is not so, what we call 
 education is a pure waste of time. I had supposed that it was 
 understood and agreed, amongst educated men, that the chief 
 end of studying the sciences was to acquire that training by 
 virtue of which we recognize the relations of man to nature, and 
 the limits of human action. 
 
 The inference to be drawn from the importance and true po- 
 sition of the scientific question is not that that question ought 
 to have been discussed in the Conference. Far from it. That 
 was no place for such a discussion. The inference is that the 
 Conference was ab initio an absurd and senseless undertaking. 
 The requisite antecedents of any joint action of nations are, (i) 
 that all scientific questions involved shall have been maturely 
 discussed by scientific men until a substantial unanimity of 
 conviction has been reached as to what is true ; (2) that these 
 convictions shall have been dogmatically taught in books and
 
 BIMETALLISM. 
 
 549 
 
 periodicals until they have become interwoven with the stock 
 of convictions and faiths of the mass of civilized men ; (3) that 
 general opinions as to what it is expedient to do should, by- 
 necessary inference, have come to be held by all civilized men. 
 When these conditions are fulfilled it is, of course, found that, 
 for almost all cases, private contract, custom, or the independent 
 legislation of individual states, concurring because proceeding 
 from commonly accepted principles, answers all the purpose. 
 The field for international conventions has therefore hitherto 
 been restricted to postal conventions (common regulations for 
 conducting a form of business which is monopolized by govern- 
 ments, but in which they act like the managers of any other 
 business), or conventions on points of international law (in which 
 the aim is to do justice to humanitarian sentiments wnich have 
 become universal). The difificulty of these latter conventions, 
 even, is instructive for the nature and limits of international con- 
 ventions, and the history of the Latin Union, as an isolated 
 effort towards international action for other purposes, is certain- 
 ly a warning and not an encouraging precedent. When, how- 
 ■ever, the action proposed involves scientific truth, and yet all 
 the necessary conditions precedent are passed over unfulfilled, 
 the proceeding is devoid of sense. It could only have the form 
 •of sense if the object were to supersede scientific discussion by 
 action and force — the fallacy of the ecclesiastical councils. The 
 scientific question belongs where I now undertake it : in the 
 forum of academic discussion. 
 
 We have then one issue joined ; I propose to show that a 
 bimetallic circulation is as absurd and impossible as perpetual 
 motion, so that a convention of the whole human race could 
 not realize it. 
 
 2. The second assumption in the Act above quoted relates not 
 to a scientific truth, but to a point of expediency and practica- 
 bility. It is assumed that an international coinage union, combin- 
 ing and binding the members to a certain programme of action, 
 is a practicable scheme, and needs only a certain degree of con- 
 sultation to be realized. I shall maintain that such a coinage 
 union is absolutely impracticable. The bearing of this is not 
 directly upon bimetallism, for that is disposed of when it is 
 shown to be absurd, but the coinage union is an element in the 
 36
 
 e^O "^HE PRINCETON REVIEW. 
 
 scheme properly known as the alternate or alternative standard. 
 These two schemes, when tested and weighed from the scientific 
 standpoint, are of totally different character and value, as I shall 
 show further on. The question about the alternate standard is a 
 question of expediency and practicability in the main, although 
 it also involves considerations of rights and justice. The differ- 
 ence is that between a perpetual-motion machine and an ordi- 
 nary machine invented to meet a certain purpose. As to the 
 latter, the questions may be raised whether it will work so as to 
 do what it is made to do, whether it will pay, whether it is dan- 
 gerous, etc., but if one or all of these questions were decided 
 adversely to the machine, it would still not be an abomination 
 in mechanics like a pretended perpetual motion. The parallel 
 holds in the case before us. The alternate standard is inex- 
 pedient for a variety of reasons, and it is impracticable because 
 it involves the necessity of an international coinage union, pre- 
 scribing regulations and dictating action to its members, and 
 such a union is impracticable. Still the alternate standard in- 
 volves no scientific absurdity. I therefore join issue, secondly, 
 on the question of the practicability of the coinage union. 
 
 II. Before entering upon the subject-matter, a word of expla- 
 nation is necessary on a certain point. If a monometallist means 
 a man who urges that all nations ought to use gold money, I 
 know of no such person in the world. It is one great error of 
 the bimetallists that they assume to know and judge what money 
 all the world ought to use. No one can reach any such judgment, 
 on the one side or the other, who uses correct processes in the 
 investigation of economic truth. Every nation ought to use just 
 that money which, in its own judgment, its interests and con- 
 venience dictate. The economist has to note what course na- 
 tions pursue under this motive, to study the consequences, in- 
 terpret the phenomena, and deduce the inferences which are 
 presented to him by the facts themselves. For myself, there- 
 fore, I have always repudiated the name Monometallist as a sec- 
 tarian name, which no scientific economist would be willing to 
 bear. 
 
 III. The historical facts bearing on bimetallism and kindred 
 topics have been collected with great zeal during the last few 
 years, but they have rarely been interpreted with the simple
 
 BIMETALLISM. 
 
 551 
 
 fidelity and loyalty just described. Let us recapitulate as 
 briefly as possible, in their chronological order, the facts which 
 are here of importance. 
 
 A. The attempt to use two metals together has been kept up 
 from the earliest use of money to the present time, and has con- 
 stituted a problem in money. It was deemed necessary to use 
 two metals, but no means has ever been devised for using two 
 which has not failed, besides producing confusion, loss, injustice, 
 and commercial distress. In 171 7, still essaying to solve the 
 same problem, the English guinea was rated at 21 silver shillings. 
 It was not worth that amount, and so became the cheaper me- 
 dium, and the standard of prices and credits. The good silver 
 coins were melted, and those which remained were clipped so as 
 to be worth less than ^ of a guinea. After the clipping once 
 began, it went on from worse to worse, as always under the 
 same circumstances, but the need for " change" kept the silver 
 coins afloat. After the middle of the century the depreciation 
 became so great that it led to a clipping of the gold coins also. 
 In 1773 silver coins were made legal tender for no sums over 
 £2^, by weight, at ^s. 2d. per oz. In 1785 France adopted the 
 ratio of I to 15I- in a reformation of the coinage, as another 
 attempt to hit the true ratio and keep the two metals in circu- 
 lation. In 1803 the same ratio was ratified. The French law 
 of 1 785-1 803 was therefore no new or special solution of the 
 coinage problem, but only another attempt such as those 
 which had been made before. Under the operation of this 
 law, France used silver as a standard until the middle of 
 the century. In 18 16 a new coinage system was adopted 
 in England which really accepted and put into a system 
 the state of things which had grown up by custom during the 
 last century — single gold standard, with silver subsidiary depre- 
 ciated coins, limited in amount, and limited legal tender. It was 
 from a study of the phenomena produced during the previous 
 century by the operation of the laws of trade upon the legal 
 system that the English statesmen were led to this system. 
 The law, therefore, followed custom and the laws of trade, and 
 did not attempt to coerce them. The sovereign now became a 
 money of moneys, i.e., other moneys and currencies were common 
 denominators of value within certain local limits. When a sec-
 
 552 
 
 THE PRINCETON REVIEW. 
 
 ond common denominator was wanted to connect the operations 
 of these local areas with each other, the sovereign met the need. 
 That English money and English commerce thus mutually sus- 
 tained each other was only an illustration of the principle that 
 good institutions support prosperity and prosperity supports the 
 utihty of good institutions. The connection between them is 
 organic, not mechanical. In 1834 the United States passed a 
 new law for a coinage of two metals, but purposely rated the 
 metals so as to get gold. In 1853, having obtained a gold stand- 
 ard by the operation of the law of 1834, they reduced all the 
 silver coins except the dollar to a subsidiary condition, and intro- 
 duced the English system. In 1853-4, by the fall in gold, France, 
 under the operation of her law, became a gold country. She 
 was burdened with the expense of the change from silver to 
 gold, but this was regarded as a slight price to pay for a change 
 which was opportune to her interests. In 1865 the Latin Union 
 was formed. The nations composing it adopted the French 
 law, and became like France, by the operation of that law, gold 
 countries. In 1867 an International Monetary Conference was 
 held, at which it was proposed to establish, by agreement, what 
 existed in fact — the use of gold as a standard amongst the na- 
 tions represented. After the formation of the North German 
 Confederation in 1867, an event which to a certain extent met 
 the German aspirations for political unity and national standing, 
 it was felt that one of the greatest obstacles to the realization of 
 the further hopes of commercial and industrial greatness lay in 
 the currency of the country. The standard was silver. The 
 coins were cumbersome. The small coin was, much of it, base 
 billon. The bank-note currency also required reformation. 
 After the war of 1870 and the formation of the empire, all the 
 motives for a currency reform were increased in force, and when 
 such reform was undertaken, all the considerations which had 
 weight dictated that it should be carried through to the adoption 
 of the gold standard. The Scandinavian nations followed the 
 example of Germany. In 1873 the United States codified and 
 simplified their coinage laws according to the existing laws and 
 customs of the country, and according to what would best serve 
 the interests of the country when specie payments should be 
 resumed. They struck the silver dollar from the list of coins
 
 BIME TA LLISM. 553: 
 
 which the mint was permitted to coin, on which hst it had stood 
 as an idle and unused permission, and brought the United 
 States to the simple gold standard with subsidiary silver. In 
 1873 silver began to fall by important steps. The operation 
 of the French law would now have taken away gold and given 
 silver to the Latin Union. The movement in this direction, 
 however, was far differently welcomed from the contrary move- 
 ment of 1853. The Latin Union refused to give up a gold cur- 
 rency and take silver, and undergo the loss of sustaining silver 
 besides. It closed its mints against silver, and the " double 
 standard " ceased to be. 
 
 1. Any one now who reviews this series of historical facts, 
 not in order to interpret them by some ulterior design assumed 
 to have existed,' but for just what they are, will see that there 
 was no ulterior design, no set purpose, no agreement or combi- 
 nation, but that each nation acted as its own interests dictated, 
 and that the concord of action and general tendency towards the 
 adoption of gold on the part of all the great commercial nations, 
 substantially in the order of their commercial importance, consti- 
 tutes one of those great historical movements which are not to- 
 be criticised or corrected, but which impose upon the student 
 the convictions which he is to adopt. 
 
 2. It is plain from a correct statement of the facts that the 
 action of Germany in demonetizing silver was by no means arbi- 
 trary. It had the fullest motives and occasion in the state of 
 that nation, and its interest and convenience.^ 
 
 3. The action of the Scandinavian nations was not arbitrary 
 or destitute of motive. The movement towards gold was now so 
 far advanced that the small nations were forced to join it in self- 
 defence. The last to join it would be loaded with the discarded 
 silver, and would have to endure a large part of the total loss. 
 upon it. This is only an illustration of the rapid impulse with 
 which such movements finally complete themselves, when the 
 forces have acquired momentum. 
 
 4. The action of the United States in 1873 was guided by 
 
 > Mr. Horton (Report, p. 240). Mr. Horton speaks (p. 745) of the " partisans 
 of gold and persecutors of silver." 
 
 *The argument of Gen. Walker before the Conference was based upon the 
 assertion that Germany's action was arbitrary. See Report, p. 74.
 
 554 
 
 THE PRINCETON REVIEW. 
 
 previous legislation, custom, fact, convenience, and the interests 
 of the country, as they then appeared, and, so far as any evi- 
 dence has ever been brought forward, by nothing else. 
 
 B. We come now to the latest incident in this historical devel- 
 opment — a case of action which was indeed arbitrary and desti- 
 tute of motive. The United States were in currency trouble of 
 their own, serious enough and difificult enough, in itself consid- 
 ered, but they enjoyed, from the suspension of specie payments, 
 one incidental advantage. They had no part or lot in the silver 
 difficulty.' They had no stock of silver on which to suffer loss. 
 Their laws were in proper shape to secure resumption on the 
 best system of coinage yet devised. They had time before them. 
 They could wait for developments and take advantage of any 
 state of affairs which might arise, without taking any speculative 
 risks at all. Mr. Horton thinks the United States had a great 
 interest because the demonetization of silver made resumption 
 harder. Resumption on silver would have been easier than re- 
 sumption on gold, just as resumption would have been easier if 
 the gold dollar had been reduced ten per cent in weight, and 
 not otherwise. In this state of things, then, the United States 
 wilfully plunged into the silver difficulty, and, moreover, came 
 forward to tell those who were in silver difficulty how to get out, 
 and volunteered to lead the way. All the other nations repre- 
 sented at the Conference had an interest in the silver problem, 
 but all refused to act, with the possible exception of Italy. 
 The United States had no interest, but nevertheless took ac- 
 tion. As a consequence, this nation now has thirty million 
 dollars of capital invested in silver, which is lying idle and can- 
 not be disposed of without loss. This sum and a large amount 
 in trade dollars have been retained at home as a new element 
 of disorder in our currency, instead of following their natural 
 course to the East. If the advocates of free coinage for silver 
 had had their way, we should also have received thirty or forty 
 millions in silver instead of the same amount in gold received 
 this Fall. Mr. Horton is of opinion that this was a noble ao ■ 
 
 ' I suppose it is necessary to say that the interest of American silver producers 
 was no interest of the United States. The iron producers were in worse trouble 
 than the silver producers, but no one proposed that the nation should expend caoi' 
 tal to ' ' bull " iron.
 
 BIMETALLISM. 
 
 555 
 
 tion, on the part of the United States on behalf of mankind 
 in general, which has rarely been paralleled. It was, in fact, a 
 piece of national Quixotism which has no parallel in history. 
 The same writer quotes this action as an exception or offset to 
 the uniform tendency of the historical events above cited, but 
 its arbitrary and unfounded character rob it of any force for 
 such a deduction. 
 
 IV. It is impossible that I should, within the limits of the 
 present article, review and criticise the points raised at the Con- 
 ference. Two or three of the chief of them here demand brief 
 attention. 
 
 I. The American delegates began by slandering the legisla- 
 lation of their country, and it was left for a foreigner to show (i) 
 that the historical facts about the legislation of 1873 were incor- 
 rectly stated by the American delegates, and (2) that the United 
 States are a constitutional country, not ruled by plebiscites, and 
 that we cannot plead ignorance on the part of "the people" 
 against legislation constitutionally adopted. Gen. Walker en- 
 deavored to sustain the allegations of his colleague by saying that 
 he, although a professor of political economy, engaged, at the 
 time, in lecturing on money, did not know what was going on. 
 It does not appear that this argument elicited any reply. Per- 
 haps it was thought that its force all lay in the recoil, and some 
 wonder may have been excited whether all American economists 
 would have been obliged to say the same. The fact is that the 
 Act of 1873 so simply enacted the existing law and facts that no 
 one attributed any importance to it. 
 
 2. The chief reasons adduced for the action proposed by the 
 United States were vague and undefined terrors of consequences 
 from the historical movement we have described. It was alleged 
 that half the money in the world has been cancelled. This as- 
 sertion has no foundation in fact. The amount demonetized is 
 just exactly what has been demonetized, viz., the amount of 
 silver held by Germany and the Scandinavian States, and to this 
 there have been important offsets. In the first place, there has 
 been the production of gold since 1873, which, according to 
 Soetbeer's calculations,' must have averaged one hundred and 
 
 ^ Edelmetall-Production {Pctervianns Mittheihingen, Erg. Heft'^o. 57, p. 112).
 
 556 THE PRINCETON REVIEW. 
 
 twenty million dollars per annum. In the second place, all the 
 silver five-franc pieces in existence have been added to the stock 
 of " money." Before the fall in silver they were worth more than 
 gold and were merchandise. Since they fell to an equality with 
 gold (below it in value; held equal by limitation'), they have 
 been available as money. It would be very difficult to show 
 that, comparing 1879 with 1873, there has been any contraction 
 whatever of the metallic money of Europe and the United 
 States. The expansions and contractions of paper money in 
 Europe and North and South America, within twenty years, 
 have had far greater influence on credit and prices the Avorld 
 over than the changes connected with silver. 
 
 3. The fear was also expressed that the adoption of gold 
 would destroy the par of exchange with silver countries, and it was 
 urged that the bimetallic system would furnish a "normal" par. 
 What is the "par" of exchange? Exchange is a ratio between 
 two quantities. How can the ratio between two quantities be 
 ** destroyed" so long as the quantities exist? The par of ex- 
 change is an entirely imaginary mean-line between fluctuations 
 which are constant, and it has no importance except for the 
 academic explanation of phenomena. We can make a " normal '' 
 par any minute; $4.44— ;^i is as good a par as any. The sov- 
 ereign and the dollar may then each of them be gold, silver, or 
 anything else ; their values will have a ratio to each other, and 
 may be stated in percentages of $4.44. 
 
 V. I proposed, however, to examine the bimetallic notion in 
 its essence, and to proceed with that task it is necessary to con- 
 sider the relation of legislation to value.^ For the exposition of 
 the bimetallic fallacy, as well as a number of others which are 
 now widely held and even taught, it is necessary to show that 
 legislation cannot affect value at all. If it could, the text-books 
 of political economy are very faulty in their analysis of value, 
 since no one of them specifies legislation amongst the forces by 
 which value is controlled. 
 
 ^The Bank of France in September charged one tenth of one per cent premium 
 on gold over silver. — Economist, Sept. 6, p. 1026. 
 
 ' " Let me dwell upon the fundamental error which suggests the measure which 
 has been proposed. That error is the belief that it appertains to governments to 
 call value into existence." (Mr. Pirmez. Report, p. 121.)
 
 BIME TA LLISM. 557 
 
 1. The value of a thing is controlled by supply and demand 
 and by nothing else. Supply and demand are natural forces and 
 act under natural laws. By this we mean that supply and de- 
 mand spring into action from the presence, in certain relations 
 to each other, of certain natural facts. The natural facts, in this 
 case, are (i) a society of men having certain needs, and (2) mate- 
 rial goods fit to satisfy those needs. The needs of the men for 
 the goods do not exist because the men so choose, but because 
 they are men. The goods are not supply for the needs because 
 the men so decide, but by virtue of natural qualities. Supply 
 and demand are therefore complementary parts of a force which 
 is natural in the same sense that any physical force is natural. 
 This force must arise when its natural conditions exist ; it can- 
 not arise unless they exist ; when it arises it acts under natural 
 law — that is, produces a regular succession of phenomena in a ' 
 determined sequence — and the statement of the law in human 
 language must be made by describing the conditions of equi- 
 hbrium between the complementary parts, since it is by their 
 equilibrium that the supply performs its function, and the 
 needs receive satisfaction, and the economic force is merged 
 in the vital force of man. The action of man on natural forces 
 is restricted to dividing, combining, and diverting them. He 
 can neither create nor destroy them. The forces may be di- 
 vided, but the sum of the effects must always be perfectly pro- 
 portioned to the force, neither less nor more. If any portion 
 of the force is missing in the effect, our task is not complete 
 until we have followed it, ascertained its incidence and effect, 
 and united it to the rest. 
 
 2. Gold has its own conditions of supply and demand, and 
 silver has its own conditions of supply and demand, and they 
 are both independent of each other. Those conditions are facts 
 in regard to the actual existence of the metals within the reach 
 of man on the one side, and the increasing, decreasing, or chang- 
 iHg needs of the human race, as it lives its life on earth, upon the 
 other. Legislation can affect these conditions in no respect 
 whatever. It cannot increase or decrease the amount of the 
 metals within the reach of man, or his willingness to labor to 
 produce them according to the profit of such production. It 
 cannot make men want what they do not want, or cease to want
 
 558 THE PRINCETON REVIEW. 
 
 what they do want. Economic phenomena are due to economic 
 forces, and one of the first lessons the student has to learn is not 
 to rest from his analysis until he has reduced economic phe- 
 nomena to economic forces and laws. 
 
 One might as well tell a physiologist that his science is false 
 because no man ever existed whose organs were all perfectly 
 normal in their functions, as to contradict an economist because 
 no man ever acted from purely economic motives. Indeed the 
 absurdity is far greater in the latter case, since the economist 
 -deals with societies, not individuals ; so that not only is the in- 
 ference unfounded, but the fact alleged is untrue of societies. 
 One might as well object against a physiologist, when he states 
 physiological laws, that moral forces (or, rather, more or less 
 immoral forces, for that is what we mean) affect the bodily func- 
 tions, as to interpose the objection against economic laws that 
 immoral forces affect economic phenomena. The fact in both 
 cases is undeniable ; the inference — that these external interfer- 
 ences alter natural forces and laws, and therefore ought to be 
 taken into account in the statement of scientific principles — is 
 equally unfounded in both. One might as well tell a physiolo- 
 gist that a knife thrust into an organ alters physiological forces 
 and laws, as to tell an economist that legislation controls the laws 
 of value. It is because the physiological laws are not altered 
 that the victim dies. The hygiene, pathology, and therapeutics 
 of society are mixed with its physiology in our text-books, but 
 the scientific distinctions must be maintained intact if we would 
 reason correctly. Value belongs to the physiology of society, 
 legislation almost always to its pathology. Legislation creates 
 the conditions of disease, leads to distorted organs, disordered 
 functions, deceptive phenomena (§ 4 below), and taxes the saga- 
 city and clear-headedness of the student to find again the normal 
 forces in their distorted action ; but we have to guard ourselves 
 well against the delusion that it changes forces or laws. To 
 adopt that delusion is to lose perception of the difference be- 
 tween social health and social disease. We are struggling here 
 for the introduction into political economy of universal canons 
 of science which are recognized in all other departments which 
 enjoy authority and are making real progress. 
 
 3. One chief cause of the notion amongst us that legislation
 
 BIME TA LLISM. 559 
 
 can regulate the value of money is, no doubt, the provision in 
 the Constitution of the United States that Congress shall have 
 power so to do. Why was it not also provided, in connection 
 with the cognate power " to fix the standard of weights and 
 measures," that Congress might regulate the length and weight 
 of things? Here is a table. It is so long. How long? Just 
 the quantity of extension in one dimension which it has as a 
 physical fact. If you were here, you would see it. As you are 
 not, I have recourse to ratios to other extensions which you do 
 know. It has the same length as the distance from a man's 
 nose to the end of his middle finger. The Congress of the 
 United States, however, has provided an arbitrary standard of 
 length, now grown familiar by use, and if I write that this table 
 is a yard long, it will be a far more convenient and accurate 
 designation, because it will refer to a more accurate length, 
 equally familiar. If Congress had adopted a standard yard as 
 long as what we now call a foot, that would have become 
 familiar, I should then have written three yards instead of one, 
 and the knowledge conveyed would have been the same. Now 
 how large a Congressional majority would it take to make this 
 table one thousandth of an inch longer or shorter than it actu- 
 ally is ? The parallel with the case of money is complete. The 
 Constitution of the United States could not confer powers which 
 nature has never given to mankind. Congress cannot regulate 
 the value of money until it can make a man give for a gold 
 dollar one grain of wheat more than supply and demand force 
 him to give, or yield a gold dollar for one grain less than supply 
 and demand will give him for it. To regulate the value of money 
 is to fix prices, and Congress has never tried that since it has 
 existed. Congress can determine how heavy a piece of metal 
 of a certain fineness shall be the standard of value, just as it 
 determines how long a bar shall be the standard of length ; but 
 it cannot regulate the value of a coin any more than it can 
 regulate a physical object to make it longer or shorter than it is. 
 4. The cases of apparent interference with supply and de- 
 taaand by individuals, combinations, and governments are all 
 vases of monopoly, which is only a special case of supply and 
 demand. An artificial monopoly is possible whenever the sup- 
 ply is capable of comprehension and limitation, and the ma-
 
 560 THE PRINCETON REVIEW. 
 
 hipulation of a monopoly consists in so limiting the supply and 
 adjusting it to the demand as to make the market take some 
 amount at some price. If the monopolist wants to sell more, 
 he must yield on his price. If he wants a higher price, he 
 must be content to sell less. It would be a great mistake, how- 
 ever, to say that a monopolist controls value. It is just because 
 he does not control value that he makes anything. There is 
 still a true point of equilibrium which supply and demand would 
 reach, if free, and it is out of the margin between that point and 
 the point at which the monopolist fixes the market price that 
 his gains, as monopolist, come. There is no other scientific ex- 
 planation of those gains. A " corner" is a modified ease of 
 monopoly, in which the first action is exerted upon the demand. 
 All offered is bought at a price above what any other buyer will 
 pay. This operation, however, is only preliminary to the forma- 
 tion of a monopoly, and a monopoly sale. It would be sense- 
 less unless there was a demand foreseen, which would, for some 
 reason, be so strong as to ensure the monopolists a sale at a 
 price above what they pay. What the monopolist does, then, 
 in either case, is to fix the ratio at which the exchange actually 
 takes place at a different ratio from that which value would es- 
 tablish. He thereby transfers other men's goods to himself 
 without giving any equivalent, and it is precisely because value 
 gives us a second point of comparison that we are able to say 
 that the action of the monopolist is unjust and oppressive, and 
 that monopolies are justly odious. 
 
 5. The apparent cases of legislative interference with value 
 are cases in point. Subsidiary coins are a case of monopoly, 
 and the problem of their management is to limit the supply to 
 the demand of the community for said coins at their nominal 
 value. Paper money is a case of monopoly. The problem of 
 its value, which has troubled so many writers, is to hold the 
 supply at or below the demand of the community for money to 
 do its business with at par with coin. If the supply of paper 
 dollars is made to exceed the number of gold dollars which 
 the country would need, they will no longer hold a value equal 
 to the value of a gold dollar each. The tariff is a case of mo- 
 nopoly. The protected producers can get the market price plus 
 the tariff, only by selling less than the community would take
 
 , BIMETALLISM. 561 
 
 at the market price. If they increase the supply, they may run 
 down the price in the home market below the price in the 
 world's market. Hence paper money transfers property from 
 its just possessors to the issuers of the paper, without equiva- 
 lent, and tariffs transfer property from the unprotected owners 
 to the protected producers without an equivalent. The extent 
 to which this takes place depends on the manipulation of the 
 monopoly ; the effect of legislation is limited to the creation of 
 the opportunity for a monopoly. 
 
 6. Legal-tender laws, when they are what they ought to be, 
 simply enactments of what is the universal custom and under- 
 standing, are rarely if ever called into action at all. It seems to 
 be forgotten that this is their original and only proper character, 
 and whenever such laws are proposed or referred to, laws are 
 always meant which involve some coercion, or distortiom of the 
 terms of a contract. Legal-tender laws of this character do not 
 alter truth, justice, or value. They only transfer property. A 
 legal-tender law does not make 90 paid = 100 due a true equa- 
 tion. The only true equation is 90 paid + 10 retained == 100 due. 
 Legal-tender laws alter the line between mine and thine so that 
 something which was on one side is now on the other, but they 
 do not affect the validity of the venerable distinction. The 
 legal-tender law simply provides that the courts which admin- 
 ister justice under the Constitution and laws of the country in 
 question shall not listen, in certain cases, to the plea of the citi- 
 zen who complains of injustice ; in other words, it withdraws 
 the protection of the courts of justice, in certain cases, from 
 citizens who complain of injustice. Some decisions even seem 
 to go so far as to interpret the law so that A may demand B's 
 property and discharge B's claim with an arbitrary allowance 
 to which B never consented. In all cases it is because the 
 forces of nature act in perfect fidelity to their laws that we 
 can see and define the injustice of this legislation. It is be- 
 cause the legislation has not affected the law of value that 
 we can have another state of things in mind as right and just, 
 and can often measure the degree to which legislation has 
 transferred the products of one man's labor and economy to 
 another man's use and enjoyment. It would be difficult indeed 
 to prove that the value of a man's property or his right to it
 
 562 
 
 THE PRINCETON REVIEW. 
 
 was affected by stealing it from him. Value is one form of 
 truth, and truth is not affected by majorities. The notion that 
 legislation affects value must therefore be positively condemned 
 as the root-error of a dozen mischievous fallacies. Legislation 
 transfers property, and that is all it ever does. 
 
 7. It is necessary to notice also the law which governs all 
 combinations. If a single individual undertakes, for instance, to 
 establish a corner, he may be reasonably sure of his own will, 
 intention, and plan, and may carry it out if he does not lose his 
 head and prove inconsistent with himself — which indeed some- 
 times occurs. If he finds it necessary to associate another with 
 himself, there arises the need of selecting a congenial comrade 
 and of securing consent, co-operation, loyalty, and good faith 
 between two separate wills. The difficulty of such combination 
 is not double that of an individual operation ; it may be twenty- 
 fold greater. If three, five, ten, twenty persons must be com- 
 bined, the difficulty advances in a tremendous ratio until it 
 becomes a practical impossibility. Hence the manipulation of 
 a corner or a monopoly does not gain force or become easier 
 as the task is widened and the number of participants is 
 increased, but the force decreases in an enormous ratio to the 
 extension of the party, and the practical chances of success 
 diminish in an equally rapid ratio to the number of participants. 
 
 VI. Having elucidated these points, which, by the way, show 
 the need, in economic discussions, of firm grasp of elementary 
 notions and principles, we may, in a brief space, bring them to 
 bear on the thesis with which we started. 
 
 I. Inasmuch as gold and silver have independent conditions 
 of supply and demand in natural facts, their relative value 
 may remain the same through a long period, or one or the 
 other may grow dearer, and the fluctuations may be rare or fre- 
 quent, wide or narrow, sudden or gradual, in all possible com- 
 binations and sequences. It has been proposed to form an 
 international union, to establish a fixed ratio for the mints of 
 all members of the union, and to make either metal legal tender. 
 By this plan it is proposed to change from one metal to the 
 other as fluctuations take place, and it is expected that the 
 fluctuations will be limited in their range, but it is not expected 
 that a concurrent circulation will be produced, or that the whole
 
 BIMETALLISM. 563 
 
 stock of both metals will be brought to act on credit and prices. 
 Reserving for the present the question of the practicability of 
 the coinage union, it may be admitted that, under some circum- 
 stances, the fluctuations would be limited, but they would be 
 more frequent and sudden, and the system would be at the sport 
 of chance, as the Latin Union was. These, however, are minor 
 difificulties. The legal-tender law, by which all this is to be ac- 
 complished, would simply, as above shown, transfer property. 
 The gain, if any, would be a gain to some at the expense of 
 others. In plain language, the project is one for uniting the 
 debtor classes of all civilized nations in a " corner" on the falling 
 metal. Such a project has no parallel save in some of the wild- 
 est plans of the International Society. The profits of the corner 
 would come out of the creditor class and the holders of the rising 
 metal. It would be establishing on a world-wide scale, and by 
 force of law, an injustice by which some men would throw the 
 risks and loss of their business on other men, who already have 
 the risks and losses of their own business to carry. For instance, 
 some Liverpool merchants interested in the South American and 
 East Indian trade have suffered loss by the fall in silver. They 
 are eager for the "double standard" to save them from their 
 losses, and no doubt it would do so, but only by throwing those 
 losses on the whole creditor class of England. Now, the creditor 
 class of England is scattered, unorganized, and unknown, but it 
 is safe to say that it has its own troubles from business and 
 investments, and is suffering from loss of dividends, failure of 
 banks, fall in prices, fall in rents, fire, shipwreck, and all the other 
 chances and accidents of life. The advocates of the " alternate 
 standard " have contented themselves with dilating upon the 
 effect of their scheme in narrowing the fluctuations of the 
 market rate of the metals, without reflecting that no such effect 
 could be attained without an expenditure of force, at somebody's 
 expense, elsewhere. 
 
 2. But the coinage union is a practical impossibility. France, 
 a country with a free mint for both metals, standing between 
 Germany, a silver country, and England, a gold country, was 
 able to work a compensatory action between them. There is an 
 obvious fallacy, however, in reasoning that the same action would 
 go on, on a larger scale and with greater efficiency, if the differ-
 
 564 THE PRINCETON REVIEW. 
 
 entiation upon which the interaction depended were obliterated 
 in a coinage union having a uniform system. 
 
 There is a further fallacy, and a far more serious one from a 
 scientific point of view, in supposing that the coinage union, if 
 extended, would gain proportionate increments of force to re- 
 strain fluctuations until they were reduced to a minimum or to 
 nothing. The law above stated here comes into operation, by 
 virtue of which a combination becomes not stronger, but 
 weaker, as it is extended, and the attempt of all nations to form 
 a corner upon the falling metal would dissipate itself like a 
 corner which united all the buyers — that is, it would become 
 simply identical with demand as we ordinarily use the term. 
 Instead, therefore, of marching towards a realization of bimetal- 
 lism or a concurrent circulation, the coinage union would work 
 towards the simple free play of natural forces, in which each 
 metal would obey its own conditions of supply and demand. 
 Nor is this all. The coinage union is either unnecessary^, or else 
 it is needed in order to impose a set line of action and to enforce 
 co-operation where voluntary co-operation would not be given. 
 How can any one believe that sovereign nations will enter into 
 any such combination, or that, if they did enter into it, they 
 would stay in and obey mandates which conflicted with their 
 interest and will ? We are not left to speculation as to the prob- 
 ability that they would so act. We have two facts to which 
 to refer: (i) When the fall in silver took place, the Latin Union 
 would have been disrupted by the secession of Belgium and 
 Switzerland if the coinage of silver had not been suspended. 
 (2) The commissioners of the Latin Union, at their last 
 meeting, agreed that Italy should withdraw her small notes 
 to make room for the return of her small coin with which 
 the other states, especially France, were burdened. I do not 
 understand that Italy has refused to do this, but the remon- 
 strances which were made in the Italian Parliament against this 
 dictation as to what Italy should do with her own currency 
 were just what must be expected in such a case, and they show 
 that an international coinage union would prove a rope of sand 
 so soon as the attempt was made to make it efificient at all. An 
 international coinage union, therefore, to accomplish a definite 
 and set purpose in turning back a movement which all recognize.
 
 BIMETALLrSM. 565 
 
 whether they deplore it or not, is an absolutely impracticable 
 scheme. 
 
 3. I have never seen any argument for the feasibility of 
 bimetallism, or a concurrent circulation, in which the whole of 
 both metals would act on prices and credit, except the facile 
 inference that the coinage union as it grew larger would or 
 might restrain fluctuations more and more, to a minimum or to 
 nothing. As I have broken down every assumption here in- 
 volved, the inference falls to the ground. It appears that this 
 reasoning follows neither a true relation of facts nor any logical 
 sequence. The coinage union as it grew larger and larger would 
 grow less and less effective, and when it was complete it would 
 have no effect at all. The notion of a concurrent circulation is 
 therefore entirely baseless — snatched from the air. So long as 
 the natural conditions of supply and demand of gold and silver 
 remained the same, whether for a longer or shorter period, so 
 long the forces would remain the same, and the effects would 
 remain the same. So soon, whether sooner or later, as the con- 
 ditions varied, the forces would vary, and the proportionate ef- 
 fects would vary. To secure a concurrent circulation, then, at 
 a fixed ratio, it is necessary to suppress the effects, which can 
 only be done by suppressing the forces, so that a concurrent cir- 
 culation could never be realized until we could extinguish econo- 
 mic forces by human agency. But we can no more extinguish 
 a force than we can create one, so that this scheme is in econo- 
 mics what perpetual motion is in mechanics. Every analysis 
 that is attempted of the idea will only issue in new proof that it 
 is an absurdity which cannot be thought, and it is no longer 
 strange that its advocates have never been able to state their 
 notion in intelligible language. It must remain vague, shadowy, 
 and popular, stated at best in symbols, metaphors, and analogies, 
 to exist at all.' 
 
 VII. If the amount of space which would be required were 
 not out of all proportion to the results for our purpose, I should 
 
 ' " As for the desire which has been expressed that the hope be left open that 
 some day a fixed relation may be established between gold and silver and an 
 international value given to them, the English delegate (Mr. Goschen) declared 
 that, in his view, it was impossible to realize this, impossible to maintain it in 
 theory, and that it was contrary to the principles of science." (Report, p. 166.) 
 37
 
 566 
 
 THE PRINCETON REVIEW. 
 
 like to analyze some of the analogies which have been em- 
 ployed in this discussion. Some of them deserve to be put into 
 the text-books on logic as classical examples of the mischief of 
 reasoning by analogy. An analogy proves nothing whatever. 
 It only serves to state a theorem in a form to be more easily 
 apprehended. The theorem, then, needs to be proven by its 
 appropriate demonstration. After showing the mischievous 
 character of the notions imported into this discussion by the 
 analogies of tubs of water joined by a tube, and horses driven 
 in span, I should not have advanced the discussion in which I 
 am engaged. The bimetallist says: A concurrent circulation 
 seems to me like driving two horses in span. I answer : To me 
 it seems like yoking the sun and moon together to facilitate the 
 reckoning of time by men by making the lunar month a simple 
 fraction of the solar year. Nothing is accomplished by these 
 statements towards testing the truth of either opinion. I 
 therefore pass by all the analogies which have been offered by 
 the bimetallists with the simple remark that they are all un- 
 true and misleading. 
 
 The advocates of the goloid dollar, who think they can give 
 greater fixity to the ratio of the metals by mixing them in the 
 same coin, advocate a more grotesque absurdity, but not a 
 greater one, than the other advocates of a " concurrent circula- 
 tion." 
 
 VIII. We must infer, then, that gold and silver will both be 
 used as components in the world's money, by the adoption by 
 some nations of one and by other nations of the other, as their 
 convenience and interest dictate. The United States, by its 
 legislation so far, has put itself on the way to become one of 
 the silver countries. It is not a dogmatic judgment ; it is infer- 
 ence from observation of the course adopted by nations, that 
 gold is more convenient for the purpose of the leading commer- 
 cial nations, and silver for those which are yet behind.* The 
 United States is one of those whose interests require the use 
 of gold, and the way back over the path we are now treading 
 will have to be won by trouble, loss, and inconvenience. Our 
 children, instead of admiring our Quixotic devotion to mankind 
 
 ' Feer-Herzog. Report, p. 60.
 
 BIMETALLISM. ' . ' • 567 
 
 in general, will ask us how we could ever commit the folly of 
 plunging into a difficulty which everybody else was trying to 
 escape, and from which our children will have to extricate them- 
 selves at heavy expense. I am far from denying that the change 
 from silver to gold is attended by loss and inconvenience, but I 
 do not know of any step of social or economic advance which has 
 ever been made without temporary loss and inconvenience both 
 to capital and labor, and the United States were not exposed to 
 any of this loss at all. Mr. Seyd has just published a book, 
 " The Decline of Prosperity, and its Insidious Cause," in which, 
 as the title indicates, he takes a very lugubrious view of things, 
 and ascribes the mischief to the demonetization of silver. This 
 fear that prosperity was declining has come up every fifteen or 
 twenty years for a century or two, especially in England, and 
 yet prosperity and civilization advance. In 1872 coal and meat 
 were dear, and the newspapers were filled with essays about the 
 sufferings of the people on fixed incomes. Then the woes of 
 the agricultural laborers came up, and the farmers were rep- 
 resented as selfish men, gorged with wealth and prosperity. 
 Now meat is too cheap, the turn has come to the landowners, 
 and the farmers are the objects of public concern. Such 
 changes are the inevitable effects of the continual changes in 
 the conditions of industry and the relations of commerce. It 
 is from and by means of such changes that the prosperity of 
 mankind advances. Every great improvement involves changes 
 and readjustments. They are not welcome, but they are un- 
 avoidable. It is not at all improbable that the number and 
 variety of the great improvements of the last twenty years, fol- 
 lowing so rapidly on each other, crossing and combining with 
 each other, necessitating quick and complicated adjustments, 
 may go for a great deal in the present reaction. It is very 
 probable that the next twenty-five years are to see massive 
 migrations of population, and great transfers of capital, from the 
 old to the new countries, which will not be made until suffering 
 has enforced them. It is probable that the value and rent of 
 land will decline in the old countries and rise in the new. It is 
 possible that social, economic, and political changes- are to be 
 accomplished such as we cannot yet guess at. It is certain to'
 
 568 
 
 IHE PRINCETON REVIEW. 
 
 my mind, however, that those years are to be years of unprece- 
 dented prosperity. 
 
 The fall in silver has its share in the temporary disorder, loss, 
 and suffering; but the use of the single gold standard will be one 
 of the strongest supports of the new prosperity. If this were 
 not so, it would be idle to lament over a movement which comes 
 along in the natural evolution of things. To try to stem that 
 movement and turn it back to the old system of repeated em- 
 pirical struggles for a bimetallic circulation, it would be neces- 
 sary for us to be sure of three things : (i) that we understand 
 present phenomena thoroughly,* (2) that we can foresee the 
 results of the movement towards gold, if it goes on, and (3) 
 that we are sure of the working of the gigantic experiment in- 
 volved in the attempt to secure bimetallism, or the alternate 
 standard, by a coinage union. These conditions are absolutely 
 unfulfilled. On the contrary, it seems that international bank- 
 ing is just at the point where its further development, and the 
 transfer of capital from old to new countries, above alluded 
 to, require an international standard of value amongst the great 
 commercial nations such as gold alone can supply. The de- 
 velopment of international banking, in its turn, will economize 
 the use of gold, and thus again defeat the fears of those who 
 think there is not gold enough. The movement, therefore, 
 bears all the marks of a true organic development, in which 
 all the parts contribute to and support each other iii advance- 
 ment to a higher stage. It also seems to me that the fall in 
 silver is precisely adapted to favor those extensions of com- 
 merce and civilization which lie in the near future. South 
 America is still in the lowest stage of economic development, 
 and will find silver its best money for a long time to come. Asia 
 is scarcely yet upon a monetary system, except where Euro- 
 peans have penetrated, and can use nothing but silver to advan- 
 tage for an indefinite future. Africa is an almost untouched 
 continent, which, within fifty years, will probably come into new 
 
 ' The authorities are by no means agreed as to the causes of the fall of silver. 
 This question came up at Paris, and Mr. Feer-Herzog maintained that the key to 
 the phenomenon lay in the state of the East Indian exchanges. (Report, p. 58.) 
 This is the view which I took before the U. S. Silver Committee in 1876, but I 
 have never seen any other confirmation of it.
 
 BIME TA LLISM. 569 
 
 relations to the civilized world. Silver is the only suitable me- 
 dium for this extension of commerce. As far, then, as we can 
 foresee, the cheapening of the tool of exchange by which these 
 extensions of trade and civilization must be carried on will only 
 facilitate them ; and if bimetallism were not an absurdity, and 
 the alternate standard either an injustice or a delusion, and if 
 either of them were practicable, the adoption of either would 
 now be the grandest mistake the civilized world could commit. 
 I attribute no weight to these prognostications of mine. It is 
 contrary to my opinion of sound procedure in such matters to 
 make them at all. I should consider it the most vicious pro- 
 cedure to make such prognostications the basis of argument 
 that any nation or that all civilized nations " ought" to use the 
 single gold standard. The economic development of human 
 society must go on its way and work out its results, and the hu- 
 man race must make the best of them. The race, however, does 
 not make mistakes, and so long as, in all its parts, it obeys the 
 dictates of its interests, it will push on a true evolution which 
 cannot but serve to enhance the prosperity of the race as a 
 whole. It is only when nations allow their action to be dic- 
 tated by speculations about the future of civilization and hu- 
 manity that they may wreck the natural development. It is 
 because these terrors about the future, and prophecies of disas- 
 ter, have been introduced to play so great a rSle on the other 
 side of this question that I venture to set against them the 
 best speculations I can make as to the probable course of 
 affairs. 
 
 Postscript. — After the above was in type my attention 
 was called, by an editorial in the New York Tribune, to a recan- 
 tation by Mr. Gibbs of the opinions maintained by him at the 
 .Conference at Paris. The plan of my article was to make an 
 independent discussion, and not to examine the literature of bi- 
 metallism beyond the Report of the Monetary Commission. 
 When, however, a journal which has sustained a uniformly 
 sound and strong position on monetary questions referred to 
 Mr. Gibbs' pamphlet in the terms used by the Tribune, it 
 seemed that here perhaps a bimetallist might at last be found
 
 570 
 
 THE rRINCETON REVIEW. 
 
 who had some clear ideas, and could state them so as to bear 
 examination. I therefore hastened to secure a copy of Mr. 
 Gibbs' pamphlet,' and also a copy of his letter to Cernuschi an- 
 nouncing his conversion, and Cernuschi's reply to the same.' 
 My hopes of finding something in these pamphlets solid enough 
 to bear examination for purposes of discussion are all disap- 
 pointed. 
 
 Mr. Gibbs has simply gone over to the bimetallic fallacy, 
 and accepted it in its grossest and crudest form. He has pro- 
 duced no new arguments for it and refuted no objections against 
 it. Incidentally he has shown that the ex-Governor of the Bank 
 of England holds, in regard to money, all the fallacies which 
 constitute the premises of our soft-money men ; and if he does 
 not agree with them in their conclusions, it is only because he is 
 less logical and consistent. This, however, might be said of all 
 bimctallists. The Tribune s estimate of this pamphlet adds the 
 greatest possible weight to the motive for my article as stated 
 in the first paragraph thereof. I am therefore led to counteract 
 that estimate by amplifying one or two points which I had 
 passed over briefly, and by inserting one or two which I had 
 judged better to omit, in order to iiiow the real significance and 
 value of what Mr. Gibbs has contributed to this controversy. 
 
 I. Mr. Gibbs' conversion to bimetallism is due to observa- 
 tion of the losses incurred in Indian finances and Indian trade. 
 He assumes that these losses are due to the fall in silver, and he 
 attributes the fall in silver to demonetization. Hence he ar- 
 gues : Remonetize ; that will restore silver ; that will stop the 
 losses. It is a pity that the matter is not so simple. I con- 
 sider it an error to attribute the losses in the India trade 
 to the fall in silver. The fall in silver is not a cause, but 
 a consequence. The financial relations between England and 
 India after 1870 took such shape that the " tribute," as it is 
 called, had to be paid by an excess of exports over imports of 
 India. This could only be accomplished by a fall in prices in 
 India, Nevertheless Europe desired to continue to sell silver 
 to India, while the relation just mentioned would have led 
 
 ' "Silver and Gold," by Henry H. Gibbs, London, 1879. 
 
 ' " Bimetallism in England and Abroad," by Henri Cernuschi, London, 1879.
 
 BIMETALLISM. 
 
 571 
 
 India todesist from buying it. Instead of :s.faHm prices (silver 
 remaining stable) there therefore has occurred the exactly equiv- 
 alent phenomenon of a fall in silver zvitJioiit any rise in prices. 
 In countries which have a depreciated paper currency prices rise 
 as the medium falls, and so the foreign trade quickly adjusts itself. 
 If prices had risen in India there would have been no trouble ; 
 but the forces which would have forced a fall in prices if silver 
 had held firm have prevented a rise in prices while forcing a 
 fall in the medium. A crisis in the Indian exchanges was 
 therefore inevitable in some form or other. Instead of taking 
 place through prices, it has taken place through the medium — 
 silver — and the fall in silver, is a consequence and not a cause. 
 This relation of facts accounts for the fall in silver, and nothing 
 else does. The silver thrown on the market by demoneti- 
 zation and by a somewhat increased production (which has 
 been greatly exaggerated) by no means account for the fall. 
 The increased supply fell on a weak market, and had accessory 
 influence, but it does not suffice to account for the principal 
 effect. It follows that it is a great error for those who 
 suffer from losses in the India trade to ascribe their troubles to 
 the fall in silver, and that their troubles cannot be cured by any 
 currency devices. While India has so much interest to pay in 
 England on borrowed capital, to which she has not yet grown 
 up, and while she has to pay in England for an expensive govern- 
 ment, to which also she has not yet grown up, she will be a 
 worse country to sell in and a better one to buy in than for- 
 merly. However, if English merchants and bankers interested 
 in the India trade could sell their silver to somebody for the old 
 price, it is obvious that they could save themselves from the 
 effect of these changed circumstances in the relations of the two 
 countries. 
 
 2. This last observation leads me to amplify what I have said 
 under VI., i. I have shown there that the alternate standard 
 would only transfer risks and losses from those to whom they 
 belong to somebody else. A fortiori bimetallism, if it were 
 practicable, would throw all risks and losses, all the time, on the 
 creditor classes. Gibbs and Cernuschi seem to be entirely blind 
 to this character in their propositions, and they do not see that 
 whatever they gain for some must either be won out of others
 
 272 THE PRINCETON REVIEW. 
 
 or otit of nothing, as I have shown in my main argument. To 
 show this more fully, let us observe the difference for different 
 classes between the significance of a fall in gold and the signifi- 
 cance of a fall in silver. The effect of a fall in gold (rise in 
 prices) would fall on annuitants, pensioners, owners of bonds, 
 etc., beneficiaries of trusts and life assurances, salaried and pro- 
 fessional men, wage-receivers, and, generally, on all who have 
 either temporarily or permanently fixed incomes. These are 
 the persons whom I designate as the creditor classes, A fall in 
 silver, as things stood in 1873, affected producers, exchangers, 
 and bankers in certain great lines of business. A fall in gold 
 would therefore affect a large number of small, weak, and scat- 
 tered recipients of money incomes, belonging to different classes 
 and having no co-operation or even acquaintance with each 
 other. A fall in silver affects great " interests," each of which 
 is marked by very strong cohesion of its parts within itself, and 
 all of which are capable of sudden and easy combination. The 
 former have little power or chance to defend themselves ; the 
 latter are powerful and influential in speech, writing, and legis- 
 lation. The former never attract public attention; the latter fill 
 the public eye and are thought of whenever money, capital, trade, 
 or industry are thought of. The losses of the latter make up ap- 
 palling figures in the statistics of bankruptcy. The losses of the 
 former figure in no statistics, since they consist in privation, mis- 
 ery, disease, and earlier death for those affected directly and for 
 their dependants. The losses to producers, exchangers, and bank- 
 ers are what govern the opinions of Mr. Seyd, and now, too, 
 have converted Mr. Gibbs. It is indeed cause for great re- 
 gret that such losses should occur, and if there were any means 
 of averting the loss altogether, the matter would bear a very 
 different aspect. But there is no such means. There is noth- 
 ing possible but an alternative, either to leave the losses where 
 they fall by the circumstances of the case, or to throw them on 
 somebody else ; and nothing is proposed in these monetary 
 schemes save to throw the losses on those who would have suf- 
 fered if the fall had been in gold instead of in silver. Now when 
 gold has fallen (prices have risen), notably in 1 870-1 873, the 
 classes who were affected had to make the best of it without 
 aid from those interested in silver, and so the prqoosition that
 
 BIMETALLISM. 
 
 573 
 
 England shall now adopt bimetallism, when stripped of all dis- 
 guises, is simply another case of the old abuse whereby a few 
 strong, well-organized interests, acting through currency legisla- 
 tion, play at " heads I win, tails you lose" with the large, scat- 
 tered, unorganized mass of the nation. English statesmen may 
 possibly upset the monetary basis on which all relations of prop- 
 erty and credit in England rest, in order to alleviate a temporary 
 strain on some branches of foreign trade, and on the finances 
 of India; but those who have to rely on American newspapers 
 for their information and impressions of what is likely to be 
 done in this matter in Europe will do well to nourish an active 
 incredulousness. Those Americans who have to rely on the 
 Hon. W. D. Kelly's reports of interviews between himself and 
 Bismarck for judgments as to the probable course of Germany 
 will do well to allow for other elements in the report than the 
 probable power of Mr. Kelly to inspire the Prince with expan- 
 sive and familiar confidence. Mr. Kelly is a man of enthusias- 
 tic imagination, and it appears probable that he and Mr. George 
 Walker are just the kind of men to excite the well-known pro- 
 pensity of the German Chancellor to befool people by an osten- 
 tatious and effusive frankness while laughing at them in his 
 sleeve. A great deal has been said about the zeal, dogmatism, 
 and fanaticism of the advocates of the single universal gold 
 standard. I do not know who these persons are, nor what they 
 have done. The only persons who, in regard to this monetary 
 question, have organized a sect, adopted a creed, undertaken a 
 propaganda, and sent out missionaries, so far as I know, are the 
 bimetallists. It is charitable to believe that they do not seethe 
 political and social significance of their propositions, but that 
 statesmen will not see this long before action is adopted is very 
 improbable. 
 
 Now Mr. Gibbs has just found out that the trade between 
 India and England is barter. He is astonished and alarmed at 
 this. He thinks this kind of trade uncivilized and attended by 
 loss to England. He attributes the evil to English gold mono- 
 metalhsm, and thinks that the evil effects have been counter- 
 acted until recent years by the French law. If it be true, how- 
 ever, as Mr. Gibbs and the other bimetallists argue, that France 
 has done this service by her law, now to gold-using Englishmen
 
 574 THE PRINCETON REVIEW. 
 
 and now to silver-using Germans, then France, through her 
 creditor class, has borne burdens and losses which belonged to 
 other people. Such being the case, we could see why English- 
 men and Germans should want the French law to continue, but 
 we should also see why Frenchmen, so soon as they understood 
 it, would certainly want it to stop ; and, if universal bimetalhsm 
 could be or should be established, the next question would be. 
 What class, under the new system, is to take the place formerly 
 filled by the French creditor class and bear the burdens formerly 
 borne by them ? 
 
 Such is the inference from Mr. Gibbs' premisses, but the 
 premisses are false. Trade with India is barter, but so is all 
 trade, and foreign trade most plainly. The trade for silver has 
 involved inconveniences which will exist until all the world uses 
 a single and universal standard of value. This inconvenience 
 has been paid for, as all other hindrances and difticulties of trade 
 are paid for, in prices. The French mint law has had nothing 
 to do with it. Finally, the French creditors have lost whenever 
 the ratio of the metals has varied so as to change the metal of 
 the French coinage. This loss, however, has been borne once 
 for all ; it has not continued after prices have been readjusted ; 
 and has not therefore been constant under the operation of the 
 double standard. 
 
 Cernuschi, in his reply to Gibbs, gives far more gross expres- 
 sion to the same fallacy about the operation of the French law 
 to prevent losses ; for he attaches it not to English traders, 
 but to all metal producers. "At the time of the French 15^' 
 the position of the producers of gold and silver was this- all 
 their produce had by law an unfailing and insatiable customer 
 —the mint. No price to haggle about, no competition possible." 
 A customer by law ! The mint a customer ! ? In some large 
 establishments, as a check on salesmen, one person is stationed 
 at a counter to weigh, measure, and count all goods for which 
 the salesmen have made bargains with the customers. It would 
 be as sensible to call this person the " unfailing and insatiable 
 customer" for all the goods sold in the establishment as to call 
 the mmt a customer for gold and silver. This gross error, how- 
 ever, IS the cloak which covers the fallacy and the injustice of 
 bimetalhsm. The law does provide a customer, but it is not the
 
 BIMETALLISM. 
 
 575 
 
 mint. It is the creditor class as above defined. There is " no 
 price to haggle about and no competition to fear" because the 
 law has delivered the victim over helpless, all the more helpless 
 because he is ignorant, the law having concealed the transaction 
 under mysteries of coinage and money. This, however, is the 
 most direct condemnation of the law itself, as well in an economic 
 as a social or pohtical point of view. It is a fallacy to think the 
 mint law has secured the producers of the metals against loss 
 and haggling and competition — that is, against all the inevitable 
 annoyances of industry without hurting anybody else ; and it is 
 an injustice to take the annoyances from one industry only to 
 spread them over others. I do not like to say anything which 
 may appear arrogant and unbecoming, but I feel justified in 
 protesting, in the name of all that scholars and scientific men 
 respect, that a man who calls the mint an " unfailing and insa- 
 tiable customer" does not deserve respectful treatment in the 
 arena of scientific discussion. 
 
 Mr. Gibbs sees that bimetallism involves depreciation, but he 
 thinks the evils of it are in this case more nominal than real. 
 The only distinction which men generally make between nomi- 
 nal evils and real evils is that my evils are real and yours are 
 nominal ; but that is not a valid distinction which science or jus- 
 tice can recognize. Mr. Gibbs seems to think the evils of de- 
 preciation nominal because they would be widely scattered and 
 much concealed, as I have shown above. All evils, however, are 
 real to those who suffer them. If they come from nature, like 
 blight, drought, storms, inundations, and other calamities, they 
 must be borne as philosophically as possible. If they are in- 
 flicted by legislation, or are transferred by legislation, nothing 
 can justify or belittle them. Mr. Gibbs wants silver remone- 
 tized, not at its present market value, but at the point where it 
 will be when the bimetallic system shall have operated on it. 
 He has not comprehended the full problem which he has to 
 solve. It is this: (i) If in England, for instance, silver is rated 
 at its present market value, all the silver now in England loses 
 20 per cent of its present value. (2) If silver is rated at the 
 point to which the bimetallic system will bring it up, no one but 
 Cernuschi knows where that will be. If a guess is made, and 
 silver is rated above the market, no debtor will want it, and so
 
 576 THE PRINCETON REVIEW. 
 
 the bimetallic system will never begin. (3) If silver is rated at 
 the market to begin with, and if the mint ratio is advanced as 
 the market ratio advances (assuming that bimetallism would 
 work), then continual recoinage, with heavy expense and endless 
 confusion, will result. I hope that it is plain, then, that the bi- 
 metallists of every grade and description are either trying to 
 transfer losses from one group of men to another, or else trying 
 to make something out of nothing. 
 
 3. It also seems desirable to notice another error of bi- 
 metallism which I had passed over; that is the notion that 
 demand due to a fall in price raises price. This doctrine is 
 essential to the bimetallic theory, and it has been carelessly 
 conceded by some who are not bimetallists. I passed over it in 
 the body of my article because it is the fallacy of that extreme 
 form of bimetallism in which it is believed that the coinage 
 union will lock the two metals so tight together that they will 
 never separate from the legal ratio any more, because there will 
 be no one to whom to sell the rising metal. Every bimetallist 
 would be driven to this doctrine if he followed out his notions 
 consistently ; but the bimetalHsts repudiate it generally when it 
 is ascribed to them. Mr. Gibbs, however, explicitly accepts this 
 notion, and assumes that the bimetallic union would lock the 
 two metals permanently together as such an undoubted fact 
 that it is his chief rehance for refuting objections. Demand due 
 to a fall in price tends to sustain price at the lower level, but not to 
 raise price, since such demand ceases when the price rises. If 
 we have a bimetallic circulation at 15^ to i, debtors do not 
 want silver at or below 15^ to i, but only below. Their demand 
 will only act on it so long as it stays below ; therefore their 
 demand never can lift it again to 15^ to i. But meanwhile their 
 demand is acting to sustain it only by absorbing any new supply 
 through real purchases. So long, therefore, as there is a new supply, 
 the price must remain below 15^ to i, and that new supply must 
 be absorbed. But this is destroying the bimetaUic and concur- 
 rent circulation just so far as it goes on. The bimetallists seem 
 to think that, if silver fell, the debtors of the world would all 
 pounce upon it so unanimously and immediately that it would 
 not fall. This is absurd in the statement, and it is absurd in 
 every detail of fact. New silver does not rain down in an equal
 
 BIME7ALLISM. 
 
 577 
 
 deposit over the earth. It comes into human society at certain 
 points. Hence the world-wide demand cannot be concentrated 
 on it. Any demand which does act on it can do so only by real 
 transactions under price fluctuations. This fallacy, therefore, 
 reminds us again of perpetual motion, wherein it is believed 
 that we can get effect out of a force without action, reaction, 
 and " escapement." 
 
 4. To meet another point somewhat more explicitly than I 
 have done it above, let me say that if any nation which now 
 uses gold finds that its interests are not served thereby, and 
 thinks that silver would serve them better, it has only to make 
 the experiment on its own risk and responsibility. If it suc- 
 ceeds, others will imitate it, and the inferences now made from 
 the past action of nations will have to be modified. So far the 
 nations have always acted as if they knew they were about to 
 commit folly and incur loss whenever they have taken up any 
 projects about silver, and they have insisted on first joining 
 hands so as to all go into the evil together. We wait, then, for 
 the first nation to give up gold and take silver because it thinks 
 silver will serve its interest and convenience better. Mr. Gibbs 
 is as anxious lest England should become a silver nation as any 
 "gold monometallist" possibly could be. 
 
 5. If, then, we are asked which nations will take gold and 
 which silver, and why any should take silver, and, if none take 
 silver, where gold enough is to come from, we answer : (i) That 
 it is not possible or necessary to tell a priori who will take silver 
 and who gold. (2) All would prefer gold, and the world will 
 probably ultimately come to use only a single universal standard 
 of value, just as it probably will come to use single and uni- 
 versal standards of weights and measures. This, however, is only 
 an anticipation which it must be left to time and the develop- 
 ment of civilization to realize. At present it has no importance. 
 If it is a correct anticipation it is fruitless ; if it is an incorrect 
 anticipation it is harmless. (3) If it is said that "there is 
 not gold enough," that assertion is senseless unless we add : 
 " to sustain prices and credits at their present level." If, 
 then, there is not enough, in this sense, the nations will com- 
 pete for gold until those to whom its advantages are worth 
 most get it, because they give most (goods) for it. Others will
 
 578 THE PRINCETON REVIEW. 
 
 drop out of the competition for gold and take silver when- 
 ever its comparative cheapness more than counterbalances its 
 inferior utility. So then, if there is not enough gold, we will 
 use silver, and those will take some silver who think it for their 
 interest, all things considered, so to do. 
 
 William G. Sumner. 
 October 25, 1879.
 
 March, 188L 
 
 THE ARGUMENT AGAINST PROTECTIVE TAXES. 
 
 THE most absurd assertion which can be put into language 
 is that a thing {e.g., free trade) is true in theory but is false 
 in practice. For, if free trade is not true in practice, something 
 else, viz., restricted trade, is alleged to be true and beneficial in 
 practice. It will therefore be a matter of scientific investigation 
 to find out how restriction acts, what forces it brings into action, 
 what are the laws of those forces, what are the conditions of 
 successful restriction, etc. etc. — in short, to find out the theory 
 and philosophy of restriction. The theory thus found will be 
 " true" because deduced from observation and ratified by experi- 
 ence. But it was conceded, at the outset, that free trade is true 
 in theory. Hence it would follow, if free trade is true in theory 
 but not in practice, that two opposite and contradictory propo- 
 sitions about the same subject-matter could both be true at the 
 same time. This is the height of absurdity. Any one, there- 
 fore, who makes this assertion is either guilty of very loose 
 thinking, or else he seeks an escape, at all hazards, from rational 
 conclusions against which he can no longer contend. 
 
 There remain two possible positions which a protectionist 
 may assume : 
 
 I. He may boldly declare that there is a science of wealth 
 based on restriction ; that he can discover the principles of it 
 and reduce them to a theory ; that trade between countries is a 
 mischievous thing, at least if it runs on parallels of latitude ; that 
 isolation and antagonism of nations is the law of nature upon 
 which wealth and civilization depend ; that there is therefore no 
 universal science of wealth, but only a national science of wealth, 
 and that this science, in its final analysis, is only a generalization 
 from certain empirical maxims of economic policy. This is the
 
 242 THE PRINCETON REVIEW. 
 
 position of the dogmatic or philosophical protectionists, who 
 seek to give a certain abstract and philosophical cast to their 
 speculations. It is the position of the List-Carey school, whose 
 " unscientific science and unhistorical history" (as Roscher called 
 it) seems to impose with such weight on some people. It is a 
 view of the matter which is especially cultivated now by the 
 learned protectionists of Germany, and which issues in some of 
 the most remarkable curiosities of economic Hterature which 
 have ever been produced either by the learned or the unlearned. 
 
 2. The other ground which the protectionist may take is that 
 protection does not increase wealth, but is, for some reason or 
 other, expedient. 
 
 In taking up again now the effort to put into simple, brief, 
 and comprehensive form the argument against protection, I will 
 separate these two modes of defending protection and take them 
 in order. It is obvious that the two positions are inconsistent 
 with each other, and every one who is familiar with the history 
 of this controversy knows that its fruitlessness has been due, in 
 a large measure, to the ambiguities, false definitions, and confu- 
 sion which have prevailed in it. It has been a constant phe- 
 nomenon in the discussion that the expediency of protection, in 
 spite of the harm done by it, has been argued, and then the 
 general utility of protection has been assumed as resulting from 
 the argument. I do not know of any disputant on the protec- 
 tionist side who does not move from one to the other of these 
 positions, as his convenience or the pressure of the argument 
 may force him, or who does not confuse them with each other. 
 
 It will be noted also that my point of attack is protection un- 
 der any form or in any degree, and not import duties or taxes 
 on consumption. This distinction can perhaps best be brought 
 out by examining one of the peculiar and whimsical notions 
 which avail to keep people from actually examining the matter 
 in issue, viz., the notion of " revenue tariff with incidental pro- 
 tection." The people who believe that this jingle of words has 
 any meaning in it must believe that the same man in supplying 
 his needs does it at the same time in two ways, by importing 
 and by buying at home too. If A wants a ton of iron and im- 
 ports it, he pays duties on it which go to the public treasury. 
 Not a cent for this transaction goes to the American producer
 
 THE ARGUMENT AGAIN SI PROTECTIVE TAXES. 245 
 
 of iron. This is why the American producer is so often heard 
 ^o cry out in horror at the amount imported. If B wants a ton 
 of iron and buys it at home, he pays the protective taxes to the 
 home producer, and not a cent goes in revenue to the public 
 treasury for that transaction. What incidental relation exists 
 between these two transactions ? They are independent and 
 exclusive of each other. If we discard the empty formula of 
 •' revenue with incidental protection," we find that we are sim- 
 ply face to face with the problem of free trade vs. protection, or 
 revenue vs. protection, as in the first place. Nothing has been 
 done by this formula towards solving either of those problems. 
 A only wanted one ton and took one way of getting it. B 
 only wanted one ton and took another way of getting it. The 
 question why either of them chose the course he did choose, 
 and what the effects were on the interests of either of them, and. 
 on the welfare of the country, of the tax laws in question, re- 
 mains still all before us. What is clear is only that protection 
 and revenue are exclusive of each other. They do not overlap 
 •each other at all. The line between them is sharp and precise, 
 and we can discuss the wisdom of protection entirely aside from 
 the wisdom of raising revenue from customs duties. The latter 
 question shall not therefore now be taken into account, and we 
 confine our attention only to the former. 
 
 In this connection we may also dispose of another of the 
 glib commonplaces by which people get rid of the trouble of 
 thinking about the tariff controversy : that we have a large debt 
 and therefore must have a high (protective) tariff. It is evident, 
 since protection and revenue exclude each other, that not one 
 cent which is paid in a protective tax goes into the public treas- 
 ury or helps to pay either the principal or the interest of the 
 debt, while, on the other hand, every cent paid in protective 
 taxes lessens the power of the citizen to pay revenue taxes for 
 the discharge of the public burdens. Hence the fact that we 
 have heavy public burdens is just the reason why we cannot 
 afford to squander our means in paying taxes to our neighbors 
 for carrying on (as they themselves allege) unproductive indus- 
 tries. The especial iniquity of the present tariff, in a political 
 point of view, is that it was laid under the cover of war taxes, 
 taking advantage of the popular ignorance of the relation be-
 
 244 THE PRINCETON REVIEW. 
 
 tween protection and revenue, and of the popular willingness 
 to submit to taxation for the purpose of the war. To argue 
 that we want protective taxes because we have a large debt to 
 pay is Hke arguing that a man ought to squander his income in 
 benevolence because his means are just now being strained by 
 an expensive lawsuit. 
 
 Having disposed of these notions which interfere with the 
 approach to the real merits of the question, we may consider 
 first whether protection can increase the wealth of the country. 
 
 I. The problem of economic science is presented in the ratio 
 between the efforts which men have to exert to supply their 
 material needs and the amount and excellence of the food, cloth- 
 ing, lodging, furniture, fuel, etc., which they obtain. Political 
 economy investigates the laws which govern this ratio so as to 
 lind out how we may determine the ratio as much as possible in 
 our favor. Throwing aside all technicalities, the case is to find 
 out how, for a given exertion and sacrifice, to get the maximum 
 of material good. I maintain against any system of restriction 
 whatsoever that it renders that ratio less favorable to men than 
 it would be under freedom, taking the arts and sciences, the land 
 and the population, as they are in the country where restriction 
 is applied. Instead of increasing wealth, it is mathematically 
 demonstrable that it lessens wealth, makes it harder to get a liv- 
 ing and lowers the comfort of the population, and that it does 
 this by taking away one man's earnings to give them to another. 
 I mean to say that a man must work harder and longer to get a 
 given amount of product under protection than under free trade, 
 and I mean to say that this state of things is due to the statute 
 law, which steps in and takes away part of his product and gives 
 it to another man. The issue is purposely stated here without 
 the use of any of the technical terms of political economy, be- 
 cause the simpler and homelier the language is the more cor- 
 rectly does it state the question, both in its economic and its 
 political aspects, both in its scientific and in its popular signifi- 
 cance, free from all admixture of either sentimental or pedantic 
 rubbish. The economic question about the tariff is: Does it 
 enable the population of the country to command greater mate- 
 rial good for a given effort ? The political question about pro- 
 tection is : Does the statute enacted by the legislature alter the
 
 THE ARGUMENT AGAINST PROTECTIVE TAXES. 245 
 
 distribution of property so that one man enjoys another man's 
 earnings? Has the state a law in operation which enables one 
 citizen to collect taxes of another? The scientific question about 
 protection is : Does it lessen the ratio of effort and sacrifice to 
 comfort and enjoyment ? The popular question about protection 
 is : Does it prevent me from supporting myself and family, by my 
 labor, as well as I could do it if there were no protective taxes? 
 
 The philosophical protectionists at once reply that this is 
 not the question, or at least not the whole of it. To them po- 
 litical economy is not an independent science. They are not 
 willing to consider the question of wealth aside from other 
 things. They want to embrace in the view what they call 
 moral, political, social, aesthetical, and sentimental considera- 
 tions. Their instinct is perfectly correct when they oppose 
 those operations of analysis and classification which would in- 
 troduce clearness and precision into the discussion. The part 
 of social science which has the most positive and mathematical 
 character is the one against which they cannot stand. They 
 write no books on political economy, but always on social sci- 
 ence, in order to keep the clear mixed with the unclear, the 
 physical with the metaphysical, the positive with the arbitrary. 
 They are eagerly followed by all the popular orators and writers 
 on economic questions, and generally by those metaphysicians 
 and students of other sciences who take part in sociological dis- 
 cussions, and almost always prove themselves the most reckless 
 dogmatizers when they do so. The attraction of the a priori 
 method, and of abstract and general propositions for ill-trained 
 men, is well known, and, generally, in proportion as one is un- 
 trained in a particular science (whatever may be his status in 
 others) will be his readiness to fly to a priori methods and to 
 dogmas which are conveniently vague, loose, and broad, when 
 he engages in the discussion of questions appertaining to the 
 science in which he has not been trained. 
 
 Mr. Carey, for instance, filled his books with vague diatribes 
 about "association." He thought to have found a great prin- 
 ciple under this name. He wanted to break off all the natural 
 ties and bonds of mankind in order to piece the parts together 
 again on a plan of his own. He accordingly wrote big books 
 on "social science," and he never reached the first conception of 
 17
 
 246 THE PRINCETON REVIEW. 
 
 the forces which may truly be called social, or the laws by which 
 they act. He and his school, in this country and in Germany, 
 have never learned to see the great bonds of human society which 
 are developed by intercourse and communication, which hold 
 the nations to a mutual giving and taking as they grow in civili- 
 zation, which are stronger in proportion as they are natural, 
 informal, impersonal, spontaneous, and in comparison with 
 which all artificial co-operation is ridiculously insignificant. For 
 our present purpose, however, the thing to note is that social 
 speculations and sociological investigations have nothing what- 
 ever to do with the tariff for protection. They only obscure and 
 confuse the tariff question. If we should classify them we should 
 find that they are either broader generalizations which flow neces- 
 sarily from sound economic principles, and so can be left to take 
 care of themselves while the economic investigations are going 
 on ; or else they are sociological doctrines which are parallel 
 with sound economic doctrines, but which are most successfully 
 pursued in special investigations; or else (which is by far the 
 largest class) they are sentimental whims, popular notions, and 
 metaphysical dogmas, which are not true, or at best are only 
 half true, but which cannot be refuted without allowing the dis- 
 cussion to fritter itself away in innumerable side issues. We 
 have to understand that an economic investigation may be car- 
 ried on just as independently as a chemical or physical or bio- 
 logical investigation. The economist does not need to be on 
 the lookout all the time to correct his results by reference to 
 some outside considerations, or to the dogmas of jejune and 
 rickety systems of metaphysical speculation. On the contrary, 
 he should regard the introduction of extraneous elements, no 
 matter under what high-sounding names, of moral, political, and 
 social, as sure signs of impending confusion and fallacy, and he 
 should especially repel any attempt to measure and criticise his 
 results by the facile generalizations of a priori speculation. So 
 much being here briefly set out, we may devote ourselves to the 
 question of protection as a question of wealth and pohtical econ- 
 omy only, as above described. 
 
 Let us take the case of a new country. It is claimed that a 
 •new country needs protection in order to get a start. Mill 
 seemed to make some concession to this case. I have heard a
 
 THE ARGUMENT AGAINST PROTECTIVE TAXES. 2\1 
 
 man who was not a protectionist and who was a professional 
 economist say that he thought a new colony might get into a 
 situation in which it might need a lift to move it on in the way 
 of growth. I will take up this latter view of the matter for dis- 
 cussion because it is the case which, if disproved, will a fortiori 
 carry all the other forms of this claim with it. 
 
 I pass over the practical difficulty involved in the question 
 who is to decide when the juncture supposed has come about, 
 and who is to prescribe or give the lift ; I pa-ss over the unsci- 
 entific and incorrect conception of econonic forces involved in 
 the hypothesis that a nation can get into any such position, and 
 also in the notion of a " Hft" to be given to a nation, in order 
 that I may come to the real test of the remedy proposed, if the 
 case could arise, and if the remedy were practically available. It 
 is evident that a protective tariff cannot render any foreign capi- 
 tal or labor available to help the nation which lays the tariff. If 
 a nation lays import duties for revenue some part of them may 
 fall on the foreigner, but if it lays such duties for protection it 
 keeps foreign goods out. If, then, the foreigner stays at home 
 and is forced to keep his goods at home, the protecting country 
 cannot make use of him or his goods in any way whatever to 
 suit its ends or avert its misfortunes. Whatever effect the pro- 
 tective taxes exert must be exerted in the protecting country, 
 on its own labor and capital. Any favor or encouragement 
 which the protective system exerts on one group of its popula- 
 tion must be won by an equivalent oppression exerted on some 
 other group. To suppose the contrary is to deny the most obvi- 
 ous application of the conservation of energy to economic forces. 
 If the legislation did not simply transfer capital it would have to 
 make capital out of nothing. Now the transfer is not simply 
 an equal redistribution ; there is loss and waste in the case of any 
 tax whatsoever. There is especial loss and waste in the case of 
 a protective tax. We cannot collect taxes and redistribute them 
 without loss ; much less can we produce forced monopolies and 
 distorted industrial relations without loss. It follows then that 
 if a nation could come into some temporary industrial compres- 
 sion or arrested growth, a protective tariff not only would not 
 help it out, but would contribute to still further limit its powers 
 of self-development and to restrain its recuperative energies.
 
 248 THE PRINCETON REVIEW. 
 
 We have then reduced the issue which we are discussing to 
 such terms that, after analyzing the phenomena, we are abfe to 
 test the protectionist theory by universal canons of science, and 
 we have a mathematical demonstration that protection is a delu- 
 sion, which, like bimetallism, f^at money, socialism, and utopian- 
 ism, is an attempt to make something out of nothing, or to 
 create energy by law. 
 
 Here we shall be met, however, by the people who insist on 
 believing that a better organization of labor, or greater activity 
 of labor, or some other advantage which is real altho not spe- 
 cific, more than offsets the injury, or that the injured ones par- 
 ticipate again in some vague gain. It is very singular that the 
 people who believe in these notions are so slow to understand 
 the fact that whatever lessens the wealth of a communitv, in the 
 widest generalization or deduction only lessens its weafth ! and 
 cannot possibly increase it, and that the result is either to lessen 
 the wealth per capita, or, if some do not become poorer, then 
 others must be rendered still more poor. The protective' tariff 
 must act on people who without it would distribute their indus- 
 try according to the chances of the greatest profit. The tariff 
 is needed, by the protectionist hypothesis, in order to counteract 
 the distribution which is thus brought about. But the tariff 
 itself can appeal to no motive save that of desire for profit. It 
 does so by providing that a certain industry shall, under pro- 
 tection, pay higher profits than it could under freedom, and it 
 expects that this inducement will operate to make labor and 
 capital seek this industry. If then desire for profit was not a suf- 
 ficient and wise guide under freedom, what makes it such under 
 protection ? The notion that the legislature has a wisdom greater 
 than that of the people, and can point out the industries they 
 ought to pursue, has often been refuted; but the protective 
 theory really assumes more than that. It assumes that the law 
 can enlighten the desire for profit, and make it a more trust- 
 worthy guide than it would be under freedom. In truth there 
 is nothing at all wanted in the cases to which protection is ap- 
 plied but capital, which the law can never produce. The effi- 
 ciency of the tariff is that it does get this capital-from other 
 people. The rest is all phrases intended to occupy attention 
 while the thimblerig is going on. If this is not so, let some pro-
 
 THE ARGUMENT AGAINST PROTECTIVE TAXES. 249 
 
 tectionist analyze the operation of his system, and show by ref- 
 erence to undisputed economic principles where and how it 
 exerts any effect on production to increase it. Customs some- 
 times grow up under the efforts of men to bring about arrange- 
 ments which will be convenient for industry and commerce. The 
 law can often follow these customs, recognize them, and give 
 them positive form. Institutions grow out of needs, and to meet 
 purposes, to which institutions the law can give form and sanc- 
 tion. I know of nothing more than this which the law can do 
 for industry. 
 
 What has been proved now of a new country holds true all 
 the more of an old one. The only difference is that a new coun- 
 try may endure protection while an old one cannot. A new 
 country which produces, as all new countries do, food and raw 
 materials may create parasite industries to live on the exuber- 
 ant productions of its natural industries, and on the special ad- 
 vantage in exchange which a new country has when it exchanges 
 food and raw materials for finished products. An old country 
 cannot exclude food and raw materials. In a new country the 
 burden of the tariff system falls on the superfluity of the people 
 — superfluity not in respect to what they would like to have, but 
 in comparison with what people in old countries have. In an old 
 country there are large classes of persons who are at best on 
 the verge of poverty, and who are forced to labor hard and for 
 long hours to win subsistence. Taxes on food and raw mate- 
 rials would crush these classes down to misery. Germany is 
 trying it with a tariff which is quite insignificant compared with 
 ours. What I have proved, therefore, with regard to the effect 
 of a protective tariff in a new country holds a fortiori in an old 
 country, and is true universally. A restricted trade lowers the 
 physical well-being of the population, and, with that, all chance of 
 intellectual and moral well-being, below what it would be under 
 free trade, with the same conditions of labor, capital, and land. 
 
 II. I go on then to consider the other protectionist position : 
 that protection is not a means of wealth, but is temporarily ex- 
 pedient. 
 
 Under this head the controversy has rambled over the whole 
 field of economic speculation, embracing also all history and all 
 statistics, and here also the vague sentimental and metaphysical
 
 250 THE PRINCETON REVIEW. 
 
 considerations have had the greater scope, as this is the more 
 popular branch of the controversy. I propose to notice only two 
 or three of the arguments for the expediency of the protective 
 tariff, and those I must take more by way of illustration. 
 
 During the recent political campaign the chief argument 
 which was used was that the tariff made wages high. I have 
 before me a circular which was widely distributed in which wage- 
 receivers were told that free trade would' either force employers 
 to close their shops or to reduce their wages to foreign rates. 
 In Germany the argument is that English workers get higher 
 wages, which proves that they are better workmen, and that the 
 Germans need protection against them. In America the argu- 
 ment is that the Englishmen do not get as good wages as the 
 Americans, and that therefore the Americans need protection. 
 The advantage of an empirical argument is that it goes as well 
 one end foremost as the other. Suppose the Germans should 
 argue like the Americans. They would then have to argue that 
 free trade would raise their wages to the English rate, as the 
 Americans argue that free trade would lower their wages to the 
 English rate. Suppose the Americans should borrow the Ger- 
 man argument. They would then have to argue that, as the 
 Americans get higher wages, it proves that they are better 
 workmen than the English, and need no protection against 
 them, and a fortiori none against the workmen of the Continent. 
 
 There is one entirely American element in this argument, 
 however. That is the claim or assumption that the high com- 
 fort of the American laborers is due to the tariff. One orator 
 during the last campaign, who spoke with the authority of high 
 ofificial position, spoke with contempt and impatience of the low 
 plane on which this tariff question is discussed, as if it were a 
 mere question of dollars and cents, when in fact it is a question 
 of status of the population and of the well-being of the wages 
 classes. 
 
 We must distinguish here two propositions about wages 
 which are constantly confused with each other, and which the 
 protectionists find it very useful to confuse, altho they are in- 
 consistent with each other, and both are false. 
 
 It is argued (i) that we want protection because wages are 
 high, and (2) that we want protection in order to make wages
 
 THE ARGUMENT AGAINST PROTECTIVE TAXES. 25 1 
 
 high. To the legislature the high wages are represented as 
 caused by some independent forces, and as a fact in the condi- 
 tion of the country which constitutes a reason for protection. 
 To the workman it is argued that, the politicians and the em- 
 ployers having considered the matter and agreed that the 
 American workingman ought to be well fed, clothed, etc., they 
 have decided that he must have high wages, and that the tariff 
 is the way to get them for him. This picture of the employers 
 neglecting their business to lobby for a rise in the wages of their 
 own men would be entertaining if it were not really so success- 
 ful in deceiving those to whom it is addressed. The two branches 
 of this argument about wages demand separate consideration. 
 
 I. Sociology is such a new science, and is as yet so little un- 
 derstood, that it is not strange if its doctrines have not yet 
 spread very far through the community, but a superficial ac- 
 quaintance with it would prevent any one from believing that 
 politicians and statesmen can plan what sort of a people it 
 would please them to have, or what degree of comfort they con- 
 sider appropriate for the working classes. Nevertheless we 
 have hundreds of politicians and orators who always start from 
 a conception of this sort. It is evident, however, that the peo- 
 ple of the United States must get their living out of the soil of 
 the United States. We have an immense amount of land of the 
 best quality, navigable rivers, great forests, mines of metal and 
 coal, and we have to get out what we can with the labor and 
 capital at our disposal. Whatever we get out will be distributed 
 amongst us according to our shares in the production. As the 
 natural stores are very rich and easy to get at, and as the labor- 
 ers are few, it follows that the average product per laborer is 
 greater than can be obtained in old countries, where the soil is 
 more or less exhausted, and where the population is so dense as 
 to make the competition of life very hard. This latter state of 
 things affords us the second term of comparison by which we 
 measure our status. Taken absolutely, there is plenty of room 
 for improvement in our situation, and in the status of whole 
 classes of our population. 
 
 We have, then, a perfectly obvious and sufficient explanation 
 of the status of our people in natural facts. The statesmen 
 have never planned this or done anything to help it. They
 
 352 THE PRINCETON REVIEW. 
 
 have only marred it more or less. What we are is the result of 
 our inherited traits and traditions, and of our physical surround- 
 ings. What there is about us which is good or bad, strong or 
 weak, is alike to be attributed to these causes. High wages, 
 therefore, or, more properly speaking, high average comfort, 
 with little pauperism or misery, are incidents of our situation as 
 early comers on a new continent. Yet there are people who 
 tell us that they, in their wisdom, have made us well off by tax- 
 ing us, and that we should not be so well off any more if we 
 should get rid of the taxes, and they persuade the people who 
 pay nearly all the taxes on consumption — namely, the artisans 
 and laborers — that they could not get their living on this conti- 
 nent if they did not pay taxes. That is like telling a laborer 
 who opens his dinner-pail that he would have more dinner if he 
 would throw away a slice of bread. 
 
 This continent, however, is not so exclusively favored that 
 it is likely to draw to itself all the population of the globe. 
 Other continents have their advantages, and the one which has 
 the best advantages for food and raw materials cannot in the 
 nature of things have those advantages which come from a dense 
 population and a high development of the arts and sciences. 
 No one will be willing to turn away from the industries for 
 which the country offers the best advantages to take up those 
 in which other countries have the best advantages, unless the 
 difference can be made up to him in some way. Hence manu- 
 facturing industry here has always had to contend with the 
 profits possible in agricultural pursuits. Wages — so far as any 
 wages class has ever yet been developed here — must be high 
 enough to give the same scale of comfort as can be won in 
 using land. The high wages and general high average of com- 
 fort are, therefore, plainly the same thing, and both proceed 
 together out of the actual physical circumstances of the people. 
 
 What, then, can the tariff do about wages ? It can only 
 increase the wages in mechanical pursuits by deducting from 
 the gains of agriculture. As we said above, it can win nothing 
 for some without an equivalent or greater deduction from others. 
 It no doubt draws upon each mechanical industry to make it 
 help support all the others, and so it weakens them all ; but 
 whatever strength and help it brings to them as a group it must
 
 THE ARGUMENT AGAINST PROTECTIVE TAXES. 253 
 
 take from other groups. If, then, we are candidly seeking for 
 the true effects of the restrictive system on the national wel- 
 fare, and on the welfare of special classes, we must note that 
 this operation cannot increase the national welfare, and we must 
 look to see on whom it is that the corresponding loss falls. It 
 is plain that it is upon the agricultural industries of the country, 
 and accordingly a special bundle of fallacies has been devised 
 for deceiving the agriculturists into the belief that they are gain- 
 ers by it. It is evident, however, that every reduction in agricul- 
 tural profits makes it easier for the employer to compete with the 
 land for labor. The rising wages and the falling profits of agri- 
 culture meet each other at a point below what the profits of 
 agriculture would be under freedom. If there were no tariff, 
 the wages of the wages class must go up to the full measure of 
 the agricultural profits under freedom. Hence the tariff lowers 
 wages. It never has had and never can have any other effect. 
 The employer in a protected industry pays no more than mar- 
 ket rates for wages, and he could not possibly pay any less. 
 The notion that he could lower wages to some foreign level in 
 the midst of a country where labor could win higher rewards is 
 of course absurd. 
 
 We see, then, that the argument that the tariff makes wages 
 high is entirely without foundation. It has lowered Avages. We 
 see that the notion of having a tariff in order to secure to our 
 people what they have as their birthright, and what the tariff 
 only diminishes, viz., a comparatively better and easier existence 
 than the people of older countries, is an imposture. It has very 
 great popular effect because the popular notion is generally that 
 we owe all our prosperity to ourselves and to what we call "our 
 institutions," when in truth we owe everything that we are to 
 historical antecedents and physical conditions. 
 
 Having stripped off this humbug from the issue, as stated by 
 the protectionists, we may come back to the scornful complaint 
 that we are discussing the question on a low level. We were 
 told that we ought to debate it as a great question of status of the 
 population, etc., and we have found that this was all rhetoric and 
 fustian except the effect of the tariff to lower the status of the 
 population. It follows, then, that we were right to debate it as 
 a question of dollars and cents only. There is nothing else in
 
 254 THE PRINCETON' REVIEW. 
 
 it. A wants protection ; that is, he wants B's money. B does 
 not want to let him have it. A talks sentiment and metaphy- 
 sics finely, and, after all, all there is in it is that he wants B's 
 money. A does not otherwise show much interest in sentiment 
 and patriotism and metaphysical goods generally. He never 
 goes to Washington to lobby for education, or scientific research, 
 or geographical exploration, or for any philanthropic scheme, 
 unless there is a chance in it for him to get B's money. He is 
 then moved to scorn at B's sordid love of money, and he goes 
 to hear a lecture on " materialism" to gratify his wounded feel- 
 ings because B will not give up his money. The matter is all 
 stated from A's standpoint. We see him all the time. For 
 him to want B's money is patriotic. It is " developing our re- 
 sources." It is noble. For B to want to keep the same money 
 is mean. I insist upon the matter being stated in the most 
 crass and vulgar way, just because that is all there is of it when 
 the humbug is all eliminated. The student of history then rec- 
 ognizes a very old friend. The robber-barons, Robin Hood, 
 Dick Turpin, and others have had the same opinion of the 
 nobility of wanting other people's money, and of the meanness 
 of the "trader" or laborer who did not want to lose his earnings. 
 2. Let us next look at the other doctrine, that we need a 
 protective tariff because wages are high; or the equivalent doc- 
 trine, that we cannot compete. The people of the United 
 States can compete with anybody in getting wealth. The high 
 wages are a proof of it ; but they cannot compete with every- 
 body else in every form of industry. They have only a limited 
 number of laborers and a limited amount of capital. The same 
 man cannot be doing two things at once. The same capital 
 cannot be employed in two uses. Hence it will be wise and 
 necessary to choose the most profitable of all the profitable 
 employments which are possible. It will follow that we cannot 
 afford to compete in any industry which will not pay here as 
 well as those which have special advantages here. If we cannot 
 compete, it is because we cannot afford to compete. We are too 
 well off. We cannot compete with " foreign paupers," just be- 
 cause we are not paupers. " Pauper," of course, is one of those 
 silly and invidious terms which have been introduced into this 
 discussion in the interest of falsehood and folly. Paupers and
 
 THE ARGUMENT AGAINST PROTECTIVE TAXES. 255 
 
 princes live in idleness supported by taxation. No one can com- 
 pete with them. Seriously, then, we cannot compete with men 
 who are fiercely competing with each other for low wages in a 
 dense population because we are not fiercely competing with 
 each other. We have abundant chances. The protectionists 
 are not content, however, to use our advantages and avoid com- 
 petition, which is what every sensible man does in private life. 
 According to them we must go to seek competition. It will be 
 told in history that a public bureau of our government spent part 
 of the capital of the nation in seeking competition with China- 
 men in making tea, at the very moment when the same govern- 
 ment was trying to devise means to prevent Chinese competition 
 in this country, where it could do no harm. As we shall seek 
 competition with less favorably situated people only at a con- 
 stant loss as compared with the gains we might win in our own 
 favored industries, thoce who are carrying on the self-support- 
 ing industries must pay taxes to make up the loss, and the 
 wealth of the country must undergo a constant waste. If a 
 blacksmith shoiild say that he could not compete with the shoe- 
 maker at making shoes, and therefore that he ought to be paid 
 twice as much as the shoemaker for making shoes, his sanity 
 would be doubted, but that is just the argument that we need a 
 tariff because wages are high. It is because wages are high that 
 we do not need one, and it is because we cannot compete in 
 certain industries that we ought not to try. Some people think 
 it is derogatory to us not to do everything for ourselves ; and as 
 they always seem glad to hear that we are exporting more and 
 more, they seem to be desirous that we should make things for 
 all the rest of the world too. What, then, I ask, is the re?t of the 
 world to do for us? If we take all the industries, how will 
 they pay us for what we do for them ? Competition is the force 
 which under freedom indicates to us what we can do for our- 
 selves and them, and what we can let them do for us to our 
 final maximum advantage. To shut off competition and go into 
 the industries which the ignorant empiricism of Congress or. 
 the caprice of individuals may select, is like unhinging the com- 
 pass and steering the ship by chance. 
 
 3. There is no argument for the expediency of the tariff to 
 be found in the matter of wages in any of its aspects, but it is
 
 356 THE PRINCETON REVIEW. 
 
 sometimes claimed that it is expedient to force certain indus- 
 tries into existence. This is called "'developing our industries." 
 We are good-natured enough to call them "our" industries, per- 
 haps because we all pay taxes to support them, not because we 
 own stock in them or participate in the profits. There is a 
 very strong popular notion that it is a good thing for A, B, and 
 C that there should be certain mills, factories, etc., up and down 
 the country — a notion which has no support in fact at all, unless 
 A, B, and C are owners of land near the factories, etc. If an 
 individual were shown statistics of men employed, wages, capi- 
 tal, plant, output, etc., of a certain establishment, and were 
 asked to invest in it, he would no doubt inquire, after all, 
 whether the establishment made profits, since unfortunately not 
 every big chimney does so ; but when we are making speeches or 
 writing essays about tariff, this last question is entirely ignored, 
 and big figures and exclamation-points take the place of the 
 only question which is important. If an industry does not pay, 
 it is an industrial abomination. It is wasting and destroying. 
 The larger it is the more mischief it does. The protected manu- 
 facturer is forced to allege, when he asks for protection, that his 
 business would not pay without it. He proposes to waste capi- 
 tal. If he should waste his own wealth he would not go on 
 long. He therefore asks the legislature to give him power to 
 lay taxes on his fellow-citizens, to collect from them the capital 
 which he intends to waste, and good wages for himself while he 
 is carrying on that business besides. This is what is called 
 " developing our industries," and the operation of the law is such 
 that the waste and destruction can go on indefinitely. Either 
 an industry can pay under freedom, in which case it does not 
 need protection, or else it would not pay under freedom, in 
 which case it is wasting the wealth of the nation as long as it 
 goes on. It follows that the protective tariff is not a temporary 
 expedient, and it is mathematically impossible that it should 
 ever issue in an independent and productive Industry. Other 
 forces may come into play in time, viz., those which would at 
 that time have called the industry in question into existence, 
 and these forces may render the industry independent, but the 
 tariff can never produce any such result. 
 
 4. Some have believed that the tariff system brought capital
 
 THE ARGUMENT AGAINST PROTECTIVE TAXES. V^J 
 
 into the country, and two or three instances of foreign manu- 
 facturers who have estabhsjied branches here have been pointed 
 to as triumphant proofs of it. I know of no statistics either 
 of the amount of capital so imported or of the amount which 
 the tariff has caused to be exported ; but I should judge from 
 such information as I have that one just about equalled the 
 other. What is far more important, however, is that if the 
 tariff were taken off any one of a great number of important 
 articles, the people could save more capital in a month out of 
 their diminished cost of living than all the capital which has 
 been brought in here in twenty years on account of the tariff. 
 A similar observation applies to the argument for deferring the 
 reform oi the tariff, that it would destroy capital now invested. 
 No one proposes or desires any reckless action which would dis- 
 regard vested interests of any kind, altho I do not see what 
 difference it would make with what any one would really do^ 
 whether he had warning that the tariff would be repealed in 
 five years or in five days , but that is a question for a statesman, 
 and not for an economist. The economist may point out that, 
 if any capital were destroyed, the savings of the people from a 
 diminished cost of living would constitute an enormous fund for 
 replacing that capital and offsetting that loss, so that, as far as 
 the mere loss of capital is concerned, there would be no argu- 
 ment for delay. 
 
 5. I proceed to a brief but very cogent argument why a pro- 
 tective tariff is not expedient. Protection works al! the time 
 against improvement. In April, 1838, New York City indulged 
 in great rejoicings over the arrival of the first steamships from 
 Europe. In April, 1842, at an " Industrial Convention" held in 
 Kew York City, the opening of steam navigation on the ocean 
 was alleged as one of the chief arguments for protection. We 
 are taxed to open our rivers and harbors, and the result is 
 cheaper goods. That is the benefit which we anticipated and 
 were working for, thinking that it would be a gain. As soon as 
 It is realized, however, comes a clamor from home-producers of 
 those kinds of goods which have been cheapened. " Whr.t ! 
 Do you mean to say that it is a good thing for the country to 
 have people get the things which we make at a low price ? This 
 will never do ;" and so a tax-barrier is set up across the rivers
 
 258 THE PRINCETON REVIEW. 
 
 and harbors to imitate the former barrier of sand and rock, and 
 make things as dear. and as hard to get as before. If protection 
 is expedient, then this argument is sound, and we need more 
 protection the more our communication with foreign nations is 
 faciUtated. Steamships, ocean cables, and cheap newspapers are 
 all the time neutralizing the existing protection, and more taxes 
 are necessary to give the same protection. If protection is 
 sound, then those who rejoice over improvements in communi- 
 cation and transportation and support protection are guilty of 
 absurd folly. If improvements, inventions, and discoveries are 
 real benefits to mankind, then protection is inexpedient as well 
 as philosophically absurd. 
 
 Commerce is plainly entering on a new stage. Common-sense 
 makes its way very slowly into the minds of men when it has 
 to rely on its own merits, but the course of progress in industry 
 and commerce is such that self-interest often becomes hand-maid 
 to common-sense, and then common-sense gets a chance. We 
 have seen five or six new industries grow up in this country 
 within a few years. They are all " land " industries ; that is, they 
 belong to the natural advantages of the country. They are in 
 their infancy, but they are already great, and what they are to 
 become no one can guess. They depend on a foreign market, 
 and they have been made possible by cheap and quick ocean 
 transit. Within a year a fleet of new steamers promises new 
 growth in the same direction. The internal transportation of 
 the country, especially in the West and South-west, will support 
 the same growth. The effect is to cause great changes in the 
 distribution of labor, great absorptions of capital in new orders 
 of investments, and the creation of immense new interests. It 
 would be overbold to predict specific results, but this much is 
 clear: the competition of American agriculture will drive Eng- 
 lish labor and capital more exclusively into manufacturing and 
 commerce. The complementary effect must be exerted here, 
 and the profits of land industries will draw off labor and capital 
 from manufactures and commerce. In other words, the inter- 
 national division ot labor will be rendered more perfect, and the 
 consequence must be greater wealth for all. But if the tariff 
 still remains as a barrier to imports, i.e., return cargoes, the ex- 
 changes must rule low to the detriment of all the exporting:
 
 THE ARGUMENT AGAINST PROTECTIVE TAXES. 259 
 
 interests, and if specie is imported prices must advance. But 
 the exports cannot rise, since they are forced to seek a foreign 
 market. They will therefore be low, while everything else 
 inside the country is high. This is, of course, the operation of 
 the tariff now all the time, and it is the mode in which the 
 tariff oppresses the land industries; but the whole course of the 
 development which I am anticipating will be to make this oppres- 
 sion»harder and sharper, while the tariff will all the time need to 
 be raised higher and higher if it is to be of any avail at all. 
 How long will the system stand such a double strain ? If there 
 is any industry which really depends upon the tariff, it cannot 
 too soon begin to learn to do without it. 
 
 William G. Sumner.
 
 November, 1881. 
 
 SOCIOLOGY. 
 
 EACH of the sciences which, by giving to man greater 
 knowledge of the laws of nature, has enabled him to cope 
 more intelligently with the ills of life, has had to fight for its 
 independence of metaphysics. We have still lectures on meta- 
 physical biology in some of our colleges and in some of our 
 public courses, but biology has substantially won its independ- 
 ence. Anthropology is more likely to give laws to metaphysics 
 than to accept laws from that authority. Sociology, however, 
 the latest of this series of sciences, is rather entering upon the 
 struggle than emerging from it. Sociology threatens to with- 
 draw an immense range of subjects of the first importance from 
 the dominion of a priori speculation and arbitrary dogmatism, 
 and the struggle will be severe in proportion to the dignity and 
 importance of the subject. The struggle, however, is best car- 
 ried forward indirectly, by simply defining the scope of sociol- 
 ogy, and by vindicating its position amongst the sciences, while 
 leaving its relations to the other sciences and other pursuits of 
 men to adjust themselves according to the facts. I know of 
 nothing more amusing in these days than to see an old-fash- 
 ioned metaphysician applying his tests to the results of scien- 
 tific investigation, and screaming with rage because men of 
 scientific training do not care whether the results satisfy those 
 tests or not. 
 
 Sociology is the science of life in society. It investigates 
 the forces which come into action wherever a human society 
 exists. It studies the structure and functions of the organs of 
 human society, and its aim is to find out the laws' in subordi- 
 
 " It has been objected that no proof is offered that social laws exist in the order 
 of nature. By what demonstration could any such proof be given a priori ? If a
 
 304 THE PRINCETON REVIEW. 
 
 nation to which human society takes its various forms, and 
 social institutions grow and change. Its practical utility con- 
 sists in deriving the rules of right social living from the facts 
 and laws which prevail by nature in the constitution and func- 
 tions of society. It must, without doubt, come into collision 
 with all other theories of right living which are founded on 
 authority, tradition, arbitrary invention, or poetic imagination. 
 
 Sociology is perhaps the most complicated of all the sci- 
 ences, yet there is no domain of human interest the details of 
 which are treated ordinarily with greater facility. Various re- 
 ligions have various theories of social living, which they offer 
 as authoritative and final. It has never, so far as I know, been 
 asserted by anybody that a man of religious faith (in any 
 religion) could not study sociology or recognize the existence 
 of any such science ; but it is incontestably plain that a man 
 who accepts the dogmas about social living which are imposed 
 by the authority of any religion must regard the subject of 
 right social living as settled and closed, and he cannot enter on 
 any investigation the first groundwork of which would be doubt 
 of the authority which he recognizes as final. Hence social 
 problems and social phenomena present no difficulty to him 
 who has only to cite an authority or obey a prescription. 
 
 Then again the novelists set forth "views" about social mat- 
 ters. To write and read novels is perhaps the most royal road 
 to teaching and learning which has ever been devised. The pro- 
 ceeding of the novelists is kaleidoscopic. They turn the same 
 old bits of colored glass over and over again into new combina- 
 tions. There is no limit, no sequence, no bond of consistency. 
 The romance-writing social philosopher always proves his case 
 just as a man always wins who plays chess with himself. 
 
 Then again the Utopians and socialists make easy work of 
 the complicated phenomena with which sociology has to deal. 
 These persons, vexed with the intricacies of social problems, 
 and revolting against the facts of the social order, take upon 
 themselves the task of inventing a new and better world. 
 
 man of scientific training finds his attention arrested, in some group of phenom- 
 ena, by those sequences, relations, and recurrences which he has learned to note 
 as signs of action of law, he seeks to discover the law. If it exists, he finds it 
 What other proof of its existence could there be ?
 
 SOCIOLOGY. 305 
 
 They brush away all which troubles us men, and create a 
 world free from annoying limitations and conditions — in their 
 imagination. In ancient times, and now in half-civilized coun- 
 tries, these persons have been founders of religions. Some- 
 thing of that type always lingers around them still and apong 
 us, and is to be seen amongst the reformers and philanthropists 
 Avho never contribute much to the improvement of society in 
 any actual detail, but find a key principle for making the world 
 anew and regenerating society. I have even seen faint signs of 
 the same mysticism in social matters in some of the green- 
 backers who have "thought out" in bed, as they relate, a 
 scheme of wealth by paper money, as Mahomet would have 
 received a Surah, or Joe Smith a revelation about polygamy. 
 Still there are limits to this resemblance, because in our nine- 
 teenth-century American life a sense of humor, even if defec- 
 tive, answers some of the purposes of common-sense. 
 
 Then again all the whimsical people who have hobbies of 
 one sort or another, and who cluster around the Social Science 
 Association, come forward with projects which are the result of 
 a strong impression, an individual misfortune, or an unregulated 
 benevolent desire, and which are therefore the product of a 
 facile emotion, not of a laborious investigation. 
 
 Then again the dilettanti make light work of social questions. 
 Every one, by the fact of living in society, gathers some observa- 
 tions of social phenomena. The belief grows up, as it was ex- 
 pressed some time ago by a professor of mathematics, that every- 
 body knows about the topics of sociology. Those topics have a 
 broad and generous character. They lend themselves easily to 
 generalizations. There are as yet no sharp tests formulated. 
 Above all, and worst lack of all as yet, we have no competent 
 criticism. Hence it is easy for the aspirant after culture to ven- 
 ture on this field without great danger of being brought to 
 account, as he would be if he attempted geology, or physics, or 
 biology. Even a scientific man of high attainments in some 
 •other science, in which he well understands what special care, 
 skill, and training are required, will not hesitate to dogmatize 
 about a topic of sociology. A group of half-educated men may 
 be relied upon to attack a social question and to hammer it 
 dead in a few minutes with a couple of commonplaces and a 
 20
 
 306 THE PRINCETON REVIEW. 
 
 sweeping a priori assumption. Above all other topics, social 
 topics lend themselves to the purposes of the diner-out. 
 
 Two facts, however, in regard to social phenomena need only 
 be mentioned to be recognized as true, (i) Social phenomena al- 
 ways present themselves to us in very complex combinations, 
 and (2) it is by no means easy to interpret the phenomena. The 
 phenomena are often at three or four removes from their causes. 
 Tradition, prejudice, fashion, habit, and other similar obstacles 
 continually warp and deflect the social forces, and they consti- 
 tute interferences whose magnitude is to be ascertained sepa- 
 rately for each case. It is also impossible for us to set up a 
 social experiment. To do that, we should need to dispose of 
 the time and liberty of a certain number of men. It follows 
 that sociology requires a special method, and that probably no 
 science requires such peculiar skill and sagacity in the observer 
 and interpreter of the phenomena which are to be studied. One 
 peculiarity may be especially noted because it shows a very com- 
 mon error of students of social science. A sociologist needs to 
 arrange his facts before he has obtained them ; that is to say, he 
 must make a previous classification so as to take up the facts in 
 a certain order. If he does not do this he maybe overwhelmed 
 in the mass of his material so that he never can master it. How 
 shall any one know how to classify until the science itself has 
 made some progress ? Statistics furnish us the best illustration 
 at the present time of the difificulty here referred to. 
 
 When, now, we take into account these difficulties and re- 
 quirements, it is evident that the task of sociology is one v/hich 
 will call for especial and long training, and that it will probably 
 be a long time yet before we can train up any body of special 
 students who will be so well trained in the theory and science 
 of society as to be able to form valuable opinions on points of 
 social disease and social remedy. But it is a fact of familiar 
 observation that all popular discussions of social questions seize 
 directly upon points of social disease and social remedies. The 
 diagnosis of some asserted social ill and the prescription of the 
 remedy are undertaken offhand by the first comer, and without 
 reflecting that the diagnosis of a social disease is many times 
 harder than that of a disease in an individual, and that to pre- 
 scribe for a society is to prescribe for an organism which is
 
 SOCIOLOGY. 307 
 
 immortal. To err in prescribing for a man is at worst to kill 
 him ; to err in prescribing for a society is to set in operation 
 injurious forces which extend, ramify, and multiply their effects 
 in ever new combinations tliroughout an indefinite future. It 
 may pay to experiment witli an individual because he cannot 
 wait for medical science to be perfected ; it cannot pay to 
 experiment with a society because the society does not die 
 and can afford to wait. 
 
 If we have to consider the need of sociology, innumerable 
 reasons for studying it present themselves. In spite of all our 
 acquisitions in natural science, the conception of a natural law 
 (which is the most important good to be won from studying 
 natural science) is yet exceedingly vague in the minds of ordi- 
 nary intelligent people, and is very imperfect even amongst the 
 educated. That conception is hardly yet applied by anybody 
 to social facts and problems. Social questions force themselves 
 upon us in multitudes every year as our civilization advances 
 and our society becomes complex. When such questions arise 
 they are wrangled over and tossed about without any orderly 
 discussion, but as if they were only the sport of arbitrary 
 whims. Is it not then necessary that we enable ourselves, by 
 study of the facts and laws of society, to take up such questions 
 from the correct point of view, and to proceed with the exami- 
 nation of them in such order and method that we can reach 
 solid results, and thus obtain command of an increasing mass 
 of knowledge about social phenomena ? The assumption which 
 underlies almost all discussion of social topics is that we men 
 need only make up our minds what kind of a society we want 
 to have, and that then we can devise means for calling that 
 society into existence. It is assumed that we can decide to live 
 on one spot of the earth's surface or another, and to pursue 
 there one industry or another, and then that we can, by our 
 devices, make that industry as productive as any other could be 
 in that place. People believe that we have only to choose 
 whether we will have aristocratic institutions or democratic 
 institutions. It is believed that statesmen can, if they will, put 
 a people in the way of material prosperity. It is believed that 
 rent on land can be abolished if it is not thought expedient \o 
 have it. It is assumed that peasant proprietors can be brought
 
 308 THE PRINCETON REVIEW. 
 
 into existence anywhere where it is thought that it would be an 
 advantage to have them. These illustrations might be multi- 
 pHed indefinitely. They show the need of sociology, and if we 
 should go on to notice the general conceptions of society, its ills 
 and their remedies, which are held by various religious, pohtical, 
 and social sects, we should find ample further evidence of the 
 need of sociology. 
 
 Let us then endeavor to define the field of sociology. Life 
 in society is the life of a human society on this earth. Its ele- 
 mentary conditions are set by the nature of human beings and 
 the nature of the earth. We have already become familiar, 
 in biology, with the transcendent importance of the fact that 
 life on earth must be maintained by a struggle against nature, 
 and also by a competition with other forms of life. In the latter 
 fact biology and sociology touch. Sociology is a science which 
 deals with one range of phenomena produced by the struggle 
 for existence, while biology deals with another. The forces are 
 the same, acting on different fields and under different con- 
 ditions. The sciences are truly cognate. Nature contains cer- 
 tain materials which are capable of satisfying human needs, 
 but those materials must, with rare and mean exceptions, be 
 won by labor, and must be fitted to human use by more labor. 
 As soon as any number of human beings are each struggling to 
 win from nature the material goods necessary to support life, 
 and are carrying on this struggle side by side, certain social 
 forces come into operation. The prime condition of this 
 society will lie in the ratio of its numbers to the supply of 
 materials within its reach. For the supply at any moment 
 attainable is an exact quantity, and the number of persons who 
 can be supplied is arithmetically limited. If the actual number 
 present is very much less than the number who might be sup- 
 ported, the condition of all must be ample and easy. Freedom 
 and facility mark all social relations under such a state of 
 things. If the number is larger than that which can be sup- 
 plied, the condition of all must be one of want and distress, or 
 else a few must be well provided, the others being proportion- 
 ately still worse off. Constraint, anxiety, possibly tyranny 
 and repression mark social relations. It is when the social 
 pressure due to an unfavorable ratio of population to land
 
 SOCIOLOGY. 309 
 
 becomes intense that the social forces develop increased activity. 
 Division of labor, exchange, higher social organization, emigra- 
 tion, advance in the arts, spring from the necessity of contend- 
 ing against the harsher conditions of existence which are con- 
 tinually reproduced as the population surpasses the means of 
 existence on any given status. 
 
 The society with which we have to deal does not consist of 
 any number of men. An army is not a society. A man with 
 his wife and his children constitutes a society, for its essential 
 parts are all present, and the number more or less is immaterial. 
 A certain division of labor between the sexes is imposed by na- 
 ture. The family as a whole maintains itself better under an 
 organization with division of labor than it could if the functions 
 were shared so far as possible. From this germ the develop- 
 ment of society goes on by the regular steps of advancement to 
 higher organization, accompanied and sustained by improve- 
 ments in the arts. The increase of population goes on accord- 
 ing to biological laws which are capable of multiplying the spe- 
 cies beyond any assignable limits, so that the number to be 
 provided for steadily advances, and the status of ease and abun- 
 dance gives way to a status of want and constraint. Emigration 
 is the first and simplest remedy. By winning more land the ratio 
 of population to land is once more rendered favorable. It is to 
 be noticed, however, that emigration is painful to all men. To 
 the uncivilized man, to emigrate means to abandon a mass of 
 experiences and traditions which have been won by suffering, 
 and to go out to confront new hardships and perils. To the 
 civilized man migration means cutting off old ties of kin and 
 country. The earth has been peopled by man at the cost of 
 this suffering. 
 
 On the side of the land also stands the law of the diminish- 
 ing return as a limitation. More labor gets more from the land, 
 but not proportionately more. Hence, if more men are to be 
 supported, there is need not of a proportionate increase of labor, 
 but of a disproportionate increase of labor. The law of popula' 
 tion, therefore, combined with the law of the diminishing return 
 constitutes the great underlying condition of society. Emigra- 
 tion, improvements in the arts, in morals, in education, in politi- 
 cal organization, are only stages in the struggle of man to meet
 
 310 THE PRINCETON REVIEW. 
 
 these conditions, to break their force for a time, and to win 
 room under them for ease and enlarg"ement. Ease and enlarg-e- 
 ment mean either power to support more men on a given stage 
 of comfort or power to advance the comfort of a given number 
 of men. Progress is a word which has no meaning save in view 
 of the laws of population and the diminishing return, and it is 
 quite natural that any one who fails to understand those laws 
 should fall into doubt which way progress points, whether towards 
 wealth or poverty. The laws of population and the diminishing 
 return, in their combination, are the iron spur which has driven 
 the race on to all which, it has ever achjeved, and the fact that 
 population ever advances, yet advances against a barrier which 
 resists more stubbornly at every step of advance, unless it is 
 removed to a new distance by some conquest of man over 
 nature, is the guarantee that the task of civilization will never 
 be ended, but that the need for more energy, more intelligence, 
 and more virtue will never cease while the race lasts. If it were 
 possible for an increasing population to be sustained by propor- 
 tionate increments of labor, we should all still be living in the 
 original home of the race on the spontaneous products of the 
 earth. Let him, therefore, who desires to study social phenom- 
 ena first learn the transcendent importance for the whole social 
 organization, industrial, political, and civil, of the ratio of popu- 
 lation to land. 
 
 We have noticed that the relations involved in the struggle 
 for existence are two-fold. There is first the struggle of indi- 
 viduals to win the means of subsistence from nature, and sec- 
 ondly there is the competition of man with man in the effort to 
 win a limited supply. The radical error of the socialists and 
 sentimentalists is that they never distinguish these two relations 
 from each other. They bring forward complaints which are 
 really to be made, if at .all, against the author of the uni- 
 verse for the hardships which man has to endure in his struggle 
 with nature. The complaints are addressed, however, to society ; 
 that is, to other men under the same hardships. The only social 
 element, however, is the competition of life, and when society is 
 blamed for the ills which belong to the human lot, it is only 
 burdening those who have successfully contended with those 
 ills with the further task of conquering the same ills over again
 
 SOCIOLOGY. 311 
 
 for somebody else. Hence liberty perishes in all socialistic 
 schemes, and the tendency of such schemes is to the deteriora- 
 tion of society by burdening the good members and relieving 
 the bad ones. The law of the survival of the fittest was not made 
 by man and cannot be abrogated by man. We can only, by 
 interfering with it, produce the survival of the unfittest. If a 
 man comes forward with any grievance against the order of 
 society so far as this is shaped by human agency, he must have 
 patient hearing and full redress ; but if he addresses a demand 
 to society for relief from the hardships of life, he asks simply 
 that somebody else should get his living for him. In that case 
 he ought to be left to find out his error from hard experience. 
 
 The sentimental philosophy starts from the first principle 
 that nothing is true which is disagreeable, and that we must 
 not believe anything which is " shocking" no matter what 
 the evidence may be. There are various stages of this phi- 
 losophy. It touches on one side the intuitional philosophy 
 which proves that certain things must exist by proving that 
 man needs them, and it touches on the other side the vulgar 
 socialism which affirms that the individual has a right to what- 
 ever he needs, and that this right is good against his fellow- 
 men. To this philosophy in all its grades the laws of popula- 
 tion and the diminishing return have always been very distaste- 
 ful. The laws which entail upon mankind an inheritance of 
 labor cannot be acceptable to any philosophy which maintains 
 that man comes into the world endowed with natural rights, 
 and an inheritor of freedom. It is a death-blow to any intui- 
 tional philosophy to find out, as an historical fact, what diverse 
 thoughts, beliefs, and actions man has manifested, and it 
 requires but little actual knowledge of human history to show 
 that the human race has never had any ease which it did not 
 earn, or any freedom which it did not conquer. Sociology, 
 therefore, by the investigations which it pursues dispels illu- 
 sions about what society is or may be, and gives instead knowl- 
 edge of facts which are the basis of intelligent effort by man to 
 make the best of his circumstances on earth. Sociology, there- 
 fore, which can never accomplish anything more than to enable 
 us to make the best of our situation, will never be able to 
 reconcile itself with those philosophies which are tryinp^ to find
 
 312 THE PRINCETON REVIEW. 
 
 out how we may arrange things so as to satisfy any ideal of 
 society. 
 
 The competition of Hfe has taken the form, historically, of a 
 struggle for the possession of the soil. In the simpler states of 
 society the possession of the soil is tribal, and the struggles take 
 place between groups, producing the wars and feuds which con- 
 stitute almost the whole of early history. On the agricultural 
 stage the tribal or communal possession of land exists as a 
 survival, but it gives way to private property in land whenever 
 the community advances and the institutions are free to mould 
 themselves. The agricultural stage breaks up tribal relations 
 and encourages individualization. This is one of the reasons 
 why it is such an immeasurable advance over the lower forms 
 of civilization. It sets free individual energy, and, while the 
 social bond gains in scope and variety, it also gains in elasticity, 
 for the solidarity of the group is broken up, and the individual 
 may work out his own ends by his own means, subject only 
 to the social ties which lie in the natural conditions of human 
 life. It is only on the agricultural stage that liberty as civil- 
 ized men understand it exists at all. The poets and sentimen- 
 talists, untaught to recognize the grand and world-wide co-op- 
 eration which is secured by the free play of individual energy 
 under the great laws of the social order, bewail the decay of early 
 communal relations, and exalt the liberty of the primitive stages 
 of civilization. These notions all perish at the first touch of 
 actual investigation. The whole retrospect of human history 
 runs downwards towards beast-like misery and slavery to the 
 destructive forces of nature. The whole history has been one 
 series of toilsome, painful, and bloody struggles, first to find out 
 where we were and what were the conditions of greater ease, 
 and then to devise means to get relief. Most of the way the 
 motives of advance have been experience of suffering and 
 instinct. It is only in the most recent years that science has 
 undertaken to teach without and in advance of suffering, and as 
 yet science has to fight so hard against tradition that its author- 
 ity is only slowly winning recognition. The institutions whose 
 growth constitutes the advance of civilization have their guar- 
 antee in the very fact that they grew and became established. 
 They suited man's purpose better than what went before. They
 
 SOCIOLOGY. 315 
 
 are all imperfect, and all carry with them incidental ills, but 
 each came to be because it M^as better than what went before, 
 and each which has perished perished because a better one sup- 
 planted it. 
 
 It follows once and for all that to turn back to any defunct 
 institution or organization because existing institutions are im- 
 perfect is to turn away from advance and is to retrograde. The 
 path of improvement lies forwards. Private property in land, for 
 instance, is an institution which has been developed in the most 
 direct and legitimate manner. It may give way at a future time 
 to some other institution which will grow up by imperceptible 
 stages out of the efforts of men to contend successfully with ex- 
 isting evils, but the grounds for private property in land are 
 easily perceived, and it is safe to say that no a priori scheme of 
 state ownership or other tenure invented en bloc by any philoso- 
 pher and adopted by legislative act will ever supplant it. To 
 talk of any such thing is to manifest a total misconception of 
 the facts and laws which it is the province of sociology to inves- 
 tigate. The case is less in magnitude but scarcely less out of 
 joint with all correct principle when it is proposed to adopt a 
 unique tax on land, in a country where the rent of land is so 
 low that any important tax on land exceeds it, and therefore 
 becomes indirect, and where also political power is in the hands 
 of small landowners, who hold (without ever having formulated 
 it) a doctrine of absolute property in the soil such as is net held 
 by any other landowners in the world. 
 
 Sociology must exert a most important influence on politi- 
 cal economy. Political economy is the science which investi- 
 gates the laws of the material welfare of human societies. It is 
 not its province to teach individuals how to get rich. It is a 
 social science. It was the first branch of sociology which was 
 pursued by man as a science. It is not strange that when the 
 industrial organization of society was studied apart from the 
 organism of which it forms a part it was largely dominated over 
 by arbitrary dogmatism, and that it should have fallen into dis- 
 repute as a mere field of opinion, and of endless wrangling about 
 opinions for which no guarantees could be given. The rise of a 
 school of " historical " economists is itself a sign of a struggle 
 towards a positive and scientific study of political economy, in
 
 314 THE PRINCETON HE VIE IV. 
 
 its due relations to other social sciences, and this sign loses 
 none of its significance in spite of the crudeness and extrava- 
 gance of the opinions of the historical economists, and in spite 
 of their very marked tendency to fall into dogmatism and hobby- 
 riding. Political economy is thrown overboard by all groups 
 and persons whenever it becomes troublesome. When it got 
 in the way of Mr. Gladstone's land-bill he relegated it, by impli- 
 cation, to the planet Saturn, to the great delight of all the fair- 
 traders, protectionists, soft-money men, and others who had 
 found it in the way of their devices. What political economy 
 needs in order to emerge from the tangle in which it it is now 
 involved, and to win a dignified and orderly development, is to 
 find its field and its relations to other sciences fairly defined 
 within the wider scope of sociology. Its laws will then take 
 their place not as arbitrary or broken fragments, but in due re- 
 lation to other laws. Those laws will win proof and establish- 
 ment from this relation. 
 
 For instance : We have plenty of books, some of them by able 
 writers, in which the old-fashioned Malthusian doctrine of popu- 
 lation and the Ricardian law of rent are disputed because emi- 
 gration, advance in the arts, etc. etc., can offset the action of 
 those laws, or because those laws are not seen in action in the 
 United States. Obviously no such objections ever could have 
 been raised if the laws in question had been understood or had 
 been put in their proper bearings. The Malthusian law of popula- 
 tion and the Ricardian law of rent are cases in which, by rare and 
 most admirable acumen, powerful thinkers perceived two great 
 laws in particular phases of their action. With wider informa- 
 tion it now appears that the law of population breaks the bar- 
 riers of Malthus' narrower formulze and appears as a great law 
 of biology. The Ricardian law of rent is only a particular ap- 
 plication of one of the great conditions of production. We have 
 before us not special dogmas of political economy, but facts of 
 the widest significance for the whole social development of the 
 race. To object that these facts may be set aside by migration or 
 advance in the arts is nothing to the purpose, for this is only 
 altering the constants in the equation, which does not alter the 
 form of the curve, but only its position relatively to some stand- 
 ard line. Furthermore, the laws themselves indicate that they
 
 SOCIOLOGY. 315 
 
 have a maximum point for any society, or any given stage of 
 the arts, and a condition of under-population, or of an extrac- 
 tive industry below its maximum, is just as consistent with the 
 law as a condition of over-population and increasing distress. 
 Hence inferences as to the law of population drawn from the 
 status of an under-populated country are sure to be fallacious. 
 In like manner arguments drawn from American phenomena" in 
 regard to rent and wages, when rent and wages are as yet only 
 very imperfectly developed here, lead to erroneous conclusions. 
 It only illustrates the unsatisfactory condition of political econ- 
 omy, and the want of strong criticism in it, that such arguments 
 can find admission to its discussions and disturb its growth. 
 
 It is to the pursuit of sociology and the study of the indus- 
 trial organization in combination with the other organizations 
 of society that we must look for th6 more fruitful development 
 of political economy. We are already in such a position with 
 sociology that a person who has gained what we now possess of 
 that science will bring to bear upon economic problems a 
 sounder judgment and a more correct conception of all social 
 relations than a person who may have read a library of the 
 existing treatises on political economy. The essential elements 
 of pohtical economy are only corollaries or special cases of 
 sociological principles. One who has command of the law of 
 the conservation of energy as it manifests itself in society is 
 armed at once against socialism, protectionism, paper money, 
 and a score of other economic fallacies. The sociological view 
 of political economy also includes whatever is sound in the 
 dogmas of the " historical school," and furnishes what that school 
 is apparently groping after. 
 
 As an illustration of the light which sociology throws on a 
 great number of political and social phenomena which are con- 
 stantly misconstrued, we may notice the differences in the 
 industrial, political, and civil organization which are produced 
 all along at different stages of the ratio of population to land. 
 
 When a country is under-populated new-comers are not com- 
 petitors but assistants. If more come they may produce not 
 only new quotas, but a surplus besides, to be divided between 
 themselves and all who were present before. In such a state of 
 things land is abundant and cheap. The possession of it con-
 
 3l6 THE PRINCETON REVIEW. 
 
 fers no power or privilege. No one will work for another for 
 wages when he can take up new land and be his own master. 
 Hence it will pay no one to own more land than he can culti- 
 vate by his own labor, or with such aid as his own family sup- 
 plies. Hence, again, land bears little or no rent, there will be 
 no landlords living on rent, and no laborers living on wages, 
 but only a middle class of yeoman farmers. All are substan- 
 tially on an equality, and democracy becomes the political form, 
 because this is the only state of society in which the dogmatic 
 assumption of equality, on which democracy is based, is realized 
 as a fact. The same effects are powerfully re-enforced by other 
 facts. In a new and under-populated country the industries 
 which are most profitable are the extractive industries. The 
 characteristic of these, with the exception of some kinds of 
 mining, is that they call for only a low organization of labor and 
 small amount of capital. Hence they allow the workman to 
 become speedily his own master, and they educate him to free- 
 dom, independence, and self-reliance. At the same time, the 
 social groups being only vaguely marked off from each other, it 
 is easy to pass from one class of occupations, and consequently 
 from one social grade, to another. Finally, under the same cir- 
 cumstances, education, skill, and superior training have but 
 inferior value compared with what they have in densely popu- 
 lated countries. The advantages lie, in an under-populated 
 country, with the coarser, unskilled, manual occupations, and 
 not with the highest developments of science, literature, and 
 art. 
 
 If now we turn for comparison to cases of over-population 
 we See that the struggle for existence and the competition of 
 life are intense where the pressure of population is great. This 
 competition draws out the highest achievements. It makes the 
 advantages of capital, education, talent, skill, and training tell 
 to the utmost. It draws out the social scale upwards and 
 downwards to great extremes, and produces aristocratic social 
 organizations in spite of all dogmas of equality. Landlords, 
 tenants {i.e., capitalist employers), and laborers are the three 
 primary divisions of any aristocratic order, and they are sure to 
 be developed whenever land bears rent, and whenever tillage 
 requires the application of large capital. At the same time
 
 SOCIOLOGY. 317 
 
 liberty has to undergo curtailment. A man who has a square 
 mile to himself can easily do as he likes, but a man who walks 
 Broadway at noon or lives in a tenement-house finds his power 
 to do as he likes limited by scores of considerations for the 
 rights and feelings of his fellow-men. Furthermore, organization 
 with subordination and discipline is essential in order that the 
 society as a whole may win a support from the land. In an 
 over-populated country the extremes of wealth and luxury are 
 presented side by side with the extremes of poverty and dis- 
 tress. They are equally the products of an intense social pres- 
 sure. The achievements of power are highest, the rewards of 
 prudence, energy, enterprise, foresight, sagacity, and all other 
 industrial virtues is greatest ; on the other hand, the penalties of 
 folly, weakness, error, and vice are most terrible. Pauperism, pros- 
 titution, and crime are the attendants of a state of society in which 
 science, art, and literature reach their highest developments. 
 Now it is evident that over-population and under-population 
 are only relative terms. Hence as time goes on any under- 
 populated nation is surely moving forward towards the other 
 status, and is speedily losing its natural advantages which are 
 absolute, and also that relative advantage which belongs to it if 
 it is in neighborly relations with nations of dense population 
 and high civilization, viz., the chance to borrow and assimilate 
 from them the products, in arts and science, of high civilization, 
 without enduring the penalties of intense social pressure. 
 
 We have seen that if we should try by any measures of arbi- 
 trary interference and relief to relieve the victims of social pres- 
 sure from the calamity of their position, we should only offer 
 premiums to folly and vice and extend them further. We have 
 also seen that we must go forward and meet our problems. We 
 .cannot escape them by running away. If then it be asked what 
 the wit and effort of man can do to struggle with the problems 
 offered by social pressure, the answer is that he can do only 
 what his instinct has correctly and surely led him to do without 
 any artificial social organization of any kind, and that is, by 
 improvements in the arts, in science, in morals, in political 
 institutions, to widen and strengthen the power of man over 
 nature. The task of dealing with social ills is not a new task. 
 People set about it and discuss it as if the human race had hith-
 
 3l8 THE PRINCETON REVIEW. 
 
 erto neglected it, and as if the solution of the problem was to 
 be something new in form and substance, different from the 
 solution of all problems which have hitherto engaged human 
 effort. In truth, the human race has never done anything else 
 but struggle with the problem of social welfare. That struggle 
 constitutes history, or the life of the human race on earth. That 
 struggle embraces all minor problems which occupy human atten- 
 tion here, save those of religion, which reaches beyond this 
 world and finds its objects beyond this life. Every successful 
 effort to widen the power of man over nature is a real victory 
 over poverty, vice, and misery, taking things in general and in 
 the long-run. It would be hard to find a single instance of a 
 direct assault by positive effort upon poverty, vice, and misery 
 which has not either failed or, if it has not failed directly and 
 entirely, has not entailed other evils greater than the one which 
 it removed. The only two things which really tell on the wel- 
 fare of man on earth are hard work and self-denial {i.e., in tech- 
 nical language, labor and capital), and these tell most when they 
 are brought to bear directly upon the effort to earn an hon- 
 est living, to accumulate capital, and to bring up a family of 
 children to be industrious and self-denying in their turn. I 
 repeat that this is the way to work for the welfare of man on 
 earth ; and what I mean to say is that the common notion that 
 when we are going to work for the social welfare of man we 
 must adopt a great dogma, organize for the realization of some 
 great scheme, have before us an abstract ideal, or otherwise do 
 anything but live honest and industrious lives, is a great mistake. 
 From the stand-point of the sociologist pessimism and optimism 
 are alike impertinent. To be an optimist one must forget the 
 frightful sanctions which are attached to the laws of right living. 
 To be a pessimist one must overlook the education and growth 
 which are the product of effort and self-denial. In either case one 
 is passing judgment on what is inevitably fixed, and on which the 
 approval or condemnation of man can produce no effect. The 
 facts and laws are, once and for all, so, and for us men that is 
 the end of the matter. The only persons for whom there would 
 be any sense in the question whether life is worth living are pri- 
 marily the yet unborn children, and secondarily the persons 
 who are proposing to found families. For these latter the
 
 SOCIOLOGY. 319 
 
 question would take a somewhat modified form : Will life be 
 worth living for children born of me ? This question is, unfor- 
 tunately, not put to themselves by the appropriate persons as it 
 would be if they had been taught sociology. The sociologist is 
 often asked if he wants to kill off certain classes of troublesome 
 and burdensome persons. No such inference follows from any 
 sound sociological doctrine, but it is allowed to infer, as to a 
 great many persons and classes, that it would have been better 
 for society, and would have involved no pain to them, if they 
 had never been born. 
 
 In further illustration of the interpretation which sociology 
 offers of phenomena which are often obscure, we may note the 
 world-wide effects of the advances in the arts and sciences which 
 have been made during the last hundred years. These improve- 
 ments have especially affected transportation and communica- 
 tion ; that is, they have lessened the obstacles of time and space 
 which separate the groups of mankind from each other, and 
 have tended to make the whole human race a single unit. The 
 distinction between over-populated and under-populated coun- 
 tries loses its sharpness, and all are brought to an average. 
 Every person who migrates from Europe to America affects the 
 comparative status of the two continents. He lessens the pres- 
 sure in the country he leaves and increases it in the country to 
 which he goes. If he goes to Minnesota, and raises wheat there, 
 which is carried back to the country he left as cheap food for 
 those who have not emigrated, it is evident that the bearing 
 upon social pressure is twofold. It is evident, also, that the 
 problem of social pressure can no longer be correctly studied if 
 the view is confined either to the country of immigration or the 
 country of emigration, but that it must embrace both. It is 
 easy to see, therefore, that the ratio of population to land with 
 which we have to deal is only in peculiar and limited cases that 
 ratio as it exists in England, Germany, or the United States. 
 It is the ratio as it exists in the civilized world, and every year 
 that passes, as our improved arts break down the barriers be- 
 tween different parts of the earth, brings us nearer to the state 
 of things where all the population of Europe, America, Aus- 
 tralasia, and South Africa must be considered in relation to all 
 the land of the same territories, for all that territory will be
 
 320 THE PRINCETON REVIEW. 
 
 available for all that population, no matter what the proportion 
 may be in which the population is distributed over the various 
 portions of the territory. The British Islands may become one 
 great manufacturing city. Minnesota, Texas, and Australia 
 may not have five persons to the square mile. Yet all will eat 
 the meat of Texas and the wheat of Minnesota, and wear the 
 wool of Australia manufactured on the looms of England. 
 That all will enjoy the maximum of food and raiment under 
 that state of things is as clear as anything possibly can be which 
 is not yet an accomplished fact. We are working towards it by 
 all our instincts of profit and improvement. The greatest 
 obstacles are those which come from prejudices, traditions, and 
 dogmas, which are held independently of any observation of 
 facts or any correct reasoning, and which set the right hand 
 working against the left. For instance : the Mississippi Valley 
 was, a century ago, as unavailable to support the population of 
 France and Germany as if it had been in the moon. The Mis- 
 sissippi Valley is now nearer to France and Germany than the 
 British Islands were a century ago, reckoning distance by the 
 only true standard, viz., difficulty of communication. It is a 
 fair way of stating it to say that the improvements in transpor- 
 tation of the last fifty years have added to France and Germany 
 respectively a tract of land of the very highest fertility, equal 
 in area to the territory of those states, and available for the 
 support of their population. The public men of those countries 
 are now declaring that this is a calamity, and are devising means 
 to counteract it. 
 
 The social and political effects of the improvements which 
 have been made must be very great. It follows from what we 
 have said about the effects of intense social pressure and high 
 competition, that the effect of thus bringing to bear on the 
 great centres of population the new land of outlying countries 
 must be to relieve the pressure in the oldest countries and at 
 the densest centres. Then the extremes of wealth and poverty, 
 culture and brutahty, will be contracted, and there will follow a 
 general tendency towards an average equality which, however, 
 must be understood only within very broad limits. Such is no 
 doubt the meaning of the general tendency towards equality, the 
 decline of aristocratic institutions, the rise of the proletariat, and
 
 SOCIOLOGY. 321 
 
 the ambitious expansion, in short, which is characteristic of 
 modern civilized society. It would lead me too far to follow 
 out this line of speculation as to the future, but two things 
 ought to be noticed in passing, (i) There are important offsets 
 to the brilliant promise which there is for mankind in a period 
 during which, for the whole civilized world, there will be a wide 
 margin of ease between the existing population and the sup- 
 porting power of the available land. These offsets consist in 
 the effects of ignorance, error, and folly — the same forces which 
 have always robbed mankind of half what they might have en- 
 joyed on earth. Extravagant governments, abuses of public 
 credit, wasteful taxation, legislative monopolies and special 
 privileges, juggling with currency, restrictions on trade, wasteful 
 armaments on land and sea, and other follies in economy and 
 state-craft, are capable of wasting and nullifying all the gains of 
 civilization. (2) The old classical civilization fell under an ir- 
 ruption of barbarians from without. It is possible that our new 
 civilization may perish by an explosion from within. The sen- 
 timentalists have been preaching for a century notions of rights 
 and equality, of the dignity, wisdom, and power of the prole- 
 tariat, which have filled the minds of ignorant men with impos- 
 sible dreams. The thirst for luxurious enjoyment has taken 
 possession of us all. It is the dark side of the power to fore- 
 see a possible future good with such distinctness as to make it 
 a motive of energy and persevering industry — a power which is 
 distinctly modern. Now the thirst for luxurious enjoyment, 
 when brought into connection with the notions of rights, of 
 power, and of equality, and dissociated from the notions of in- 
 dustry and economy, produces the notion that a man is robbed of 
 his rights if he has not everything that he wants, that he is 
 deprived of equality if he sees any one have more than he has, 
 and that he is a fool if, having the power of the state in his 
 hands, he allows this state of things to last. Then we have 
 socialism, communism, and nihilism ; and the fairest conquests of 
 civilization, with all their promise of solid good to man, on the 
 sole conditions of virtue and wisdom, may be scattered to the 
 winds in a war of classes, or trampled under foot by a mob 
 which can only hate what it cannot enjoy. 
 
 It must be confessed that sociology is yet in a tentative and 
 
 21
 
 322 THE PRINCETON REVIEW. 
 
 inchoate state. All that we can affirm with certainty is that 
 social phenomena are subject to law, and that the natural laws 
 of the social order are in their entire character like the laws of 
 physics. We can draw in grand outline the field of sociology 
 and foresee the shape that it will take and the relations it will 
 bear to other sciences. We can also already find the stand- 
 point which it will occupy, and, if a figure may be allowed, 
 altho we still look over a wide landscape largely enveloped in 
 mist, we can see where the mist lies, and define the general 
 features of the landscape, subject to further corrections. To 
 deride or contemn a science in this state would certainly be a 
 most unscientific proceeding. We confess, however, that so 
 soon as we go beyond the broadest principles of the science we 
 have not yet succeeded in discovering social laws, so as to be 
 able to formulate them. A great amount of labor yet remains 
 to be done in the stages of preparation. There are, however, 
 not more than two or three other sciences which are making as 
 rapid progress as sociology, and there is no other which is as 
 full of promise for the welfare of man. That sociology has an 
 immense department of human interests to control is beyond 
 dispute. Hitherto this department has been included in moral 
 science, and it has not only been confused and entangled by 
 dogmas no two of which are consistent with each other, but also 
 it has been without any growth, so that at this moment our 
 knowledge of social science is behind the demands which exist- 
 ing social questions make upon us. We are face to face with 
 an issue no less grand than this : Shall we, in our general social 
 poHcy, pursue the effort to realize more completely that consti- 
 tutional liberty for which we have been struggling throughout 
 modern history, or shall we return to the mediaeval device of 
 functionaries to regulate procedure and to adjust interests? 
 Shall we try to connect with liberty an equal and appropriate 
 responsibility as its essential complement and corrective, so that 
 a man who gets his own way shall accept his own consequences, 
 or shall we yield to the sentimentalism which, after preaching- 
 an unlimited liberty, robs those who have been wise out of 
 pity for those who have been foolish ? Shall we accept the 
 inequalities which follow upon free competition as the defini- 
 tion of justice, or shall we suppress free competition in the
 
 SOCIOLOGY. 323 
 
 interest of equality, and to satisfy a baseless dogma of justice? 
 Shall we try to solve the social entanglements which arise 
 in a society where social ties are constantly becoming more 
 numerous and more subtle, and where contract has only partly 
 superseded custom and status, by returning to the latter, only 
 hastening a more complete development of the former? These 
 certainly are practical questions, and their scope is such that 
 they embrace a great number of minor questions which are 
 before us and which are coming up. It is to the science of 
 society, which will derive true conceptions of society from the 
 facts and laws of the social order, studied without prejudice or 
 bias of any sort, that we must look for the correct answer to 
 these questions. By this observation the field of sociology and 
 the work which it is to do for society are sufficiently defined. 
 
 William G. Sumner. 
 
 VALE COLLEGE 
 
 LOAN LIBRARY 
 or Political Economy.
 
 November, 1882. 
 
 WAGES. 
 
 ONE may read, in scores of books and articles, that political 
 economy is going through a transition stage. The infer- 
 ence appears to be that the period is a convenient one for any 
 one who chooses to do so to contribute some crude notions to the 
 prevaiHng confusion. It is certainly true that there is no body 
 of economists engaged in carrying on the science of political 
 economy by a consistent development of its older results 
 according to such new light as can be brought to bear upon 
 them. The science is exposed to the derision and flippant jests 
 of those whose vested interest in old abuses is threatened by it, 
 and it has forfeited its influence in the counsels of legislators 
 and the cabinets of statesmen because those who call them- 
 selves economists are busy in turning economic science to scorn. 
 Every science suffers more or less from men who meddle with 
 it without mastering it, and from those who think carelessly, 
 generalize rashly, or make concessions hastily; but a progres- 
 sive science is always in the control, in the last resort, of a body 
 of competent scholars who correct aberrations, and every such 
 science possesses a body of criticism which is strong enough to 
 repress presuming ignorance and charlatanism. Political econ- 
 omy is in no such position. A host of writers have been busy 
 for the last twenty years introducing conflicting and baseless 
 notions which, for want of a competent criticism, have won 
 standing in the science. Others have made a boast of turning 
 their backs on scientific method, and of describing, by way of 
 contributing to political economy, some portion of the surface 
 appearance which is presented by the mass of economic phe- 
 nomena in their sequence, variety, and complexity. That is as 
 if a historian should boast of abandoning the attempt to trace 
 17
 
 242 THE PRINCETON REVIEW. 
 
 social forces in history, and of returning to the description of 
 royal marriages and diplomatic intrigues. With all this the new- 
 school has been by no means moderate in its terms of contempt 
 for all who did not accept the decree that Smith, Ricardo, and 
 Mill were exceptional imbeciles to adopt and teach the old 
 doctrines. I confess, for one, that for some years the writers of 
 the new school imposed on me not a little by their airs of con- 
 fidence and superiority. It seemed to me that I could perceive 
 the errors into which they had fallen, the emptiness of their 
 objections, the crude and unscientific character of their think- 
 ing ; but I was forced to doubt and hesitate lest it might be I 
 who was at fault. 
 
 For an example I will not take a small case or an extreme 
 case. I will take an example of a very interesting and valuable 
 book by one of the best living writers on political economy, but 
 one who has, in my opinion, made unfounded and improper 
 concessions on important economic doctrine. Leroy-Beaulieu' 
 has not been able to escape the fascination of the longing for 
 equality, and he declares his conclusion that Ricardo's doctrine 
 of rent has no application at present because of the immense 
 amount of new land which has become available, and that the 
 Malthusian doctrine of population has no application because 
 improvements in the arts are lowering the cost of subsistence 
 in spite of the increase of population. Further on I shall notice 
 some of the same writer's views about wages. 
 
 In the first place, the question What is true? is one thing, and 
 the question of applicability to a given case is another. The 
 former question is the one which is the concern of the scientific 
 man. There is, however, another and more important view of 
 the objections raised by the French economist. 
 
 In all our sciences we are forced to investigate ratios at the 
 limit or other features of limiting cases. The older economists 
 did this without having analyzed their processes sufficiently to 
 classify them. The Ricardian law of rent is stated as a limiting 
 case in the operation of the diminishing return from land. In 
 any such statement the amount of land and the stage of the 
 
 ' Essai sur la Repartition des Richesses et sur la Tendance ^ une Moindre 
 Inegalit6 des Conditions, par Paul Leroy-Beaulieu. Paris: Guillaumin et Cie. 
 1881.
 
 WAGES. 245 
 
 arts must be constant quantities. When the statement is 
 derived from the limiting case it is used in political economy, 
 as in all other sciences, by giving all values to the variables. 
 Therefore the Ricardian law of rent applies to all cases whatso- 
 ever from Minnesota to Connaught. If we change the con- 
 stants, either by getting more land or by advancing the arts, we 
 produce no change whatever in the law, but only transfer its 
 operation to another plane. As I regard it, M. Leroy-Beaulieu 
 has fallen into the error of regarding a change in the constant as 
 setting aside the law. The law of population is stated in terms 
 of a limiting ratio between population and subsistence, land and 
 the stage of the arts being constant. In its simplest terms the 
 law is that the mortality and the increase of population are in 
 equilibrium at the limit. M. Leroy-Beaulieu says that the law 
 is set aside because we are not at the limit ; but the law evi- 
 dently covers all cases whatsoever, and to say that it does not 
 apply is like saying that men are not under conditions of heat 
 because they are not being either roasted or frozen. Whole 
 libraries of books have been written, by way of criticism on the 
 doctrines of political economy, whose argument consists in 
 showing that human societies are rarely at the limit, or that 
 limiting cases rarely or never occur. It seems to me, therefore, 
 that the responsibility ought to be strictly enforced against 
 men of standing in the science for concessions which introduce 
 confusion, set the popularizers all astray, and make greater the 
 task of those who are striving to secure the appreciation of 
 sound doctrine. The men of the new school have scarcely met 
 with any contradiction for the last ten years. They have had 
 things all their own way. The effects of their teachings are to be 
 met with in newspapers and popular writings. I am, however, 
 one of those who believe that all this activity of the new school 
 has been in the way of confusion and mischief. I do not doubt 
 that we can to-day, with the aid of wider social philosophy and 
 more careful study, expand and correct the doctrines of our 
 science. We can advance it by an orderly and strictly genetic 
 development. Any one who tries to advance it otherwise may 
 be an apostle or a prophet ; he is not a man of science. 
 
 I now propose to re-examine the subject of wages. 
 
 The origin of capital is lost in the obscurity which covers
 
 244 THE PRINCETON REVIEW. 
 
 the first beginnings of civilization. Some faint presages of 
 capital are to be noted amongst brutes. We are told that a 
 gorilla has been seen to take up a stick with which to defend 
 himself when attacked. It is related that a monkey in a 
 zoological garden used a stone to crack a nut, and hid the stone 
 under the straw so as to have it ready on the next occasion. 
 Beasts, however, with such extraordinary exceptions, live on 
 the spontaneous products of the earth, which they consume as 
 they find them, and which they obtain without tools or weapons. 
 Such must also, at some time, have been the condition of 
 man. In that stage of life alone could a man subsist on the 
 immediate product of his labor. His labor consisted purely in 
 an act of appropriation of the spontaneous fruits of the earth, 
 which he consumed as he obtained them. 
 
 There is one tool-weapon given in nature — the flint ; and there 
 is one natural agent which man learned to use so early that we 
 can find no period when it was not in use — fire. Accident was 
 the leading factor in the earliest stage of civilization. All that 
 we know of primitive men warns us not to believe that, if one 
 man found a flint-knife, his comrades quickly took up the deter- 
 mination to acquire something of the same kind. The evidence 
 all imposes upon us the conviction that the period during which 
 the first steps towards capital, by the use of flints and fire, were 
 being made must have been so long and painful that we cannot 
 appreciate it. It is probable that steps forward were made only 
 where population was dense enough to make effort necessary, 
 and not dense enough to produce degeneration or distress. 
 During that period the developments of rudimentary civilization 
 must have been erratic and uncertain. Whenever any man or 
 men, stimulated by perceiving the advantages which a man 
 enjoyed who owned a flint-knife, and unable to conquer him and 
 take it away from him, undertook to acquire one, not by acci- 
 dent but of set purpose, such persons were driven either to 
 accumulate a store of food which would support life while 
 searching for flints, or to go hungry while prosecuting that 
 search. In either case the price of advance was the acquisition 
 of capital by self-denial. From that stage of things up to the 
 present moment it is true, leaving accident out of account, that 
 every step of advance by which man has raised hivisclf abcwe tJic
 
 WAGES. 245 
 
 level of other animals has been won by standing on a past self- 
 denial, i.e. capital. Capital is, like every other good, only a 
 chance. Man may abuse it to his destruction or may use it for 
 his advancement. That is where the moral deduction comes in, 
 with which the economist has nothing to do, but the converse 
 of the above proposition admits of absolute statement : Every 
 diminution of capital lowers civilization without any possible 
 alternative, and, in its measure, carries the race back towards 
 the primitive barbarism. Labor and self-denial, to work yet 
 abstain from enjoying, to earn a product yet work on as if one 
 possessed nothing, have been the conditions of advance for the 
 human race from the beginning, and they continue to be such 
 still. From the beginning capital has been multiplied into itself 
 in a constant involution. It is labor raised to a higher power 
 and concentrated, and it is by this accumulation that man has 
 gained the disposition of power enough, capable of concentra- 
 tion on a given point, to accomplish all his victories over nature. 
 From the flint-knife up to the breech-loading rifle and the ocean 
 steamer every step of the development is open to our observa- 
 tion, and not a single step in the sequence could be omitted or 
 put in another position without making the result impossible. 
 
 The extension of our political economy which is most essen- 
 tial is the investigation of the element of time, and a specifica- 
 tion of its value and relation in each of our generalizations. 
 Already in the above sketch of the development of capital it is 
 apparent that the relations of time are of the first importance. 
 The work of mankind on low stages of civilization is irregular 
 and unmethodical, but by the time that the agricultural stage is 
 reached the successive periods of production repeat themselves 
 with the regularity, because according to the necessity, of the 
 seasons. Capital is the product of the past season. The work 
 of the present season cannot go on without it, and it is not pres- 
 ent unless the past period has been industriously employed. 
 The future enjoyment, in its turn, depends on the industry of 
 the present. The capital, moreover, in each period of produc- 
 tion must be consumed ; that is, used up and sacrificed. It 
 must be sought again in the new product at the end of the pres- 
 ent period of production, but in the interval it must be suffered 
 to pass away and disappear. The element of risk therefore
 
 246 THE PRINCETON REVIEW. 
 
 belongs to the nature of capital, and the work of mankind goes 
 on in a series of pulsations in which the capital is consumed and 
 sought again with increase in an endless series of reproductions. 
 
 On the hunting stage each man participates in the work and 
 in the enjoyment. On the pastoral stage we already find cases 
 in which men are left outside of any family connection and 
 without cattle, the most essential form of capital. Such men, 
 if not adopted into a family, and others who voluntarily take 
 such a course, serve others who can give them a social status 
 (security) and a share in the means of subsistence. In the early 
 stages of the agricultural stage each man tills land for himself, 
 and, so long as the land is abundant, new-comers simply take up 
 more of it. In such a state of society, which is repeated sub- 
 stantially in all new countries, there is no class of persons who 
 labor for others for hire. If any do this in their youth, or for a 
 few years, they speedily acquire the small amount of capital nec- 
 essary, in that stage of society, for tilling land, and become in- 
 dependent land-owners. As the population increases, however, 
 the stage of the arts being assumed constant and land being- 
 taken constant in amount (viz., such an amount as is available 
 for the use of a given society, whether it be, on that stage of the 
 arts, a square mile or the whole earth), increments of subsistence 
 must be won at greater cost of labor and sacrifice. The society 
 is therefore forced to higher and higher organization because 
 higher organization with differentiation of function increases 
 production. As this movement goes on the society becomes 
 more and more complex ; the stake of each one in the stability 
 of the organization is greater and greater, and whole classes 
 arise which perform remote and incidental functions which 
 would not exist at all in a less developed social system. In such 
 a society a class of persons comes into existence who have no 
 capital and no land. They must subsist from day to day out of 
 the existing capital of the society by obtaining that capital from 
 the owners of it through some form of voluntary agreement. 
 
 The English economists speak of the gain from the poorest 
 land in cultivation as equal to current wages and profits. That 
 they should have regarded wages and profits as positive data or 
 known quantities is not strange in view of their situation and 
 the circumstances of their country. There are in fact no posi-
 
 WAGES. 247 
 
 tive data in economics from which results may be deduced as 
 unknown are derived from known quantities. We have to ac- 
 custom ourselves to think of the industrial system as in con- 
 stant flux and readjustment. The elements of the system are 
 numerous and are subject to constant variations in quantity and 
 in their relations to each other. They are constantly moving, 
 so that all forces which are produced in the system are dis- 
 tributed and taken up throughout the whole of it, so that every 
 part is affected. A man of scientific training who studies society 
 can no more doubt that this is true than he could doubt 
 its truth as a general doctrine of the physical universe, altho 
 society is more complex and its phenomena elude our investiga- 
 tion more completely. No doubt, taking a certain period, say 
 a decade, into account, the existing ratio of product from the 
 poorest land in cultivation to the labor and capital which must 
 be expended on that land in the existing stage of the arts sets 
 the general limit of the status of the lowest class of the popula- 
 tion, from which the status of other classes is established in the 
 proportion of what they contribute by their labor and capital to 
 the total product of the country. In a new country where land 
 can be tilled with a minimum of capital and a minimum organ- 
 ization of labor, any able-bodied man can obtain it and can win 
 from it all the essentials of subsistence. To such a man the re- 
 lation of wages to land is presented as an open alternative. 
 There is no class, in such a country, of men who are driven, by 
 the necessity of living, into a desperate competition with each 
 other, without reserve, to get a share in the capital of the so- 
 ciety. Women do compete with each other without the alter- 
 native. This is one of the chief reasons why their earnings are 
 less than those of men in similar cases. In such a country 
 there will be only an imperfectly differentiated wages class. The 
 minimum of wages, where wages are paid, must be such as will 
 give, all things considered, as good a return of cpmfort as can 
 be won directly from the land. Since the latter return is great, 
 wages must be high. Such is the state of the case at the pres- 
 ent time in the United States. On the other hand, a country 
 whose population is so great that the last increment of subsis- 
 tence must be won from soils which require a great expenditure 
 of labor and capital to win a meagre supply of the means of sub-
 
 248 THE PRINCETON REVIEW. 
 
 sistence per head of the laborers must have a class of persons 
 always on the verge of distress. As the use of such soils re- 
 quires a large expenditure of capital, the laborers engaged upon 
 it are employed by hire, and their status fixes a minimum of 
 wages for manual labor. 
 
 Let us now vary the constants, the amount of land and the 
 stage of the arts. It is plain that we immediately widen the 
 margin of ease still further in the new country, and that we im- 
 mediately relax the stringency of the situation in the old coun- 
 try. That is why civilization has advanced, and why we are now 
 striving all the time to win progress in the arts. If the advance 
 should be won as a single isolated step, it would bring relief for 
 a time to all and an enlarged chance to all, but the law itself 
 would not change at all ; and if the population increased until it 
 had absorbed all the advantage which had been won, the same 
 results as before would be repeated. At the present time the 
 unoccupied land of the earth is brought within such easy reach 
 of all civilized men that there is no reason, save in the negli- 
 gence of the classes interested themselves, why there should be 
 any class of persons in the civilized world directly dependent on 
 hire. The greatest mischief of all socialistic and semi-socialistic 
 teaching is that it teaches the classes in question not to avail 
 themselves by their own energy of the chances which are open 
 to them, but to stay where they are and expect somebody else 
 to make them happy there. 
 
 In a village community each man addressed himself directly 
 to the soil to get out of it the means of subsistence. If then he 
 failed for any reason whatsoever, he could only blame himself 
 or nature. In our highly organized society we are all bound to 
 each other in various relations while trying to win subsistence. 
 The struggle for existence, therefore, which formerly had the 
 character of a struggle of man with nature, now has the char- 
 acter of a struggle of man with man, and a " social question" 
 arises whenever a man is dissatisfied with the return which he 
 wins from the social co-operative effort. For instance : If a 
 man were working by himself as a wheelwright and selling his 
 wagons, he would have to put up with the best return which his 
 labor and capital could win. If he could find any other trade 
 which he could adopt and which would pay better, he would
 
 WAGES. 249 
 
 change. If, however, a capitalist employed wheelwrights and 
 sold wagons, and if the trade should not bring back the capital 
 and profits, the employer would either discharge men or lower 
 wages. This is the form in which, under the social organization, 
 the warning would come to the men that a redistribution of 
 labor was required, but it would appear to them to be the act 
 of the employer. Similar observations would hold of scores of 
 other cases in which the ills of earthly Hfe come to us as mis- 
 deeds of our neighbors towards us, on account of the relations 
 in which we stand in the industrial organization. 
 
 Supply and demand, in the last analysis, are only so much 
 need of subsistence and so many resources of subsistence, or, in 
 other words, they are only the forms which are taken in the 
 social organization by the original need of man addressed to 
 nature on the one side, and the stores of nature open to the 
 effort of man on the other. An isolated man would find the de- 
 mand in his brain and the supply by his hand. When the sup- 
 ply had produced satisfaction the demand would arise again, and 
 the reactions between the man and his environment would be 
 repeated as long as he lived. In a primitive society a man who 
 needed food exerted himself to get it from nature by some 
 direct effort. A "just" return for his effort was — what he got. 
 Under division of labor and exchange, even up to the last re- 
 finements of our modern industrial organization, it is still true 
 that the society develops needs and addresses its efforts to 
 nature to try to win satisfaction, but every man is forced to 
 reach nature through a multitude of relations with his fellow- 
 man. We stand in a double relation as suppliers and demanders 
 around the one pile of goods which our organized effort has 
 won from the earth and advanced into a shape to satisfy human 
 needs. Hence every exchange involves two articles, each under 
 two different relations. One article is supply to A and demand 
 to B, while the other article is demand to A and supply to B. 
 Hence demand and supply are the relations which bind men to- 
 gether into a human society for co-operation and high organiza- 
 tion in a joint effort to win the supplies of life. The lowest 
 terms to which any exchange can be reduced are therefore 
 represented by two curves cutting each other; that is to say, by 
 two simultaneous equations between two variables. Even then
 
 250 THE PRINCETON REVIEW. 
 
 we have only a representation of an instantaneous transaction. 
 If we take into account successive transactions and variations in 
 supply and demand, we must introduce the element of time. 
 We should then have to use the third dimension to represent 
 the case, and after all we should have only an empirical, statis- 
 tical, or, as we might call it, a statical, representation of supply 
 and demand. If we should attempt any analysis of supply and 
 demand regarded dynamically, we should also have to use the 
 element of time ; and if we made such an attempt, we should 
 find ourselves doomed to inevitable failure. It is not possible to 
 analyze supply and demand. Why does A offer wheat for $l 
 and B bid only 99 cts. for it ? These are secrets of the con- 
 sciousness of the parties. One or both of them may be led by 
 considerations which are erroneous. That will not affect the 
 influence of his bid on the market. The economist can do no 
 more than to note the bid when it is made as a contribution 
 to the making of the price. The reasons for it he cannot dis- 
 cover. The most that he can do towards the analysis of supply 
 and demand is to study the facts and circumstances which, by 
 general tendency, go to make the supply of a given commodity, 
 or the demand for it, greater or smaller. Indeed this is the 
 only thing which it is of importance for us to know. Supply 
 and demand are together the ultimate force or fact to the econo- 
 mist. They are to him what gravity is to the astronomer or 
 chemical affinity to the chemist. We want to know the mode 
 of their action, but the reason of it is beyond our reach. Supply 
 and demand act to clear the market. If there were a closed 
 market and a sale without reserve, supply and demand would 
 just distribute all the commodities on the market. Supply and 
 demand would not give each person what he would like to have, 
 nor satisfy any ideal desires, any more than a man who ad- 
 dresses himself directly to nature in the first instance gets what 
 he would like to have, but, if they act freely, supply and demand 
 distribute commodities so that a given amount shall produce a 
 maximum of satisfaction to the community between whose mem- 
 bers the exchanges are made. At that point supply and demand 
 would be in equilibrium and no further transactions would be 
 made. In a simple society, with exchanges at country fairs, this 
 state of things was reached. In our modern society, in which pro-
 
 irAGES. 251 
 
 duction, exchange, and consumption never cease, the conditions 
 of the market constantly change and never cease, so that sup- 
 ply and demand move on towards an equilibrium which is never 
 realized because the conditions of it are constantly changed. 
 What then is "justice" in this connection? The distribution 
 which takes place under the free play of supply and demand 
 gives us our definition of justice as applied to the contribution 
 which an individual puts into the social effort and the share he 
 gets out of the social product. There is no other definition of 
 justice which can be seriously considered. 
 
 There are two sources of confusion which must now be cor- 
 rected. 
 
 1. The first is the definition of wages. If wages mean the 
 remuneration of labor, then wages are a chief class, and we must 
 distinguish between payment by the piece, contract wages, de- 
 ferred wages, store pay, etc. etc., as sub-classes. If we make 
 the definition of wages to fit contract wages, then the remuner- 
 ation of labor will be a chief class, and we must distinguish 
 between wages, payment by the piece, store pay, etc. etc., as 
 sub-classes. Either classification is legitimate if it is faithfully 
 observed throughout, but if any ambiguity is allowed to creep 
 in it will produce the logical errors of a double definition and 
 confusion between a chief class and a sub-class. These logical 
 errors run through a great deal of the controversial literature 
 about wages, and when they are cleared away a great part of 
 the controversy falls to the ground. The second of the above 
 classifications is by far the best, because it allows of a defini- 
 tion of wages which conforms to the popular use of the term. 
 Wages arc a payment per unit of time by the employer, in return 
 for which the employee agrees to use his prodtictive powers during 
 the time specified as the employer may direct. I use the word 
 under this definition only. 
 
 2. In the works of Mill and the other authorities there is a 
 confusion as to the source from which wages are paid which is, I 
 think, one chief cause of all the controversy which has arisen on 
 this subject. It is distinctly taught under the head of wages 
 that the demand for labor is capital, and that wages are paid out 
 of capital. Under the head of distribution it is said that the 
 product is divided into wages, profits, and rent, from which it
 
 252 THE PRINCETON REVIEW. 
 
 would follow that wages are paid out of product. Leroy-Beau- 
 lieu describes the employment of capital to sustain labor dur- 
 ing production with great minuteness (pp. 366-70), and then 
 declares summarily that the only " wage-fund " is " the total 
 annual production minus what is necessary to maintain capital " 
 (p. 382). Ricardo held that profits and wages are the leavings 
 of each other. Later economists have generally rejected this 
 doctrine, but even those of them who maintain that wages are 
 paid out of capital fall back into arguments which imply its 
 truth. For instance, Cairnes, who earnestly maintained that 
 capital is divided into wages, raw material, and fixed capital, 
 argued that trades-unions could not increase the wages in the 
 several trades, because, if they did so, they would reduce profits 
 below the rate which would make investment worth while. On 
 his own doctrine, increased wages could not trench on profits. 
 He should have argued that wages, if increased by a trades- 
 union, could only be increased at the expense of raw material 
 or fixed capital, which would be far more difficult than to in- 
 crease them at the expense of profits. Indeed if the trades- 
 union movement did not coincide with a new distribution of 
 capital into its three parts (a new distribution which would pro- 
 duce a rise in wages), the trades-union could not possibly force 
 an advance at the expense of raw materials or fixed capital. 
 We shall see further on that wages and profits are not the leav- 
 ings of each other, because they are not parts of the same whole. 
 If we could arrest the production and consumption of wealth 
 in the United States at a given moment of time and take an 
 inventory of all the wealth at that moment existing, it is evi- 
 dent that it would be an exact arithmetical quantity. It 
 would be what the combined industry, economy, extravagance, 
 folly, and idleness of all past time on the part of the American 
 people had made it. It would be less because we have had 
 a civil war, a protective tariff, a paper-money crisis, fires at 
 Chicago and Boston, etc. etc., than it would have been if our 
 public policy had been wiser and our misfortunes less. What- 
 ever the existing wealth might be, no regrets could carry us 
 back to increase it by a grain of wheat or a pound of iron be- 
 yond what it was at the moment supposed. This wealth would 
 be divided by its character and by the disposition of it which
 
 WAGES. 253 
 
 was intended by the persons who owned it, in the then begin- 
 ning period of production, into fixed capital, raw material, and 
 supplies for the support of laborers. In one country, like Eng- 
 land, the industrial system might be such that the support of 
 laborers would nearly all be distributed in wages. In that case 
 the term "wage-fund" might with great propriety be applied 
 to it as a technical term to avoid a circumlocution. In another 
 country, like the United States, the supplies for the support 
 of labor might be, for the most part, owned by yeomen farm- 
 ers and other independent laborers, or they might be distrib- 
 uted by other modes of remunerating labor than wages. A 
 laborer may own a farm and support himself while working, 
 and wait for his pay until the work is done. He then advances 
 part of the capital and is not strictly a laborer only. He may 
 take "store-pay." In that case he also advances part of the 
 capital of the enterprise, and he goes into the market to borrow 
 that capital, paying very heavy discount rates for it. These 
 cases cannot throw any light on wages. They have to be noted 
 only to eliminate them from the consideration of wages. The 
 wages system exists, as above shown, only where the ratio of 
 population to land is such that a class is differentiated which, 
 having no capital or land, is dependent day by day for support 
 on a contract relation with those who have capital. We have 
 also seen that, above the very lowest stage of life, capital must 
 precede and be the means to every productive effort. 
 
 In the actual period of production then, on a wages system, the 
 existing supplies for laborers are distributed to laborers in wages 
 while they, with the help of the fixed capital, till the ground 
 and work up the raw materials, transforming the old capital into 
 a new product. The risk, as we have seen, belongs to capital, and 
 the great advantage of the wages system is that it leaves the 
 risk all on capital. The laborer works by time, and when the 
 time is over his contract is fulfilled. He takes no risk or re- 
 sponsibility. He is therefore at liberty to address himself to 
 the accumulation of capital in the simplest possible manner, by 
 economy of his wages, undisturbed by other elements. His share 
 in the business lasts during the period of production and ends 
 with it. He has no claim or right in the product, for he sold 
 his share in producing it and took his pay for it during the pro-
 
 254 THE PRINCETON REVIEW. 
 
 cess. The product is divided at the end of the period of pro- 
 duction into the replacement of the capital (support of laborers, 
 raw material, and wear of fixed capital), profits, and rents. As 
 the capital to be replaced belonged to the capitalist, all the re- 
 placement goes to him together with the profits. Rent goes to 
 the land-owner. The products are next distributed by supply 
 and demand amongst all the members of the society, who turn 
 them into capital and divide them, according to their good judg- 
 ment, into the same parts as before, the product of the last 
 period perhaps becoming the raw material of the next, and 
 another period of production is then begun. If the product 
 and profit of the last period were large, the accumulation of 
 capital will be large — that is, the stock of supplies for laborers 
 in the next period will be great ; but it is not until the next 
 period, and after an increase of capital, that any effect on wages 
 can be produced. Hence it is clear that wages and profits are 
 not parts of the same whole. Wages were in capital at the 
 beginning of the period of production; profits are in the pro- 
 duct at its close. We cannot establish any equation between 
 the wages and the total capital, or the profits and the total pro- 
 duct, or the total capital and the total product. How then can 
 we establish an equation between wages and profits so as to 
 determine the effect on one of variations in the other? 
 
 When now we have thus analyzed the operation in detail of 
 the constant action and reaction by which the industrial func- 
 tions of society are carried on, it is immaterial what may be the 
 speed at which the process goes forward, or what may be the 
 varieties of detail in different industries. Nothing can alter the 
 nature or sequence of the forces and effects. The effect of 
 credit to economize time and synchronize certain steps changes 
 nothing in the scientific analysis of the process. It is a separate 
 complication and refinement to be studied hv itself. 
 
 Four inferences may be drawn immediately. 
 
 (i) We see that all questions whether the laborer gets his 
 share of the product or not are, under the wages system, non- 
 sensical. (2) That the appeal, often made in England, to work- 
 men to take lower wages, so that the English products can be 
 sold cheaper in foreign markets, are founded on false concep- 
 tions of wages, and ought to have no weight. (3) That the
 
 WAGES. 2$$ 
 
 arguments of the American protectionists, drawn from compara- 
 tive rates of wages, are all fallacious. (4) That the attempt 
 to connect wages with the price of products, by a sliding scale 
 or otherwise, is founded on no true relations, and is doomed 
 to failure. If an employer should say to his men, " My business 
 is not prosperous like that of my neighbors. I want you to work 
 for me for $2 a day, altho the market rate which you could get 
 is $2.25," — he would not deserve a respectful reply. Neither is 
 there any sense at all in the demand of the men, if they say to 
 the employer, " Your business is exceptionally prosperous, and 
 we want you to give us $2.25, altho the market rate which we 
 could get elsewhere is $2." 
 
 The notion that wages ever can be paid out of product is 
 the most ridiculous notion which has ever been introduced into 
 political economy. It would mean that a man who was tilling 
 the ground in June could eat the crop he expected to have in 
 September, or that a tailor could be wearing the coat which he 
 was making. Men could then eat their intentions, wear their 
 hopes, and be warmed by their promises. Even more than this ; 
 they might then believe that regrets were no longer vain, and hav- 
 ing borrowed the future they could recall the past. The man who 
 has been industrious to-day has a supper to-night. The man 
 who has been idle to-day is hungry to-night. If wages can be 
 paid out of product, the latter man, in his hunger, penitence, 
 and regret, might as well obtain a loaf advanced from nature on 
 credit to-night as to get one at any other time before he has 
 won it by labor. He could then eat and sleep, and in the morn- 
 ing he could break his promise to nature and refuse to produce 
 the loaf. Whenever nature yields to man an atom which he 
 has not earned, or advances it one second of time before he has 
 earned it, we may all turn socialists and utopists. The real gist 
 of the question about wages lies right here. The " wage-fund " 
 is of no importance one way or another. Every one who has 
 yielded to sentimental faiths or longings to lessen the hardships 
 of getting a living, or to discover some way by which men may 
 attain to happiness except by conquering it, has seen himself 
 forced to attack the doctrine that wages are paid out of capital. 
 
 Some instances of the fallacy about wages which has just 
 been exposed are worth analyzing. In the July number of the
 
 256 THE PRINCETON REVIEW. 
 
 Princeton Review Mr. Carroll D. Wright gives two cases 
 which he makes the basis of deduction on the doctrine that 
 wages are paid out of capital. The first case is stated thus: 
 
 " The workers are often the direct cause of the reduction in wages. This 
 is well illustrated by circumstances within my observation. A well-known 
 and prosperous dealer in boots and shoes in one of our large shoe towns is 
 very popular with the workingmen because he will sell them a pair of boots 
 for a quarter less than the same quality can be purchased elsewhere. It 
 does not occur to them that they have paid that discount, but they com- 
 plain to their employers who have cut them down — a cut-down required 
 in order to furnish the popular dealer with goods at a low price to enable 
 him to undersell smaller dealers. This retail dealer obtains from the man- 
 ufacturer his lowest price for making one hundred cases as per sample. He 
 then offers to pay so much — a sum less than the manufacturer's estimate 
 — and pay cash. The manufacturer rather than lose a good cash order 
 consents to make the goods, but not being able to reduce the cost of raw 
 material takes the discount out of labor, and the workman berates the 
 employer for reducing his wages while he praises the dealer for selling him 
 his boots at a low price. Such circumstances often exist," 
 
 The inference which we are invited to make is that the 
 workmen were foolish to buy where they could buy most 
 cheaply because they thereby caused their own wages to be 
 reduced. 
 
 In the first place, is the case correctly observed? If so, the 
 employer-manufacturer sold goods by favoritism to one dealer 
 who lowered his price to all his customers, and the employer 
 lowered his wages for all his production so that his men had less 
 to spend for all objects of their desire. The employer, there- 
 fore, in the last analysis, took something from his men and gave 
 part of it to the general public of the vicinity and kept part 
 himself, while his men lost on their wages what they gained on 
 their shoes and more too. No one can regard such a statement 
 as correct who has any conception of economic laws and rela- 
 tions. The true facts lie on the face of the statement. The 
 reduction in price to the retailer came out of interest and insur- 
 ance against bad debts, because it was given for cash. It did 
 not have any connection at all with wages. It is to be assumed 
 that the manufacturer would have given similar terms to any 
 retailer who would have paid cash. Otherwise he would have 
 been guilty of favoritism which would have ruined his business.
 
 WAGES. 257 
 
 If wages were reduced, that act could not have had any connec- 
 tion at all with the fact that the employer had allowed to one 
 customer a reduction for cash. Were, then, the men wise 
 to profit by the reduction? Undoubtedly they were. Mr. 
 Wright is driven by his view of the matter into the venerable 
 fallacy that we get rich by what we spend, not by what we save, 
 or that a demand for commodities is a demand for labor. That 
 is really the fallacy at the bottom of all the unsound views of 
 wages, but it is a certain extension of it to hold that the way 
 for the men to make their wages large is themselves to demand 
 a great many of their own products ; that is, to spend their 
 money freely. 
 
 Mr. Wright's second case is this : 
 
 "The day-laborer feeling himself more of a man than formerly must 
 oftener wear a white laundered shirt, but he cannot pay over fifty cents 
 for one. The demand of the higher civilization of the day-laborer must 
 be met, and white laundered shirts are supplied at retail for fifty cents, and 
 even for thirty-seven cents. But the wages of the women who make 
 them have been reduced to eight cents per shirt. All such illustrations 
 are simple, but well adapted to show the workingman what is meant by 
 wages being paid from the product of labor, and in accordance with the 
 profit which may be expected from the sale of the product." 
 
 What effect this proof of the effect of paying wages out of 
 product may have on the laborer I cannot say, but I should 
 think that it might arrest the economist by some misgivings as 
 to his dogma. The fixed fact, the known quantity, in this case 
 is " the demand of the higher civilization of the day-laborer." 
 The day-laborer appears to be in command of the situation. 
 He decides that he wants a white laundered shirt and that he 
 only wants to pay fifty cents for it. Considering that he is the 
 first man in the history of the human race who has ever been in 
 a position to make his wants the law of his satisfactions, he cer- 
 tainly is moderate. As it is, his demand is satisfied by cutting 
 the sewing-women down to eight cents wages. He might have 
 called for shirts at a cent apiece, in which case the sewing-woman 
 must have seen her wages reduced to two or three mills. He 
 might have demanded boots at twenty-five cents, coats at fifty 
 cents, cigars ten for a cent, and so on, and the wages of boot- 
 makers, tailors, and cigar-makers must have come down in 
 18
 
 2S8 THE PRINCETON REVIEW. 
 
 obedience to the law that wages come out of product, to the 
 proper figure to satisfy his demand. Mr. Wright would be 
 forced to argue that the way for the wages class to improve their 
 condition is to buy each other's products freely at generous 
 prices. I am a day-laborer myself. My higher civilization 
 demands that I have a saddle-horse for five dollars and a cottage 
 at Newport for a hundred dollars. If wages are paid out of 
 product, I presume that, now that I have published my wishes, 
 they will be gratified not later than next summer. As for 
 horse-breeders and builders, let them look to their wag-es. I 
 should like the cottage furnished. 
 
 The wild and untrained writers on political economy per- 
 form one useful function. They seize on all the fallacies and, 
 naively and with good faith, perpetrate the reductio ad absurdiim, 
 Mr. George holds that wages are paid out of product, and that 
 they are a portion only of the laborer's own product which the 
 employer gives back to him. If this is true, it suggests three 
 questions: i. What is the difference between a slave and a 
 wage-receiver? 2. Why is any man an employee? 3. Why is 
 not every man an employer? 
 
 The rate of wages is determined, like every other case of 
 value, by supply and demand. The total capital will be divided 
 between wages, raw material, and capital by supply and demand. 
 Capital, however, is limited by its nature with respect to the 
 extent to which it may be transferred from one of these divi- 
 sions to the other. From period to period the capital, when 
 reproduced, is transformed into one or the other class by the 
 dynamical operation of supply and demand. 
 
 From period to period changes in the arts, in the industrial 
 development, in national habits, in fashion as to co-operation, 
 etc. etc., will alter the proportion between the amount of capital 
 paid in wages and the amount used to support laborers under 
 other industrial organizations. The supply of laborers in one 
 or the other mode of industry will also vary. Capital is divided 
 between the wages system and other systems by supply and 
 demand. 
 
 Changes in fashion, art, science, education, etc., will alter the 
 relative importance of non-competing groups in industry. Gen- 
 eral changes will also affect the number of laborers in each of
 
 WAGES. 259 
 
 the non-competing groups. Capital is divided between the 
 non-competing groups by supply and demand. 
 
 Inside of any one group the capital of that group will be 
 distributed (in the absence of trades-union rules or other in- 
 terferences) by supply and demand, according to the demand, 
 and supply of personal talents and capacities. 
 
 Some have inferred from the application of supply and de- 
 mand to wages that the problem of wages was a simple case of 
 a ratio, so much capital to so many men. The error here lies 
 in applying a mathematical relation which is far too simple for 
 the facts of the case. I have stated above what is the simplest 
 mathematical form of an exchange under supply and demand. 
 Obviously it is a great error to treat it as a simple ratio of arith- 
 metical quantities, or even as a ratio of variables. 
 
 Others have turned away from the application of supply and 
 demand with impatience. The Germans like to say of it that it 
 is nichtssagend. Some of them put " law" in quotation when 
 they speak of it. Any one who can sneer at supply and demand 
 or regard it as a barren formula has certainly failed to under- 
 stand it, or to study the scope and subtlety of its action. No 
 one has ever analyzed supply and demand, regarded dynami- 
 cally, because no one can. Leroy-Beaulieu says: "We cannot 
 affirm that this formula [supply and demand] is false. We 
 ought only to say that it is philistine and commonplace. It is 
 certainly true, as Cobden said, that when two bosses run after 
 one workman wages rise, and when two workmen run after one 
 boss wages fall; but this sort of truism is not fitted to satisfy 
 strict thinkers. What are the circumstances which determine 
 the demand and the supply?" This last question he does not 
 answer, nor even attempt to answer. It seems to me that 
 a strict thinker proves himself by recognizing an ultimate 
 scientific fact or law when he comes to it. The more one 
 studies, the more one finds that the results of all studies are 
 truisms. One is astonished that he did not see at once, by pure 
 common-sense, the highest and last result of laborious investiga- 
 tion. If there is anything philistine and commonplace, it is to 
 set aside the results of study as " truisms," and to pursue ques- 
 tions which can only lead off again into a maze of unclassified 
 phenomena. Further on the same author says that in addition
 
 26o THE PRINCETON REVIEW. 
 
 to the supply and demand of labor we must take into account 
 the fecundity of capital. He urges that the demand for labor is 
 a function not simply of the amount of capital, but also of its 
 organization and activity. But in any given period of produc- 
 tion any new activity or improved application of capital cannot 
 act upon the wages during that period. The advantage will 
 appear in the product of that period, it will swell the capital of 
 the next period and then act upon wages. He then adds : " It 
 is not proper to say simply, The more capital increases rela- 
 tively to population, the more do wages rise. This proposition 
 would be either inexact or incomplete, for the productive force 
 may advance far more rapidly than the accumulation of ma- 
 terial capital." This objection is not sound. If productive 
 force increases, it immediately produces more capital. That is 
 the proof that it has increased, and the mode in which the gain 
 from increased force is realized. Advance in productive power 
 is therefore followed by increase of capital within an interval of 
 at least one period of production, altho further increase of 
 capital, due to the same development of productive power, may 
 continue to advance in a geometrical ratio through a long series 
 of subsequent periods. New machines produce quick and 
 approximately uniform increase of capital. Education or better 
 government produce slower returns, which advance at a high 
 ratio through a long period. The same author then comes to 
 the "true formula" which he proposes "after having set aside 
 the formulas and inflexible notions of the principal economists:" 
 " The more production increases relatively to population, the 
 greater is the chance that wages may rise." We have here a 
 capital example of the necessity of separating the element of 
 time in economic problems, and subjecting it to special study. 
 We set out to find a formula for what determines the rate of 
 wages, which is always a fact of a given time and place. We 
 are offered a formula of the conditions of change in that fact 
 between one time and another. Let us try a parallel. It is 
 asked, What determines the weight of a man ? The answer is, 
 Gravity acting on the mass of his body. No, M. Leroy-Beau- 
 lieu would say, that is a formula or inflexible dogma of the 
 principal physicists. The weight of a man is determined by the 
 fact that, if he has a good constitution, good health, good diet,
 
 WAGES. 261 
 
 obeys hygienic rules, does not work too hard, loses no limb by 
 accident, etc. etc., his weight may increase from one time to 
 another. Such errors would be impossible in any science but 
 political economy, but recent economic literature is largely 
 made up of just such confused thinking and reasoning. The 
 rate of wages is the rate at which services are exchanged for 
 means of subsistence under free contract and competition. It 
 is therefore determined by supply and demand, like price, rate 
 of interest, rate of foreign exchange, and all other cases of value. 
 We find therefore that there never ought to have been any 
 " question" about wages at all, any more than there should have 
 been a question about raw material or fixed capital. It is all 
 wasted energy to re-analyze the subject and expose the fallacies 
 which have been introduced by incompetent meddlers in econo- 
 mic science, encouraged by the concessions of the economists. 
 Wages do not belong in distribution at all. They belong in the 
 application of capital to production. The capitalist-employer 
 is led by self-interest to try to keep wages down just exactly as 
 he tries to prevent waste of raw material or wear and tear of 
 fixed capital. The employee is led by self-interest to try to get 
 all the wages he can. The struggle is legitimate and necessary. 
 The result of it is that supply and demand distribute the capital 
 amongst the laboring wage-receivers in the proportion which 
 conduces to the maximum of production under all the existing 
 circumstances. If trades-unions or employers' associations intro- 
 duce interferences they may temporarily disturb this adjust- 
 ment, but all such interferences avenge themselves in the end 
 by compensating reactions. If a man knows how to earn more 
 than he is getting, he ought to insist on getting more where he 
 is or he should change. If an employer can get an equally com- 
 petent man at lower wages, he ought to get him or lower wages. 
 If we depart at all from this rule, we entangle ourselves in an 
 endless muddle of sentimental rubbish, we lower production, 
 and contract the welfare of all. There is therefore no " social 
 question," or struggle of class with class, involved in wages. 
 The notion that there is under " distribution" some new and 
 unexplored field of economic science is entirely without founda- 
 tion. That notion threatens to bring political economy still 
 further under the dominion of metaphysics and sentiment, by
 
 262 
 
 THE PRINCETON REVIEW. 
 
 the introduction of some notion of "justice," derived aliunde, 
 as a controlling conception in economical science. It is indeed 
 painful to think what an immense amount of poetry and decla- 
 mation is swept away when we once get at the truth of the 
 relations with which we have been dealing. If these relations 
 were correctly understood, it would be impossible to make 
 people any longer applaud the orator who finds it unjust that 
 an industrious man is better off than a lazy one, or who wants a 
 revolution because the man who has won capital by self-denial 
 gets more luxurious living for himself and his children than the 
 man who has spent as he went along. We should, however, 
 have more sober industry and manly effort on the part of free, 
 independent, and intelligent laborers to win capital and to put 
 themselves and their children in a better position. There is no 
 reason at all, at this moment, barring disease and accident, why 
 any man living should not acquire capital, and, in view of the 
 progress in the arts, there is no reason to apprehend, as far in 
 the future as we can see, that this chance will not become 
 rather greater than less for all who are prudent, industrious, 
 and frugal, and who will turn their backs on the social doctors 
 who have patent schemes for making everybody happy by set- 
 ting those-who-have-not to rob those-who-have. 
 
 William G. Sumner.
 
 YALE COLLEGE 
 
 LOAN LIBRARY 
 of Political Economy.
 
 AA 001 120 498 9