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LIBRARY 
 
 OF THE 
 
 University of California. 
 
 Received -vX^»^^<^ , iSg} . 
 
 Accession No.^S2^f6- Class No. 
 
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PROBLEMS OF TODAY. 
 
 TUE NATIONAL REVENUES. 
 
 CLEARLY AND IMPARTIALLY DISCUSSED. 
 
 i 
 
 0- 
 
 Ey Dr. Richard T. Ely, Political Econo- 
 juist of tho Juliiit^ Uopkintt Univer:»ity. 
 
 [Written for t^e Baltimore Sun.l 
 
 ARTICLE I— INTROBUCTOUY. 
 
 t>avo been asked by The Sun to write a 
 Series of articles on various problems of 
 tlio il:iy, some of them relating' to national 
 life, others to Srato iiCfairs and still others to 
 our own city. It gives me pleasure to comply 
 Kivith this request, for I reco(rnizo in Thb Sun 
 a journal of wi io lnfluence,of intearrity beyond 
 q lestion and of raio impartiality as between 
 the various classes of industrial society; a 
 newspaper, in short, conspicuous for its de- 
 voUon to the public weal and not for its sub- 
 Sf?rviency to special private and selfish inter- 
 esi5, 83 so often happens in these days. It is 
 well that the reader should at once under- 
 stand the character of this proposed series of 
 articles, of which the present istheopaninff 
 one. First, then. It; must be borne in mind 
 that an exhaustive treatment of the subjects 
 uisfussed cannot be expected; that such a 
 troitment is not contemplated, for the topics 
 are too lirse to admit of it even within the 
 generous limits allowed ma by The Sun. I 
 intend rather to elucidate certain elementary 
 principles in the simplest lauffuaere at my 
 command, and to make a few sugrgestions in 
 regard to such questions as the na- 
 ture of commerce, the balance of trade 
 theory, the policy of protection, its connec- 
 tion With monopoly and lis beariu>r on the 
 welfare of labor, the treasury surplus, JetTer- 
 sonian demncrac3', taxation in Sia^eand city 
 and temperance reform. I shall not play-the 
 part of an advocate and say certain things 
 merely because they are calculated to pro- 
 duce an effect or annoy an adherent of oppos- 
 ing views; r it her, I shall endeavor to help my 
 reiders to get at the truth about many vexed 
 questions which are much obscured by parti- 
 san controversy. Few statistics will be used, 
 because statistics both as a science and an 
 art j9 siill in an unsatisfactory condition, and 
 the data it furnishes are larerelv unreliable; 
 further, because "nothltur lies like figures"— 
 in other words, it requires a trained mind to 
 pass jtidurment on statistical arguments, and 
 It is very easy, by a sort of hocus pocus, to 
 make statistics prove whatever you please. 
 Let us take as an example of fallacies in sta- 
 tigti.s one which has carried great weigh 
 with it. Irefertoiihe argument about our 
 Increase in wealth end its connection with a 
 protective tariff, in Mr. James G. Blaine's cel- 
 ebraied letter in which he accepted 
 the nomination to the presidency of the 
 United States. Mr. Blaino states that 
 the wealth of the United States in ISiJO 
 amounted to !fU,00O.OO0,O(X»; that "after 1S60 
 the business of the country was encouraged 
 and developed by a protective tariff," and 
 that at the end of twenty years the valuation 
 of our property had Increased to the enor- 
 motts agtrr! r $44,000,000,000. An Enarlish- 
 
 man, h ;\ nnui' diatoiy comeS forward 
 
 ■with a s ju* to show that there has been 
 
 an equally marvelous increa<?e In national 
 wf^alth in his country since 1846, w^Jen free- 
 trade principlos were introduced, and ho 
 attribute s this prosperity to the policy of free 
 trade. Bo ir areu- 
 
 lunio CO i-..>v.^,>^io. V, j.iiu I was walking 
 down Biltimnre street yesterday a merchant 
 sold ten thousand dollars' worth of crooda. The( 
 two f'V'^-^^ " "oened together, but was one 
 the ca other? Manifestly you want 
 
 some other proof than the fact that the two 
 events wero contemporaneous. It is equally 
 necessary to atk, bo'h In the case of Great 
 Britain and the United States, what other 
 forces besides tariff latvs were at work to in- 
 creasL' the wealth of each nation, and merely 
 to ask this qucsMon shows that these 
 law9, whether wise or unwise, after all played 
 only a min(;r r^ le. The opening up of new 
 territories, the improved means of commu- 
 nication and tiarisportation, the further 
 application of steam to industry, a host of 
 new inventions and discoveries, accompanied 
 by a population rapidly growing in numbers 
 and increasing In intiiiii^enceand skill— those 
 evidently are the main causes of the aug- 
 mented national wealth of the United States; 
 a!;d Whether the doctrine of protection is 
 true or false, the tariff, after all, was only 
 one factor, and a minor one at that. But let 
 U-? examine this statistical argument more at 
 length. Forty-four billions! That is truly 
 an enormous sum, but bow much of that 
 have you, ray reader? Have you more than 
 you want? How many of i:p, in fact, have 
 enough to satisfy our rational wants? How 
 many of us could advantas?eously exporui 
 more than we have in food, clothintr, im- 
 proved dwellinss, books, music, travel, whole- 
 some recreation? Certainly most people in 
 my circle of acquaintance; and the question 
 may' well be raised whether what we 
 have as a nation is desirably distributed, 
 and whether certain alarming teridencles 
 to concentration of wealth and monopoly in 
 busine, s are whotly unconnected with our 
 t'ariff legislation. Many more similar ques- 
 tions are pertinent, but they will not be 
 raised in this article, it is hoped that what 
 has been said will suffice to show the neces- 
 sity of caution in the acceptance of alleged 
 statistical proof. Statistics are useful, and 
 the formation of an International Statistical 
 Insiit-uie to improve statistics, both as a 
 science and prt. Is to be hailed with unquali- 
 fied satisfaction, but the place o^f figures in 
 a series of articles like this is limited. It is 
 proposed rather to b.^se what is said on facts 
 which can bo observed by everybody, and on 
 principles of common sense and well- 
 attested experience. The subject of national 
 revenue is the first to occupy our atteution, 
 because nearly all national problems involve' 
 sooner or later questions of national finance. 
 There are various Bouroes of revenue, 
 as land, productive enterprises, loans and 
 taxation, and some local and central govern- 
 ments defray a large portion of their expend- 
 itures by profits on certain lines of busi- 
 ness entrusted to them. Berlin, for 
 example, meets more titan eighteen per cent. 
 of its expenses from the net iMvenues of 
 its gas works, although gas is sold below fl 
 a tho: sand; the profits on State railways in 
 the various German States mora than cover 
 the interest charges on their public debts, 
 and one of these German States, Bavaria, pro- 
 vides for over half her budget by returns oa 
 I enterprises of cue kind and another. Bich- 
 Mond, Virginia, and a few other American 
 cities derive profits from gas works. Our 
 federal government, however, is almost; ex- 
 
 iclusively dependent upon taxes. But it must 
 be remembered that taxes are of tw^ kln9l6. • 
 direct and indirect, the former on pli-operty 
 
 JTi. 
 
 LRnd Income, the latter on comi 
 
 iS. The 
 
jment are, how^^ST exclusively inJirect 
 p taxes. We have then to ask this question— 
 "What are the peculiar featured of indirect 
 taxation in greneral, and what SDecial charac- 
 terlsric3 pertain to indirect raxatioh in the 
 United States? An attempt will be made to 
 answer this question in the following: article. 
 
 DIRECT AND INDIRECT TAXATION. 
 
 How and "Where the Fedferal Bardensi 
 Fall— By Professor Richard T. Ely, of 
 Johns Ht^pkins Uuiversity. 
 
 [Writtin for the Baltiraore Sun.l ' 
 
 JARTICLE II. 
 luuirect Ta5teah,^y^ tas;es on commodities; in 
 other words, on ^^^^5, ^t ^^^ ^vear«n^ 
 consume in other ways, OTS#^„n^ ^^..tu^nsls 
 and implements used Inmabufacturtogfiroods 
 for purposes of consumption. They are 
 called indirect tnxes because theyare usually 
 paid in the first instance by one person and 
 shifted by him to anciiher. The importer of 
 salt, sugar and coal pays taxes on these com- 
 modities when they enter the territory of the 
 United States, aids them to the price of his 
 commodities, sells them to some one else, 
 perhaps a wholesale dealer, who in turn dis- 
 poses of them to a retailer, having added the 
 tax and a profit on ihe money which he ad- 
 vanced in payment of the tax. The retailer 
 finally sells them to you and me, but by this 
 time the tax has been turned over several 
 times and hflS jrrown like a snowball rolling 
 down hill. To the retailer tho tax has become 
 «n indistiniruishable part of the price which 
 he pays, and on which he must derive a profit 
 from us, the consumers. Thus indirect taxes 
 ft/»i up, and roll up every time one person 
 shifts them up >u another, until finally the 
 augmented burden rests up >n the phoulder 
 of the taxpayer. An indirect taxisihus a 
 tax which violates one of the celebrated four 
 Canons Of tixation, for it taices from the 
 pockets of the taxpay.er far more th in it puts 
 in!o the nublio treasury. It is a wasteful 
 kind of taxation. This is not mere theory. 
 It is a fact of which any one can satisfy hlm- 
 aeif by conversation with intellijjrent mer- 
 chants who understand the operations in 
 jD which they are enirae-ed. 
 
 HTDIRECT TAXES VIOLATE THB PRINCIPLE 
 OF EQUALITY. 
 
 Another accepted canon of taxation is that 
 Its amount should be measured in each case 
 in proportion to ability or the revenue which 
 Hibitizen of the oommnnwealth enjoys. This 
 if what is called equality of taxation. Gov- 
 ernment should exact equality ol sacrifices of 
 us ail. An income tax honestly, assessed and 
 honestly collected, meets the requiremcMts 
 of this canon. How does the caso stand 
 ijJth ittdireot taxation? This is taxation of 
 consumption; but does consutiiption of taxed 
 commodities vary with income? We Import 
 I ealt and tix it nearly fifty per cent, of its 
 I value. Docs the ricn man consume more salt 
 litban the pocjr man? Do you increase the 
 ^amoarit of salt in your soup with an improve- 
 ment in your financial condition? It is eaid 
 that, on the contrary* the amount of salt con- 
 ■umed by the poor man isjrreater than that 
 #on8umed by the rich mao, because the latier 
 uses other o jndiments, while salt is often the I 
 only seasonintr the former enjoys. We have 
 ' I In a tax like this what is called a retrre^isive 
 jj lax, a tax which increases as income de- _ 
 '" ^-eascs— tb2 worst kind cf a tax and the most ' 
 
 ijinjust. The tax on sugar is over seventy- 
 ,ftve per cent, on value, and from it a lartre 
 ^>art of our revenue is derived. It is similar 
 In principle, although there is a difference in 
 rates accord ing- to value of sugar, so that 
 higher ^rrades pay mope, and it is true that 
 people of laree means consume more than 
 poor people. But the difference in rate and in 
 quantities consumed by no means corre- 
 sponds to differences In Incomes. It may be 
 doubted whether a man with ten thousand a 
 year consumes less than one with fifteen 
 thou!=anvi, and he certainly does not consume 
 an inferior qualty of sugar. 4^ man with 
 two hundred thousand a year will not con- 
 sume twenty times as much as one with two 
 thousand a year, much less will he consume 
 one hundred times as much. Here we still 
 have the regres-ive tax. But take even 
 taxes on silks imported, which yield fifteen 
 millions a year, and aopear to be one of the 
 fairest of Indirect taxes. The rate i« almost 
 fifty per cent. Silk can hardly be called an 
 article of superfluous luxury at the present 
 time, and a lawyer who supports a family on 
 three thousand a year is taxed out of all pro- 
 portion higher than the plutocrat whose 
 income is three hundred thousand dollars. 
 It is needlees to continue illustrations. With 
 the progress of democratic thought, the idea 
 of progressive taxatic^a meets— rightly or 
 wrongly, that need not be discussed 
 here— with increasing favor, and some of 
 the States where the principles of deiusicracy 
 are carried farther than anywhere else in the 
 world, the Swiss cantons, have recently in- 
 troduced progressive taxes on property and 
 on income, but our federal government relies 
 wholly on a system^of reercssive taxatlonl 
 One would think this in itself would be suffi- 
 cient to check the ardor of protectionists 
 who are at the same time workingmen: but 
 this is by no means the whole story. Take up 
 any treatise on taxation and read the argu- 
 ments in favor of Indirect taxation, and 
 what is ihe first thing to attract your atten- 
 tion? it is that with the present calls upon 
 civilized governments, and with the unwill- 
 insfness of people to pay direct taxes, and the 
 resistance which men of means offer to high 
 direct taxes in proportion to income, it is 
 practically impossible to maintain the modern 
 gyvernraent without large contributions 
 from people of limited njsource", and the 
 only way to tax them is by indirect methods; 
 in other words, mincrling taxes with prices 
 paid, so that goods cannot be bought 
 without paying taxes. It is. too, worthy of 
 notice that the English system of Indirect 
 taxation which we have inherited originated 
 in the corrupt re^ trf Charles II, about two 
 hundred years ago. Then the burden of 
 government rested unon the land held by 
 feudal tenure, but the Parliament of Charles 
 II, "by a majority of two only, divested the 
 Inndedgentry of all their feudal obligations 
 to the crown without touching the'.r privi- 
 leges, and as compensation to the State im- 
 posed an excise duty upon,beer, spirits, wine, 
 tobacco aud numerous other articles. * * * 
 It marked the dawn of our modern system of 
 indirect taxation; and the emancipation of 
 the aristocracy from special burdens on land 
 thus accomplished helped to alter the whole 
 current of our later fiscal history." These 
 are the words of an English writer on flna'.ice. 
 
 H 
 
 I 
 
^s,-^ 
 
 
 INUIKKUT TAXATION AND PAUPERISM 
 
 There is a connection between indirect tax- 
 ation and pAuporiam which Is worthy of nc- 
 tice. All direct taxarion places a limit 
 beyond which it will dqj eo. This Is 
 too low In Maryland— at %ny rate lower 
 than elsewhere— but • evert with us a 
 man muat have at l.aist a hundrel 
 dollars to be taxed. Indirect taxation does not 
 discriminate between the last dollar of the 
 poor widow and the dollar which is only one 
 in an income of a million. It raises prices, 
 reduces the value of incoiOe, and forces 
 some who are already near the awful line of 
 pauperism to cross it, and thA« puts to death 
 hicrher aspirations in a class of citizens and 
 lowers the level of civilization. But the ab- 
 surdity of the thlnar is seen in this, that 
 when the tax has destroyed the value of a 
 man as an industrial factor in the community, 
 what has been taken away is given baokin 
 alms! 
 
 INDIRECT TAXES OBSTRUCT TRADE. 
 
 The cost of collection of indliect taxes is 
 hiarh, and necessitates an army of spies and 
 linformers. They thus interfere with liberty 
 ' of movement and obstruct trade in a thousand 
 ways. Thus, asaln, indirect taxes take out and 
 keepout of the pockets of the people more 
 thati they yield to the treasury of the State. 
 
 INDIRECT TAXES CONGENIAL TO DESPOTISM 
 AND ARISTOCRACY. 
 
 Indirect taxes are imposed on people with- 
 out creatine: so much discontent as direct 
 taxes and without so close a scrutiny of the 
 method in which the proceeds of taxation 
 are expended, because the mass of men do 
 not realize that they pay taxes every time 
 they purcbaee dry jfoods or firroceriea. They 
 are an underhanded kind of taxation. It is 
 not. then, surprising that they are in the 
 minds of many identified with despotism and 
 aristocracy, while there is a firrowinjj opposi- 
 tion to them on the part of enlisrhtened de- 
 mocracy—an opposition which undoubtedly 
 troes too far ^t times. In the Unite d' States 
 itshould be rememered that while national 
 revenues flow from Indirect taxes. State and 
 local srovernments are almost entirely sup- 
 ported by direct taxation. National revenues 
 are about as largre aa the revenues of all the 
 States and all the local political units put 
 together, so that we pay about one-half of 
 our total expenses of government by the 
 proceeds of direct taxes and about one-lialf 
 by the proceeds of indirect taxes. There 
 would be great opoosition to an extensive 
 system of direct federal taxes, because the 
 face of the federal taxgatherer in our States 
 is not a welcome sight. Of course he Is now 
 everywhere, but he keeps out of sight of 
 moat of us, and so we do not realize it. 
 A jrood deal of this feeling against 
 direct taxes has been properly called 
 "puerile," and among a people suflGlciently 
 jfDoral, patriotic and enliurhtened Indirect 
 taxation mignt perhaps be abolished. We 
 must, however, take people as we find them, 
 and at present its total abolition is out of the 
 question. Of course it is an undoubted ad- 
 vantage to be able to pay one's taxes in small 
 amounts from time to time, when one buys a 
 few pounds of sucrar, a little tobacco or an 
 article of clothing. Our Indirect federal 
 taxes are of two kinds, tariff duties and in- 
 ternal revenue taxes, the former laid oa i 
 commoditi 's Irnnorif* i^ into the Country, the ' 
 
 latter on cornmoditles pt^ilfliced^Wfcuin tlio 
 country. Now there Is a peculiarity about 
 the revenues which flow from taxes on im- 
 ported commodities, and that is that those 
 taxes are In the tJnited States not laid for 
 the sake of revenue, but for quite another 
 purpose. The aim of the tariff taxes is to 
 render it n Ticult to bring commodities 
 
 into the U. _ :?tati'8, and thus either to 
 remove competition from those Americans 
 engaged io ine production of commodities 
 which some of us want to Import, or at any 
 rate to serve as a breakwater, and to modify 
 the power of coinnetitlon. The revenue 
 which tnese taxo3 afford is merely an Inci- 
 dental matter. The ptjrpnso of the next 
 article will be to consider certain peculiar 
 features in our flnanciai situation, caused by 
 j thefnct that taxes are laid on cummodiiies 
 for ottier than revenue purposes. 
 
 
 PROBLEMS OF TODAY. 
 
 SUKFLUS IN THE TKEASURi. 
 
 THE INTERNAL REVENUS TAXES. 
 
 Frot. Richard T. Ely, mf Johns Hopkina 
 University, or Internal aad Tarifif Tax* 
 ation — Their Comparative 31©rlt«. 
 
 LWrilten for the Baltimore Sun. I 
 ARTICLE III. 
 
 The principles which should control public 
 expenditures differ in marked manner from 
 those which should g'ivern private eip^Mul- 
 itures, and the failure tu recogtiize this fact 
 explains many mistakes wnich have been 
 made in Atnericat* flmtncial h sr-rr. It is not 
 nei-essary in this place to eiabor te all the 
 differences between private flnai.eio ing and 
 public flMiiiicicTintr, bu' in any discu:«<ion of 
 currdBt financial problems one should be 
 clearly erraspcd. It is this: Private expend- 
 itures sb'juld bd govcriied by revenues, while 
 Id the case of a public body it should flr.-it bo 
 determined what one wants to spend, ana 
 then receipts should be made t« corr* spond 
 to public needs. The private man brings his 
 receipts up to the hiahest point; in othT 
 wordt, tae endeavors te obtain as large a profit 
 from his business as possible, or to derive as 
 large an income from his occupation as cir- 
 cumstances will permit. After he has foutid 
 that his income i» $500, $1,000 or $5,000, as the 
 case m«y be, he then— and if a prudent man 
 not before— decides what he can spend. 
 Unlike a private party, th« representatives of 
 the people ought first to decide that it is 
 necessary to spend certain sums of money 
 for the public good, and then ask the people 
 to provide the means, layine taxes to meet 
 expenses; or, if part of expenses are de- 
 frayed by profits on pihlic wiTk and other 
 sources of revenue, laying taxes to meet the 
 deficii ncy in reoeiots. This U a well- ested 
 principle of pub:lc financiering. Strict 
 adherence to this principle brings order and 
 harmony ij^to public accounts, while Its 
 violation oroduoes confusion and waste. It 
 implies that taxes are laid for revenue 
 purposes. 
 
 Wheu we begin an examination of oui* fed- 
 eral finances we are struck \ij the dispropor- 
 ilou between the needs of government and 
 (ho revenues for meeting these needs. Some- 
 times the revenues are too la rare and some- 
 times too small, and when it is noticed that 
 they are apt to be plentiful when there Is 
 
oo^ilifiraitiveiy 8aj.<,;i call for expenaiturei?, 
 and distresglnpiy safeSiil when our needs are 
 , larcre and urgent. It ]a a not unnatural <5on- 
 j elusion that there Js a radical defect incur 
 I financial system. Such is the case, and the 
 ' defect is the on© mentioned, that taxes are 
 not laid for revenue purposes. When taxes 
 are Imposed upon a people to defray the ex- 
 peuaes of government, it will be flsoertained 
 what those expenses properly are, and the 
 rare of taxation wiil bo so adj ist«d as to raise 
 enousfb monoT, neither more nor less. This 
 is the plan pursued by the mayor and 
 council of Baltimore, and the tax rate 
 is designed lo vary, and to be $1 50, $1 60 or 
 $1 70, accord inar to our actual needs. It can 
 readily b« seen, howuver, that the mo- 
 ment one losea sisht of the objoct ^f tax- 
 ation, which is revenue, and iayj taxes for 
 other purooses.it would be surorisinif if reve- 
 nue should correspond vvith the need for 
 reverjue. That there should be this corre- 
 spondence implies not only that taxes should 
 be laid with a view to the probable revenue 
 from them, but that the system of taxation 
 itself shoulci be a flexible one In at least some 
 of Its essential prints, 8) that revenue may 
 readily be lowered or raised without an acute 
 disturbance of business relations. The Eog-- 
 lisheovernraent finds flaxibility in its Income 
 tax, which is raised or lowered from year lo 
 year, according to estimated revenues from 
 other sources and estimated expenditures. If 
 it is required to raise larg-e sums for the pros- 
 ecutiou«©f a war. the proper minister at onoo 
 brings a bill into Parliament to raise the rate 
 of the income tax. Gla Istonc oriffinally in- 
 tended to defray all the expenses of the 
 Crimc^aa war by taxation without loans, and 
 Parliament, with that end in view, raised the 
 income tax considerably. This involves no 
 disturbance of busiuess relations, for it is 
 not a tax on business or property, and 
 It requires much only of those who 
 have much to srive. Thus, entirely apart 
 from the fact that this method makes the 
 i^fluoutial classes feel their respoaslbility 
 for th6 course of flrovernment, this English 
 iHCorao tax, so far as it sroes, assures a condi- 
 tion of sound public financierinsr. It is not 
 meant in t&is place, and at this timp, te raise 
 the question of the desirability of an income 
 tax. Even the friends of an income tax are 
 vprv properly inclined to regard it as better 
 adoDtea to State than Federal purposes, but 
 what is said illustrates my point, namely, 
 that it is necessary to establish a system of 
 taxation which in some of its parts 
 at least shall be flexible. Now, ir is 
 manifest thut our federal government 
 never has had a system of taxation which 
 answered the requirements of national finan- 
 cierinsr. Our chief soutca of l-eveoue has 
 been taxes on imported commodities. When 
 are those likely to yield larsre returns? Mani- 
 festly duriuar time of peace and prosperity. 
 When are they likely to yield little? Mani- 
 festly duriner periods of foreisro complications 
 and wars. But it is durinjf periods of the first 
 sort that we need litile, ansd durinjf periods of 
 the second sort that we need mucb. Twa pe- 
 riods la our history are specially instructive 
 on this point, and these are the periods cov- 
 ered by the war of 1812 and the lato civil war 
 Mr. Gallatin was forced to rely upon loans 
 durinff the first war and these could be placed 
 o6lj under disadvantajreous conditioas for 
 the public, becausa there was no adequate 
 basis for them in pjiblio reveniv-a, for thos9 
 
 coBSisted of duties on i mpor ted^com mo 1 1 
 and tho war, which called for increasefj ex- 
 penditures, diminished imports. Mr. Dallas, 
 in 1814, said: "The plan of finance which was 
 predicated upon the theory of defraying the 
 extrp.ordinary expenses of the war by suo- 
 cesalvo loans, had already became inopera- 
 tive," and he ascribed the collapse "to the 
 inadequacy of our system of taxation to 
 form a foundation of public credit, and the 
 absence from our system of the menus which 
 are the best adapted to unticipste, collect and 
 distribute the public rerenue." Mr. Dallas 
 uses the followiner instructive words in his 
 "Eeport ©n the Finances for 1815:" "It cer- 
 tfiinly furnishes a lesson ©f practical policy 
 that there existed no system by wdicli tbe 
 internal resources of the country could 
 be brought at once into action when 
 the resources of its external commeroe 
 became incompetent to answer tho exi- 
 irercies of the time. The existence 
 of such a system would probably have In- 
 vijTorated the early movements of the war, 
 might have preserved the public credit un- 
 impaired, and would have rendered the 
 pecuniary contributions of the people more 
 equal as well as more effective. But owint? 
 to the want of such a system, a sudden and 
 almost exclusive resort to the public credit 
 was necessarily adopted as the chief instru- 
 ment of finance," 
 
 It seems Si-arcely necessary to remind the 
 readers of Thb Sun of the results of the 
 fiuancial policy of the late war. Secretary 
 Uhase. in his first report, in 1861, estimated 
 revenues from customs duties at 557,000.000, 
 and at the end of the first quarter found it 
 necessary to reduce^the estimate to 132,000.- 
 000. There existed no system "by which 
 the Internal resources of the country could 
 atoncebebrouKht Into action," and before 
 this machinery could be created and ren- 
 dered efifective, the war was nearly finished. 
 Tho result was a vast and demoralizius? public 
 debt, on part of which it was necessary to 
 pay tjrelve per cent, for money received, and 
 return $100 in gold for $50 lent to eovern- 
 ment; further, the creation in time of haste, 
 confusion and dire need of, a tax system, 
 which may be called a monstrosity. 
 
 Our tax sj'stem now yields surplus revenue, 
 and it is dilficult to reduce it because it is 
 framed fer the benefit of private interests, 
 and these resist its reduction. "The full real- 
 ization of self-srovernment requires a delicate 
 adjustment of tudfiretary machinery, but 
 surplus revenue acts as a weight which 
 throws that machinery out of balaixie." 
 These words are from H. C. ^dams*s"Public 
 Debts," as able a work on finance as has ever 
 appeared from the pen of an American. 
 
 Now it is not true that this surplus revenue 
 could not be advantageously expanded. 
 Thore are many uses U which it could be 
 put which would be hiffhly heneficial. Pos- 
 sibly some of them will bo raemioned here- 
 ttfter. It is not pleasant to pay taxes, but it 
 may ha doubted if the ordinary mun invests 
 any money which yields so laicre a reti;rn as 
 that which ho pays in taxes, provided always 
 that it is expended hy honest and intelJiiifeut 
 public officials. This is often not appreci- 
 ated because there is to'> canoral a failure to 
 recognize what is due to i?ood srovernment. 
 (But the moment the macriiiu>ry of urovern- 
 mentbesrins to move unsat sr.iciorily or ex- 
 _y.bltJl&r38 of breaklnjr down, even tiie most 
 
 \ 
 
oonflrmed tax dodders do not liesi'ate to 
 utter crl9a of alarm and indifrnation. I'crhaps 
 the anarcbistio aeitation has don« 8om« irood 
 in callinp attention to the importance of good 
 KOTernnient. Mayor Latrobo, It •ccurstorao 
 In this connection, made an excellent polntin 
 bis recent address before the West Baltimore 
 Improvement Association. He admitted tha 
 burden of taxation, but put tho question, 
 "Does any one regret the issuintr of a ainifle 
 loan made heretofore for public Improve- 
 ments, such aa the Gunpowder water-works, 
 the new City Hall, Druid Hill, Patterson and 
 Hiversido Pjirks, the opeuina: of Cathedral 
 and German streets?" This la true, 
 and it is doubtless true hat the needs 
 of the United States goyernraent m^iy la the 
 future require enougrh more than now to con- 
 sume all our present annual surplus, for Sec- 
 retary Fairchild's report shows that the ordi- 
 nary federal expoaditiircs increased over 
 thirty millions from 1884 to 1887, yet it is 
 also true that in a matter like this we ougrnt 
 not to proceed faster than is warranted by 
 the enlightenment of public opinion. This 
 skould crystaiize about a measure ana dt - 
 mand it before revenues ^or carrying it into 
 effect are provided. To provide revenues be- 
 fore it ii decided for what we need them is 
 wuttinir the cart before the horse. The surplus 
 revenue could be uaef uiiy expended.but there 
 is every reason to fear that it will not be. 
 Rather than inaugurate any public work de- 
 iiSfned to benefit the entire public, but which 
 is not as yet demanded by tho public, 
 timid Congressmen are more likely to erant 
 money to clamorous private interests, with 
 the idea of wlnuinar their support. More- 
 over, such a public measure as the appropria- 
 Uoa of public money for the removal of illit- 
 
 I^AWS TO KJ Git A 1 : t5>lSlEircE. 
 
 
 ©roy— one of the dansrerf to the republic— 
 cannot be discussed on its merits so long aa 
 an enormous surplus exists. Its advocates 
 are suspected of improper motives, very 
 likely of trying: to ret rid of the publio 
 money to bolster up war taxation, and It 
 fails to rooelvte the fair, impartial discussion 
 which it deserves. Let ao one take this as an 
 pxpressioa «f apprwral for the so-called 
 "IJlair Uill." it is simply uso«l as an Illustra- 
 tion to sh w the difficulties which attend even 
 the discussion of any nopuiar mea«»ure j»olonar 
 as our present methods of financieriuff ooa- 
 tlnue. 
 
 Aa it in seen that durlpg on imports are not 
 Batl^ifactory as an exclusive source of federal 
 reve lUfs, and can only formniart of a system 
 of federal taxation, the question arises, 
 what have tho«e to offer as a sub- 
 stitute who wish to ab Ush our pres- 
 ent Internnl rfveniie taxes? Unless the 
 revenue reformers k(*«p these various points 
 in mind they are likely to be outwitted. 
 i Tho ten per cent. taritT re luction of 1873 was 
 repealed iu 1875 on account of deflolonoy of 
 revenues, and if there is nothinfrto take the 
 place of internal revenue taxes and they are 
 abolished, ©very future fiscal emertroncy 
 i will serve as aa effective pit a forablirher 
 I tariff. If we desire once for all to broak 
 with ont-hlffh and complicated tariff system 
 \ to avoid flnanclerintr of such a nature as to pro- 
 duca violent fluctuations in businesa affairs 
 
 I and to brl'isr business down to a natural basis, 
 we mui^t be prepared to maintain and estab- 
 lish a sva'em of taxation cHpablo of meettnj? 
 ' the varyinif demands on tho public treasury. 
 
 ^The Nature and Purposes of Comnaerce \ 
 Discust^ed by Prof. Ri«'hard T. Klj, of ' 
 Johns Hopkins University. 
 
 I'vVriLton for the Baltimore Sun.] 
 
 ARTICLE IV. 
 
 The design of our present tariff laws is to f 
 re^ulnte comm* ree, and they are ba*^od on a i? 
 certain theory re- peoting the nature and pur- 
 pose Of commerce. This fuel should be fully 
 grasped, for no on« is qualiflod to spoik on 
 protection and free trade who ha^ not clear 
 ideas in regard to the part which commerce 
 plays in modern iadusirial llfe.Thofree-tradcr 
 finds favor with tho mercantile community 
 because he looks upon an extension of com- 
 tnorcial relations with satisfactlon.and thinks 
 that restrictions anri rearUaiions of commerce 
 do more harm than good- Wh'^n an ancient 
 French monarch calltsd an opulent merchant 
 to him and desired hi^s adviue in reerard to 
 measures suitable for the extension of com- 
 merce, the merchant simply replied, 
 "Lalssez faire," which, interpreted into 
 plain English, means: "Lot U3 the mer- 
 chants alone. We ask noihinsr more, 
 ^To ask no assistaice. We only desire that 
 you should not interfere with ug." It was 
 then qu.te natural that an early American 
 free-trader— Con d 7 Rasrnet— who, in 1839, 
 published the once well-known "Free-Trade 
 Advocate and Journal of Political Econ- 
 omy," should take fis the motto of his peri- 
 odical "Laissez nous faire." Tho protection- * 
 ist, on :he other hand, looks with distrust 
 up<)U foreitrn commerce, for he fancies that 
 the interests of the home producer may 
 thereby be eedamrered. He therefore advo- 
 cates restrictions upon commerce that he 
 raaydimloHh it;* aaasfnitude. Occasionally one 
 is even found who wishes that a wall of fire 
 surrounded the United Si ate*, so that nothing 
 miiTht be import^ad. Coupled with the appre- 
 hensions concerniutr the home producer one 
 fr^queutly finds disparaging views ooncern- 
 inif the real utility of commerce. These are 
 partly traditional, and are found from the 
 earliest times to the present. The ancient 
 Persians held commeroo to be a school of lies. 
 Cicero and the Roman philoaophars despised 
 commerce, Cicero golr;fir 3> far as to say a 
 merchant could never make anything unless 
 1 he lied in the moat atrocious manner. St. 
 Chryaostom believed it scarcely po^ible that 
 a man could be at the same time a Christiaa 
 aad a merchant. 
 I There can, I thinK, soaroely be a doubt 
 that the itilluence of theay old views lingers 
 ' on after commerce has changed materially its 
 mature. Fv rraerly commerce originated in 
 robbery, and it supplied chieflv articles of 
 iyxurr. The Phc9 licians and Greeks were 
 ; pirates before they were meifobaats, and 
 piracy played an important role in the de- 
 velopment of Engrlish commerce in the six- 
 teenth century. Nomadic people first robbed 
 caravans, and onlv at a later period became 
 <j:uide8 and protectors of them, and thus as- 
 sistaatet in the oreat ion of a legitimate oom- 
 raerce. Piracy and robbery are no longer 
 kids, but only enemies to commerce, whicli is 
 uow found on the side of law and order. 
 
 An error of a different sort is still unduly 
 current. It is that commerce is not produc- 
 tion. Benjamin Franklin said there are three 
 ways for a nation to icquiro wealth: "The first 
 
 J 
 
d by commerce, which is, generally. ' 
 j cheatiuff. The third is by agrriculiure, the [ 
 r ouJy bonf'«t way." Tbe late Horace Greeley ' 
 i used to lameut ia bis Tribune the larffe num- ! 
 j ber of raerchaats, and to hope that the time j 
 would come when ninety-nine men out of a ' 
 hundred would becomo real producers. 
 
 The truth ie that the merchant is as truly a ' 
 producer as the farmer. The farmer creates 
 no new matter. No one can do that. He 
 simply changes the position of things; puts 
 thiciirs in fit places, and thus adds to their 
 utility. He drops the corn In the hill— 
 chanfires its place— puts it in the rlcht 
 pi ce. He chaofiTos the .position of earth, 
 putiingr it over the corn. The corn ia 
 acted upon by natural forces. Certain eie- 
 menta in the earth, air, water change their 
 pdsItioBs, and form new combinations. The 
 eorn er«w?, and what was useless becomes 
 useful. The farmer has chftnared the posi- 
 tion of thin?8 and created utility or a Quan- 
 tity of value. That is all. No more than the 
 morchant can ho add one particle to the 
 quantity of matter In the earth. Now, 
 under the direction ef the merchant, the 
 position of thiBfrs is chanared. Goods are 
 brouifbt from a place whepo tfaey are not 
 needert, and v*^^her» f hey could hare no value, 
 to a place where they «re needed. Thus the 
 Merchant crt at»g pr»«l80ly what the farmer 
 ereat/s: ttaraely, a qusuilty of utility or 
 value. We nauy call it "pi a»e- value." Liice- 
 wigfe the mercharat keeps tbin/zrs from a time 
 when not want«d to a tioae when wanted, and 
 increases their utility. Thus ha createi 
 "tirae-valup." And it should be remem- 
 berf'd in this c»«Hecti«n that ocmmeroe, 
 with the aid of the improved means of com- 
 raunicatinn and transportatlan, has become 
 80 effective in the creaiiou of time-values 
 and place-values that famines are now un« 
 known in the civilized world, whereas, even 
 as late as th^ las' cwntury, dlstriots in France 
 and Eng-land "iitfered the horrors of famine, 
 while supei'fluity could be found within three 
 hundrt'd uailes. 
 
 It has beea stated that oooameroe pre- 
 viouflv ministered t« luxury. Onlv articles 
 of hif?h value in small bulk could, in early 
 days, tiecomf the object of commerce, for it 
 cost more to transport Siich commodities as 
 the unassiPS consumed than they were worth. 
 Proclous stone?, aruber, finely- woven fabrics, 
 silk», spices, wine, oil— these are the 
 articles with which early commerce was 
 concerned. Perhaps HOthinjr can better 
 illustrate the progress of commerce ia 
 our centurv than those pa^^saares la 
 Adam Smith's "Wealth of Nations." in which, 
 in 1778, he assures tl^e EHsrlish farmers that 
 they n«ed never fear the iasportation of Irish 
 eatti© nnd Irish srrain, because tJiey were so 
 bulky in proportion to values as to render so 
 distant a trarisportation unprofitable. *'Evea ' 
 the l9r«'^din£r counties of Great Rrltain are 
 never likely to bo much affected by the free 
 importatioa of Irish eattlo." And a little 
 furrhoron Smith adds: "Even the free Im- 
 portation of forelurn corn oould very little 
 aff«ct the interests of the farmers of Qreat 
 Britain. Corn is a much aiore bulky com- 
 modity t"ha« hurcher's meat. ♦ ♦ • The 
 small quantity of foreiern corn Imported even 
 in tinjes af th« eroarest scaroiry may satisfy 
 our farmers that they can hnva uothinifio 
 fear from the freest importation." AJ every 
 one knows, a hundred year!* later the impor- 
 tation of corn asd beef from America, three 
 thouaand miles away, has been a cause of 
 alarm to the British farmer. 
 
 Two conclusions follow aaturallv from 
 this: One in that distance is Rot In itself the 
 barrier acainst competition which It once was, 
 jiconaequently does not afford the same de- 
 jrrpe of proteotion to a eiven locality; the 
 other is that restrictions upen commerce 
 rio'v are a laattor of concern not merely or 
 
 ch.ofly to the woaithy, aaoStS" was tho ca3«. 
 put may be felt disastrously by the poorest 
 in raiainif the prices of artlcl«>8 of dniiv con- 
 si^mption for the masses. The question of 
 freo trade and protwction thus assutBes a 
 mae-ritude h.>retof .re unknown. The total 
 forei4rn commerce of E'i«:land was estimated 
 in 1350 a^t 2 shillint^s 10 p? nee per capita, ia 
 1614 at 16 shii infrs 6 pence per capita. In 1801 
 
 ^^ ! ^''"lol^^^'^iL''"'^' «"'^ 6 pence per capita, 
 but iu 1880 at 16 pounds and 6 shillings pir 
 
 ^_'')^fiV^rc&mUyiLln(ior the exports^of the 
 
 Si'S .?.^%^eQi'° m^*^''i? ^''Of^ 53 0;J in 1801 to 
 fii 9d m ism. ihe foreign commerce of 
 Germany more than doubled from 1860 to 
 
 loo J. 
 
 Comme-ce has ffone hand in hand with tba 
 increaainp national and international divis^'oo 
 of labor which has mad© modern wealtti and 
 tne wide diffusion of comfort possible la 
 early stas-^s of industrial development, each 
 family was sufflcisnt unto itself and enjoyed 
 R rude kind of indopeadenoe, but existence 
 was precarious. Daarth fMllswed plenty 
 quickly, and tnere could be no itd^quate pro- 
 vision for future coatimroHClea. But as 
 eiviiization began to advance the div.sloa of 
 labor WHS carried further and further, until 
 at present time each one has some 
 one occupatioB, perhaps manufacturlnir 
 the sixtieth part of a shoe. Thou- 
 sands minis^ter unto bis wants, and he 
 [in turn ralnisfors unto thousands. To use a 
 I scientific expression: Diflferentiation accom- 
 panies social development. But the point of 
 I Iniporranceforus nowis this: Thisdive-rslty 
 of pursuits, upr.n which our Industrial oivis* 
 zation rests, implies and requires tne exist- 
 ence of active commerce. The principle Is 
 for #'«ch individual to do what he can do best, 
 and for tne peopia of «ach resrlor. to utilize 
 their own reUtively greatest advantages. If 
 Minnesota can beitarow wheat, and South 
 Carolina cotton, and Virginia corn.lt is mani- 
 ffcst that the total wealth of society, the prod- 
 ucts for our consuiuDtioB, will be more 
 abundant if each locality Is devoted to that 
 pursuit f r which it U specially adapted. 
 
 Precisely the same principle holds wirh re- 
 gard to International commerce. If England 
 is specially adapted for certain pursuits and 
 we for oihetH, it must be clear that our 
 mutual prosperity will be promoted by a di- 
 versity or pursuits and an cichaotre of prod- 
 ucts. Or are there special conditions ap- 
 P icabletu a divisi h of labor batwem nations 
 which hre not applicable as b.^tween the var- 
 ious parts of the s me country? Some will 
 say: if England sends us commodities, our 
 labor and capital will be deprived of oppor- 
 tunities for employmatit? But bow su? If 
 England sends us commodities, laust we no! 
 Sena comniodiiies abroad in payment? And 
 wilt ntJt our labor and capital have morr 
 abundant employment in the production oj 
 cammodiries for which they are spcclalli 
 adapted ihaa in tbeso for which they ar« 
 not spaclally adapted? 
 
 Thureura tboso, however, who think that 
 It la a srot d thing for a nation to send abroad 
 more than It imports, so that i( may have a 
 favorable balance of trade. Ic is imagined 
 that a nation grows wealthy by this means. 
 It IS therefore necessary to examine th6 bal-. 
 ance of trade theory. 
 
PROBLEMS Qf TODAY, 
 
 '^ — 
 
 15ALANCE OP TUADE liiLUKV. 
 
 POPULAR NOTIOxNS REDUCED TO SE:;. 
 
 The vr ijority of the Wealthier Nations 
 Il.i^e the Balance Acainst Them. 
 
 [Written for the Caltimore Sun.l 
 
 ARTICLE V. 
 
 "ilo who attempts to draw any conclusion 
 w)j;iitver as to a natloii's woalih or poverty 
 froiu the more fact of a fa', oiablo or un- 
 •;iV(>rablo balance of ti'ailo, has not «rr apod 
 The first fundamental principla of political 
 ccon-jmv." 
 
 When I heard thei»e words uttered wi:h 
 emohasishy one of the most careful livir jr 
 s'ati^tioians, some yesrs ago, I must oo; f* s- 
 that I was a little startled, aecustf)raed as i 
 hAil bren to laudafions of favor ibl':? bal mces 
 of trarle as indications of increasinar werilth- 
 Yet 1 suppose nothing in the entire ranpre of 
 econf.inic sciences is more beyond contro- 
 versr. 
 
 Everybody knows what la m?ant by a 
 favorable b lance of tra^e. A trade betweon 
 two cnunt?i"S is considered favorable for 
 that one which exports a lareer quantity of 
 sroodg than it imports, and unfavorable for 
 the one which imports more than It expnrrs. 
 Minilarly tbe entire forelsrn trade of a country 
 l3 revrardod as favorable if all exports exceed 
 in vulue Jill imports. Theiden is that there 
 is In such cases a balance which most be paid 
 io money, and that a nation, like an in- 
 dividual, crows opulent by the accumulation 
 of money. Let us examine these various 
 ideas with some care. 
 
 If our exports exceed in value our im- 
 ports, what does it mean? It may siernify 
 that a number of Europsans own property 
 in the QniteJ States and that this surplus 
 pays their interest, dividends and profits. 
 We know, as a maiter of fact, that many 
 Europeans do oavu much property in tho 
 United States. Englishmen own va?t tracts 
 of land in our country, many millions of 
 acres, particularly in our West, and the 
 absentee English landlord is become a promi- 
 rent feature of American as well as of Irish 
 life. Likewise irreat blocks of stocks and 
 bonds issued by American corporations, as 
 well as municipal, State and Federal bonds, 
 ere held in Europe. Now is it not evident 
 that after we have sent abroad enough koous 
 to pay for gools sent us, wo must still send 
 abroad an annual tril)ute in exports to satisfy 
 the claims of foreigners upon our industryy 
 This accounts for a portion of our so-called 
 favorable balance of trade, but who will say 
 that it is a cause for national self-gratula- 
 tion. 
 
 iiuta favorable balance of trade in the 
 United States may also siarnify something 
 else. It may me in that we are paying oflf the 
 capital of the debts wo owe abroad. If the 
 surplus is not Invge enough evon topay inte- 
 ■ lest on European claims, we may bec'ano 
 more deetdy involved in debt, the favor tMo 
 fjalance of trade to the contrary nothwith- 
 >iaudii)>r. Lot us recall our itistruoiive ex- 
 perience durinc the late civil war. We were at 
 that time makln/ heavy demands on Euro- 
 pean industry on account of extraordinary ex- 
 penditures at homo. Our Imports exceeded in 
 Taluo our exporis. We wore, as a matter of 
 faet,£rolnc in debtfor current expenses. Aftor 
 
 the ;fln^ 
 
 'OipUi yii ijui iwiciKU JiiUUULUUUUd-^, SiUd OUT ■ 
 
 exports exceeded in valuo our imports. - 
 that time our favorable balance of trad< 
 6'> far as it eoi lid be accounted for by the pay- 
 ment of del)r, was undoubtedly u good thing. ! 
 
 A favorable balanco of trade mi^ht be par- 
 tialiyexplainod by the acquisition of prop- 
 fivty abroad by Americans. 1 do not say th>it 
 such is a fac. 1 simply sav it is a possible ex- 
 planation. If Americans are acquiring prop- 
 erty abroad, it is manifestly necessary not 
 only to send out of the country goods in suffi- 
 cient quantity to pay for troods we import, 
 but a surplus to pay for investments which, 
 on this hypothesis, are being made in foreitrn 
 countries. 
 
 If the balance of trade is favorable, the dif- 
 ference, (;r a part of it, is sometimes imported 
 in bullion or money. 
 
 A favorable balance of trade may, then, 
 denote increasinir wealth, or it may denote 
 poverty and economic dependence upon for- 
 eifc'fi n itions. It may denote neither the one 
 Tior the other, but simply sisrniry that a 
 nation is noldina- itsown in international rela- 
 tioM>-. Tne mere fact of a favorable balance 
 «f trade in itself tells you absolutely netting 
 about a country. It is, however, true that a 
 malority of tbe wealthier nations of the 
 earth have what we call an unfavorable bal- 
 ance of trade. 
 
 Letus compare the value of imports with 
 that of exports in a few countries, selectinj? 
 recent years almost at hap-hazard, and not 
 taking yeari with a design of proviuif some- 
 thing. 
 
 The value of German imports for 1876 was 
 J5,914.8 millions of marks,* that of exports 
 2,551.2 milli(;n3 of marks; for 1887 the flirutes 
 are: Imports, 3,887.0 millions; exports, 2,775.3 
 mlllii;ns. Precious metals are included, but 
 If they were excluded the proportions be- 
 tween exports and imports would not be 
 radicully chaiiReJ thereby. 
 
 The imports into France in 1873 were valued 
 at 4,576.4 millions francs,t the oxp ^rtsat 4,823.3 
 millions of francs. The figures for 1874 are: 
 Imports, 4,422.5 miliions:; exports, 4,702.1 mil- 
 lions; for 1875. imports, 4,41.8 millions; ex- 
 ports, 4,807.0 millions; for 1876. imports, 4,9J8.8 
 millions; exports, 4,547.5. Precjous metals 
 ore included in exports and imports, but as 
 in the case of Gerujany.they are relatively so 
 au^all, and are in this case so nealy equal, that 
 I the proporuons between exports and imports 
 are uot changed, 
 
 Tho exports from France exceed in value 
 the imports from 1873 to 1875, inclusive, but in 
 1876 the imports exceed in value exports. A 
 possible explanation would be that France 
 was sendintr commodities out of the countrv 
 from 1873 to 1875 to pay for the expenses of 
 the war with Germany, but that in 1876 trade 
 had regained its normal condition. 
 
 Hume tells us that over a hundred years the 
 English nation was struck "with universal 
 panic" because some one demonstrated that 
 the balance of trade was so unfavorable as to 
 leave them— that is, the Enjrlish people- 
 without a shiliina- in money in five or six 
 years. That ttemousiration was made 20 years 
 before Hume wrote his essay on "The D<1- 
 ance of Trade," but he records the fact that 
 money was then more plentiful in England 
 than evL-r before. The uafavonblo balance 
 of tmde still continues in Enjriand, and is 
 «omethinor enormous— the besi proof of Eng- , 
 4Silid*8Jinmenso weal;h, for this unfavorable | ' 
 
 I 
 
 '\\ 
 
 \ 
 
 ? 
 
iD..lance repitauuLs 
 pay to EiiBlisbm*»n. 
 
 "nrr 
 
 Jaad io 1874— to take the statistics la one year 
 only", which auswers our purposes aa well as 
 a do^en, exclusive of precious metals— were 
 valued at £331443,000: the exports, also ex- i 
 elusive of pivcious met:tl,«, at £278,053,000. 1 
 
 Kich little Belifium also has a large uafa- 
 •Vorable balance of trade. The imp rt-j into 
 JBeleriura, exclusive of precious metals, were 
 valued atl,448.5 millions oir francs; the exports 
 from the uoumrv, also exclusive of precious 
 metals, at 1,063 8 njiliions. 
 
 Theseare wealthy countries, but the United 
 States, with its favorable balance of trade. Is 
 also prosperous. In the fiscal year 1877-8 our 
 imports were vali.-ed at ?466.873,000, and our 
 exports at 8733,812,0)0. But E;? > pi-poor, im- 
 poverished E;^ypt-has the most maffuiflceut 
 B*vcalltd ftirorablj balance of trrtd^ lo be 
 found in the worldl I mean, of course, in 
 proportion to its entire commerce. In 1874 
 the imports were valued at 5iJ7.06i,153 pias- 
 ters, the exports at 1,343,347,266 piasters; the 
 •estimate for 1876 was, imports, 561,946,693 pias- 
 ters, exports 1.3;J3,3.'J3. 408 piasters. 
 
 These illustrations, which mig-bt be multi- 
 plied indetiniteiy, show how much sijfnifl- 
 •cance is to be attached to a favorable balance 
 <of trade in itself. However, it is only a 
 wealthy nation which can huve a larg-e un- 
 ffavorable balance of trade as a permanent 
 thinpr. What does this mean? It means that 
 .«uch a nation possesses stocks, bonds and 
 various kinds of property in other countries, 
 and that the people of those countries are 
 -workiujf forit. Itissirailar to the case of a 
 Tinan who is able to consume more than he 
 a»im!.elf prod uees. It is a sign that others are 
 working for biui. To value a foreisn com- 
 merce in proportion to exports is to miscon- 
 icelve the advantajfes of commerce. Com- 
 merce is valuable for what it brinjfs us, uot 
 :for what it tiikes from us. 
 
 It will readily be un.ierstood, then, that lam 
 not at>le without reservation to join in the 
 gelf-K-rdtulations of those who delijfht in our 
 largre balance of trade, and that I scarcely 
 ihiuk this a stroug tariff artrument. Our 
 tavorablb balance of traiie places us in the 
 Baiue caiepTory as Ireland, India and E^ypt. 
 
 *A mark is $0,233; for purposes of r^^uirh 
 ^calculation, four maikii luiiy be refraraca as 
 -equal in value n> oi.e dollar. 
 
 tA fratic is a little more than $0.18; for 
 Tou^h eomputatiou?, five :ranc3 maybe re- 
 (KardeJ as Lquai to one dollar. 
 
 Balance-of-Trade Theory-Furtlier Views 
 on the Irade Problem by Prof, liiclmrd 
 T. Ely, of JohnH Uopkins Uuiversity. 
 
 LWriiten for the Baltimore Sun.I 
 
 ARTICLE VI. 
 
 There are several points connected with the 
 balance-of-trade theory, as usually t^tated, 
 about which it is esseutini ti:ac we should 
 have clear ideas. They therefore require 
 turther examination. 
 
 jTirst, it follows naturally, from what has 
 been said in the previous article, that a favor- 
 iBible balance of trade does not siK-nify that 
 ,*he precious metals are flowinjf into the 
 oountry. In i'self it tells us nothing- about 
 the/nternational movements or the preclms 
 laeta/s. Gold and silver may be coming to 
 ihecou^ntry while an unfavorable balance of 
 trade exists. 
 
 '; ,>in lc83 the amount of arold and silver 
 .ii^tiOited into Et r'^'"'' exceeded in value the i 
 s)reci^^; "^i<^ mg_. ed, althougrh durinsr 
 
 "^ "" vj^ aifaip st 
 
 wT-' 
 
 EriarifjDd to an am ..... .,>,..,.■ ... ,...,.. 
 
 otiehundrej and twenty millions of pounds 
 sterlinj?-. 
 
 ^ On the other hand, the precious metals 
 ,may bel^ain? a country whiie a favorable 
 balance of trade continues. The commerce 
 of the United States for 1884 serves as an 
 example. The balance of trale wa"* in our 
 favor, but the value of precious metals 
 exported exceeded the value of precious 
 metals imported. 
 
 Seeood. If a favorable balance of trade in- 
 the CJnited States were always accompanied 
 by an addition to our store of money, it 
 would not necessarily be a catise for national 
 self-^ratulation. People frill into the 
 most obvious errors in this matter because 
 they do not stop to inquire into the differences 
 between those thiols which mike an indi- 
 vidual prosperous and those which make a 
 nation prosperou-s. A merchant gays: "If I 
 increase my stock of money I become 
 wealthier." This is true, but it doe? not fol- 
 low necessarily that we would all ba mora 
 pro3p3rou3jf the total amount of mone> In 
 existence were doubled It would, on the 
 other hand, be a misfortune to some people, 
 and to multiply the araouot of money in ex- 
 istence twetry times would proD^hly be a 
 univrsal cal^tmlty, up-etiinff ail exi«tin^ in- 
 dustrial and commercial relations. Thismust 
 be made ekar. If the money in my pocket is 
 iiicreased twentyfold it is a jfood thinsr for 
 me, because my proportion of the money in 
 the country is increfisiod. I cin buy more 
 RTOOds. But if the amouMt of money in eve 
 one's possession is multiplied by twenty, wi 
 there not be a corrHsnondina- rise in price- 
 If so, will I be bLMter off than I was beforer^ 
 in one cas^-, I will, namely, if I owe sonae 
 thing to some one; if I am in debt and my 
 d(,*bt Is to be paid in monev. If, on the other 
 hand, sums of money an« due me, thisiticrease 
 in the circulating medium impoverishes me. 
 We may look at thi^ matter— and it is of vital 
 Importance in those dlscus-iions— from an- 
 other standpoint. Why do we want money? 
 MaiiifePtly for the thinjfs it will buy. But 
 does the increase in the supply of money in 
 Itsf-lf increase the quantities of useful things 
 which we wish to b y? 
 
 The Spaniards In the sixteenth and seven- 
 teenth centuries made the mistake of 
 overestimating the importance of gold and 
 silver to a country, and instead of building 
 up commerce and manufactures and imorov- 
 ing their agriculture, seemed to think of 
 little else than the devices by which the 
 largest possible amount of the precious 
 metals could be brought into the country, 
 especially from their American possessions, 
 and once In the country could be kept there. 
 They n'^glecled the most itnportant sources 
 of wealth, and to this day they have not re- 
 covered from the disastrous consequences of 
 their mistaken policy. 
 
 I am far from saying that It makes no dif- 
 ference whether we have much or little 
 money. A large amount is require! to con- 
 duct the business of the country and to ob- 
 viate the inconveniences of barter. An in- 
 : creasing amount is required for our growing, 
 expanding industrial life. A fall in prices, 
 owing to insufficient supply of the precious 
 • metals, increases the value of financial obli- 
 gations incurred in the past and enriches 
 bondholders and other creditors at the 
 expansjB of the rest of the community. 
 I All th'« I recognize. I simply main- 
 
taia 1 of ooininerco 
 
 by prwtejtive tarilli is required at the 
 pre!?eat time on account of our money 
 supply. There are other wnys and better 
 ways of provlditifT for a sufficient quantity oif 
 money. The international movetneut of the 
 precious me-als is lanscly automatic. If the 
 precious metals bt^trln to leave a oountry 
 which is not cursed with an Irredeemable 
 paper currency prices will fall, but the 
 moment prices fall it becomes more proflt- 
 able for foreiirnera to purchase our oora- 
 modliies, and tnore is thus a tendency to 
 check the flow of money from the countrr. 
 This by no m^ans exhau.-?fs this larsro subject, 
 but it is sulficiont for present purposes. 
 
 Tblrl. 1 have to remark that as between 
 countries commodities are exchanged for 
 commodities, and that very little money 
 passes from the one to the other. If Eng- 
 land sends us commodities we do not, as a 
 rule, send money abroad, but we pay for 
 them In commodities. This is a matter so 
 familiar to merchants who have dealings 
 with ftjreifirn couuries that it may seem to 
 them scarcely worth while to mention it. 
 Yet a failure to comprehend this fact and its 
 bearinirs is a chief cause of confusion of 
 thouifbt in resrard to international trade. 
 
 This third point is closely connected with 
 the second. When money does beirin to 
 leave a country It becomes more profitable to 
 export commodities than formerly. Thus 
 throug-h action on prices the natural rela- 
 tions between exports and imports are main- 
 tained. I send ifoods to Euifiand ani the 
 Eniflishmari to whom they are sent becomes 
 indebted to me. At the same time another 
 Enjflishraan senJs goods of the same value to 
 an American Imuortor. So we agree that 
 this Importer in America shall pay me, and 
 that the Eni^llsh exporter shall receive his 
 pay from the Englishman who bought my 
 goods. Thus no money leaves Eoeland and 
 none leaves America. This all takes place 
 through the medium of bills of exchange, 
 drafts, occasionally postal money-orders, and 
 the like, and the services of bankers and 
 broKers are required, but the principle is the 
 simple one just described. 
 
 Illustrations will serve to render this still 
 clearer. In the year 1884 in Eneland it re- 
 quired an importation and exportation of only 
 a little over foriy millions of pounds sterling 
 to do a foreign business of over six hundred 
 end twenty millions. It required in the same 
 year in the United States an exportation and 
 Importation of less than eighty-eiurht mil- 
 lions of dollars to do a total foreign business 
 in imports and exports valued at about four- 
 teen hundred millions of dollars. 
 
 Fourth. The balance-of-trade theory grew 
 up at a time when it was imagined that there 
 was a raoi'e serious diversity between the 
 Interests of one nation Hud those of another 
 than actually exists. It used to be supposed 
 that what one nation irained another lost, 
 and our proteciive tariffs can be traced back 
 to that illusion. This must not be misunder- 
 stood. This illusion i» not a sufficient ex- 
 planation of protectionism now. It is not iu 
 this connection even slated that somethincr 
 may not be said for protectionism. It is 
 simply aS3erted as a historical fact that 
 protective tariffs can be traced back to this 
 illusion. 
 
 Somo^optiipists push the idea of hnrmonv 
 
 1 
 
 i^bf int- far. Uurortu- 
 
 ' nately, ^^.^......v, ........ .^ .. jes not exist— 
 
 unless, indeed, we view these interests from 
 thehighis Christian stand noir.t. Butin the 
 main, iu matters of trade, international intor- 
 csu are harmonious, at least to this degr(3e, 
 thai each ought to desire the prosperity of all 
 the others. This Is so sniplo that it seems 
 absurd to state it as a scientific prop isition; 
 yet the fai^ re to act on this principle has 
 been a fruitful cause of enmity between 
 nations. Do we desire opulent or impover- 
 ished customers? Which class does a mer- 
 chant desire? Ttie case of a merchant's cus- 
 tomerA is similar to that of the purchasers of 
 a country's products. Nevertheless some peo- 
 pletalk as if we had something to hope from 
 the impoverishmeut of Europe by means of 
 war or otherwisel 
 
 What we would hereby train would be tem- 
 porary and be more than counterbalanced by 
 loss in the future. All this has been stated 
 often enough, but one hundred years ago it 
 was as something startling that Hume pro- 
 claimed his desire for the prosparity of other 
 jiaLions as consistent with his loyalty to 
 England. These were his words: "Were our 
 narrow and raaiiunmot politics to meet with 
 success, we should reduce all our neii^h- 
 boring nations to the same state of b1 )th 
 and ikrnorance that prevails in Morocco and 
 the coast of Barbary. But what would be 
 the consequence? They could send us no 
 cotnmoditJes; they could take none from us; 
 our domestic commerce itself would lan- 
 guish for want of emulation, example and 
 instruction, and we ourselves should soon 
 fall iuio the same abject condition to which 
 we had reduced them. I shall therefore ven- 
 ture to acknowle 'ge that not only as a man, 
 but as a British subject, I pray for the flour- 
 ishing commerce of Germany, Spain, and 
 even France itself. 1 am at lea-t certain 
 that Great Britain and *<11 those nations 
 would flourlsn more did their sovereigns and 
 rainistersalopt such enlarged and beaevoieot 
 sentiments toward each other." 
 
 The imlance-of-trade tl,ieory, then, as ordi- 
 narily'presented must be rejected. It repre- 
 sents it as the purpose of each nation to ex- 
 port more than it imports in values, mani- 
 festly impossible as a universal policy, to say 
 Qotbiug uf the fact that it misrepresents tiie 
 true end of coiuimorce, whlcn is import-, not 
 ,exp >ns. The bypotnesis up^n which it is 
 b sed is false, and the couciusiotis draun 
 
 from it are misle'din?. 
 
 ^ * ♦ ^ »> 
 
 Thb Consumehs Pay It.— Hie Medlicott 
 Comp.xny, of Windsor LocivS, Conn., manu- 
 facture tlno wo den knit goods. According 
 to the Springfii^dd llepuOlican, tnis company 
 imports 70.U00 pounas ''f Australian v\ool 
 o.'Ch year, and on this t'tey pju- u duty or 10 
 cents a pouiid, $7,000 a year. ilr. Charles E. 
 Cliaffee, piinoipai stcckhol ler and prt si.ient 
 of the >mpauv, and a staunch republican 
 and strict protect! »nist, ^ays he buys this 
 Australian wool because that particular 
 quality cannot be nbtiiineJ here at any price. 
 Wno pai>: the ^,000? The co:;sumer.-*, and 
 nobody tlse. Ttus is only one case where t'le 
 public nood detiia 'd-i u rovi.'^ioii and roduc-' 
 tion of the ari&.—Boxfon T auscripf, rep. 
 
tt - il 'Uii i 
 
 f 
 
 PROBLEMS OF TODAY. 
 
 TB^ TARIi>F AKD ITS HISTORY. 
 
 A Bad SYSTEM'S INSIDIOUS ADVANCE. 
 
 Li- I I I i« 
 
 A Sketch of tb« Federal Taxf ng Systems 
 by Prof. Kicbard T. Ely, of Johns Hop- 
 kin* University. 
 
 L Written for the Baltimore Sun.] 
 
 ABTICLB VII. 
 
 I infer from occasional remarks that some 
 people who have been good enoueh ro read 
 ray articles Imafirlne that I take a mora radi- 
 cal position on the subject of free trade than 
 that represented cither by The Sun or Mr. 
 Gloveland's messag-e to Consrreas. This is 
 not the case. I have no desire to attach 
 American manufacturers, and I certainly am 
 not prepared at present to advocate the with- 
 drawal of all protective duties at once. On 
 the comrary, I hold that this would be a 
 g-rievous blunder and a positive wroatr. 
 
 The subject of tariff legislation must be 
 viewed historically in order to understand 
 the merits of the present controversy 
 between free-traders and protectionists in 
 the United States. The men are few, indeed, 
 who would claim that it Is rational to legis- 
 lat3 on the tanlT as if we were sroinif to start 
 from the beginning- and frame a new policy 
 for a new land. Our present policy is an 
 historical growth, and as such must be 
 trea.cd. When one sees the jobbery and cor- 
 ruption connected with tariff legislation, the 
 hypocrisy it fosters, and perceives how cer- 
 tain monopolies hide themselves behind it as 
 a safe bulwark, one feels at times moved by 
 righteous indignation to wish the whole thimr 
 swept from the face of the earth. But more 
 mature reflection tends to calm one. and show 
 the impiacticability of any such radical 
 measure. 
 
 It is impossible to present a history|of the 
 tariff legislation of the United States in those 
 tirticles, for if it were attempted, to do that, 
 and to do it thoroughij', now issues might 
 arise in the country, and, indeed, in turn 
 become matters of tae past before this series 
 of papers could be brought to a close. A few 
 main faeis should, however, be brought to 
 mind, and a firm grasp kept on them in dis- 
 cussions on the tariff. 
 
 PTvjtectioniem, whatever proportions it may 
 have since assumed or whatever appearance 
 it may now present, entered our country 
 with the meekness of a lamb. Everybody 
 knows how it happened. It became neces- 
 sary in 1789 to provide the young republic 
 with revenues. Direct taxation "seems to 
 have been rejected without serious consider- 
 ation as not adapted to our federal irovern- 
 ment. There was the usual prejudice against 
 direct taxation, coupled with a jealousy of 
 the States against what they would have 
 dfemed interference in the affairs of their 
 citizens. Now, as indirect taxes were the 
 only alternative, it remaned to choose be- 
 tween taxes on commodities produced at 
 home. Internal revenue taxes, and taxes on 
 imported articles, customs duties. 
 
 Itte prejudice against internnl taxes seems 
 to have been nearly as strong as against 
 diredt taxes, and for somewhat the same 
 reason. Taxation of commodities is in any 
 shape a serious interference in the business 
 affairs o f produ cers, but when com mod i ties . 
 
 are tax^a ou entering the country in a few 
 ; great ports it is Jess obvious. Today there 
 are, doubtless, persons who fail to see the 
 lact, and it is beyond all controversy that the 
 taxation of three or four articles of domestic 
 .< r^ wth or manufacture Is an almost incom- 
 parably smaller measure of interference In 
 private affairs than the taxation of four 
 thousand and more imported articles. On 
 the other hand, the tax paid by producers at 
 home is more readily visible; the fact of the 
 existence of the tax is palpable. It was there- 
 fore decided to begin our revenue system 
 with customs duties. 
 
 The first tariff act; was passed in 1789. It was 
 mainly for revenue, while protection was 
 only incidental. Another motive which was 
 prominent, if not predominant, is well de- 
 scribed by Prof. Henry U. Adams in his mon- 
 ograph on "Taxation in the United States, 
 1789-1816." It was the spirit of nationality 
 whicb was so pronounced In the early fed- 
 eralists^ 
 
 It was hoped by means of a tariff on Im- 
 ported commodities and by the use of domes- 
 tic products to weld together the different 
 States into a strong Union. It was this 
 Fame animus which prompted public men to 
 appear in homespun clotbing. The differ- 
 ence between this plea for protection then 
 and the plea we hear now is brought out by 
 Prof. Adams in these words: "The argument 
 then regarded as convincing was, 'The sure 
 •way to establish nationality is to exclude for- 
 eign products.* Now, on the other hand, we 
 hear, 'The sure way to become rich is to ex- 
 clude foreign products.' " 
 
 But what was the rate of taxation iraoosed 
 by the act of 1789, and what was the charac- 
 ter of this taxation? First its comparatively 
 simple character mun bo noted. There was 
 a list of articles subject to s^peciflc duties. 
 Taxes on quantities of commodicies, and not 
 
 onvalues-iheslmplestkindof Importduties. 
 Thop taxes were very moit-rate. Nails and 
 EDikes, for example, were taxed one cent 
 per pound, molossas 2>» cents per gallon, 
 hoots 50 ceuts per pair, hemp 60 cents p^r 112 
 pounds, co'il 2 cents per bushel. There were 
 three or four classes of duties, based on 
 values, or ad valorem duties. One clafs paid 
 ten percent., another seven and a-half per 
 cent., a small cla^s fifteen per cent., while «1J 
 unspecified imported goods were taxed 6 per 
 cent. Th^re was a short free list. Including 
 important commodities, such as wool, cotton, 
 dyeing woods and dyeing drugs, copper in 
 plates, and all furs. The signiOcance of these 
 rates becomes manifest by coinparison with 
 the table of ad valorem rates on dutiable mer- j^ 
 chandise enteed during the fiscal year end- ' 
 tng June SO. 1887. In this table we find that 
 the rates vary from a little over 21 per cent, 
 to 154 per cent. 
 
 Revenue was Insufficient and rates were 
 raised about two and one-half per cent, in 
 1790. The purpose was revenue, and not pro- 
 tection. The truth is, there were scarcely 
 nny manufactures to protect at that time 
 except sbiphuildine. Agriculture at d com- 
 merce were the chief pursuits. Revenue 
 nas still Insufficient, and the tariff law of 
 1793 was p ssed, and this was supposed to 
 carry out the intention of Alexander Hamil- 
 ton as expressed in his celebrated report of 
 the previous year on manufactures. The 
 
 .average rate of duties thus became thirteen 
 
 ■^g one-half per cent. » 
 
 I 
 
 I 
 
/nteinffSr revenue taxation #iir%¥r^?rdco^ i 
 In 1791, and distillei spirits were taxed, pro- I 
 ducincrtbe "whisky insurrection" in Western 
 Pennsylvania, Opposition to this tax was 
 manifested in several States, and the grounds 
 -* '^npoaiiion were larffoly those which 
 afirainst indirect taxation in (general. 
 1 1794 internal taxation was extended, and 
 inus three new sources of revenue wer* in- 
 cluded. The sale of liquors, the manufac- 
 ture of snuff and auctions were taxed. Car- 
 ; were also taxed about this time, and at 
 
 o varying from $2 each ptr year to $15 
 
 each per year. Stamp duties on certain letrai 
 papers wore aidei in 1797. Direct taxes on 
 lands and houses wore added to the sources 
 of revenue towards the close of the century. 
 Then direct and indirect taxes aroused op- 
 position and were one cause of the lall of 
 the feder illsls. They were all abolished 
 after Jefferson became President. Before 
 that they had not been satisfactorily ad- 
 ministered and had not become very pro- 
 ictive — to do which reqaires several years 
 r a new system of taxation. 
 What was the consequence of this state of 
 thiniyrs? Precisely wJiat might have been cx- 
 -^cted. Import duties were raised in 1793, 
 J.794 and 1797 because new demands were mado 
 on the public treasury and revenues were in- 
 BufiDoieot. After internal taxation had been 
 swept away the movemenx became more 
 rapid. Taxes on imports were raised in 1804, 
 and although this, like previous acts, was re- 
 garded as merely temporary, it is sijrtilflcant 
 **that no important duty once imposed, ex- 
 cept that upon salt, was ever relinquished." 
 
 Well, duties on imports were raised contin- 
 ually until disturbances with Eusrland called 
 for such larpe expenditures that they were 
 doubled in 1812, which, instead of producloK 
 more revenue, lessoned exlstinpr revenue; for. 
 In the arithmetic of taxation, two and two, in- 
 oad of raaklojf four, often make only one. 
 fter all, it was necessary agrain for the 
 me party, which, in response to pop- 
 lar claraor, had abolished internal rev- 
 luo taxation, to reintroduce it, agsin 
 jincr to the expense of buildinar up 
 suitable machinery for administering the 
 fcystem and waiting for It to begin to produce 
 iartre returns. The worst aspect of such 
 ' Bhifting policy is the disturbance of business, 
 under which the weaker eleinents, "the small 
 nou,"gotothe wall, thus producing a ten- 
 enoy to monopoly and concentration of 
 Tvealth. The lesson to be drawn from this is 
 )us, and corroborates what has already 
 1 said. It is essential to publio welfare 
 > a I a Ry stem of taxation adequate to meet 
 ictuaLing, and on the whole increasing, de- 
 lands on the public treasury should be main* 
 lined. It is not stated at present what this 
 should bo. Our internal revenue taxes may 
 bo retained or something put in the place of 
 them, but in either case the main fact re- 
 mains. Our duties on imports will always bo 
 fluctuating, will always tend to increase, and 
 will always give opportunity for Jobbery and 
 corrupti<m» fiiuiess chey are based on true, 
 ratior.ai pi^ihciplo, and to baso them on 
 rational rriooiple is impossible unless other 
 [ f ruitt'At, eAutly prvftnagsd sources ef MT«auo 
 1 1 ex is I. 
 
 The duties up to 1816 were for ravenuo 
 
 vith inclucntai proteotion. but in that year 
 
 i\ Clay sp'ke in favor of "a thorough and de 
 
 i 
 
 V 
 
 oTJei protectlorPfo home manufactures by*^ 
 amplo duties," and his ally, }lr. lugham, de- 
 clared the revenue to be only an '^inciiental 
 consideration." How did it happen that the 
 old standpoint was completely reversed so 
 that the principle of **preteotion, with Incl- 
 dontal revenue," took the place or the prin- 
 ciple '*reveuue,iritn incidental protection?" 
 Tne event which K'd to this chanire in policy 
 muit be describtfd in the article to follow. 
 
 \ 
 
 \ 
 
 
 Furtber Connideratlr ^ of the Subject by 
 Prof. Kichard T. l^iy, of Johns Hop- 
 kins Uuiversity. 
 
 [Written for the Baltimore Sun.l 
 
 ARTICLE VIII. 
 
 We have already ezamiued the first cause 
 'Which ie4 to the establishment of protec- 
 tionism as **the Amf-rican sygtem." This 
 OAUSe was a faulty federal revenue system, 
 lacking the first principle of scientific finance. 
 Which is flexibiUiy and elasticity, Wc have I 
 
 seen further that this weakness inheres of 
 necessity in any system of national revenues 
 based almost exclusively on duties levied on 
 imported eommoditie?, because these yield 
 least in evory critical juncture. A deficit and 
 debt result therefrom. The question, then, 
 arises, How shall we increase revenues? But 
 having provided only one source of revenue, 
 we most naturally have recourse to that. 
 But this is not all. Taxation moves 
 along the lino of least resistance, Adam 
 Smith tells us that in tlie days of fed- 
 erQiism, government was so weak that 
 only those were taxed who were powerless to 
 resist taxation; namely, the common people. 
 The clergy and nobility wero exempted, and 
 privileged classes arose, as always haupens 
 under weak governments. But in the case 
 of taxes on imported commodities there is a 
 line along which they can move without en- 
 countering any opjwsition whatever. Let us 
 express ourselves more accurately. There 
 may be some opposition, but this is oppos 
 tion on thepart of the unorganized masses 
 —"the forgotten millions"— while there is an 
 organized body of special interests urginST an 
 increase of taxation along this line. Govern- 
 ment is entreated to tax those things which 
 home producers desire to sell, in order to 
 limit competition. In whichever other 
 way the legislative authority turns 
 for revenue, powerful opposition is en- 
 countered, while there is no outside 
 pressure brought to bear to urge it 
 to levy taxes of such a nature as to interfere 
 as little as possible with the pursuits of the 
 people, and to place as small a burden as pos- 
 sible 00 the ordinary man. The forgotten 
 millions are besinning to organize, and this is 
 the chief significance of bodies like the 
 Knights of Labor. By their very nature they 
 are impelled to watch publio measures from 
 the standpoint of the people at larare, and not 
 from the standpoint of special private inter- 
 ests. More will be said about this hereafter. 
 However, the line of least resistance forth o 
 movement of taxntion is manifest in a coun- 
 try which relies for revenue mainly, if not 
 exclusively, upon customs dutKs. Protec- 
 tionism was the most natural outgrowth pos- 
 sible of our system of taxation, and I dwell 
 upon this because precisely at this time it is 
 wBssential that we should understand those 
 principles which underlie cur financial de- 
 velopment and make It what it is. Otherwise 
 
 f 
 
 \ 
 
a repeiitioa ot past "errora is sometbinsr la- 
 evi table. 
 . A second cause, however, was powerful in 
 I the establishment of protectionism in the 
 \ United Slates, and it was this second cause 
 which Jed in the first Instance to the substitu- 
 tion of the princinle of "protection with in- 
 cidental revenue," for the older principle, 
 "revenue with incidental protection," and an 
 eiamlnatlon of this cause Is of prime im- 
 ^ portance in a study of our tariff historj'. I 
 '■ refer to the hostilities between the United 
 '' States and England— and, to a less extent, 
 France— which finally culminated in "the 
 war of 1812." Before these hostilities our 
 ! chief pursuits were commerce and atrrlcul- 
 ture, while manufactures were insiirnificant. 
 There was more or less manufacturing indus- 
 try, but it was pursued in small shops where 
 j, the proprietor worked with his own bands, 
 
 I assisted by two or three journeymen and one 
 
 II or two apprentices. There wus, for ei- 
 ' ample, always the village carpenter, and 
 
 shoemaker and the blacksmith at the country 
 cross-roads. But manufacturinsr on a large 
 scale could scarcely be said to exist, and It 
 was even in Europe only in the early stapes 
 of its development, for the *MndU8trial revo- 
 lution" had but recently besrun. Now, dur- 
 ing the European wars, which centered first 
 about revolutionary France and later about 
 the person of the first Napoleon, our com- 
 merce developsd with a rapidity which is 
 I said to be without parallel in the world's his- 
 I tory. It was unsafe to send goods In 
 European vessels, as all European powers 
 had their enemies, and ih© goods were con- 
 sequently liable to capture. America was the 
 great neutral power, and our commerce was 
 for some time tolerated under more or less 
 vexatious restrictions. While commerce 
 was in this troubled period of the 
 world's history pursued with diffi- 
 culty, the relative disadvantage of our 
 commerce was least. It was estimated that 
 our advantage, as compared with the com- 
 I merce of other countries, could be placed at 
 I twenty or thirty per cent. While this condi- 
 ' tionof things continued, we naturally ab- 
 sorbed an ever-increasing share of interna- 
 tional trade. It was equally natural that our 
 capital and labor should bs attracted by the 
 rewards of expanding commerce. The fol- 
 lowing table will place vividly before the 
 reader the result of the events described 
 from 1789 to 1796. 
 
 Year. 
 
 American tonnage 
 employed in for- 
 eign trade. 
 
 British tonnage 
 employed in 
 American trade. 
 
 1789 
 
 1792 
 
 1794 
 
 1796 
 
 127,329 
 
 414.679 
 525,649 
 675,(H6 
 
 94.110 
 
 206,f;65 
 37,058 
 19.669 
 
 The American tonnage entraged In foreign 
 trade increased up to tiie year 1807, when it 
 amounted to 848.306. A change was then 
 forced upon American Industry. Thestruearle 
 between Franco and England waxed fiercer 
 and mutual hatred became more intense. 
 Both determined that there should be no 
 neutrals, and endeavored to force the United 
 States to take sides with one or the other. A 
 series of measures were inaugurated with 
 this end in view. Thus Great Britain in 1806 
 declared a blockade of all those ports in 
 Europe which belonged to powers allied to 
 France, and Napoleon followed this action 
 by his "Berlin decree," which forbade all 
 
 vessels from entering any British har^ 
 bor. England retaliated in 1807 with 
 the "orders in council," aimed di- 
 rectly at American vessels, and forbidding 
 them to enter any European harbor outside 
 of Great Britain and Sweden. Napoleon re- 
 plied with hla "Milan decree," which ordered 
 the capture and sale of all American vessels 
 entering British harbor?. What was Amprica 
 to do? There were various things which 
 might have been done, but as to what actu- 
 ally was done, I doubt If any American feels 
 proud of this chapter in his country's history. 
 Low taxes seemed to be valued above every- 
 thing else, and no provision was made by 
 Congress for maintaining our dignity and 
 our rights as a nation. The ponny-wise-and- 
 pound-foolish policy was pursued, with re- 
 sults even more than usually disastrous. 
 Our Congress decided to withdraw the 
 assistance which our commerce offered 
 to the nations of Europe, hoping 
 thus to bring them to terms. It was a 
 kit;d of governmental "boycott," which, 
 boomerang-like, reacted most severely 
 on ourselves. The embargo act of 1807 for- 
 bade the depirture of any American vessel 
 for a foreign port, and this was followed by 
 the non-inieroourse act of 1809, which pro- 
 hibited commerce with France and England, 
 but not with other powers. This act expired 
 in 1810, but was revived against Great Britain, 
 which continued its hostile actions until the 
 outbreak of the war of 1812. This war was 
 the most complete kind of prtitectivjn, for 
 commerce with England was by us declared 
 unlawful, and our ports were blockaded by 
 Englandl 
 
 Our commerce was crippled, and as early as 
 18U8 a marked change in xhc character of our 
 industrial llfowasvisible.The capital and labor 
 which formerly had obtained employment in 
 international trade was diverted to manufac- 
 tures. "A commercial war," eavs Professor 
 Henry C. Adsms, "ia always propitious for 
 the establishment of new industries), and la 
 the present case Ithere was developed an in- 
 tense desire to maintain by law, after the 
 cessation of hostilities, those conditions 
 which secured to Industries control over the 
 home market. Then for the first time was it 
 that protection as an Independent industrial 
 system forced its way into the history of the 
 United States." 
 
 The exports from the country during the 
 years 1808 to 1814 declined from a little over 
 one hundred and eight millions of dollars to 
 less tnan seven millions, and revenues from 
 customs and tonnage from a little over 
 twenty-seven millions to less than five mil- 
 lions. 
 
 "Establishments for the manufacture of 
 cotton sroods, woolen clothes, iron, glass, pot- 
 tery and other articles sprang up with a 
 mushroom growth." These are words used 
 by Professor Taussig, from one of whose 
 works on the tariff 1 take the following 
 statistics showing the growth of the cotton 
 industry during the war period. There were 
 but four cotton factories in this country in 
 1803, when new machinery and new methods 
 began to be introduced. In 1805 the number of 
 spin.Ues was 4,500; in 1807, 8,000; in 1809, 31,000; 
 in 1810, 87,000, and in 1815, 130,000. 
 
 When the war with England was brought 
 to a close our commerce had been in consid- 
 erable part destroyed. Capital and labor had 
 been diverted to manufactures, but these had 
 been established under aonormal conditions. 
 
They had now to face the oompetltiou of 
 Europe, and in particular of Eo«iond, whose 
 stores of oommodities, lonir pent up by war, 
 besan to flow oyer the world, and in quanti- 
 tlea In exceaa of the power to pvirchast) them 
 on the part of oon8ijaiers. The manufactur- 
 ers cried out for protection to their "iufant 
 industries" agralnst the old-established indus- 
 tries of Europe, and tlieir cry was beard. A 
 D .Esible jvlternatlvo course of action must be 
 discussed in the followingr article. 
 
 PROBLEMS OF TODAY. 
 
 PROTECTIONISM KEYIEWED. 
 
 ITS PAST AND PRESENT FEATURES. 
 
 Continued Dlscnssion of the Subject by 
 Professor Richard T. Ely. 
 
 [Written for the Baltimore Sun.l 
 
 ARTICLB IX. j 
 
 The industrial situation In the United 
 States at the close of the war of 1813 was a 
 tryinsr one, presentin? problems which re- 
 quired for their successful solution states- 
 ronnship of a hlRh order. Now, statesman- 
 ship of a hisrh order does not mean merely the 
 ability to lead men, but the ability to lead 
 them in a direction which subsequent events 
 pro%'e to be the right direction. It Is, how- 
 eVer, possible ooly for those to forecast with 
 a reasonable desrree of probability future 
 events in the life of a nation who have a 
 profound knowledge of the causes at work 
 which are shaping national destiny and 
 makinf? it what it is. We are now speakinsr 
 of industrial development, and the science 
 which treats of this is political econ- 
 omy, one of the most diflBcult sciences 
 to master in its various ramifications. We 
 see, then, how much is required in a man to 
 give such character to his political activity 
 that it shall wear permanently the mark of 
 statesmanship. There must be leadership 
 with all the rare and admirable qualities 
 which that implies, and this must be accom- 
 panied by action based on a profound insiprht 
 into the nature of social and economic forces 
 at work both ib the nation and in the world 
 at larfire. 
 
 Great as were the men of the first half of 
 Ibis century. In the llRht of present events It 
 must be acbnowledjred that anythiner which 
 can fairly be called statesmanship was rare 
 Indeed amoni? them. 
 
 The year 1816 witnessed the firm establish- 
 ment of the protectionist theory as "the 
 Ameilban system." 
 
 Protection tomRnufaoturinfir Industries had 
 not oome of our deliberate and carefully- 
 formed purpose. First, as we have seea, the 
 thought of our leaders, with Hamilton at 
 their head, was this: We must have revenue, 
 and If, in raisiiiar this revenue, we tax 
 Imported commoditips of a kind produced at 
 homo, and make importers pay from five to 
 fifteon per cent, on the bulk of Imports, our 
 home industries will receive, merely as an 
 incidental matter, a slight protection, and it 
 is well that iboy should be thus favored. 
 
 This was a mistake, for. srrantinR the prin- 
 i ciple, a way was opyned for its subsequent 
 
 f KfJWth, The principles which uistinKuisn 
 i between a tariff for revenue only and a tariff 
 [lor proteotion are radical, and it Is not easy 
 ' to combine the two. Perhaps it is not too 
 much to say that any attempt to do so 
 amounts to a victory of the principle of pro- 
 tection. 
 
 When the first tariff bill was under discus- 
 sion In Congress, Mr. Clymer, of Pennsyl- 
 vania, appears to hare been gifted with an 
 Insltfht comparatively rare, for he wished the 
 bill separated into two parts. The one part was 
 to be a revenue bill, and was to be shaped 
 with reference to revenue principles solely. , 
 Other matters, such as protection to infant 
 industries, were to be considered by them- 
 selves, and on their own merits. This was 
 entirely rational, and if protectionism is de- 
 •irable, this Is the proper scientiflo method 
 for affording it. The question now Involved 
 is not protectionism or free trade; but, if 
 protectionism is desirable, bow shall we es- 
 tablish it. 
 
 The disadvantac-es of taxes on Imported com- 
 modities are many. One of the chief of them 
 is that it compels us to move about blindly 
 In the dark without power to estimate fully 
 the consequences of our own acts. We pay 
 taxes to encourage manufactures, but the 
 extent of the burden we carry no man knows, 
 because we are operating in violation of that 
 canon of taxation which prescribes that taxes 
 should take out and keep out of the pockets 
 of the people as little as possible over and 
 above what flows into the public treasury. 
 "We pay a tax which goes to the government 
 and is returned to us In the inestimable 
 benefits which good government confers, 
 but we pay another tax in increased prices of 
 commodities, and we cannot ascertain the 
 precise amount of this burden. It contains 
 fiome of the worst evils of indirect taxation 
 ■which have been already described. It is 
 covert, it takes from us in sly pick-pocket 
 fashion, and we never know the cause of our 
 diminished fortuoesi The ordinary man 
 simply feels that something is wrong, but he 
 cannot tell what it is. The Sun, in its 
 Friday's article on 'The Cost of It," 
 gave an estimate to the effect that 
 ■we pay to government only one- 
 fourth of the total burden. In other words, 
 if this estimate la acouratie, for every dollar 
 we pay into the federal treasury we pay 
 three more in higher prices than would 
 otherwise be necessary to home producers, 
 and instead of an apparent burden of 
 $217,286,893, we are bearing an actual burden 
 of $880,000,000. 
 
 The second false step waff made In the es- 
 tablishment of an inadequate system of 
 federal finance already sufficiently elabo- 
 rated in these articles. It Is only necessary to 
 remind the readers of Thk Sun of the fact 
 that Its nature was such as to compel a 
 recourse to customs duties for the increasing 
 demands of government. 
 
 The manufacfurers of 1818 wanted protec- 
 tion, and pleaded for their Infant industries, 
 and this argument told, for the protection 
 afforded them was originally limited to a 
 short period. The duty on cotton and woolen 
 eroods was, for example, raised to twenty- 
 flve per cent., but this was to hold only until 
 1819, when It was to be reduced to twenty 
 per cent., which was about the averasre rate ■ 
 ^^under the act of 1816. Calhoun defended 
 Ithlft protective measure on the srround that 
 
Infant Industries requliia f Bl'^'^iRatenbg' caro 
 lOf -irovernment. It is - Contended, how- 
 [bver, by free-traders that real In- 
 fant Industries never pet any protection, 
 but In the tumultuous clamor of special pri- 
 vate interests only toe powerful can hope to 
 receive Brovernment aid. There is much in 
 our history which, so far as it btops, tends to 
 eubstantiate this view. Every one knows 
 that instead of gradually lowerincr the duties 
 levied for the sake of infant industries as 
 they proarressed toward adolescence and ma- 
 turity the protective duties were raised. 
 The more they sroti the more they wanted, 
 and the twenty per cent, duty of 1816 would 
 be scorned in 18881 
 
 Yet we must not lose sight of the facts of 
 the case. What was to be done? Two false 
 gtexw taken by Conerress have bden men- 
 tioned, but more powerful was the war of 
 1813, with tho precedinsr events which led to 
 It. This war period was in Itself the stronsrest 
 kind of protection, and manufacturers grew 
 up under this protection, which came not by 
 our action, but In spite of ourselves. Should 
 these manufactures be allowed to perish 
 their capital to be destroyed, in part at least, 
 and should the labor which they afforded 
 employment be cast adrift? Contrress replied: 
 No! Protectionists say: "Yes, your free- 
 trade theory will be all riorht when you have 
 established perpetual peace Detween nations, 
 but;that Utopia has not yet been attained, 
 and until human institutions are radically 
 chanfired war will from time to time Inter- 
 fere with the plans pf you free-traders and 
 disturb that international division of labor 
 upon which you predicate their beneficence. 
 Yes. When you can guarantee perpetual 
 peace we will become free-traders: in the 
 meantime we will adhere to protection. Free 
 trade is cosmopolitan and visionary. Pro- 
 tection Is national and practicall" 
 
 This is about the way Frederick List 
 arprues in his National System of Political 
 Economy, and he strikes me as the ablest of 
 the protectionists. The proposition of Mr. 
 Clymer shows us a poa><ibIe alternative to the 
 Bourse actually loUuwed by Congress. It 
 would have been entirely practicable to have 
 separated the question of reyenues from that 
 of protection. We could have afforded pro- 
 tection by bounties to home manufacturers, 
 and have encourajred them by awards of 
 largo prizes of one, two, three, or even four 
 hundred thousand doUar^^ for improved in- 
 dustrial processes and for superiority of 
 product. This is a plan which could be more 
 easily carrier! out than our tariff system, and 
 If protection i3 desired, the more carefully it 
 is examined the more it must commend itself 
 to the impartial student. Forelcrn producers 
 would not be excluded, but the bounty could 
 be made to equal the disabilities of a state of 
 infancy. We would pay it with open eyes, 
 and would know precisely what our Infants 
 cost us, and could balance this burden over 
 aarsinst the advantages which ihey confer 
 upon us. We could watch the progress of 
 manufactures from the state of infancy 
 through youth to full maturity, and make 
 bounty at every period proportional to its own 
 weaknesses as compared with the strength of 
 foreieners, and we could do this with fuU 
 consciousness of what we were about. 
 
 Or we might exempt all manufacturing es- 
 tablishments like federal bonds from all tax- 
 ation, national, State and local. As all for- 
 
 eign manufacturers are staggering under a 
 heavy load of taxation, thig would be an im- 
 mense help to home producers. We could 
 •in this case also ascertain tho exact amount 
 of our burden. We might assess all manu- 
 facturers so exempted from taxation every 
 year, and by calculating what they would 
 pay If not exempted we wouH know how 
 much assistance we were giving. Prices 
 would not be raised by this sort of protec- 
 tion to infant Industries. 
 
 These devices are mentioned as possible 
 and practicable alternatives. It is not In- 
 tended to recommend them, nor is it desired 
 to condemn In this place and at this time. 
 
 Still another possible alternative in 1816 
 was to let the mauufaoturers shift for them- 
 selves like othe^lpeople, and adapt them- 
 selves to changed conditions as best they 
 might. More will be said about this plan 
 hereafter. 
 
 TARIFF AND FAVORITISM. 
 
 Prof. RIchd. T. Ely Tells How Favorites 
 FlonriKhed Under Tariff Legislatiou. 
 
 rWritten for the Baltimore Sun.l 
 
 ARTICLE X. 
 
 In my last article I stated that tbe proposi- 
 tion of Mr. Clymer favoring a separation 
 of revenue measures from other political 
 schemes showed that there was a possible al- 
 ternative to the course actually followed by 
 Conerefig in the firm establishment of protec- 
 tionism in 1816. There were, in fact, several 
 alternatives, and two of them have been 
 described. One was the bounty system and 
 the other the plan of special exemption from 
 all taxation, either of which, it was argued, 
 was preferable as a scheme of protection 
 when looked at in the light of reason. It 
 still remains to be considered whether it 
 would not have been better to have refused 
 any interference in behalf of manufacturers 
 and to have allowed them to adjust them- 
 selves to new conditions as best they mlKht, 
 as other people are forced to do, and thus to 
 have established with respect to manufactur- 
 ers In general the policy of non-interference. 
 
 This is a matter of present Interest because 
 the question of general policy Is coming up 
 again and is certainly to be raised repeatedly 
 in the near future. First, It must be rer 
 niarked that a liberal policy with respect to 
 trade and non-intervention In general has 
 been Injured by those extremists who claim 
 too much. Doctrinaires say government 
 should do as little as possible, and that is the 
 best government which governs the least. 
 Yet when we see the English laboring classes 
 elevated by factory legislation protecting 
 the laboring .classes by restricting the labor 
 of women and children and prohibiting 
 **pluck-me stores" and payment in kind, and 
 thus the theories of radical socialists like 
 Carl Marx discredited, for they say that 
 the workingmen have nothing to hope 
 from the present state: when we witness 
 somewhat similar beneficial effects in Mas- 
 sachusetts and New York, and when we 
 reflect on the inestimable benefits of our free 
 public school system even when reviewed ex- 
 clusively from the standpoint of material 
 wealth; when wo Icarn that, doctrinaires to 
 the contrary notwithstanding, municipalities 
 are to increasingextent supplying themselves 
 with gas without the Intervention of corpo- I 
 wjations, and that with the most satisfactory' | 
 
results— when we contemplHte all I these 
 things we are too inclined to reject the entire 
 policy of non-intervention and favor irovern- 
 ment Interference everywhere. It is neces- 
 BAry !o discriminate. One law KOverns those 
 Dursuita which are monopolies, another those 
 which are always subject to the steady, con- 
 stant pressure of competition, while yet a 
 third principle prevails with reference to 
 labor, and in sreneral it may be said of pur- 
 suits which are stronprly , competitive that 
 competition lain the main a sufficient resru- 
 lator, and that so far as they are con- 
 cerned that government is best which 
 Ifoverns least. 
 
 "DurinjTthe present century," says adis- 
 criminatlnsr writer, "two Kreat discoveries 
 have been made in the science of firovern- 
 ment. The one Is the Immense advantage of 
 aboUahlng restrictions upon trade; the other 
 is the absolute necessity of imposinjf restric- 
 tions upon labor." He Avould have expressed 
 his meaniner more clearly if he had said 
 "upon labor In behalf of labor," for he had 
 In view ret? ulations increasing- real freedom. 
 W hlle, then, only an extremist will support 
 the proposition of non-intervention as of 
 universal application, the impartial student 
 of American affairs can hardly fail to see his 
 inclination strengthen in favor of lettinj? 
 commerce and manufactures take their own I 
 course without legislative interference, the 
 more minutely he examines our present con- 
 dition and its historical antecedents, for he 
 will find that the best laid plans for fostering 
 infant industries and building up a barrier 
 between American labor and the so-called 
 "pauper labor" of Europe come to naueht. 
 It is scarcely possible to carry them out, and 
 in the end the hard-workinar, thrifty indus- 
 trial class of employers and employes alike 
 are hampered In their efforts to gain a liveli- 
 hood, while enormous trusts and syndicates 
 are formed, crushing as with an iron hand the 
 independent manufacturer, and grinding 
 down American labor by bringinjr into Com- 
 I)etitioa with It Ignorant and lawless Eu- 
 ropean hordes, which have been brought into 
 the country free of all duty. 
 
 The infant industry theory finds its cl»8sl- 
 cal statement In these words in John &tuart 
 1 Mill's treatise on political economy: "The 
 expenses of production being always greatest 
 ai first, it may happen that the home pro- 
 duction, though really the most advan- 
 tageous, may not become so until after a cer- 
 tain duration of pecuniary loss, which it is 
 not to be expected that private speculators 
 should incur in order that their successors 
 may be benefited by their ruin. I have, 
 therefore, conceded that In a new country a 
 temporary protecting duty may sometimes 
 be economically defensible; on condition, 
 however, that It be strictly limited in point 
 of time, and provisions bo made that during 
 the latter part of Its existence it be on a 
 gradually decreasing scale. Such temporary 
 provision la of the same character as a 
 patent, and should be governed by similar 
 conditions." 
 
 This is precisely what during the first half 
 of our national existence we proposed to do, 
 and, as has been, stated tariff laws were up to 
 a lew years limited, and laws have actually 
 beet passed contemplating a gradual reduc- 
 I tion of tariff duties, with the Intention of 
 
 thus entering upon a permanent free-tra 
 period. But our history has been of suc^ 
 character as to lead one to doubt the practica- 
 bility of the infant Irfdustry theory. A tariff 
 law passed for two years is extended and 
 duties raisoi before we scarcely enter our 
 national existence, and the fate which thus 
 overiooK Hamilton's "temporary" inorense of 
 duties has been repeated again and again. It 
 is true that a rational system of federal flnan- 
 cierinfiT might have helped matters somewhat, 
 but even if we should be led to adopt better 
 financial methods have we reason to hope 
 that exi)erience in the near future will 
 be different? The theory of our institu- 
 tions is that municipal councillors, State 
 legislators and Federal Congressmen meet 
 to discuss the public welfare calmly and 
 Impartially, and to pass such laws as they 
 may regard beneficial to the people. The 
 truth Is the initiative in legislation in general 
 does not come from the legislator, but from 
 the pressure of some powerful external 
 special Interest. Go to an ordinary legisla- 
 ture or city council with a measure and you 
 will be asked who is back of it, who wants it 
 passed, and what is the consideration? If 
 you simply come with the general welfare at 
 heart, and have no great organization with 
 votes at your back, your reception "will be a 
 cold one. Now so long as this is so, how can 
 it be expected that governmental aid will be 
 withdrawn Just in proportion as those who 
 receive it grow strong? That is the theory, 
 but on the contrary the pressure for aid in- 
 creases as strength increases. Can one in- 
 stance in all the history of the Ameri- 
 can tariff be adduced where protection 
 was offered to aid In the establissh- 
 ment of an industry not already In existence? 
 I think not one, yet this is what the theory 
 calls for. The idea is that after canvassing 
 the situation. Congressmen say: "Our natu- 
 ral resources are such that we ought to have 
 a beet-root sugar industry, for example. Yet 
 not a trace of such industvy exists on account 
 of the enormous difficulties in the way of its 
 establishment. Let us, therefore, tax im- 
 ported sucrar togivd our would-be produoars 
 a chance." 
 
 The actual practice is this: Representa- 
 tives of powerful establishments go to Wash- 
 ington and say: "We have large paper mills 
 in the Connecticut valley or elsewhere, and 
 we wish to bo protected against foreign 
 competition.'* It will readily be seen how 
 akin this is to the monopolistic spirit, for 
 monopoly means simply absence of competi- 
 tion. 
 
 Several things are proved by this "brief 
 sketch which any one snecially Interested 
 will find more amply demonstrated in Taus- 
 sig's "Protection to Young Industries." One 
 is that protective tariffs did not give us our 
 manufactures. They came into existence 
 wlihout It. The question of free trade versus 
 protection Is not at all a que-^tion of manu- 
 factures or ^o manufactures. Nor Is it a 
 question of a deversifled or homogeneous 
 Industrial life. 
 
 We see, further, that protective duties onc9 
 esta blished tend to Increase, and that a ireat- 
 ny?iitof the tariff in accordance with scien- 
 tific principles is at least very dlflaoult, if not 
 iroposaiblo. A recent careful writer says that 
 
 tho theory of protection is not altogether 
 
 ■II i . 1 I— I- -jfe.- -.11. 
 
erroneous could it be applied, Tt)ut tie noma 
 that no modern parliament or congress can 
 be trusted to apply it, and on that account 
 be r^ects protectionism in practical politics. 
 Why is it that the more protection one has 
 the more one wants? The reason is this: 
 Manufacturers may be divided into several 
 classes with respect to profits. There are 
 those advantageously situated and skillful 
 and enerifetic— ffreat industrial leaders 
 These men require no special help, and they 
 belong to the first class. There are those 
 ; whose profits are a little smaller on account 
 of inferior natural advantages or inferior 
 mental qualifications. These are manufac- 
 turers ot the second class. So proflts descend 
 until In every pursuit you find those '*on the 
 rajrtred edge" who but just live, who barely 
 *'keep their heads above water," as we say. 
 Prices are high enough to enable these man- 
 I ufacturers of the lowest grade to live, and 
 the profitableness of another business la 
 j measured by the differences between Its 
 1 cost of production and the cost ol production 
 ! In those establishments which Just keep 
 1 ^live, so the lower the scale of IneflBcienoy, 
 t the higher the profits of the favorably Bitu«_ 
 ated. Let these lines rfeprw^sent tl^e jorlous 
 frradea of manufactures in the'dtflteTl'States: 
 
 Profits of class 1 will be measured by the 
 distance between 1 and 6. Now, if you wipe 
 out 6, it must be by lower prices, and thus 
 will the abnormally high profits of class 1 
 fall. Now, under a system of free trade, the 
 operations of those advantageously situated 
 will be extended and those working In- 
 efficiently will be compelled to exert them- 
 selves and produce better and cheaper goods 
 or to change their occupation. :The question, 
 then, at issue is this: Shall we have only 
 manufacturers of a high degree of efficiency, 
 or shall we also raise up and keep in exist- 
 ence an Inferior class of men? Manufac- 
 tures we are certain to have, for we are more 
 advantageously situated than other countries 
 with respect to some branches of industry, 
 and there is probably scarcely any line of 
 manufactures which could not be pursued in 
 some favored spot by some one. 
 
 Now it must be manifest that the more 
 efficient the labor and caoital of the country 
 the more we will all have to enjoy and the 
 greater our opportunities for leisure. What 
 is produced now is not sufficient by any 
 means to satisfy all rational wants of all 
 men. Much more must be produced for that 
 purpose, and if what is produced is often not 
 consumed, owing to the absence of purchas- 
 ing power on the part of the masses, this Is 
 another matter, and the difficulty cannot be 
 remedied by protective tariffs. 
 
 The extension of aid to manuracturers In 
 1816 accustomed us to look upon it as our 
 duty to tax ourselves for the benefit of cer- 
 tain pursuits, whereas, if they are natural to 
 the country and desirable, they e\n be profit- 
 ably established without help. The pauper 
 KPirit has been nourished and it appears to 
 have worked like free soup-houaes on the 
 ipoor. Some business men, instead of bending 
 all their energies to the production of cheap 
 
 and good commodities, are always plotting to [ 
 get something from the public purse. Thus j 
 towns are induced to bid against one another 
 for railroad facilities, and our federal govern- 
 ment has been pursuaded to part with the 
 heritage of the people *'to encourage" rail- 
 road building, whereas it would seem desir- 
 able, if we, the people, i>ay for the roads, that 
 we should own them. 
 
 When channres in productive processes In- 
 jure skilled workingmen we say they must 
 suffer quietly and be content, because the 
 general public gains. If a type-setting 
 machine should render the skill of type- 
 setters superfluous, it would produce Im- 
 mense sufferinsr, but we would not subsidize 
 them from the public treasury, or levy a tax 
 for their benefit of one hundred and fifty per 
 cent on those using the machine. Working- | 
 men, on the contrary, are severely rebuked 
 when they resist improvements. 
 
 When the elevated railroads in New York 
 Injured property owners, the claim for dam- 
 ages was resisted on account of the public 
 good. So, at the close of the late 
 war, thousands upon thousands of farmers 
 were well-nigh ruined, and many of them 
 completely so, by the contraction of the cur- 
 rency, which lowered the price of their farms 
 and raised the value of all existing mort- 
 gages until often the mortgage equaled the 
 value of the farms. Yet farmers were not 
 indemnified on account of their less. 
 
 Is it not, then, better to exclude favoritism 
 in legislation, and to let each industry stand 
 on its own bottom? 
 
 PKOBLEMS OF TODAY. 
 
 PROTECTIONISM AND LABOR. 
 
 MONEY-MAKING AND WAGE-EARNING. 
 
 Pi-of. Richard T. Ely Shows How a High 
 TarifT Governiiieut Worka Against the 
 Workiugiuau. 
 
 [Written for the Baltimore Sun.l 
 
 ARTICLE XI. 
 
 As time went on the plea that protection 
 should be afforded to the "infant industries" 
 of the United States grew ridiculous, and its 
 advocates , began to cast about for an argu- 
 ment which would meet with some other 
 reply than a sarcastic smile. Manifestly the 
 period of Infancy must end some time, and 
 the infant industry argument is based pre- 
 cisely on the hyp )thesis that protection is 
 merely a temporary need. 
 
 The infant industry plea Is not often heard 
 now, and may be regarded as decidedly 
 antiquated. iLet occasionally echoes of the 
 old war cry of the protectionists are still 
 heard. Although they are so feeble as 
 scarcely to deserve notice, it may be well to 
 devote just a word to them. 
 
 First, oue hundred years of protection 
 ought to have developed our industry beyond 
 the stage of infancy if protection ever can 
 do it. 
 
 Second, the arguments which make for pro- 
 tection to industries in a younir and enter- 
 prising but poor country, and which, indeed, 
 in such cases. If intelligently applied may 
 Justify it, no longer holds in the 
 
 *i 
 
United States. 1*; neeael. 
 
 It l8 said, because the puiHurs, tinhoujrh nat- 
 urally remunerative, cannot become so for 
 eeveral years, and men want Immediate re- 
 turns. This is true in a now country, but It ia 
 rot true with us. We have many men in the 
 United States whose pursoa are as long: as 
 those which can be found anywhere, and 
 whose minds are as shrewd as those of for- 
 eign cipilalists. If it is a mere question of 
 who is able to hold out longrest in a comDeti- 
 tive contest, American capitalists need no 
 ftssiatHnce. They are quite competent to 
 look out for themselves. Nor is it true that 
 immediate returns are desired. Almost un- 
 limited monly can be obtained In the United 
 States for enterprises which promise even 
 after years to yield larcre returns. Let us ex- 
 amine a few evidences of this fact: 
 
 Why is it that lonjr-tirae loans are more 
 valuable than short-time loans? It micrht be i 
 supposed that if a federal, state or municipal 
 trovernment owes me some money I would 
 want it at once, and sayr'the sooner I am paid 
 the bettor." But the contrary is the case. I 
 say, "the later the date of payment the better 
 pleased I shall be." It is because capital is ; 
 so abundant that people are jflad to part with 
 its use for a lon^ term of years if they can 
 be Buaranteed a small annual payment. liook 
 at the readiness with which people advance 
 money for canal schemes and other flrreat im- 
 provements in the hope that they will after 
 years become profitable. A few concrete 
 Instances will help to make this plain. In 
 conversation with a jfreat capitalist, he men- 
 tioned to me In connection with a certain 
 scheme: *'l told H. that if ho wanted to do a 
 noodtninjr for himself and the country that 
 was a good opportunity. I told him that he 
 must expect to lose money for ten years, but 
 that then he would beerin to make money." 
 
 A company in New York— and it practi- 
 cally, I am told, consists of one man— has 
 been.preparintr a great dictionary of the Eng- 
 lish' language for publication for years. It 
 has spent thousands of dollars, and I am 
 inclined to think even hundreds of thousands, 
 already, and has not received one dollar la 
 return, because the work has not yet seen the 
 lieht. Nevertheless, it continues to spend 
 money by the thousand, and seems perfectly 
 8^jti«fled in the prospect of a lai'ge future 
 profit. 
 
 When I was traveling in the North once I 
 met a gentleman from Virginia who was 
 managing a larure farm there, owned partly 
 by himself and partly by two capitalists. The 
 iirrangemont was that he should manage the 
 Virgifjia farm, receive a certain cash sum 
 every year, spend whatever ho might deem 
 desirable in improvements, and then divide 
 the surplus. It so happened, however, that 
 this gentleman also owned a farm in 
 New York State, where he had formerly 
 lived, and to which he was anx- 
 ious to return. Now, as It bad been 
 agreed In case of dissatisfaction thai the dis- 
 satisfied Darty must buy the other out at an 
 appraised valuation, ho decided to spend so 
 much in Improvements every year that there 
 ghould be no surplus to divide. This he did 
 year after year, yet the two capitalists, who 
 occasionally visited the farm, always ox- 
 pressed perfect satisfaction with the man- 
 angement, AS a matter of fact, tney did not 
 care for any revenue, but were content to see 
 
 rthelr property grow in value.These are merely 
 
 I typical cases. The truth is, if at the present 
 
 \ time the natural Conditions are such as to 
 
 make any branch of industry profitable, there 
 
 ' are men keen enough to see it, shrewd 
 
 j enough to bold their own against competi- 
 
 ' tion from abroad, and rich enough to await 
 
 its development until it yields revenue. We, 
 
 as a nation, are rich and powerful, and 
 
 ble«sed with natural opportunities such as no 
 
 other country enjoys; and however it may 
 
 be elsewhere, as, for example. In Jaran, the 
 
 infant Industry theory Is an absurdity in the 
 
 year 1883 in the United States. 
 
 Nevertheless, appetite grew with what It 
 fed upon, and the call was for increasing 
 protection. How justify It? As I said, pro- 
 tectionists began to oast about for another 
 Bpeclal plea, and they found it, and from 
 about 1840 up to the present we have heard a 
 new war cry.namely, protection of American 
 labor against "the pauper labor of Europe." 
 
 It does not seem diflQoult to account for 
 
 this new plea, A political labor party arose 
 
 about the year 1835, and soon acquired some 
 
 ' influence. George Henry Evans, whose name 
 
 , may be remembered by some of the readers 
 
 of The sun, was one of its leaders, and 
 
 ■ among its organs may be moniioned the 
 
 Workingman'a Advocate, the Dally Sentinel 
 
 and Young America, Its platform contained 
 
 twelve demands, among which were the fol- 1 
 
 lowing: 
 
 "The right of man to the soil; *vote your- 
 self a farm.' 
 
 "Down with the monopolies, especially the 
 United States Bank. 
 "Freedom of public lands. 
 "Homesteads made inalienable. 
 "A lien of the laborer upon his own work 
 for his wasies. 
 "Abolition of imprisonment for debt." 
 A "workingman's convention" met at Syra- 
 cure, in New York State, in 1830 and nomi- 
 nated a candidate for Governor, who received 
 but a few votes. In New York city, how- 
 ever, they were more successful, for, joining 
 forces with the whigs, they elected a few 
 members of t|ie Legislature. These men 
 finally entered the locofoco party and were 
 captivated by "Old Hickory." whose nomi- 
 nation and election they attributed to their 
 Influence. The democratic party, under 
 Andrew Jackson's leadership, re-echoed some 
 of the war cries of the workingmen's party, 
 and seemed finally to have side-tracked this 
 early labor movement and to have brought It 
 safely into the fold of democracy. 
 
 Plainly the laboring classes were begin- 
 ning to acquire a consciousness of their own 
 existence as a distinct class in Industrial 
 society, and wily politicians thought Ii time 
 to throw the worklngman a^ sop. Hence, 
 about 1840 we find the watch'word "Protec- 
 I tion to American labor against cheap f orelcrn 
 labor" taking the place of the former rally- 
 ' ing cry, "Protection to our Infant indus- 
 ' tries." No doubt for party purposes it was 
 an immense Improvement. It proceeied 
 upon the hypothesis that the American em- 
 ployer must pay more than his European 
 competitor for labor, and that difference must 
 be made up to him by a tax on foreign com- 
 petitors; some. Indeed, with a nice air of accu- 
 racy claiming It as a scientific principle that 
 duties should be precisely such In every 
 instance as to equal the differonce^in cost of 
 
labor. It is assumed that If duties lau, 
 American labor must also fall in price, and, 
 like European labor, become pauper labor. 
 One manifest 8up?riorlty in this new plea 
 ia that it does not advocate duties 
 as something temporary, but as some- 
 thinff to endure as lonpr as American 
 labor Is **dear" and foreiprn labor Is "cheap." 
 Another is the benevolence wrapped ud in it: 
 and not merely benevolence. It is benevo- 
 lence of a superior and unique sorti Benevo- 
 lence often means sacrifice on iho part of 
 him who exercises It, as when I wear an old 
 coat that I may help educate the orphan 
 child of an old friend. Not so the benevo- 
 lence of the protective tariff, for it is war- 
 ranted never to take a penny from ihe 
 pockets of its most devoted adherents. They 
 may live in palaces, eat the choicest outs of 
 roast beef, drink champasrne, and be merry 
 while their bank aocouuts swelll Have they 
 not done their part? Are they not the repre- 
 sentatives of protection to American labor? 
 
 But is American labor, after all, protected? 
 Let us at once oro to the Heart of thincrs. If I 
 have anythinur to sell, it ia conceivable that I 
 I may be helped in two ways by government. 
 To say that I wan t to sell a thio? means simply 
 that I want to Ret Bomethinjf else for it. 1 
 sell that I may buy. Money simply comes in 
 as a medium, A farmer sells corn for money, 
 and with that money buys shoes. Corn is 
 really excbattfired for shoes, and money is 
 used as a medium merely to facilitate ex- 
 chance. Now, if government in some way can 
 increase the suupiy of those things which 
 I wish to buy, I may be benefited. More 
 will be offered me for what ;i have to 
 sell. On the other hand. If government can 
 diminish the supply of the article I want to 
 sell, I can get more for it, and I am benefited. 
 How stanosthe case witn the wae"e receiver? 
 What has he to sell? The commodity labor, 
 and nothlnor else. With that commodity 
 (labor) he must purchase all other things. 
 Now what is government doing for him? Is 
 (tovernmeut rendering labor scarce and com- 
 modities plentiful? On the contrary, no 
 duty is put on labor. Labor comes in 
 free. Not only thai; our protectionists are 
 helping to increase the supply of labor and to 
 keep its price down. Do not federal consuls 
 encourage emigration from Europe to Amer- 
 ica? Do not States and Territories send 
 agents abroad to aid and abet foreifin labor 
 in its purpose to fill up the supply of labor in 
 our own market? Do not the protectionist 
 employers themselves keep iheir aarents in 
 every part of Europe to help swell the throng 
 of those coming to our shores, and, in 
 case of demand for higher wages, to take 
 the place of the discontented? Strangel 
 Yet it is all truel Every word of 
 It, and" the orjrans of the protectionists gloat 
 over the increasing supply of labor in our 
 markets. The commodity which the laborer has 
 to sell is not protected. All that government does 
 is to help increase its supply and thus reduce its 
 price. 
 
 But then it must be that government ia 
 trying to increase the supply of those things 
 which workingmen want in exchange for 
 their commodity, laborl God forbid! It is 
 taxing them and rendering them scarce! It 
 looks as if government were working against 
 labor, doesn't It? A funny world, isn't it? 
 
 THE BEARINGS OF IMMIGRATION. 
 
 Continued Discussion of the Subject by 
 Prof. Kicliard T. EJy, of Jolms IIupkin« 
 Uuiversity. 
 
 I Written for the Baltimore Sun.] 
 
 ARTICLB Xir. 
 
 Our last article showed that while labor was 
 not protected by tariff laws, the commodi- 
 ties which labor received in exchange for its 
 part in production were taxed and rendered 
 dear. We saw that in consequence of this 
 fact government had worked acainst labor 
 in two ways, for it had on the one band en- 
 couraged the importation of labor free from 
 all charge, and on the other it had discour- 
 affed the importation of those things which 
 labor requires for the maintenance of life. 
 The reader should keep a firm grasp on these 
 facts in all discussion on the bearings of a 
 protective tariff on labor. It is easy to 
 see what would have been done by 
 sincere and intelligent advocates of 
 governmental protection to home labor. 
 I do not now raise the questioa as to 
 the desirabilty of such protection. I simply 
 propose to answer this question: A'^suraing 
 that it is the duty of the federal government 
 to aid labor by taxes, how should these taxes 
 be laid? lit isj proposed to help labor to 
 secure hiarh wages, and it is therefore neces- 
 sary to raise the price it commands by dimin- 
 ishing the supply. What can be simpler 
 than the solution of the problem? Tax the 
 commodity labor by taxing every for- 
 eigner landing on our shores, and encoffr- 
 age» on the other hand, a pentlful Importa- 
 tion of goods. This would necessarily 
 alter the relation between supply of labor 
 and demand for labor, and supply of com- 
 modities and demand for commodities in 
 the interest of labor. Now, how high a tax 
 should the siocert^ advocate of protection 
 f*»vor on each able-bodied emigrant from 
 foreijrn lands upon his entrance into an 
 American port? We must find out the value 
 of a woraiiigman, viewed simply as a pro- 
 ducer—not as a husband or father or citizen, 
 but simply as one who produces things which 
 have vilue in the world's markets. Now, 
 calculations of this kind have actually been 
 maae, and f 1,000 may be taken as a low valua- 
 tion. Taxes on imported commodities are e4 
 high as one hundred and fifty per cent., an<t 
 a tariff devised in the interest of labor 
 ought to put the highest tax on those who 
 supply the commodity labor. We may say 
 then that a tax on each foreicrn able-bodied 
 emitrraiitof $1,500 is not excessive as com- 
 pared with other taxes on imnorts. Females 
 might be taxed $1,000 and children $500. If 
 tbis would not give a certain advantatre to 
 home labor, then two and two do not make 
 four. 
 
 It is to be noticed further in this connec- 
 tion that distanee in itsolt is not tne protec- 
 tion to labor which it once was, for the trans- 
 portation of emiwrrants is so cheap now that 
 the employer practically has a free world- 
 wide market iu wtiich to procure the com- 
 modity labor. THUS the saying Is literally 
 true, the laborer sells his commodity in a 
 free market and buys in a protected market. 
 
 It may be well to say a word more about 
 restrictions on immigration, for tbis is now a 
 live question, and my opinion has recently 
 been asked. I cannot at present favor re- 
 strictions on immigratlim of the kind above 
 described, although they are simply the 
 logical conclusions from principles which, it 
 is claimed, we are now trying to app y in the 
 interest of labor, it seems to me there are 
 other and better ways for advancing ;tho 
 ^interesis of labor, foremost among wiilch is a 
 
thoiiumi, B>»irmtviiv iirtiiiiuif of eacb boy i 
 and Riri boru on American soil for the actual 
 duties of life. These duties are both public.) 
 atiii private, and prcparatioQ for them must 
 Include training: duslifned to fit one to 
 become a worthy member of a family, 
 a worthy oitizen aud a useful member ' 
 of industrial society. Iq other words, 
 each child oui?bt to be so train e<l as to 
 Xo honorably its future duties with 
 1 . i, to the family, the State, and, further- . 
 more, to render au honest equivalent for ' 
 those economic (tooda which are needed to 
 support life in decency and comfort, or, 'still 
 more simply expressed, to eret a livinsr. This 
 preparation falls iu part to the church, and 
 with her functions we are not now concerned. 
 LarRely, aud to an iucreasinjf extent. It must 
 fall to the school, because old-fashioned 
 methods, especially as seen In the apprentice- 
 ship system, are becominer antiquated. They 
 are burdensome alike to employer and em- 
 pl( ye, for the former is often as much op- 
 posed to them, and frequently more 
 opposed to them than the latter. 
 Probably General Francis A. Walker, the 
 head of the most successful Massachusetts 
 Institute of TechnoioKry, is as well qualified 
 to speak on this subject as any man, and of 
 appreniioeahip he savs this: *'As it exists to- 
 day it is an advantasre to neither party. The 
 apprentice can only learn a narrow specialty, 
 so narrow, as a rule, that its only value to 
 him is the meacrre pittance which he can earn 
 from day to day, but at the sacrifice of any 
 further educational advantaeres." The 
 schools, then, need both extension and im- 
 provement, and that in several directions. 
 Ono is in respect to practical ethics, 
 for alontf this line our schools have 
 , been lamentably deficient. Practical ethics 
 are required to prepare for a worthy life in 
 the family and in the State, Second, practi- 
 cal traininer for the business of lifo in the in- 
 dustrial sphere is a necessity. We need in- 
 dustrial traininjr in cenerai, as has so often 
 been set forth in The Sun, and, in particular, 
 we need more professional schools, usinj? tnat 
 expression in its broadest sense. At one time 
 it was thought by many that special schools 
 were not required for lawyers, preachers and 
 physicians, but now the mistake of this has 
 been demonstrated by actual experience. 
 Well, the mechanic needs special schools as 
 well as the lawyer or preacher. Our Klrls 
 ousrht to learn how to cook and sew, ana our 
 boys to handle tools aai keep accounts in 
 schools. 
 
 Third, the present branches of study should 
 bo better lauRht, and this requires a hiarher 
 Krade of teacners. The profession of teacher 
 should be elevated iu rank and its rewards 
 increased. 
 
 What has this to do with the tariff? Every- 
 thing, because we are discussinar protection 
 to labor, aud I am pointing out in what true 
 protection as distintruished from spurious 
 protection consists. Protection to labor con- 
 sists In renderintr it hisrhly qualified. 
 
 Do I need protection from inferiors? On 
 the contrary, it is the superior man who may 
 drive me to the wail. So if American labor 
 by suitable tralnintf of youth is rendered 
 more highly qualified than foreitrn labor, it 
 will find itself belter protected than by any 
 tariff walls vvhich human Ingenuity can in the 
 year 1888 erect about the Uuited States. 
 
 Labor may rightfully demand mat laws 
 should be passed to keep out a low and de- 
 grade i c ass of emijjrants, who tend to lower 
 our civilization urid to throw upon us the 
 burden of their support as paupers or crim- 
 inals; and here aerain we come to an actual 
 burden which rests upon our entire Industry 
 weltrhing down employer and employe alikeV 
 Protection from the scum and offsouurinff of 
 fciuropeand Asia may ri«rhtfi)lly be demanded 
 by all. Dr.Edward W. Derals,aformer8tudent 
 of mine, has made some recommendations 
 Which seem to mo worthy of commendation. 
 1! • visestBt the pissporr system be intro^ 
 <j •iASUfeS'ecJLiv^.jaetlQod of oontrollinp 
 
 luimiwruliun, aua tuuL only those be allowed 
 to enter our country who can bring a pass- 
 port duly signed by an American consul. 
 i\o passport, however, shall be granted to 
 those Hssistcd to emigrate by any charity or- 
 ganization or governmental agency, Trans- 
 portation to America costs so liiile 
 that iocal Europeai autliorities find it 
 cheaper to unload tiieir poor and degraded 
 upon us ih.m to keep them at home. 
 Already our burden for public aims is heavy, 
 for it is estimated that one lu a hundred re- 
 ceives charity in the United States even at 
 this early period in our history, and the pro- 
 portions of the burden will be realized by 
 those who reflect that even the great Ger- 
 man army iuclu'iee less than one in a hun- 
 dred of the population. 1 would say that the 
 passport ought not only lo set forth mat tne 
 ono to whom it is giveu is not aided in emi- 
 gration by charity, hut that he has not been 
 a recipieut of public charity for the preced- 
 ing twelve mootus. 
 
 No passport should be given to those as- 
 sisted by the agents of any land-grant rail- 
 roads In the Uuiitd States, or, in fact, by the 
 agents of any corporation. 
 
 Pas-ports should be granted to those over 
 sixteeu only in case they can read and write. 
 Tnese restrictions are the most important 
 which occur to me. Any aitempt to limit 
 immigratiofi so as to exclude those who bold 
 dangerous opiniont is a sugtrestion at once so 
 absurd and impractioaule tnat I hope no one 
 who reads The bUN will require a demonstra- 
 tion of its folly. 
 
 The poorer quality of a large proportion of 
 European emigrants is seen in the sections 
 of country from which they emigrate. For- 
 merly German immigrants came to us from 
 the Khine and the piO!«perou8, eolightefied 
 country in the west of Germany. Now they 
 come from the eastern parts and Polisn 
 frontiers, the mosc degraded part of the 
 "Fatherland." Similarly, it is said that the 
 poorest parts of Irelat^d are now sending us 
 their surplus population, and that the Irish 
 now coming to America are inferior to the 
 earlier Irisn emigrants. 
 
 If it IS salii mat this sort of protection to 
 home industry is an injustice to European 
 countries, it can bo repli; d that it is not im- 
 probable that we shall be able to do most 
 tor the advancement of human civilization in 
 America if wo uo not load ourselves down 
 with a to ) heavy weight. America has her 
 part to play in tne world's history, and if this 
 IS to be a beneficent pcirt it is essentinl that 
 we should amply protect our own people and 
 allow our in&titutions to develop naturally 
 from within, withiut violent a^isaulc from 
 alieu influences. O i the other hand tnere 
 are many questions which European govern- 
 ments musi sooner or later settle for them- 
 selves, aud I am not sure mat we benefit 
 humanity by receiving the worst elements 
 they send us, anu thus enaulinsr tutm to pro- 
 long the exidteuce of aucieui abuses. 
 
FHOBLEMS OF TODAY. 
 
 PKOTECTIONISM AMD LABOR. 
 
 AMERICAN LABOR NEEDS NO SUBSIDY. 
 
 Superior EAciency of American TVork- 
 inemen— Further Views by Prof. Kicli- 
 ard T. Ely. 
 
 [Written for the Baltimore Sun.l 
 
 ARTICLE XIII. 
 
 1 think It was a French jcin? "who asked his 
 wise men to explain why it was that if you 
 should put a large fish into a pail filled with 
 waier, the water would not run over. This 
 puzzled thera all preatly, until some one sutr- 
 gested that it was not a fact that the water 
 would not run over. The king:, indeed, had 
 not stated that it was a fact. I am reminded 
 of this Btory when I hear some of the current 
 discussions on the tarifif. 
 
 It is said, for example, that the American 
 manufacturer must receire hiizrher prices be- 
 cause labor costs him more than it costs his 
 European corapatitor, and that these higrher 
 prices must be secured throutrh the action of 
 a protective tariff. But is it a fact that labor 
 costs the American manufacturer more? I 
 doubt it. Wasres may on the whole be hijf her. 
 although even here, on account ot unsteady 
 employment, the difference is not so jrreat as 
 many imagine: but waijes and the cost of labor 
 are two quite different things. The cost of 
 labor depends upon two things— first, wages 
 paid; second, the efficiency of labor. Will the 
 practical man, who pays $2 a day to his em- 
 ployes engaged in some manufacturing en- 
 terprise in iMassachusetts, at once remove his 
 business to Georgia if told that employes can 
 in the South be procured in abundance for 
 $150 a day? By no means. He would be a 
 fool to do it. He will first ascertain many 
 other things about business, and he will in- 
 stitute a diligent inquiry into the relative 
 efficiency of Northern and Southern labor. 
 He will say: *'The vital question with me is 
 not how much I pay a day, but how much 
 will it cost me to get a given piece of work 
 done." Now when we thus compare labor cost 
 in Europe and America it appears that in a large 
 portion of the industrial field the American 
 jnamifacturer has a decided advantage over his 
 fo7'eign competitor, for it costs him less to get a 
 giver^iece of work done. The American re- 
 ceives higher wages, but does so much more 
 work in a day than the European that his 
 services are cheaper and more desirable. Is 
 not this plain? Suppose I employ two men, 
 A and B. A receives $3 a day and B $4 a day, 
 but B accomplishes three times as much in a 
 day as A. Who is the cheap laborer? Here, 
 as so often happens, the current saying, "the 
 best is the cheapest," holds true. An Amer- 
 ican bricklayer receives more per day than a 
 Dutch bricklayer, but he receives less per 
 brick laid. The same holds with regard to 
 wages per day and wages per piece 
 in certain grades of spinning, and 
 one who is familiar with the details of 
 manufacturing in Europe and America can 
 give examples in abundance. Mr. Schoen- 
 hof has looked carefully into this matter 
 and made a report to the Department of 
 State, which was noticed in The Sun in its 
 issue for December 31, 1886. It appears that 
 hia the manufacture of silK In Sia English 
 
 miilYthe average earnings of the employes 
 were $3 25 a week, while they were f 5 50 a 
 week in an American mill with which Mr. 
 Schoenhof was acquainted. Nevertheless, 
 the American operatives did so much more 
 work that the results were cheaper in our 
 country. A factory near Frankfort-on-the- 
 Main in Germany pays 21 cents per pair for 
 making the uppers for ladies' high top button 
 gaiters, while the price paid labor for the 
 same services in Lynn, Mass., is only 11 cents. 
 A pair of boots can be manufactured in Lynn 
 and laid in boxes for 33 cents, which is far 
 below the German cost, although the Ger- 
 man laborer receives $3 38 per week, on the 
 averatre, and the American $9 00 per week. 
 
 It is not true, by any means, in all indus- 
 tries in this country, that the cost of labor is 
 less, but it seems probable that, on the whole, 
 we are quite capable of holding our own in 
 this reaped. As a rule, high-priced labor is 
 cheap laoor, and labor for which little is paid 
 is worth little. I have often been Impressed 
 with this fact in observing the effectiveness of 
 servants in those parts of the North with 
 which I am acquaisted as compared with the 
 effectiveness of Virginia servants. 3; A house 
 servant may be procured readily in the small 
 towns in Virginia for $5 a month, whereas in 
 a New York village you would be very 
 likely compelled to pay $10 a month. Nev- 
 ertheless the Northern servant accom- 
 plishes about three times as much, and 
 is in reality the one to furnish the 
 cheap labor. A "social protective tariff" has 
 been more or less discussed by political 
 economists in recent years. A "social pro- 
 tective tariff" means simply a tariff designed 
 to compensate the manufacturers for in- 
 creased labor-cost in a country where labor- 
 ers receive high pay for few hours and en- 
 joy other exceptional advantages. Some- 
 thing can be said on theoretical grounds in 
 favor of this proposition, but the difficulty in 
 nppiyingjtis found to be the fact that it is 
 the laborers with long hours, low pay and 
 few privileges who seem most to require 
 protection. England is the country most 
 dreaded in international competition, but 
 nowhere in Europe are wages so high and the 
 number of hours' woric per week so small. 
 Tho Enelish workman has, in some re- 
 spects, at least the advantage over the 
 American. He works only flftr-six hours 
 a week, and his labor organizations 
 are so strong that they can afford him better 
 protection than American organizations. 
 Labor organizations in England have, in fact, 
 passed through that stage of existence in 
 which American organiaations still find 
 themselves, and are no longer obliged to 
 struggle for the right to exist. They are ac- 
 cepted as a settled fact. Arbitration is more 
 successful in England than with us, and fac- 
 tory legislation is more highly developed. 
 *'Pluck-me" stores were prohibited in Eng- 
 land in 1833, whereas a Pennsylvania judge— 
 and Pennisylvania is a State where the Amer- 
 ican system of protection is strongest— in the 
 year of grace 1887 actually declared the law 
 prohibiting payment in kind unconstitu- 
 tional, and that on the ground that American 
 workmen must be protected in their freedom 
 of GontractI rhe father of one of my colleagues 
 is an English manufacturer of cotton, whose 
 employes, to the number of twenty, I be-_^ 
 Jieve, ca me to America to seek their for- 
 

 tunes, and they all, without a sIorIg excep- 
 tion, returned to Enariand convinced that 
 they fared better whore they were. This is 
 not meant to depreciate the advantapea of 
 our country, for on account of our still un- 
 developed resources there are openings here, 
 and particularly for the Rifted, which can be 
 found nowhoro In Europe. It does prove, 
 however, that our superiority for the work- 
 man is not a clear case, and the country we 
 most dread in internatioual competition is 
 tho one whore, with the exception of our 
 (jwn, wages are highest, and where workmen 
 aotualJy toil fewer hours per week than thoy 
 do in our own. Some of the countries with 
 the lowest waces in the world;aro not at all 
 felt in internaiional competition. 
 
 After all, it seems a strangre thinfr to con- 
 tend that a country with superior advantaKea 
 cannot compete with one with inferior natu- 
 ral gifts. It is like claimintr that a man who 
 raises one hundred bushels of corn per acre 
 •will be driven out of the market by one who 
 raises only fifty. Yet this is actually what 
 some claim. What is the reason why wages 
 are hierh in tho United States? It is simply 
 because nature has lavished hersrifta as never 
 before upon an intelligent, enterprisingr and 
 industrious x)eople. Labor and capital, when 
 jfovernmentdoes not force them into unnat- 
 ural channels, yield a larger return than in 
 Europe. If you invest a capital of, say, $1,000, 
 and an amount of labor equal to 1,000 
 days' work In America, you will receive 
 a greater product, more bushels of pota- 
 toes or wheat, or pairs of shoes, than in a 
 country like Germany. There is consequently 
 more to be divided amonsr all those who take 
 part in production than in the fatherland, 
 and of this greater plenty labor receives a 
 ghara in hieher watres. There is nothing so 
 veils the real nature of trads as the use of 
 money as a medium of exchange, and if one 
 imagines transactions to take place without 
 the intervention of money, it helps wonder- 
 fully to clear up many things. A farmer 
 and two laborers, let us say, produce, with a 
 uriven investment of labor and capital, one 
 thousand bushels of potatoes, whereas a Ger- 
 man peasant, with his two hired laborers, 
 produces only six hundred bushels. Mani- 
 fesily, there is less to divide between labor 
 and capital in Germany, and profit and wages 
 are both small. Now, there are those who 
 want to tell us that men working under supe- 
 rior conditions cannot hold their own against 
 those working under inferior conditions. 
 Is any one disposed to dispute the fact that 
 our conditions are more favorable for the 
 creation of wealth? A little travel and care- 
 ful observation in foreign lands must be suf- 
 ficient, I should say, to convince any fair- 
 minded person that our natural facilities are 
 ■uperior. Barren hillsides are cultivated in 
 Germany which would in America be neg- 
 lected. Why is this so. If not because the 
 American farmer can do better than to ex- 
 pend his labor and capital on barren hill- 
 Bides? Take railroad building. Tho grand 
 opportunities for investmenta in railroad 
 oouatruction have in Europo already been 
 seized, and new investors aro obliged to be 
 content with small returns on insignlQcant 
 branch lirea. Go into an English or German 
 town, ana you will find capitalists and 
 laborers eager for opportunities which 
 Americans would despise. Why? Simply 
 because the grand opportunities in old coun- 
 
 tries are very few. This may be hooked at 
 from a still different standpoint. Will it be 
 disputed that the total wealth created in the 
 United States is largo in proportion to our 
 capital and our population? If not, then the 
 entire point Is conceded. The tariff laws cre- 
 ate no new wealth, and our larger wealth 
 creation can only be traced to our better 
 advantages. 
 
 I desire« as soon as possible, to tell the 
 readers of The Sun what I think ought to be 
 done at tho present time with respect to the 
 tariff, but I must beg them to be patient, be- 
 cause so much ground must be cleared of 
 undoubted fallacies before it is possible to 
 take a rational view of the protective tariff, 
 and when the word fallacies is used 
 reference Is had to things which no 
 inan can believe when ho once turns 
 them over in his mind and carefully analyzes 
 them. These fallacies, in fact, frequently 
 amount to absurdities, and all the absurdities 
 illy no means proceed fiojnjthe protectionists. 
 However, I desire now to call attention to 
 the fact that England and Germany could 
 not ruin all our industries, even if their ad- 
 vantages were In everything superior to ours. 
 Many will say if foreign countries can pro- 
 duce more than we with a triven amount of 
 labor and sapitaL, they will drive us out of 
 the world's market, and even capture our 
 home markets. But how is this possible? 
 Will they supply us with commodities and 
 take no return for them? If that were true, 
 the backward nations of the world would 
 indeed have an easy time of it, for 
 other more highly developed nations 
 would supply them with commodities 
 for nothing on account of their in- 
 feriority. If, however, somethinor is taken 
 in return, then the production of that some- 
 thing will furnish opportunities for labor 
 and capital. Perhaps, it will be said, they 
 will take their pay in money. If they do 
 this, the precious metals begin to leave us, 
 prices will fall in our country and rise else- 
 where, and it will thus become profitable to 
 buy our commodities, which would Bgain 
 turn the stream of precious metals back to us- 
 
 The truth is simple. It is relative advan- 
 tatres, and not absolute advantages, which 
 determine the course of international trade- 
 If Englaiid can with ten days' labor produce 
 either one hundred bushels of wheat 
 or two hundred yards of woolen cloth, 
 and with the same labor we can pro- 
 duce seventy-five bushels of wheat or 
 one hundred yards of woolen cloth, England 
 will not on account of hersuperiority furnish 
 us with both wheat and cloth. She will fur- 
 nish us with that commodity in which her 
 advantage is greatest, and we will send her 
 that in which our inferiority is lea8t;',in other 
 words, we will exchange our wheat for Eng- 
 lish woolen cloth. Both England and America 
 will gain thereby. Each will do that for 
 which nature has best fitted her. This is the 
 way exchanges naturally take place between 
 nations. One mar be superior to others in 
 well nigh every branch of production, but 
 each one will seek to find thoso pursuits in 
 which it has greatest advantaees. The wealth 
 of the world will thereby be increased. Had 
 England accepted our offer of reciprocal 
 free trade in 1783, and free trade had 
 always obtained, we would have had 
 manufactures, but it is doubtless true 
 that a larger portion of our labor and 
 
If capital would ha , ^ i^^elT devoted to~a2Ticul-' 
 ' ture, and farmiQfir would be a more flourish- 
 i infi: pursuit, for it i« in asrricuiture that our 
 f relative advantages over European countries 
 are most conspicuous. While not prepared 
 to join without qualification Jefferson's 
 laudation of asrricultural pursuits and his 
 condemnation of mauufactures, 1 cannot 
 but think we would fare quite as well if our 
 chanfire from an agricultural people to a man- 
 ufacturing- people were not proceedinsr with 
 such a hot-bed rapidity, and if our cities 
 grrew in size wifh a more regular and less 
 feverish haste. Has not, indeed, this unpre- 
 cedented increase in the population of cities 
 been one of the chief causes whioti have 
 made them so corrupt and depraved that 
 they are regarded as a menace to our civil- 
 ization? 
 
 THE GOVJ^RNMENT TELEGRAPH. 
 
 Political Ecoiaoinies in the Civil Service 
 and the Federal Tariff System Dis- 
 cussed hy Prof. Richard T.Ely, of Johns 
 Hopkins Uaiversity. 
 
 [Written for the Baltimore Sun.l 
 
 ARTICLE XIV. 
 
 It was seriously proposed a few years aero 
 to introduce the study of political economy 
 into the public schools of Belifium, and there 
 can be no doubt that in a country ruled by 
 popular vote it is of the first importance that 
 the people should receive some trainioff In 
 early life in the elements of that science 
 which is concerned with the fundamental 
 conditions of national prosperity. A very 
 little knowledse of practical economics 
 would make, us a happier and a still more 
 prosperous people, and it is not necessary for 
 one believincrthis to hold exajftrerated notions 
 rejfai'dinpr the achievements of political 
 economists. Political economy, if it were 
 more generally understood, could not pre- 
 vent all strikes and lockouts, but even a 
 sliprht knowiedere of the nature of industrial 
 society would do away with many 
 of the senseless controversies between 
 labor and capital which are so crreat a loss to 
 us all. Political economy is not in a position 
 to give an absolute and unqualified answer 
 to the question. Shall we have a government 
 telegraph service in the United States at the 
 present time, or a private service? Famili- 
 arity, however, with such discussions on the 
 part of the people would make much that we 
 hear on the subject Impossible, and force the 
 advocates of various measures to confine 
 themselves to valid arguments, and thus to 
 help us to arrive at a rational decision. A 
 presentation of the claims of the Western 
 Union Teletrraph at Washington last week 
 has attracted a great deal of attention, and 
 yet this presentation Involved an error which 
 to one who knows something about the prin- 
 ciples of the telegraph service is as palpa- 
 ble as the assertion that throe times 
 six are nineteen Is to one who knows the 
 multiplication table. Nowhere else, it was 
 maintained, can a message be sent so far for 
 so little money. But what has distance to do 
 with proper telegraph charges? Why should 
 more be charged for sending a message 
 a lon» distance than for sending one a short 
 distance? Does any one imagine now tthat 
 , anything is carried? There Is a slight diflfer- 
 pnce in cost between messages sent for a long | 
 
 distance and a short distance, especially if it 
 is necessary to retelegraph the message, and 
 the greater length of lines involves a small 
 additional investment of capital. Neverthe- 
 less, the difference is a minor matter, 
 and, with the exception of Russia and 
 Turkey, every country in Europe dis- 
 regards it, and has one charge for 
 all domestic telegrams recrardless of 
 distance. It is like the case of the pcstoflQce. 
 Rowland Hill introduced his celebrated re- 
 form, the penny postage system, by analyzing 
 the expenditures for carrying letters and 
 presenting the results of his investigations 
 to the public. It costs something for the 
 postoflBce to receive letters, cancel the 
 stamps, sort them and send them on the way. 
 It costs something at the other end of the 
 route to sort and deliver the letters. Here 
 are two elements of the total cost, and the 
 third is actual transportation, and this Hill 
 showed was on each letter so insignificant 
 that it could advantageously be neglected 
 altogether. Thus cost was seen to be nearly 
 Identical for all letters, and the better in- 
 terests of all were promoted and adminis- 
 tration simplified by one uniform charge. 
 Similarly, we have one uniform charge 
 in most countries for telegrams, and 
 this is 12 cents for 12 words in England; in 
 Germany, 17 cents for 10 words; in Belgeum, 
 9 cents for 10 words. Germany's charge is 
 the highest, I believe, in Western Europe. 
 Now, what about long-distence teleerams? 
 No European country outside of Russia has 
 any long distances like ours, and when a tele- 
 gram is sent three or four thousand miles in 
 Europe it becomes an international telegram, 
 and charges on international telegrams are 
 based on different principles, and are, very 
 properly, higher than for domestic telegrams. 
 The receipts on international telegrams must 
 be divided between two, or more countries, 
 and are higher on that account, as well as for 
 other reasons, on the same principle that it 
 usually costs more to send a parcel a given 
 distance when it passes through the hands of 
 two express companies than if it is carried 
 the whole distance by one. 
 
 It was further asserted that the telegraph 
 service was a loss to England. It was not 
 mentioned that this is due to two simple 
 facts: One is that England paid an exorbi- 
 tant price for her telegraph, and that the in- 
 terest on this outlay is reckoned among ex- 
 penditures, and the other that there had 
 been a recent reduction of fifty per cent, in 
 charges, and, like postoflRce reductions in 
 charges. The first effect of such a measure is 
 sure to be a loss, although in a few years a 
 profit results therefrom. Neither was it men- 
 tioned that other countries derive a profit 
 from their telegraph service. All these are a 
 few simple elementary facts, and yet, through 
 ignorance of these, a people may be easily 
 deceived. The Sun Tuesday mentioned a 
 matt«r in this connection which is worthy of 
 serious consideration, and that is, the in- 
 creased patronage. The Sun did not commit 
 itself, but simply called attention to the mat- 
 ter. Other newspapers have, however, sponen 
 of it as an insuperable obstacle in the way of 
 a government telegraph. Yet familiArity with 
 economic discussions ought to show one that 
 there is another aspect to the case. Our fed- 
 eral civil service is bound to increase, and 
 there are those among my readers who will 
 
 ,' 
 
f lire to see it double its present dimensions. 
 This is inevitable, because the expansion of 
 the country must brinarTwlth it increased fed- 
 eral business, unless. Indeed, all government 
 business, army and postofflce included, is 
 handed over to nrivate corporations! Now, it 
 strikes me that the real damrer la this: that 
 our civil-service force will gradually and im- 
 oerceptibly grow until we have 100,000 more 
 federal employes than at present. That is pre- 
 cisely similar to what has happened before. 
 A danger which oreeps upon us unawares is 
 a serious one. Should, however,|our federal 
 employes be increased by 18,000 at once, that 
 ^TOuld force upon the attention of the people 
 the principles of sound administration, and 
 the danger of an abuse of political power for 
 partisan ends. The result could hardly fail 
 to be most salutary. 
 
 Although this is a somewhat longer digres- 
 sion than 1 intended, I do not regret it, for 
 
 > there are certain aspects of the tariff ques- 
 tion which can be profitably treated in con- 
 nection with other problems of the day, and 
 they will be so treated in this and some of the 
 succeeding articles. The whole topic of the 
 desirability of a wide diffusion of economic 
 knowledge was suggested by the receipt of a 
 protectionist campaign document while I 
 was writing my last article. This was ad- 
 dressed "To the Laboring Men of the United 
 States," and is so full of popular fallacies 
 that it requires a somewhat lengthy treat- 
 ment. It is one of the things which are only 
 possible because in industrial affairs people 
 have not yet got so far as the multipli- 
 cation ' table, and do not know that three 
 times six are eighteen— not nineteen. It is 
 not the question of free trade or protection, 
 but the question of valid arguments, and 
 national action must proceed from such argu- 
 ments. Again, it seems necessary to protest 
 that no one contemplates any action which 
 will overthrow manufactures that have 
 grown up under a protective tariff. There 
 are rea sons w hy that should not be done, and 
 
 why all the industrial interests of a country 
 would suffer If that were done. These will 
 be presented In due time. Now wo are con- 
 cerned with the campaigil document which 
 lies before me. 
 
 "The receipts of the government," it is 
 stated, "are mors than necessary to pay the 
 expenses, consequently they must be re- 
 duced by the enactment of new tariff laws. 
 The democrats propose to lessen the receipts 
 by reducing the tariff, and this will flood the 
 country with foreign goods made by the 
 pauper labor of Europe, and must necessarily 
 take that much labor from our American 
 workiugmen. The republicans propose to 
 reduce receipts by abolishing the internal 
 revenue tax laws and raising the tarifi^on 
 foreign goods to such a point as to prevent 
 them coming into our country, and thereby 
 give to our workiugmen the right and priv- 
 ilege of making goods to supply our home 
 marKets. Every article brought Into this 
 country that took ten days* labor to 
 make it takes just ten days' labor from 
 our people; this fact is too plain to be 
 contradicted. The free-tradd capitalist wants 
 tho tariff reduced because his money will 
 then buy more of the products of labor. In 
 other words, he says to you: *I want the 
 privilege of buying wherever I can buy the 
 cheapest, and with free trade you must work 
 
 
 for the same wages now paid the pauper 
 labor of Europe, or I will buy European 
 goods.' With a tariff that will protect our 
 American iiidustrles there will be such a de- 
 mand for labor that legally organized labor 
 can demand of their employers fair and just 
 wak'Gs; but with a low tariff you render it 
 impoaaible for your employers to pay you 
 good wages, because they must sell their 
 products in competition with the products 
 made by tho low wages in Europe. In the 
 first nine months of 1887 there were about 
 1.500,000 tons of foreign iron brought to this 
 country. Now, if this iron had been 
 mule here it would havo given out 
 $33,000,000 of wages to our own workmen, 
 and that would havo employed during that 
 time 80,000 men. This is but one article of 
 manufacture, and so it is with a multitude of 
 other articles now coming into this country, 
 but which your votes can keep out. This 
 country should make laws to protect our 
 own workmen, and not the workmen of Eng- 
 land and Europe." 
 
 This opens up a groat question, the ramifi- 
 cations of which affect our daily life in a 
 thousand ways. I moan the relation which 
 exists between spending money and giving 
 employment to labor. This will be consid- 
 ered in our next article. 
 
 
 PROBLEMS OF TODAY. 
 
 THE SEEN AND THE UNSEEN. 
 
 THE OPPORTUNITIES FOR INDUSTRY. 
 
 The Industrial Problem Further Dis- 
 cussed by Prof. Richard T. ICly, of Johns 
 Hopkins University, 
 
 [Written for the Baltimore Sun.l 
 
 ARTICLE XV. 
 
 Shallow as he was, Frederic Bastiat un- 
 doubtedly said many good things, and is en- 
 titled to ourferatitude for having cleared up, 
 as no once else, some of the first nrinciples of 
 economics. Perhaps one of his happiest 
 efforts was his exposition of the difference 
 in industrial society between that which Is 
 seen and that which is not seen. A worthy 
 shopkeeper, Jacques Bonhomme, is enraged 
 because his careless son breaks a pane of 
 glass, while the spectators who gather about 
 the scene offer the father this consolation: 
 "It is an ill wind that blows nobody good. 
 Everybody must live, and what would be- 
 come of the glaziers if panes of glass were 
 never broken." vv ho among myreaders has not 
 heard similar expressions of opinion? And how 
 many of them are there who do not feel that 
 there is a certain justice in the view of tho 
 indifferent' but good-natured rsoectators? I 
 remember a report which reached me three 
 years aero that u warehouse in Baltimore was 
 destroyed by flre. I was in a small company 
 at tho time, and a young woman, of at leest 
 average intelligence, made the remark, *'It is 
 time the old building did burn down and give 
 workincrmen a chance to get employment- It 
 has been standing the last fifty years." 
 Some time previously a good friend of mine, 
 a lady of considerable means and a devout 
 member of one of our leading churches, told 
 mo that she considered it the duty of the 
 wealthy to spend money on dress in order to 
 glvo employment to labor. A clergyman— J 
 whom I esteem— was recently reported in 
 
ball on religious grounds, but admirtinp: that 
 after all It was a i?ood thinfr for dressmakers 
 and other employes who were ent^aped on 
 the elaborate toilets, as well as for the mer- 
 chants, who sold thousauds.of dollars' worth 
 of poods. 
 
 At the close of my last article I made a 
 quotation from a hi^h-tariff campaicrn docu- 
 ment to tne efTect that 1,500.000 tons of iron 
 brought to this country from Europe oueht 
 to have been produced at home, as la that 
 case $33,000,000 would havo been spsnt for 
 wases in our country and 80,000 men would 
 have received employment for nine months. 
 Let us examine these various opinions with 
 some care, for they are all closely related. 
 Certain phenomena are seen injeach instaoce. 
 The glazier receives six francs for putting 
 in a new pane of glass, and he is 
 happy because he has an opportunity to earn 
 some money. The warehouse burns down 
 and bricklayers, carpenters and masons are 
 employed for several months in putting up a 
 new buildiuff. The wealthy iady spends !5200 
 for asiritrle dress, and the merchant who sells 
 the material and the dressmaker are both 
 pleased, precisely as those are delisrhted who 
 minister to the wants of the belles at the 
 Charity Ball. The hi)?h-tariff people shut out 
 foreign products and point to our busy 
 workmen eneraered in manufacturinpr those 
 thing's which, but for the tariff, would be im- 
 ported. All these things are seen and ob- 
 served of all men. but there are other phe- 
 nomena of equal importance which pass 
 unnoticed. Jacques Bonhomme, the shop- 
 keener, was just on the point of orderingr a 
 new pair of shoes for his wife, for which 
 he expected to pay six franca. These 
 shoes be is now unable to order on account 
 of his loss, and the shoemaker misses his op- 
 portunity to earn six francs. This is that 
 which is not seen, but it is beyond all contro- 
 versy that no additional employment has 
 been Briven to labor because the Ciireless son 
 broke the pane of glass. The shopkeeper's 
 wife is, however, put to the shame and morti- 
 fication of wearinc: old and patched shoes; 
 and from all this we see that society is poorer 
 OQ account of the broken pane of glass. 
 There is a smaller quantity of commodities 
 to be enjoyed by the various members of the 
 community than there would be otherwise, 
 and suffering ensues. So it will likewise be 
 discovered that loss and waste in the other 
 cases are simply loss and waste, and no 
 amount of sophistry can ma&e them any- 
 thing else. 
 
 We see the men putting up a new building 
 on the site of the old, but that which is not 
 seen is a decreased expenditure somewhere 
 else, and yet there is scarcely a doubt about 
 this. Possibly the insurance company which 
 sustains the loss decides on that account not 
 to construct a new building for its own use 
 as it had intended, and thereby the demand 
 for labor is diminished. It is more probable 
 i that it is obliged to refuse a loan which some 
 {builder desired for the purnose of carrying 
 forward improvements. Or, the company 
 may be obliged to lower dividends, and on 
 account of diminished means people buy 
 fewer bats, shoes, coats and oiher things 
 which they need My good friend who 
 spends 8200 on a single dress sees em- 
 ployment given. She does not per- 
 _ceive tpat, if she had given ._ twenty 
 
 xea!i' 
 
 quite as much work would have been (riven 
 to sewing women. Extravagance nnds no 
 justification whatever on the plea that it 
 gives employment to labor. A possession of 
 money sunply means that a person has con- 
 trol over a certain amount of labor and can- 
 ital, which may be directed in any channel 
 one pleases. I may so use my money that 
 labor and capital shall minister to my wants 
 and to my pleasure, or so that labor and cap- 
 ital shall minister to the wants and pleasures 
 of others. When I do the one I show that I 
 love myself; when I do the other I show 
 
 *^nnJ;n^°^® ^^ neighbor. One man snends 
 $200,000 on a private house; another S300 000 
 on a public library building. Labor is em- 
 ployed in either case, but in the one an 
 individual derives a selfish advantae-e there- 
 from, and in the other the advantage is gen- 
 erously conferred on the public. 1 know a 
 school in which poor ignorant people are 
 trained to useful occupations at the same 
 time that the mind is instructed. The sum of 
 $1,500 endows a permanent scholarship and 
 keeps one person here for all time. That 
 $1,500 furnishes directly as much labor as the 
 same money spent in a feast, and indirectly 
 it furnishes a thousand times as many oppor- 
 tunities for employment, because craduates 
 go forth from this school skilled, intelli- 
 gent and honest laborers, increase the 
 wealth of the country and holn to orsranize 
 industry on a solid basis. I have known 
 $1,500 to send one hundred boys from 
 the slums of New York city to the 
 West, where most of them— not all 
 of them.but the great majority— b?came hon- 
 est, respRctable, hard-working, citizens, who 
 all their lives long furnish opoortunities for 
 labor in the commodities which they pur- 
 chase. When the boys were taken West the 
 »1,5U0 gave employment to labor on railroads 
 and hotel's and boardins-houses, just as 
 much employment as the same monevst)eut 
 on charity ball costumes would have* given 
 and thereafter it furnishes a thou -lani times 
 as much employment. The faithful, c-mscien- 
 tious person, who will take the trouble, finds 
 enriiess opportunities to spend m-in'^'y-oas 
 to help others, to lift them un and prepare 
 them for useful careers, and needs n«'ver 
 spend money on self to give emplovment to 
 labor. My friend mny he risht in spending 
 »300 on a dress. She must answer for that to 
 her own conscience; but she spands it, if she 
 understands the consequf^nces of her own 
 acts, simply because she wants a beautiful 
 dress, and considers it in this instance justi- 
 fiable 10 prefer her own happiness to that of 
 others. 
 
 No. V let us return to the tariff. We see 
 1,500,000 tons of iron enter the country Tnat 
 is seen. We fail to notice that in payment 
 for this thirty million bushels of wheat leave 
 the country, and that the farmers find a 
 market for their produce which would other- 
 wise be closed. Our business men are talk- 
 iue- about foreiirn markets, but is any one 
 insane erjough to think that we can sell to 
 foreicrners unless we import from them? And 
 what would be the object in such procoed- 
 inars— in always sending goods away 
 from the country and never receiving 
 any? The thing which is not seen 
 is that If we stop iraporiinir we must stop ex- 
 Doriing, and that if we stop exporting ""-- 
 deorive our own home labor of employ tn 
 and transfer employment which Amer 
 la'or might have to the socalled na; 
 labor of Europe. Ought it to be necessary 
 to dwell on this in Baltimore? Would wo not 
 have a flourishinsr trade with South America 
 In our own city did not th' tnri<? r-.',,ir.- it 
 
 i 
 
 f 
 
 V 
 
.' All ,. ut; ttiftt li' cause w.:» cari- 
 
 " 'C inn It from South America we 
 
 cannot export them? For how canshipplnfj 
 thrive u:ile8s it has cargofs both ways? And 
 a-* we cannot export to South AnierlCB. are 
 wp not depriviuic Americau labor of employ- 
 ment? 
 
 Is mere any ono who would like to see us 
 ahs^THin from all dealink's wi: h iorei*rn c<mn- 
 trlos? If It is R-ood for us to krt-p all our 
 money at home, why is it not sroo'i for one 
 einple State to abaiain from all dealings with 
 otherStates? And if jfood for a Srp.te, why 
 not for a city? Let us build a hiu-h wail 
 about Baltimore, and shoot the man dead 
 who comes In or crocs out. That would keep 
 our money at home. But whv should not 
 each famiir be sufficient unto i.self, and ke^p 
 all its money at home? I am a practical 
 farmer. Is it not foolish for me to send money 
 avTay from home for butter, etrars, poiatofi?, 
 chickens, haras and '"he like? I could raise 
 them if I desired. Why not do this? Be- 
 cause luy time is worth more for other pur- 
 poses. Ir is only in a state of complete bar- 
 barism that each person is sufficient unto 
 himself and avoids exchanges with his neigh- 
 bors. JNow If it is prcifltable for an indi- 
 vidual to find out those tbines for which 
 nature has adapted him, why is it not 
 ailvantaireous for the people of a city 
 or Slate or a nation to find out 
 those things in the production of which 
 the Aimijfhty has given tnem facilities, and to 
 exchaukre surplus products with the surplus 
 Df. -ducts of other cities. States and nations? 
 Surely it is thus that the most abundant op- 
 portunities will be offered to labor to find 
 employment; not merely that, but tne lare-cst 
 possible returns for its services will thus be 
 scoured. 
 
 THRIFT AN1> liXTKAVAGANCE. 
 
 Importance of General Information on 
 Practical Afiairs Discussed by Prof. 
 Kichard T. Ely, of Johns Hopkins 
 University. 
 
 [Written for the Baltimore Sun.l 
 
 ARTICLE XVI. 
 
 "A faulty political economy is the fruitful 
 parent of ciime." This is one of the wisest 
 of I he many wise sayings of Dr. Thomas 
 Arnold. Everybody acts upon some theory 
 of political economy, for it is impossible for 
 ■I rational man to olay his part in industrial 
 society without having some reason for his 
 actions. A man who acts without reason 
 for his actions we call either an insane man 
 or a fool. But as soon as a man puts his 
 ^^eaaon for an indusjtrial action into words he 
 explains the economic theory which under- 
 lies the action. Everybody must in the 
 nature of thing-s be more or less of a politi- 
 cal economist, and consequently more or 
 less of a theorist, for to act without theory 
 and without reason are one and the same 
 thlncr. Of course, the reason priven for an 
 action may be valid or it may in- 
 voive all sorts of fallacies; equally, of 
 course, the theory of industrial action in 
 a ptven concrete case put forward by a 
 business man may or may not be sound, but 
 the moment he beu-ins an arjfument he be- 
 comes a theorist. Economic theory treats 
 simply of the principles which irovern action, 
 and In its last analysi.^ is based upon ex- 
 perience. An esteemed contemporary of The 
 Sun, published within a thousand miles of 
 the City Hall, has of late bad much to say 
 about free- trade theorists and professors of 
 political economy, who are teaching their 
 classes free-trade doctrines. I propose to 
 make no special comment on these various 
 squibs, which are both amusinsr and enter- 
 talningr, but it may bo well to say a word 
 
 '|»abouc the claims of poiuicai economists m 
 general, and about the basis on which 
 they^ rest, few these are involved sooner 
 or later in all economic discussions. 
 Political economy is concerned with 
 the facts of industrial life which it 
 attempts to arraog-e. classify and explain. 
 This involves a treatment of past industrial 
 life, the forces which have been at work and 
 which have made it what it is today, finally, 
 an examination of those forces now at work 
 and which are shapinpr the future. But why. 
 It can be asked, should political economists 
 presume to instruct business men about the 
 facts of Industrial life when business men 
 are all the time eueaaed in industrial life and 
 make it what it is? Let us see. You con- 
 verse with a business maa in Pittsburir, Penn- 
 sylvania, about those aspects of business 
 which concern the public, and he will very 
 likely crive you a theory which he will claim 
 is impretrnable because it is based on 
 facts with which ne is thorou;?hly 
 familiar. No political economist can con- 
 vince him, he will tell you, that 
 his theory is not sound, for ho knows that it 
 is. Very well. Now, pro to New York and 
 converse with a busincs? man, and he may 
 dogmatically lay down exactly the opposite 
 theory, of which he Is quite as positive, be- 
 cause, as he says, bo knows the facts. This 
 may suergest an explanation of the functions 
 of the political economist, and when even in 
 the same city you find business men of differ- 
 ent occupations holdinj? the most contradic- 
 tory opinions, it becomes evident that it 
 would be desirable to have a class of men 
 with a largrer acquaintance with facts to 
 stand between these jarrine: factions. This 
 is precisely what political economists attempt 
 to do. A thouprhtful business man must 
 often feel that he is in the position of a man 
 in a dense forest, who, as the proverb 
 has it, can only see the individual 
 trees and not the forest at- all. A political 
 economist is rather in the position of a man 
 on an elevation who' overlooks the entire 
 forest and erets a better general view than 
 one in the midst of it, and can better tell him 
 how to escape from the forest. But this also 
 suffgests something" else. Tlie more minute 
 and detailed knowledge of the man in the 
 forest itself ia of Importance. Should he, 
 without reflection, follow the directions of 
 the man on the hilltop he might find himself 
 hopelessly stuck in a quasrmire which could 
 not be seen from a distance. Both the gen- 
 eral and the special knowledsre are required, 
 and political economists who fall to accord 
 due respect to the special informa- 
 tion of the man of affairs fall into 
 most grievous error. Mayor Latrobe 
 acted with a full appreciation of this 
 fact, as it seems to me, when during his last 
 term he selected the members of the recent 
 city tax commission, for he chose a repro- 
 senlative of business, a representative of the 
 law and a representative of the science which 
 deals with taxation. Industrial society, 
 or. If a more popular term Is desired, the 
 business world, is a thing which grows like a 
 piant or an animal, and careful observation, 
 coupled with accurate inductive and deduct- 
 ive reasoning, enables us to discover tho laws 
 of its growth. Its health and its disease. No 
 
 ' organism Is, however, more complex, and 
 political economy is still in its infancy, and 
 
 j while worthy of attention, its teachings must 
 
undoubtodly be accepted with more or less 
 caution. Political economists, it is true, 
 differ in important particulars, but 
 I suppose these differences are ^ot 
 more radical than those oC physicians, 
 or in fact than those of many ^ber scientific 
 men, while it may be said that Jhose respects 
 in which there is substantial harmony amonsr 
 them are still more important th&n. their dif- 
 ferences. Now, when, as is the case in the 
 general view taken of commerce, there is 
 soraethins: approaching substantial^nanimity 
 amoncr economists. It is not unreasonable to 
 claim that this view deserves at least as 
 much attention as it receives. When a polit- 
 ical economist seta forth his opinions it 
 should be remembered that these are not 
 merely his individual opinions, but opinions 
 formed in the liffht of a science, which, if it 
 is still in its infancy, has nevertheless been 
 pursued for one hundred years, and has re- 
 ceived contributions from some of the bright- 
 est minds of modern times. Nor, when it is 
 considered that the science which deals with 
 human beings, livlntr In society and consti- 
 tutinff a livintr ortranism, is the most com- 
 plex and difficult of all sciences, can it be 
 claimed that its progress has not on the 
 whole been encouraging, while It is probable 
 that this progress is at the present time more 
 rapid and more hopeful than it has ever been 
 before. It is further noteworthy that politi- 
 cal economists have not been "mere theo- 
 rists," if by that is meant men who have had 
 no practical experience outside of their own 
 specialty. I have, on the contrary, been 
 struck by the fact, in reading the bioirraphies 
 of political economists, that they were as a 
 rule good business men, some of them win- 
 ning great distinction in pursuits which are 
 ordinarily called "practical." There is Ri- 
 cardo, for example, who on the English stock 
 exchan£« outstripped all his competitorij 
 and won so laree a fortune at an early age 
 that he was able thereafter to devote himself 
 exclusively to intellectual pursuits. Few 
 men have done more for economic science, 
 though, stranjre as it may seem, this practical 
 business man was the most purely abstract 
 and theoretical— usine that word in an ordi- 
 nary sense— of all political economists, and 
 did barm in leading political economists 
 away from a careful observation of actual 
 experience. Then in England we may also 
 mention Henry Fawcett, professor of polit- 
 ical economy in the University of Cambridge, 
 probably the best postmaster-general Bnar- 
 land ever had. Kobert Owen, ex- 
 tremist and radical though he was, 
 made, it seems to me, some impor- 
 tant contributions to economic science, 
 and he was for a long time regarded as the 
 most successful cotton Jmanufacturer in 
 Great Britain. He was often spoken of as a 
 "cotton prince," just as we eall certain n)en 
 railway kincrs. One of the most excellent 
 works on banking was written by J. W. Gil- 
 bart, formerly director and general manager 
 of the London and Westminster Banic, and 
 of the great banking houses of London. 
 "Lombard Street, a Description of the Money 
 Market," is one of the standard works in 
 economic literature, and it was written by 
 "Walter Bagehot, a practical financier, as was 
 "The Theory of Foreitrn Exchanges," the 
 author of which is the Rlarht Hon. George J. 
 Goschen. When we turn to Germany we 
 can find scarcely one economist of note. 
 
 } I think, who has i! en some prao- 
 
 t tical part in the gnvertmuut of his country, 
 or of some of its local political units, and that, 
 go far as I have learned, with uniformly 
 beneficial results. Political economy has 
 until verr recently been in a backward posi- 
 tion in our own country, but it is now rap- 
 idly takin? a better position as a practical 
 science. One of the American contributions 
 to economic science is the work, "United 
 States Notes," by Hon. John Jay Knox, 
 whose reports as comptroller of the currency 
 are among the best tbini'S writren on our 
 bankinir system. As oresident of "The Bank 
 of the Republic," in New York, it will be ad- 
 mitted that Mr. Knox is now doine the worK 
 of a "oractical" man. Our national banking 
 system itself, one of the best which the world 
 has ever seen, is to no inconsiderable extent 
 due to Dr. McVickar, formerly professor of 
 political economy in Columbia College. Gen. 
 Francis A. Walker is today one of the most 
 distioeruisned political economists, and as he 
 has, in addition to other service**, brousrht 
 th(' Massachusetts Institute of Technology 
 into the front rank of such institutions, he 
 ought to receive the respect of the com- 
 munity as a practical man, for I will venture 
 to say that to rnanaire successfully a trreat 
 institution of learning requires as profound 
 a knowledge of men and affairs as it does to 
 build up a creat commercial or manufnctiir- 
 ine es'Hhl'Shment. Dr. .Tame-, of the Univi^r- 
 8ity of Pennsylvania, has written the best 
 treati'je in tue Eiikrl;sh lan^uasrt^ on "The Re- 
 lation of the Modern Municipality to the 
 Gas Supply," and by his opposition to the 
 sale of the municipal gas works of Philadel- 
 phia has saved that city millions of dollars, 
 which strikes me as an extremely practical 
 thii)»r to do. The best treatise on public 
 debts in any language is the work of Dr. 
 H'^nry C. Adams, pri fessor of political econ- 
 omy in the University of Michican, and to 
 write an exct llent work on so practical a 
 topic is certainly practical. 
 
 The truth of the matter ls,political economy 
 is a body of knowledge as yet hicomplete and 
 imperfect, still of vm^t importance, which has 
 been built up by the labors of those on the 
 one hand who were primarily business men 
 and secondarily political economists, and on 
 the oiher hand by those wno were primarily 
 political ec 'nomisis and secondarily Ousine^s 
 men. While it may be true that- political 
 economists have often failed to give due 
 weight to the special detailed knotvledtre of 
 those who are exclusively men of affairs, it is 
 equally true that we have suffered serious 
 loss— a loss amountiiie to hundreds of mil- 
 lions—because business men have so often 
 failed to master general economic principles. 
 Business needs political economy, and polit- 
 ical ecoeomy should dilijrentiy appropriato 
 the teachings of business. 
 
 Dr. Arnold said— to rt- cum to my text— "A 
 faulty political economy is the fruitful par- 
 ent of crime." More might have been added, 
 f</r it is not only the fruitful parent of crime; 
 it is the most fruitful parent of foily and 
 consequent misery. The last article in this 
 series dwelt upon the importance of phe- 
 nomena not readily s^^en. It seems that a 
 few points are not yet clear. It is said "it is 
 after all batter to spend one's money in ex- 
 travagance than to hoard it up." Money 
 "iioarded up" and "locked up" is something 
 about which we hear every day. What is 
 meant by these expressions? Who hoards up 
 money? No one in these days— at any rate 
 very tew. Money is put in banks. Does any 
 one of my read'.rs imasrine it stays 
 there? By no means. It is used in 
 business and i!?ives employment to labor. 
 Take our savings huiiks. In one of 
 them there are denosits of:>over sixteen mil- 
 lions of dollars. la this monoy hoarded up? 
 Bv no means; it is all used. Tou Fee money 
 
^ 
 
 employed In building In Baltimore, and you 
 say it is a srood thinjf, for it makes business 
 and drives employment to labor. Where did 
 that money corau from? If any r* ' f 
 this ariiele will tallcxTith practical i 
 
 and practical bank-^rs, I think he will soon 
 be convinced that that is precisely the money 
 which is in popular parlance hoarded up or 
 locked up. 
 
 One of the first thinc«i which oueht to be 
 tauyht In schools is that what is saved is 
 spent. To srtve money does not mean to 
 ■- It simply means to spend money 
 \vay that soraethincr is left to show 
 for it. Take two mechanics, each receivlncr 
 hiffh wajres. say f4 a day. Ono spends his 
 money in having- '"a srood time." People like 
 him; they smile upon him— while his money 
 lasts, but no Jofj^er— and eay ho "keeps 
 ! in circ-ulation." The other mechanic 
 
 iUl, Pelf-tienyiner, fruural. "He hoards 
 hi^ money." but he builds him a home. So it 
 is set'u when one groi s below the surface of 
 thmes that the money saved has after all 
 been spent, and just as much employment 
 has been piven to labor. At the end of ten 
 jeHTs your "trood fellow" is verylik<dyim- 
 roverisNud and broken down, and the thrifty 
 mechanic has shown himself after all the 
 better roan, the better father, the better cit- 
 izen. 
 
 I know of nothiuK- rcoro pernicious in its 
 consequences than these shallow judtanents 
 which we hear about spendiiiflr money and 
 •keepine it in circulation." It is the faulty 
 political economy which makes the man 
 more popular who spends ten thousand 
 dollar? on a feast than his neicrhbor who 
 "saves" ten thousand and builds six homes 
 for workiugfmen'a families. It was this 
 faulty piditical economy which made the third 
 Napoleon, the curse of his country and of his 
 treneratioG, so popular in his excravaarance, 
 while the frugal court of the Prussian mon- 
 arch was settinjf his pecjple an example of 
 industry and thrift which are now makinc 
 them both wealthy and mie:bty, dreaded by 
 Entrland In the mdusirial field as much as by 
 France in the military Held. It was this 
 fHulty political economy which led the same 
 esteemed contemporary to which I have 
 already referred to suargest that a crreat and 
 prinditie: monopoly was not so bad a thing 
 after all, because its head men spent their 
 moncv "ruvally." 
 
 nsszaer 
 
 PROBLEMS OF TODAY. 
 
 THE DANGER OF MONOPOLIES. 
 
 IN FELLOWSHIP WITH SOOULISTS. 
 
 The "Trust" Unoousciously a Kevolution- 
 ary Sentient, as Shown by Prof. Rich- 
 ard T. Ely, of Johns Uupkius University. 
 
 LWrittun for the Baltimore Sun.] 
 
 ARTICLE XTII. 
 
 I have dwelt upon the importance of polit- 
 ical economy, and have endeavored to show 
 that political economists are practical men. 
 I may add that political •conomy, as it Is pur- 
 sued today, is a most intereatiufir study. 
 •■Every bet^irming: is difficult," aays the prov- 
 erb, and this holds with reference to politi- 
 cal economy: bit when ono once conquers 
 the difflcultios of the besrlnning, no Intelloc- 
 ,tual pursuit can be more fa^joinutlngr than 
 i that which is concerned with an examination 
 into the nature, the doveiopmout and the de- 
 •Irablo constitution of industrial 8ool«ty. It 
 Inay bo doubted, however, whather any one 
 of ihe many topics with which It deals is of 
 more absorbing intereit than monopolie:", 
 ■while it scarcely admits of controversy that 
 no economic topic is less understood. 
 
 It is uL'cceaary in a aiaousaion of monopo- 
 1. i to divide them Into classes, for the priu- 
 icipleg which hold for one class will b» found 
 [In: ' ble to another, and any effort to 
 hi . monopolies together, and to treat 
 
 them "all alike will produce confusion, both ' 
 In theory and praciioe. Monopolies are now /j 
 disouased daily in the press in thaJr oonnec/ 
 tion with the tariff, and trusts, und syndi- 
 cates, but it cannot be snld that the; discua- 
 Blt)n produces a Kreat amount of light. Itis, 
 however, accompanied by prowlr/g: indii?- 
 nation as the evils of certain monopolies ai 
 more and more k»anly felt, but tkis indlg:- 
 tiation is as likely to produce harm as cood, 
 UnlesB it can be directed iat6 propar chan- 
 nels. While it may b« claimed that the 
 indig-nation is rlirhteous, it is indeed a bold 
 man who would be willing: to say that it Is 
 enlishtened.i 
 
 Monopolies with rrsprot to ownership and 
 {management may ba divided into two classes, 
 [public and privaif. The postofRoe is a pub- 
 lie monopoly and Is a national blesslnsf. The 
 telet^raph is a private monopoly, and the fact 
 |that it is so is n<;ihlnir less than a national 
 |C.'ilamity. Private monopolies ar® odioug. 
 jThey are contrary to the spirit of the oora- 
 jmon law and of American institutions, and 
 wherever or whenever they exist, are a per- 
 petual source of annoyance and irritation. 
 Public monopolies, on the other hand, are 
 productive of vast benefits when confined to 
 their own proper sphere. Modern civilization I 
 would srive place to anarchy should all public 
 monopolies be abolished. The army and tjavy 
 and police are public monopolies, and when 
 we see e-reat corporationii,a3 in Peansylvania, 
 lemploying- orivaie armies of their own, mer- 
 cenary troops eneaaroU of a citizen of another 
 State, thinkintr people look upon It with 
 alarm as incipient anarchy of the m- st malie- 
 nant type. We must, then, draw a sbaip line 
 In all our discussions between public aad pri- 
 vate monopolies. 
 
 13 ut monopolies may be divided infto two 
 different cUsses from another standpoint. 
 Certain pursuits are monopolies on account 
 Of their own inl)er«»nt qualities. Thwe we 
 call natural monopolies. Legislation neither i 
 makes them monopolies nor oan it Tjrevent 
 them from becomiijg: monopilles. All tkat 
 legislation can do is to recognize the fact 
 that they are and must rem'.in monopolies, 
 and to act upon it. There are other pursuits 
 Which aro made monopolies by leci'latlon, 
 at)d these we call artificial naonopolies. 
 Patents throw around thos© eng^atred 
 In the manufacture of certain articles 
 a barrier which shuts out eompetition. 
 The production of a new American book ia an 
 artificial monopoly, rendered sueh by a copr- 
 rip-ht. Legislation could, if it ware tboutrht 
 desirable, abolish both patents and copyrlsrht's, 
 and thus do away wita thoee monopolies 
 which they create. Swltzerlan* is an exaraple 
 of a country which does Hot rrant Dateats, 
 and thus does not create by means of patents 
 artificial monopolies. Tariffs, which shut out 
 foreign oompetition, sometime* enable home 
 producers to form »i|rantlc combinations 
 which crush in a e^rasp of relentlMS cruelty 
 every attempt at compatitien wlthia our 
 own borders. These combinations could 
 rarely embrace the entire elrllizod world 
 were every feature of protectionism re- 
 moved from our tariff letrialatloa. These 
 pursuits are, therefore, also artificial monop- 
 olies, and they are daily incre.tsinsr in num- 
 ber to the consternation of tbe public. Per- 
 haps 1 outrht to make an exception when I 
 say that tke increase of monopolies of tiie 
 lartiflcittl sort Is viewed with alarm by the 
 public. Socialists view it with satisfacaou, 
 ;because they believe that competition in 
 jlndustry Is an evil which oucht to toake way 
 jfor complete and perfect monopolr In every 
 fpursuit. Socialists see in trusts and syodi- 
 catps nothing but the renaorseless maroh of 
 
inouopnly, whicG Vbjay aayio luut:. ptwaiotea 
 will never cease until ooaoo«trfttlO!v of 'busi- 
 ness become* eompjet*. Th« last stasre 
 In this evolution, sccording to tbeir 
 doctrine, is the transfer of monopolized 
 business to public control and the conse- 
 quent inauaruiation of the 8oci»ligtic state. 
 The capiralista en^asred in thase com- 
 blnatious are hailed by 80ol»li»tlo writers 
 as fellow-social is I?, and the socialistic ten- 
 dency in trusts and other artificial monopo- 
 lies admit of no doubt. When ■»»• come to a 
 discussion of artificial monopolies we, in 
 fact, touch the only really daajrero us social- 
 ism in the United States. Those who spend 
 enerpy in figrhtins' the socialism of thtj doc- 
 trianaires who write books and deliver lec- 
 tures are, in my opinion, simply Don Quix- 
 otes attacking: windmills. "The tramo isn't 
 wort the candle," and that is tiB« reasou 
 why— if a personal eipianatioa is in 
 order— I have never spent muGb tlm« 
 in criticism of the socialists, I hava 
 believed there were certain truths in 
 the teachiDKTS of scientifio socialism 
 which it is well enough to notice, but the 
 prospect of professed socialists evar raininc 
 an ascendency in America baa seemed to noe 
 BO remote a continsfsncy tbat I have never 
 thonjjht it worth the while to spoil pen and 
 paper and waste ink in exposing their errors. 
 The results of years of study, reflectioa and 
 Investigation have convinced me that the 
 only danRcrous socialism in America is 
 monopoly controlled bv private greed. This 
 is sufficiently important to justify us in 
 piviusr some attention to the views of one of 
 the most rational socialists, who sees the 
 approaching: triumph of bis faith in 
 the "trust." I refer to Lawrence 
 Gronlund, who, in his now work, 
 *'Ca Ira, or Dantoa in the Preoch Revolu- 
 tion," speaks of the socialistic tendency of 
 business in America lu these words: "Of 
 the movements by individuals, the most sitf- 
 niflcant is that toward production on a large 
 tcale. By •production' should also bo under- 
 stood transportation and commercw, for they 
 Edd value to tne product, just as well as doas 
 the labor of tl3e oparattves on raw materials. 
 All that is necessary here is to note this ten- 
 dency, for all admit that production every- 
 where—the most trivial as well as the most 
 important— is bolnsr concentrated in the 
 hands of richer and richer employers, of 
 larg-er and larjjer corporations. 
 
 "But there is one feature of this con- 
 centration tbat deserves special mention 
 because it is novel, and as yet It 
 seems confined to the United States, where 
 the capitalist system Is more unfettered tdan 
 anywhere else. It is what is called ihe Trust. 
 This is monopoly In its most concentrated 
 form. Suppose the presidents of all the in- 
 corporated companies In a >?lven branch of 
 industry in the whole country assembled, and 
 one of their number in whom they all have 
 perfect trust- hence the name— selectei to 
 perform »he function of abtoluii manaarer, 
 with power to detereiine, autocratically, how 
 much each company is to produce, and ooa- 
 sequentiy its share in the proceeds, aiad rou 
 have the 'trust.' It differs from a 'pool' In 
 this, that none of the parties can withdraw. 
 The individuality which the law con- 
 fers on each company by the act of 
 incorporation is merred in the *trust,' over 
 which the Si ate hKS not the least control; in- 
 deed, the whole arrangement is kept as per- 
 fect a secret, as far as the nubile is concerned. 
 as possible. ***** It is easy to see, 
 that, whtn ths'SO 'trusts' become arenerai, 
 and that is only a qusstion of very short 
 time, they will rovolutlonizo our present sys- 
 tem, for they mean the destruction of cotii- 
 petition, which taea will ds utilized simpiy 
 to crush their weaker rivals. Some of our 
 newspapers, on jrettinar wind of these 
 'trusts.' have become alarmvd, seeinr iu 
 them terrible future dancers to the State, 
 and that, indeed, they would be; they 
 would institute a new slavery, the most 
 formidabio slavery tbat ever existed, 
 
 If evolution would stop there But it 
 will not. That la whv fM- «,^J^ '^ 
 
 lis at the bottom. an\^c^^ioJ'o^eThVSnl' 
 . talistsontrafi-ed in it are unconaoinn-?,, ♦?'" 
 
 ■ .greatest revolutionists m 'the w^d'^^' '^^ 
 
 coi?RTob^"ori^.^;jrn?f/a't!iT; "^^ » 
 
 mode ofproouctim int^futun"'^ facucal 
 
 CUSSion of monopo!l«8 No nVnhW ^# f ^**" 
 
 cause ^an7^^ coZt^^l,'^Sf''Tol^o^^^^^^ 
 protect orumi. mn»t dea^rvlnj of at?int^on 
 We Will Dt>irln the discusaioL Vf minonZ' 
 by a treatmpRt of naturoi mr^W^i^V "^^^ 
 cause that will help to cWr th« fl^^ m*'.^^ 
 render tho cfcaracterijties of ^artiflcSkl 
 
 man, but was itiven to man ready m«?ip ^7^ 
 was a gift of nature, or, if J^S Seitn If 
 God. 5ut go much w^s fflven, and no more 
 ?akeawav°fril*it"i*° ^"'^ •'^^ ?oTanTor 
 
 more attention than it ^ VeilivfuJ i Vl5 
 Kladlv rak« iirw tVt. re<3aiviiktf. I would 
 
 caref ullv t*y.^ it^^ QU«sttion and discuss it 
 i^areruuy, were it not so «r»p» n nii««f ir>r, t* 
 
 equafe Irh^yVr^ZriuS^ efforts-fnad- 
 
 are encourasine It <? tn hi h.^i"^'^^'*"'''^ 
 further step wlfle taken anStharthl^^' ^ 
 
 be tlfeVnT/tmie Je'n^^kT o1"fhr ^^^ 
 Sfv7bee"nT;ne°^o?'t>'*^l- ^^^orfunat'e 'al 
 
 u/lv feltn^iS'S*' *^ "•*^"''*^ monopoly. Tbe 
 u^ feature^ his^^jiutioajfihjspro^^^^ 
 
 conflscaiion of the rent of land, but 
 the view which Cardinal Gibbons-if 
 current reports may be trusted— takes 
 or Ills comptcraniated measure seems 
 to me most sensible. I do not believe it 
 ^T, ; ^JJ^ appear to the American people a 
 JUHt thinp- to take the property of land- 
 owners without compensation. I do not be- 
 lieve that the moral sen^^e of the American 
 P«^f, . will ever rolorate any serious steps 
 looifin? to the confiscation of thisspsciea of 
 property. To me-whatever false accusatioa 
 mf:y have been brought arainu; me to the 
 coi trary notwitbstandintf— it has ever ap- 
 peared a cruel and unjust thintr to do, and 
 tuus 1 hav« al,vavg t.iufht. However, it 
 seems to me - as to Cardinal Gibbons evi- 
 aently— a waste of breath to refute the errors 
 or Henry George. Ttiey are not a living' 
 issue. It is, however, worth our while dill- 
 Siiiuly to read a book like "Proeress and 
 ii'overty," and to jjather from it the useful 
 lessons which It undoubtedly teaches. With , 
 this I leave the land question for the present 
 and pa«S over t o othor natural monopolies. 
 
 
"LU 
 
 TJ 
 
 »F COMPETITION. 
 
 1 . Not Always a Desirable Thins— 
 I'rof. Bichard T. iilly Uiscourses Upon 
 the Subject of Natural Monopolies. 
 
 rWrltten for tho }J .itiinore Sun.l 
 
 ARTICLE XVIII. 
 
 i •ooftheiiJ ■ iifindifiruRtion with 
 
 \sj ...uuopolies Hi. -. v'dU by tbo pul)Uc 
 
 aecumulaies daily. Mr. Rnyoer, who so ably 
 n • : > ' ta a Maryland constliuenoy, Has 
 tLVUfiuc u bill into Conpreb's for tlie r,iprea- 
 Bioii of trusts and other coriJorat* oomblna-. 
 tloas, wbile an iavestitration into this subject 
 liaa actually beeti oiUered. A sitnilar bill has 
 been brought forward in the Lacislature of 
 New York, and in Illinois proceodiutrfl a£rair-St 
 the Cbicato Gas Tru^t hare been insiituted. 
 Can any question be mora thorousrhly allro 
 than lUi»? Ami Is it not worth wbU© to care- 
 fully consider the subject of monopolies in 
 all its ramiilca'.ions in ordrr that we may 
 kaow how to deal with it practically? The 
 truta it that wo have coaie to % critical 
 period In our ecojiomic doyelopmont, and 
 aerent opportunity !<< offered our various leg- 
 i " bcdia.< to do something: of permanent 
 
 1 for th« peoDi'^ When a learned 
 
 judffe, well-known iu Baltimorf, heard some 
 tiiueaiTO that I Intended to write a series of 
 artlules on corporations, he «t;nt ms tbli 
 n ve: "Lf.y on and spare not." The timo 
 
 1 :iie when lecrislators and Confrre«smen , 
 
 mav "lay on and spare not," and f«el sure 
 that the paople will support th(»m. I dislike 
 tt) mention tb© name of Cnrdinal Gibbona 
 airaio, bec«uie I wish to k«ep this i«ori©i of 
 articlPS as free from pcr«onalitt«B as oOMible, 
 but I cannot refrain from mention of his able 
 paper on the Kuiahts of Lshor, which, it 
 
 -Tastome, is a documentor historical im- 
 ^-rcance, and that on this account: He said 
 in that; loiter that the time had come in the 
 world's history when the church ghouid 
 •eej£ an alliance with the masses, and 
 should abandon special efforis to 
 conciliate the mighty m war, the powerful 
 in trade, tho great ones of tbia earth, because 
 In the future tne control of the destinies of 
 the world I esttd with the people. It seeraa 
 to me that tnere never was so auspicious a 
 ti;re for a irreat popular ieadov as now. Such 
 a one, cutting loiso from the influence of 
 cotpnrato combinations and all special In- 
 leiwats, could become a veritable Moses for 
 tho American people and win Immnrtal fame. 
 But wno has the moral character, couplod 
 With the qualities of leadership, on the one 
 hand, and. on the other, the sirf=n»rth of in- 
 tellect rtqui'-iie for a correct /ipprehonsion 
 of our social, ludu*trlal and political situa- 
 tion? It is too much to be feared that 
 this opportunity will be allowed to slip 
 by, aiid throuifh failure to dlscrlial- 
 Dato between various classes et moeopulied 
 and to treat eacti by itself absolutely noth- 
 ing of periiianeut utility will be acooni- 
 piished. The (Erranjrers in our Western States 
 gained complete control of several Le/flsla- 
 tures and endeavored to restrain corporations 
 from domiuailou in the future. Wut wfeat 
 did they aououiplisb? Something undoubt- 
 edly. Yet it may be questioned whether cor- 
 porate domination was ever te marked in oar 
 West as it is today, ana everyone knews that 
 a considerable poriios of what was done has 
 since been undone. It strikes lae that the 
 farmers have been worited in the conflict. 
 Now, what is the reason that they bare teeen 
 driven from their vantare-rrouud and 
 routed? Simply becauss liK^y did not under- 
 stand tno mature of tue aubjtctd with wnieh 
 they were dealiusr. 
 
 When we hear speeches on menopoUes 
 
 I DOW, and read articles ou oombinatiwHS, euo 
 
 tiioufht is found to be cletrly hrouffecfer- 
 
 ward, and onlv one. It is thia: Conapetiuou 
 
 |/» our Balva .^ a tke life ef 
 
 trade; combiia lous preveat ooaapetlilon, 
 cone^qneutly they are injurious antf skeuld 
 be abolijhed. St.ftt«d in tbia reneral foria, the 
 propoBJtion is not true. Compeiltion is net 
 always a tood thing; compotltioa decs not 
 ; always lower prices; on tbe contrary. It fre- 
 quently raises prices; competitiou is not 
 always a possltjiiity; competition has pro- 
 duced marvelous results in those pursuits 
 which are adaptod to oom petition, and this 
 unwarranted conclusion is <rawn froas ilie 
 fact that competition everywhere and at all 
 tinios la a ifood thing. The practical daaiper 
 which confronts us is this— that in attempt- 
 inif to force the application of the principles 
 of competition t« those puriuit* whioti arc 
 not adapted to competitlOB we will mle« our 
 present opportunity and do more harra thau 
 Kood. 
 
 There are certain businesses which are In 
 their very nature— by reason, 1 meaaof their 
 own inherent qualities— monopoliefl. These 
 we call natural monopolies, and any en- 
 deavor to regulate natural and artiflcial 
 monopolies by the same law is predestined to 
 failure in the future, as it always has failed 
 in the past. Had, indeed, the problen of 
 natural monopolies been solved lu the past, 
 there would be few artificial monopolies, and 
 these oould be manatred without difficulty. 
 Natural monopolios are the basis of all aao- 
 nopoiies of modern times. 
 
 The fact that certain businesses are natural 
 monopolies has been so amply shown both hy 
 actual experience and by aa elaboration of 
 economic principles that 1 can scaroely re- 
 gard it as anythiuir elM than an evidence of 
 iprnorance for any one to deny it; yet our 
 habits of thougrht are so governed by princi- 
 ples of competition that it is difficult to make 
 this Clear to those not accustomed to eco- 
 nomic discussions. I beg- my readers, there- 
 fore, to be patient while t attempt to explain 
 veirv carefully, and at as much length as tais 
 series of articles will warrant, the doctrine of 
 natural monopolies. 
 
 It will be most convenient to begin by an 
 enumeraiiott of those businesses which are 
 natural monopolies. They are gas-iupply, 
 street-car service, highways and streets, 
 electric lighting, all rail »v ays, canals, bridges, 
 lighthouses, ferries, docks, harbors, aatural 
 navigations, postal service, teleirraBtas and 
 telephones. This, doubtless, does wot include 
 all natural monopolies, but wiiti the excep- 
 tion of land, which will not be discussed, it 
 embraces all the more ircportr.nt aatural 
 monopolies existiujr at the present tlnte. It 
 is cliimed that the regulatio . of these nat- 
 ural monopolies must be different from the 
 rrpulailoa of commerce, agrriculture aad 
 manufactures, beoauee the underlying 
 principles of these pursuits are peculiar. 
 Now, it must not be supposed tiiat competi- 
 tion is never felt by those who are intercated 
 in natural monopolies. On the contrary, they 
 at; times feel the keenest kind of competi- 
 tion. A pursuit is a natural monop- 
 oly when It is excluded from the 
 steady, constant pressure of competition. 
 Whan natural monopolies are enraged in in- 
 duatrial contests these contusti can after all 
 scarcely be called competition, and popular 
 instinoi feels this, for It finds Involuntary ex- 
 pression in language. We speak ef struggles 
 between natural nnonopolles as war. *'A war 
 bab broicen out between the gas companies," 
 or between the trunk line railways, people 
 say, and It is war in it« characterlstloa. It is 
 destructive, and has, ike war, a termination 
 of hostilities In view. Comnetition, oa ih* 
 other hand, never teptninatRS. It is not a 
 fierce and destructive onslaurhc, byta steady 
 pressure which tends te stimulate eaterprlse 
 and to bring about fair donling. Compare 
 a firm like Hamiit)a E.ister & Co. with 
 the Consolidated Gas Company. The oae 
 is subject to assaults from lime tetlme which 
 always termiaate, and muat a? surely tersu- 
 uate as ttjmorrow's sun must rlse.while Itoen 
 
f 
 
 ^ ri 
 
 
 scarcely eoteiTrito th". riCncrdl^ffBfflan pryh- 
 abiiities ihftt the other can .ver termIn»tJ it 
 i. hoped that the difference is ollar I? ii la 
 faJiacies of those who claim that firorernm«nt 
 
 br«ad Th'-f if a'^^/.^^^r" *^« fl<»ur lutS 
 .ur«aa. idi« is a favorite arramt^nt witb 
 
 inouopolis.s, and is thus .ratad^u a relent 
 
 edlcorml in a journal published ic a nejJh 
 
 borioer city: "Tbera ig no m*re Reason why 
 
 the fiwvernment should onaratp tha tli. 
 
 p.ph than run ihefluur aills-fe.* fa faor 
 
 for ereiTbody uses flour, whil. It Is diuK 
 
 It even three per cent. Of th. people u»« the 
 
 ; telegraph " it would b« hard ta pack more 
 
 buit IS a natural monopoly, ttie other not Vnri 
 
 mh^.r^^^M^^.''?, ^°^ ^« "^^ applicable "Jo tSe 
 other. Secondly, charjres for tb« ug* of « 
 natural monopoly are part of the expsngeg of 
 business, and, like indirect taxc^ ar« .hffted 
 
 . While certain pursuits are liable to b* In- 
 i^of ? by war tb«y are not and cannot be aub- 
 ject to the steady pressure of competition 
 These pursuiu fire uatural nionopo fta w« 
 w.II be helped to understand why tSer Tre 
 natural mouopoll&s if some of tkeir peculi.ri 
 tifea are deacribad, and I will quote from a re 
 cent cArefuI writer, and then pasR on to a 
 further consideration of certain puzzlinJ 
 fils- connected with natural £onopo- 
 
 W' ^}^^'^ they supply is necessary. 
 
 or Lfi'Sfu^nT"^ """'"""•'^ '•""'^ "°'= 
 , "3. Thf article or conven lence they aunniT 
 18 used at the place where, and In cSSSoc^ 
 ion wi* the planter mflchinery by Xch 
 It 18 supplied. ^ w"ica 
 
 ^ "K't?'^^^*'°^® °^conveuieuoe can in gen- 
 eral be? JaPK.ly, if not indefinitely, Dcrefsed 
 
 Japft^/ ^'''^°''^^°'^'' ^^'^'^-^^ ^^ Plaut^ and 
 
 r^v^V^®*'^**"*^ *"^ harmonious arranffoment 
 which can only be obtained by ualty,arepa?a. 
 mouac considf rations." ^iJ,aiop«ra- 
 
 PROBLEMS OF TODAY. 
 
 COMPETITION OUT OF PLACE. 
 
 NATURAL MONOPOLIES DEFY RIVALRY. 
 
 Prof. Richard T. Ely»» Tiews on Mon- 
 opoly and Competition Continued. 
 
 [Written for the Baltimore Sun. I 
 
 ARTICLBJ XIX. 
 
 The qualities of natural monopolies enu- 
 merated in the previous article are sufflcient 
 to show one versed in the principles of indus- 
 trial society vrhy those pursuits to which 
 these qualities pertain must be monopolies. 
 They can hardly be regarded as entirely sat- 
 Isffictoryto one to whom economic discus- 
 Bions are not familiar. It is said that Ajrassiz 
 could draw a picture of an animal if he but 
 saw a sinfrle bone which had once been part 
 of its frame, because natural laws which he 
 had grasped showed him that the peculiarl- 
 Ties of the bone which he saw necessarily 
 deterramed the structure of the animal which 
 fte did not see. It is not enoush, however, 
 for us not versed In natural science to feee a 
 bone; we want a comnlete drawing cf the 
 animal. It is similar with resrard to economic 
 institutions, onlv that there is this important 
 difference: Political economy ja not so far 
 advanced as natural science, and the political 
 economist has not so marked an advantag-d 
 m hia specialty over the ordinary man. 
 
 The reason why some pursuits are monopo- 
 lies may be stated in a somtiwhat different 
 "wav. Why do men enter, business? To make 
 money. This is the' dominant motive, and 
 thi s Ke eps the w_prld jroinc. I do not mean 
 
 , that men are not anima!!e(i hy other luutive"* 
 nor would I have it thoug-bt that even all 
 commercial transactions can be explained by 
 the pursuit of sain. I simply state that this 
 ^°r't*^ X sufficient for our present purposes, 
 and that, ordinarily, if a m' n in business is 
 permanently— not temporarily, but steadily, 
 year after year— losintr monfy, it ig a sien 
 that his activity i« wasteful, Involv- 
 intr a loss to the community as well 
 as to himself. Havine fixed this fact 
 in mind that the dominant motive in 
 business Is pain, it follows naturally that 
 those business methods which yield mt)8t 
 pain are bound to prevail and to drive from 
 the field of competition lesg profitable busi- 
 ness methods. We have in these two simple 
 facts an e;tplanation of natural monopoly. 
 Business of the kind mentioned can be most 
 advantae-eoutHly pursued under the form of 
 monopoly. The services or thing-s which 
 they supply ciin be produced not merely for 
 a smaller eipeoditure of laborer capital, but 
 for a far smaller expenditure. There is, con- 
 Bequently, always an increase in Rain for 
 those men intere^tPd in natural monopolies 
 who can brinar about a combination, and 
 this increase in gain is a c .nstant, never- 
 ceasinff attraction, tendinj? to brinar rivals 
 together. It is a steady force lixe the attrac- 
 tion of )!?ravitation, and it will act in spite of 
 all legrislative enactment. Ic transcends in 
 power ;any State locrislature and even the 
 federal Congress. But I po further than this. 
 Prom the standpoint of political economy, 
 which desires a cheap and abvm dant produc- 
 tRn of {roods and services, the monopolistic 
 method of production for those pursuits 
 which are natural monopolies is nnt merely 
 Bomething- inevitable; it is somethinpr desir- 
 able, for attempts at competition waste the 
 national resources and tend to bring about 
 commercial crises and stagnation In business. 
 We want monopoly In pas supply, water sup- 
 ply and the like; the only question is what 
 kind of a monopoly? 
 
 Perhnps the tendency to monopoly will be 
 made clearer by an illustration. Let us sup- 
 pose two pas cnmpanies are competing, and 
 each has a capital of $1,000,000. The total 
 capital eneaK-ed in the pas business is 
 $2,000,000. If the two consolidate, the amount 
 of capital already invested will not be mate- 
 rially lessened, but expen-^es will be reduced. 
 Instead of two central offices there vriil pe 
 one, and the dupl cation of mains will be 
 avoided for the future. Fewer collectors 
 will be needed, fewer men to distribute bills, 
 fewer men to put In meters, and the in- 
 creased output of pas willnotbeatrendea with 
 a proportionate increase of cost. If it costs a 
 certain sum to manufacture ten million cubic 
 feet of eas. It will not cost twice as much to 
 manufacture twenty millions. 
 
 This article can "br< largely. If not Indefi- 
 nitely, Increased without proportionate in- 
 crease in plant and capital." There is. then, 
 always a very considerable advantage in com- 
 bination. 
 
 It may be asked, then, whv are there so 
 many attempts at competition? The answer 
 is very simple. The number of enterprises 
 in ffas supply which attempt legitimate com- 
 petition is extremely small, and can only be 
 made by those who do not understand the 
 business. Most npparent attempts at compe- 
 tition are simply raids on a company which 
 has a good business, and the end in view is a 
 division of the business and a participation 
 In the spoils. A test is easy. When a new 
 pas company is formed in the interest of the 
 'dear people" in order to give 
 them, as it Is usually said, the 
 benefits of competition, let the confluent citi- 
 zen take the managers at their word and ask 
 them to make a contract to supply gas at the 
 current low rate for a number of years, and 
 be will find that they will refuse. Rates go 
 down and a bitter strugirle ensues, but it is 
 not competition. It is a flght for mastery. 
 Trhe only question at Issue is: Under what 
 terms shall we combine or in what manner 
 shall territory be divided? This has no 
 
h 
 
 
 w 
 
 timore, for oHf case 
 i^ oui .Hit' oi inuusauud, althouffb I brljeve It 
 rarely takes so long: to come to an airreemeDt. 
 xseverthole^s here, ag eh^-where, it is only a 
 matter of tinio. and ahuuld la the future a 
 thousand new oompanies be established 
 the result would be oomblnatioo. for 
 
 L*n iT'.L f'^^wEn "'^ It about, and no one 
 can help it. While we have the testimony of 
 reascn we are not rostricted to that, for we 
 have the testimony of experience. It is prob- 
 ably within bounds to say that over three 
 thdusand vt-ry likely ten thousand, attempts 
 
 S,..d'i'"?n'^*'?[?ic'" ^f «"PPly *>»»^« been 
 made In this and other countrios, 
 and the cpnlizea world has yet to shwi 
 
 5-»/ ./'**'', w^"*'"''^* ^f Permanent, svccess^ 
 Sj^lccmpeiition m gassuppfy-axid this natural 
 
 Slr^^ip^'^for ''''' ^f ^'-^"t from others, but Is 
 selected for speoial noneideration because it 
 Js more easily understood on account 
 Of the restricted scope of action of a 
 flintrle pas company. It must not be 
 supposed that the amount of capital 
 required for an undertaki- jr is an essential 
 Tacior in determlnina: whether it shall be a 
 natur .1 monopoly or not, for this is variable, 
 and it often happens that a business alu ays 
 •ubjoctto competition has a larger capital 
 than one which has the field all to itself A 
 bank may, often does, have a laricer caoital 
 thana^as conipany; so may a dry Voods es- 
 tablishment. Profe89-)r Henry 'CAdam^ In 
 his moriouraph on the ^'Relation' of vffirkte 
 to Indiistnal Action." divides business into 
 three classes, namely: (1,) those of diminish- 
 Inpr returns; (2,) those of constant returns. (3 ) 
 those of ir.creasine: returns. An undertakin'ff 
 IS a business of diminishin«r returns whert af- 
 ter a certain point, soon reached, an additional 
 investment of labor and eapitkl is not at- 
 tended with proportional returns. Asrricu^ 
 ture 18 the best illustration. After ^farmer 
 puts a certain amount of labor and capitaloD 
 a field or corn he says, it does not pay to in- 
 vest more. If corn ouK-ht to be hoed three 
 times. It may be of some use to hoe it four 
 times, but the additior.al return will not be 
 large enoutfh to make It pay. The fourti? 
 hoe nff yields far less than the third, the fifth 
 far less than the fourth and so on. Similarly 
 f/r!f ''* 'T" of suitable size has been brought 
 undeT cultivation by one farmer, be will find 
 i»^ff ^n.l^f:\^ operations, buy more land and 
 S*!! ™ore labor and capital into agriculture 
 ■will not pay. Consequently for one 
 man to attempt to pet a monopoly 
 inn?"" A f?^ '' ^1 absurdity. It cannot hi 
 J?f^f; o J^r ^ S^J'^ia point has been reached 
 returns fall off, and a man oDeratinjr on a 
 Bmaller scale has an advantac-e. Commerce 
 and manufactures are businesses of constant 
 returns. After a business has attained a 
 normal size additional investments will be 
 accompanieJ at best with constant returns 
 and the manager will have no advantajre over 
 others by reason of an excessive amount of 
 capital. It IB Rurprisinar how far a Rifted 
 
 »v*i^®,^^"l° !" °"^ ^ays can profitably 
 £f. n^.j?'l ^"Sineas, but everyone reaches 
 his limit, and, except in case of artificial 
 barriers, Hue protective tariffs, merchants 
 and manufacturers, like farmers, alwayi 
 feel the pressure of competition. En- 
 terprises which fall under the third 
 class are quite different. The lareer the busi- 
 ness the greater the relative profit, and so 
 there is always an Inducement for an en- 
 largement of the field of operations 
 
 i,,^."^ ^^'k '^ """^ *"* , ^\^"" i' *8 stated that a 
 business becomes relatively more profitable 
 in proportion as the amount of capital in- 
 vested Increases, it is already granted that 
 larjfe concerns have the power to cr ush small 
 ones, for if business is more profitable it is 
 because production Is cheaper, and if ihe biir 
 mail produces cheaper ho will crush the little 
 man. 
 
 tr^'ll^?^'i'^"^*?•®^P' competition are then 
 totally inapplicable to natural monopolies. 
 Competition is impossible, and att. mpted 
 corapetit on wastes capital and ultimately 
 raises prices. The temporarily low prices 
 
 during industrial wars arc i.,..,orv. Let Ub 
 come bacit to the convenient illustration of 
 4ras supply, a practical man demonstrated 
 before an association of gis manufactSers 
 recently that ^ras could be made unS sSld fo? 
 a handsome profit at flfiy ct-nt^ a thousand 
 This denjonstrath.n was pAuted i T a joSnai 
 devoted to the ga. i:iterest,and I am Sot awa?e 
 that among themselves gas men have denied 
 It. Yet there are few American cities 
 vrhere It can profitably be made today 
 ?h^„.''^'^?°*^ comi^aiiies f.)r less than twice 
 I that, and even one dollar a thousand is con- 
 sidered cheap tras. Why? Simply because 
 destructive gas wars have waSed propeS:y 
 increased the fixed charges which gas cim- 
 wi«*""^**'^,®*'*? ^"'^ rolled up tneir capital- 
 jlzatlon out of all re.<son. Nu honest man 
 
 denv^tS?r rVn^i"^ ^^^"^ '^^ business wfl? 
 aeny this. Gen. John Newton sai>l rec-ntly 
 that CTHS In New York city could profltab v 
 
 and the high price heattriouted to the wastes 
 ^\.in^.°'S^^""'"',*^ ^'^'^^ '° ^he duplication of 
 S-n^f" ^^^v,'^^^*! J^'^ companies: Further 
 proof of this statement U seen in the fact 
 that cities which supply their own gas and 
 exclude competitiDh can do so for lesfthan a 
 fni"^;, «on-, Joseph Chamberlain when 
 
 tL H,*d'^? n**°^^ ^l*" ^^ ??y colleagues tha? 
 the city of Birmingham, England, purchased 
 the gas works at his instig ition when he was 
 mayor, and that the results wore most for- 
 tunate. Another ooilengue of mme who hna 
 lived in Manchester, tell, me That h7 never 
 paid over sixty-four cents a thousand and 
 TGtthis price yields a handsome profit and 
 has enabled the city to carry forward im- 
 provements without burden to the taxpay- 
 ers. Some towns in Scotland supply gas for 
 less than fifty cents, and I have even heard of 
 a tweniy-flve-cent rate, though for that I 
 TVil! not vouch. 
 
 •oT^^^Jl"^^ «fv'*^ ?-° official statement of the 
 ras works In Wheeling, West Viririnia- Citv 
 bought the works in 1S71 for $100,000 *Thev 
 
 w?feT«fiSfn"'"''^'? 1^87 were J39,000, from 
 Which $6,000 must be deducted for payment 
 ©fcitydebi, and $:il,009 ror "repairs, etc '' 
 leaving $12,000 ner. Rates $1 60 later $120 
 is Ism. ^ °'°''- ^''^ number Of iXbifinfs 
 
 ♦.•2y« 2"*^' *° ^^^^ ^^^ for arty cents In Bal- 
 timore. Now, cnean gas i? a great help to 
 m&nufaoturers, and especially to those doing 
 businf-ss on a small scale. Thus a correct 
 policy In regard to this natural monopoly helps 
 to keep com petl lion alive by preventing ifll 
 unnatural and artificial monopolies, olher ■ 
 futore'a^ l^V* ^^^^^°^ ^^^^ ^^ reserved for a -' 
 
 FRANCHI SES SHOU LD BE SOLD. 
 
 Gas Works and Street Hallways Discussed 
 by Prof. Kichard T. tly, of Johns Hop- 
 kins University. 
 
 (Written for the Baltimore Sun.l 
 
 ARTICLE XX. 
 
 Since my last article in this series appeared 
 a reader of Thb Son who has lived in Belfast, 
 Ireland, for suino lime has had the kindness 
 to send me a letter about the experience of 
 
 I the people of that city with the gas supply 
 and as It 18 nearly typical I will quote some 
 
 I extracts from the letter: "I have had eomo J * 
 
 BeK°^lbmi?^mf '"P^^^ ^"' the-t5wn-^ 
 miiaar. Anout fiitepn years azo the town 
 
 works mc''o7?h!^^''"" ^" Puchase the ^s 
 tv.« »!; ^"mf *^° company then supplying 
 the town. The purchase monev was b r- 
 
 Sr^.onn^n'S '^^ government. At The time 
 the council took over the works the 
 gas company were charging something like 
 5 shillings ($120) per 1.000 feet. Under 
 the management of the gas committee 
 l!.^ ^u"^^^^"^} on the purchase money 
 and the requirements of the sinking fund for 
 Uie payment of the debt have not only been 
 met, but the committee have b'^en able to 
 
make gradual reductions in the price to' cus- 
 tomers. The price, 1 believe, is now t^vo 
 shiiJinjrs and nine pence (66 cents) per 1 000 
 feet, and the profits would justify a trreater 
 reduction, but I understand the committee ig 
 strentrtheniusr its position and oontinually 
 ImprovlnK Plant and machinery. When it is 
 considered that Belfast has to import all ita 
 coal from Entrland and Scotland, it can 
 readily be seen that tras should be supplied at 
 
 fiZ^l^J^^^^ ^^^^^ *" ^o^ftia conveniently 
 
 situated to coal mines. Two years ago the 
 
 Belfast eas committee held an exhibition of 
 
 gas srovea and t?as-hearing: apoliances, &c.. 
 
 and the exhibition has induced many to use 
 
 the ^as for motive power and cookin^r, etc. 
 
 ' • ♦ Under the English towns 
 
 improvement act town commis^^ioners can 
 
 Obtain compulsory powers to purchase pas 
 
 i companieji, &c., if considered for the benefit 
 
 of the public. It would be a great blessing 
 
 if such powers were conferred upon town 
 
 authorities in this country." j 
 
 There are several things which may be 
 done m view of the fact that the gas supply 
 18 a natural monopoly, and one thing which 
 clear y should not be done. It should never 
 pe attempted to introduce or compel compe- 
 tition between rival companies, for the re- 
 sult IS only evil. Not one particle of good 
 SmiH?.n''"^«/° the public by attempted com- 
 petition. Streets are torn up and pavements 
 hptiPh I?" properly relaid. This injures the 
 health of citizeus, for nothing is better calcu- 
 Uted to promote malaria-as many of us in 
 Baltimore know to our sorrow— and it wastes 
 our property. If It is urged that money il 
 spent, I reply that such a plea for competi- 
 
 l^i^i?''°° wl^ t".^®"^ ^^"°™ Ignorance or dema- 
 gogism. What is spent is wasted, and if not 
 so spent it would nave been employed in 
 some otner enterprise, very likely a legiti- 
 mate enterprise which would have really 
 beneflto i the people. *wiijr 
 
 One 9f the things which may be done 
 
 recognize the fact that an existing 
 
 pany nas a monopoly, and to make it a 
 
 monopoly in return for concessions. 
 
 1 nrn^no««t !" a.^o^them city recently. It was 
 
 ! proposed to allow a rival company the privi- 
 
 r^f A 5 "^ Citizens with gas, and the members 
 
 awLv w,Vh'Th'i^^T"^°''V^ '^*^^*' »^ fl^^t carried 
 w^o^^^ '^ ^^^ *^®* of competition, andlto 
 
 nnnM.^'' -n'™-^* ™>^" *^o *" the direction o! a 
 popular Illusion is shown by the statement 
 
 w«? « c^^^^^K- ^^^* competition in Itself 
 was a good thine-, even if tt accomplished 
 notbing. A gifted young lawyer,however,who 
 had read James on gas supply, went before 
 trie council, aud» with every member against 
 hitn at the start, was able to convince them 
 ?J„o ♦!, * '^^^^ "^^^ companies. The result 
 u!t^i^\. ^}^^ existing company agreed to 
 1 mit Its price at once, and in a certain con- 
 tingency to lower it in the future. The 
 proper method for the city authorities to fol- 
 tSrTnfli?^^^® °*^® °^ *i^«8 supply, pro- 
 ^mrl n'f^°°' l"'"^^*' «^^« itself, is very 
 simple, ihe franchise should be sold at pub- 
 
 il.^"'^i"°'.'^^5^'y advertised, for fitieen 
 J^^+t^J^^^u ^^ should expire, the city reserv- 
 J!r thf ^^"^' ^' repurchase at the expiration 
 rr«hm,iH kL°^ i^^ »° appraised valuation. 
 It should be made very clear that plant and 
 other property Of the corporation should be 
 purcbasea only at their value at the time, 
 aimIhlHt'.''?;!^H '"^ '^'''' condition and thei^ 
 SnV Si i^^? '^® Durpose of the undertaking, 
 but without any addition f;.r compulsory^ 
 purchase, good-will or future profited' 
 
 This method, or, in fact, any method of 
 private ownership leads to entanglement of 
 public and private intere8ts,which is demoral- 
 izing for n9thing promotes corruption like 
 
 13 more wholesome than simplicity in admin- 
 istration. It 16 desirable tosepaniic by as sharp 
 fn^i°^ "^ possible pu blic and private undertak- 
 ing, and this end can best be accomplished by 
 pwoership of gas works by municipalities. It 
 la on this account^ that 1 recommend in my 
 
 is to 
 cnm- 
 iegal 
 This 
 
 
 \ 
 
 report as tax commissioner that ~tBe Mary- 
 land Legislature refuse hereafter to grant 
 any charter to any private corporation to 
 supply gas or water within the borders of our 
 Srute. A constitutional amendment pre- 
 venting the Legislature from granting 
 any such charter would be desirable. Noth- 
 ing could be more calculated to prevent cor- 
 ruption and purify government, for nothing 
 has so corrupted and debased our political 
 life as private corporations in control of 
 natural monopolies. We have got so used to 
 municipal corruption that it seems to us as 
 someihing inevitable, but such is not the 
 case. I have lived for years in cities in which 
 the breath of suspicion never touched the 
 municipal government, where corruption and 
 methods of avoiding it were not at all ques- 
 tions of the day, and when the Hon. Joseph 
 Chamberlain aadressed the students of Johns 
 Hopkins University he claimed for mu- 
 nicipal administration in Eotrlaud that it was 
 above reproach. It is idle for us to say "we 
 must wait until we become morally better." 
 I believe we are as moral a people today as 
 the English or the Germans. Our terrible 
 corruption in cities dates from the rise of 
 private corporations in control of natural 
 monopolies, and when we abolish them we do 
 away with the chief cause of corruption. 
 
 "But we must take natural monopolies out 
 of politics." It never has been done, and it 
 is an impossible thing to do— absolutely im- 
 possible. No gas works, no water works, no 
 street-car lines, no steam railways, are so 
 thoroughly in politics as those in the United 
 States. Who is so innocent as to think our 
 great railway corporations "out of politics?" 
 If any one Is so simple I advise him to spend 
 a few weeks in tne present winter in Wash- 
 ington or Annapolis and kei-p his eyes amd 
 ears open. When I was in Berlin some years 
 faifo 1 made a report on Prussian railroads, 
 under the direction of the American minis- 
 ter, Hon. Andrew D. White, for the Depart- 
 ment of State at Washington. Every facility 
 was afforded me for my Investigation, and 
 my inquiry into the political effect of 
 Stat J ownership, which obtains in Ger- 
 many, was most careful. Since that 
 time I have followed the development of 
 the Prussian policy with some cure, and it 
 cannot be charged that I have been influ- 
 enced by the government view, for my 
 favorite German newspaper— the only one 
 which I take— is bitterly hostile to the exist- 
 ing government. I make bold to say that to- 
 day our American railroads are incomparably 
 more "in politics" than the German railroads. 
 Not only this, those German railroads which 
 have been bought by the state, I believe, are 
 less "in politics" than they were when they 
 were private property. Why this must be so 
 will be considered hereafter. But the reader 
 must not jump to the conclusion that I 
 am going to advocate complete public 
 ownership and management of all natural 
 monopolies at the present time in the 
 United States. I am going to do 
 nothing of the kind. However, I unhesi- 
 tatingly advocate such ownership and man-, 
 agement for gas works, and I challenge any 
 one to instance a single American city— or, 
 for that matter,any city, wheresoever situated 
 —which has gone over to pnblic ownership 
 and wnich regrets it; which, indeed, has not 
 found that a corrupt political influence was 
 thereby removed and political life purified 
 The most unfortunate city in the world 
 with its public gas works has been Phila- 
 delphia, but when it was proposed to sell the 
 gas works, and when a ring bad "fixed" the | 
 council, as well as many of the newspapers, 
 there was such an outbreak of popular in- 
 dignation, with hints of the penitentiary, that 
 the council was terrified into doing its duty. 
 Street railroads are one of the most im- 
 portant natural monopolies, and a tendency 
 for public ownership and manatrement is 
 beginning to become manifest. In the 
 United States, however, there is but one 
 
33 
 
 PL V a ^ is the ODo 
 
 whicb is operated In connection with the 
 Brooklyn bridfirc. Althouah it is said to be 
 the best luauasred streot railroad in the 
 country, I am not prepared to advocate 
 public ownerablp in lialtioiore at present. 
 What we want is the New Orloaos system, 
 and that is what 1 have recommended in my 
 report on taxation. It i3 sale of franchise, 
 with reserved ritfht to purctiase all the 
 property, that is, land, buildings, horses, 
 cars— in short, all the plant— Ht an ap- 
 praised valuation at the expiration of a 
 sfiort period, s^y fifteen years. In this, as in 
 every case of natural monopoly, it should be 
 made perfectly clear that no compensation 
 ouerht to be srranted for compulsory pur- 
 chase*, tfood-will or expectation of future 
 profits. This yields a large revenue to the 
 city and leaves the people free at the expira- 
 tion of each period to adopt any system of 
 street railroad service which they see fit. It 
 works very well in New Orleans, where in 
 1886 nearly one-eighth of all municipal ex- 
 penditures was defrayed by the sale of a sin- 
 gle franchise for twenty-five years— the max- 
 imum period for which one should ^ver be 
 granted. 
 
 When the first franchise was prranted in 
 Baltimore, in 1859, the mayor of the city ap- 
 pears to have been a man of rare integrity, 
 for through him the right to acquire the 
 street railroads, at the expiration of each 
 period of fifteen years, was reserved to the 
 city, and in 1889 the city again comes into 
 possession of a most valuable privilciare. A 
 franchise which now yields nine per cent, of 
 gross revenues could be sold probably for 
 twenty-five per cent. In New York city a 
 franchise has been sold for forty per cent, of 
 gross revenues, and in Buffalo, N. Y., half 
 the size of Baltimore, thirty-five per cent. 
 Was offered for one. 
 
 What I should like to see, however, is the 
 introduction of another system, which is 
 hinted at in one of our acts of incorporation, 
 namely, a reduction of fares. There is not a 
 shadow of a doubt that passengers could be 
 carried in Baltimore for three cents— more 
 than is charged in Berlin, where the compa- 
 nies must keep the streets paved from curb 
 to curb, must provide each passenger with a 
 seat, must in laying tracks have some respect 
 for the rights of owners of vehicles, and do 
 a thousand and one things which an Ameri- 
 can corporation does not dream of, 
 to say nothing about that fact that in 
 1911 their entire property reverts to 
 the city without compensation. The 
 report of the tax commission — and in this re- 
 spect there was unanimity of opinion, for 
 the other members agreed to mv report — 
 speaks of rendering proper methods of deal- 
 ing with natural monopolies compulsory 
 upon Legislatures and municipalities. The 
 people must do this, for their representa- 
 tives in our days of "government by special 
 interests" love corporations better than they 
 do the people. It was for a long time sup- 
 posed that the people bad no rights which 
 anybody was bound to respect, and you could 
 eveu find professing Christians— men who 
 claim that they love tiieir neighbors as 
 themselves— bartering away for a mesa 
 of pottage the rights of the public, 
 women and children, and even unborn 
 generations. Were Christ on earth I expect 
 He would call them liars and hypocrites. 
 However, imprisonment of New York city 
 aldermen in Sing Sing, and the conviction of 
 Jacob Sharp, evf-n If it proved a fiasco in the 
 end, has helped to clarify somewhat the ideas 
 o( men with regard to trie rights of the pub- 
 lic. What ifl now needed is in every city a 
 public property defense league to watch the 
 Interests of the public, and to hunt down and 
 snnd to the penitentiary those who forget 
 that public offi.e is a piiblio trust. 
 
 PROBLEMS OF TOUAY. 
 
 ABOUT POLICE FROTECTION. 
 
 WATER- WORKS AND ELECTRIC LIGHTS. 
 
 Monopolies for Cities to Possess Ois- 
 cusned by Professor Richard T, Ely, of 
 Johns Hopkins University. 
 
 fWritteu for the Baltimore Sun.l 
 
 ARTICLE XXI. 
 
 Reports of proceedings in the Legislature 
 at Annapolis compel me to mention a matter 
 which would naturally be treated In a later 
 paper. A bill has already passed the Senate 
 providing for the employment of special 
 policemen by corporations and firms. It U 
 very questionable to entrust even to this ex- 
 tent functions of government to private 
 parties. It is a return to the anarchistic, dis- 
 organized state of society when the old barons 
 had their retainers and engaged in warfare to 
 suit their special pleasure. It was generally 
 supposed that we had left this barbarism, 
 but there is an unfortunate tendency tore- 
 turn to It in the United States. It is well to 
 notice some thoughtful remarks on occur- 
 rences of the year 1886, which appeared in two 
 newspapers. The Missouri Republican, in 
 its issue for January 1, 1887, says: "The 
 past year will be forever memorable as the 
 year la which private armies of mercenary 
 soldiers betran to be established in this coun- 
 ^j,y^ « « * « j^ jjgg ^jeeti fondly supposed 
 
 that Dublio law was strong enough to do right 
 and maintain right between the citizens over 
 whom the Commonwealth has jurisdiction. 
 That, it now seems, waa an error. When a 
 difference occurs between a great pork-pucker 
 and his employes it is not to the State that 
 either party has resort; and to check appre- 
 hended resistenoe the pork-packer finds it 
 easier and perhaps cheaper to call out a regi- 
 ment of hired soldiers who have been armed 
 and trained for the service of the hlKhest 
 bidtler." The New York Nation, in lis issue for 
 January 37, 1887, says: "It cannot be too soon 
 or too well understood that,a3 an armed organ- 
 ization offering itself for hire for purposes of 
 defense in various parts of the CTuion, Pink- 
 erton's men are, we must all admit, the 
 jrrcaiest disgrace that has befallen the United 
 States. ♦ ♦ * ♦ Its appearance in an 
 other civilized country would fill today every 
 man in it with shame and astonishment," 
 More may be said: It would be impossible 
 elsewhere. It is not clear what is the inten- 
 tion of those who are behind this bill, but it 
 would seem that it opens the door to all sorts 
 of abuses. We In Maryland are quite capable 
 of maintaining the peace without the assist- 
 ance of imported cutthroats and assassins 
 from the slums of other cities, and the least 
 concession that can be demanded to 
 public decency Is the Ohio law, which 
 forbids the employment of n on-rcsi- 
 dents aa special policetnon or deputy 
 sheriffs. In Ohio no one outside of tho 
 county may be sworn in as deputy, and 
 In Baliiraore no one not a resident of the 
 city should be employed as a special police- 
 man. This is the minimum concession. The 
 proper waj^. It would seem, to regulate the 
 matter would bo to have all policemen ap- 
 pointed by public authorit5%and allow, under 
 certain circumstances, the employment of 
 
 I 
 

 w 
 
 
 i^uiicemeu oy private parties wiTling- to pay 
 therefor. It is lo be uoticea that after sad 
 experience other States are passinff laW3 to 
 forbid the employment of non-residents as 
 deputy sheriffs or special policemen; and by 
 a little forethouKrbt ia this matter we can 
 prevent bloodshed and bitternesi belvveen^ 
 classes such as we see elsewhere. It is to be 
 hoped that working-men and all who have the 
 welfare of our State and city at heart will be- 
 stir themselves in this matter before it is too 
 late. Tiiig is one of those cases whore em- 
 ployment of homo labor Is the only safe 
 policy. 
 
 The next natural monopoly to be consid- 
 ered is water eupply, and comparatively little 
 need be said abo:t this, for the principles 
 whjch control it are precisely like those uov- 
 ernintr the sras supply, save that the reasons 
 for public undert ikinffs are still stronger. It 
 is more easily mana^ea, and the importance 
 offreneral use of water In larpo quantities 
 cannot bo overestimated. One of our special 
 blessings in Baltimore is our abundant sup- 
 ply, and it is questionable whether any 
 Bpecial charge should be made for its use 
 Certain It is that the advantage of our public 
 service over any private service must be 
 measured by millions of dollars. I have made 
 epicial iavesiifration of water supply in sev- 
 eral towns, and I have yet to find one Instance 
 in which municipal self-help did not 
 work better than tho beneficent patri- 
 otism of private corporations. I have 
 looked into the experience of a whole 
 Bfroup of towns In New York State, and they 
 oil tell one story. I have iK-fore me as I write 
 complete and trustworthy returns of two or 
 three of these, procured with some labor by 
 the exertions of friends. The exper ience of 
 Randolph, in Cattaraugus county, N. Y., tells 
 the story for all. A private company wanted 
 to put in water-work s, and the lowest bid 
 
 ^?>oVi, ^^""^ "^^^^^ ^'^ ifiducecJ to make was 
 ?^8,000, and that was under condition that the 
 town should subscribe for stock. The charge 
 for water was to be $10 for a household, with 
 e.vra faucets, closets, &c.. in proportion. 
 Ixanuoloh finally built its own works for a 
 total cost of $20,299 88, and with o char^fe of 
 %i for each household, instead of $10, is mak- 
 ing a profit. Everybody I9 delighted with 
 the experiment. Gowanda, in the same 
 oountv, has had a similar experience, as havo 
 Fredonia and Dunkirk, in Chautauqua 
 county, while the neierhboring- city of James- 
 town tried tho private corporation plan to Its 
 sorrow. The fi-entlemaa who sent me the ac- 
 count of the Randolph experiment writes mo: 
 As to J;ime9iown I have hoard nothing but 
 complaints." As I write, a gentleman who 
 .has eqtered my office tells me about the still 
 moro unfortunate experience of the people 
 .of (xalesburir, Illinois, with private water- 
 '^orivs. They have been so annoyed by fall- 
 tre of the company to fulQll its promises, 
 aid by poroetual litigation, that they would 
 ow gladly purchase the works, which 
 :ive been Idle for two years. The plan 
 ( privato companies is to o-et the 
 owns to subscribe for a sufficient 
 
 "^"^ of hydrants at a sufficient sum 
 
 -■ to pay nearly the oatire intere st on 
 
 : outlay, and all the other revenues 
 
 ii clear profit. A trcntleman who Is 
 
 'leyforoneof the larjfe companies en- 
 
 v' 'f^^ suppiyjner towns with water-works 
 
 'Id me that his skill had been taxed In aa- 
 
 * 'hem to pump wat^r enaugb Iqto 
 
 and 
 to it 
 
 ^ 
 
 tiicu-stocii. It had been wate: 
 asfHin, and it wag still necessai 
 to conceal the enormous profits"' 
 
 VVhen we take up electric lights, we shall 
 ^''r^I'ZIxT^'''' '° abandon tho principle of 
 local eeir-uovernment and municipal self- 
 help. No organization is doing so much to 
 throw light on these questions as the Amor? 
 can Economic Association, and no organiza- 
 tion IS more deserving of the hearty sunnort 
 of every patriotic American. One Jf it^ mSs? 
 useful publications will be a monS^rap? on 
 municipal public works, which is now i 
 press, and from which lam able to c-iveafew 
 f .cts in advance. The Part on eleS- dc IhrhtT 
 ang is contributed by Charles ^Sore Sn 
 editor of the Detroit'^Even i^' News and^^s 
 most interesting. Bay City Mioh nnt in I 
 Plant in October, 1886. arrd7upp fe'i' lights fo^ 
 i42 each per year, whereas it had been paying 
 a private c< mpany fluO per year. ^"^'"*f 
 
 Levvistown, Maine, owns its plant" sav? 
 Mr. Moore, "and by the use of water pnwj? 
 
 SLVt^'^nr''«n'^in ''''^^ "" ^^ °*^"^s per lamp per 
 night, or lol 10 per year. The plant for 100 
 t'^J^A^^ ^'ost 114,500; the cost of Construction 
 was i4oO per running mile. The price paid 
 
 ■S22fi'K°°'''*°^''^» ^^'^°^ ^5 t« 65 cents for 
 hghis burning only till midniirht. Now, at a 
 
 night?'' "^^"^^^ ^^"^^^ ^^^ ^^^^^ ^^"^^ »i^ 
 
 Madison, Ind., also appears to have cb- 
 taini^d crood results irom public works. 
 
 Jrl^unJ't^^^^^^ ^.^y »r« these facts not 
 fnJi J''^^^ known? One reason is that so 
 ,f.f' J.-'^L^"''"^^,^ newspapers are completely 
 )?iHL/"'''^^*"^'*°i *'' corporations, for other 
 cities are not so fortunate as we are in Bnlti- 
 
 Sl^hH%™°^i^''^'"^u^°'/^°'^*^ of a failure of 
 pubhc works is heralded abroad to the four 
 corners of ! ho earth, while examples of suc- 
 crss are not discussed. Who talks about our 
 ?^}^\'^^^^ ^'^^ '"'*^^' ^^ich was built for less 
 than the appropriation, or the fine federal 
 Duildiug put UD in Madison. Wis., for $12,0u0? 
 Ihese examples are not isolated. Careful 
 inquiry will reveal an astonishing number, 
 vvnen, however, extravagance and compara- 
 }\ll ^I'lure characterize a public enterprise, 
 like the Capiiol at Albany, we never 
 hear the ladt of it-as if private enterprise 
 were not frequently a failure! The truth is. 
 private enterprise generally, in its own 
 sphere, agriculture, commerce, manufac- 
 tures, goes far ahead of public enterprise, but 
 in Its own sphere public enterprise will in the 
 loofct run tro far ahead of private undertakings. 
 ^vLen wetake up railroaiis wo again turn 
 Irom municioai problems to State aud fed- 
 eral problems, and woemer upon a discus- 
 sion which, while it is equally interesting, is 
 moreuimuultof ompreiu-nsioii, for the ope- 
 rations of this natural monopoly are vast and 
 lar-reaching. Not only aro the principles 
 somewhat hard to understand, but the cor- 
 rect practice among us is not at once diseern- 
 ibte, for it must be granted that federal 
 ownership and management of radroads is a 
 thmtr so far off that ii does not enter into 
 praciical politics today. 1 will, however, try 
 to make a few principles clear, and to lay 
 down certain practical rules which should 
 govern us in our dealings with railroads in 
 Day following article. 
 
X 
 
 i^- 
 
 COMri.TlTlUIH Ui' KAlIiKOADS. 
 
 ]Satural Monopolies Further Considered 
 by Prof. Kiciiard T. Ely, of Johns Hop- 
 kins University. 
 
 tWriiteu for the Baltimore Sun.l 
 
 ARTICLE XXII. 
 
 Some years since I was passlnsr a sum me 
 in a village In Western New Tork, Fredonia 
 by . The only railroad which the Fre- 
 
 (ion _juld then use in jjfoiDg to Buffalo, 
 
 about forty miles distant, was the Lake Shore 
 and Michi' iihern, and tho rates, three 
 
 cents mu ., e felt to bo excessive for so 
 
 old and thickly settled a country. There 
 ■was— as there still is— a Drovision in the char- 
 tor of tho old Lake Shore Road that fares 
 should bo reduced as soon as dividends 
 reached a certain point, which, of course, 
 ihey never have reached and never will 
 reach. How the people like to bo hum- 
 bucraredl But at this time a purallel railroad, 
 the "Nickel Plate." from Buffal o to C hicago, 
 was in process of construction, and the Fre- 
 donians wereenthusiastio over the prospect 
 of cheap tickets to Buffalo. I well remember 
 the exclamation of a lady on the 
 street cars, "Now we are going to have cheap 
 tickets to Buffalo," and I can see as if it had 
 happened' but yesterday the attorney for 
 the "Nickel Plate," to whom she was sneak- 
 ing, as he beaited assent from his benevolent 
 c»untenance. Any one who Unew anything 
 about the economies of railroads, who had 
 grasped even a few elementary facts about 
 natural monopolies, could have told the 
 people that they were doomed to disappoint- 
 ment in their hope of permanent relief from 
 the competition of a parallel road; but the 
 illusion had taken such a strong hold on them 
 that remonstrance was worse than useless. I 
 felt tempted to call in question their predic- 
 tions, but it is not pleasant to be called a 
 crank or "mere theorist," so I held my peace 
 and awaited developments. The road was 
 buiil and has now become the property, 
 to all intents and purposes, of tho Lake 
 Shorel Fares were never reduced. Single 
 tickets to Buffalo are just what they have 
 been for years, and round-trip tickets have 
 been raised five cents. What earthly gooi> 
 has been accomnlished by this parallel road? 
 Doubtless speculators and constructive com- 
 panies put money in their packets, but the 
 people are poorer on account of the enormous 
 waste of national resources. The fixed 
 charges of the Lake Shore have been in- 
 creasied, its capital invested has been aug- 
 mented, and a reduction, upon which the 
 Legislature could once have insisted, would 
 probably now bankrupt the road. 
 
 Another bubble hurst about the same time 
 and in the same State. I refer to the West 
 Shore Koad, which parallels the New York 
 Central and Hudson Uiver Railway. What 
 was not that going to accomplish? As a 
 matter of fact a railroad war did breakout, 
 and passenger ticicets fell to one-half tho 
 former rates for a short time. This was 
 war— not competition- and tho West Shore 
 was beaten, badly beaten, and lensed Its lines 
 for 499 years to tho Now York Central. Be- 
 fore this happened, however, passinger faros 
 had been restored to their old rates, and a 
 reduction, which would once have been prac- 
 ticable. Is now out of the question. 
 It is estimated that the money wasted by 
 
 < 
 
 amounts to two hundred millions of dollars. 
 Let tho reader reflect for a moment on what 
 this moans. It will be admittea that, taking 
 city and country together, comfortable homes 
 can bo constructed for an average of $1,000 
 each. Two hundred thousand houses oould 
 bo constructed for the sum wasted, and two 
 hundred thousand houses means homes for 
 one million peoplel I suppose It; is a very 
 moderate estimate to place the amount 
 wasted in the construction of useless rail- 
 roads at a thousand millions, which, 
 on the basis of our previous calculations, 
 would construct homes for five millions 
 of people. Butthi^ is probably altogether too 
 Small an estimate of even tho direct waste ro- 
 sulting.from the application of a faulty polit- 
 ical economy to praciical life. When the in- 
 direct losses are added, the result is something 
 astounding, tor the expense of a needless 
 number of trains and of what would other- 
 wise be an excessively large permanent force 
 of employes must be added. Of course, 
 nothing much better than guesswork is pos- 
 sible, but I believe that the total loss would 
 be suflScient to provide a greater portion of 
 the people of the iJnited States with homes. 
 
 These is something almost pathetic in the 
 amazement and disapp lintment of the gen- 
 eral public when the Nickel Plate and West 
 Shore were absorbed, and tho same thing %vas 
 seen in Baltimore last fall when the gas com- 
 panies agreed to consolidate and the Bilti- 
 more and Ohio telegraph lines were acquired 
 by the Western Union. Attempts to prevent 
 such consolidation had been made by legisla- 
 tion. A purchase of the West Shore would 
 have been illegal, but a lease for 499 
 years was not. The Baltimore and Ohio 
 was required to give bonds in Phila- 
 delphia, to be forfeited in case of failure 
 to compete. All this was as childish as 
 the anger of the public on account of these 
 various consolidations. Competition is 
 foreign to the nature of natural monopolies, 
 and all the laws of Congress and of State 
 Legislatures to force competition upon them 
 will be as fruitless in the future as they have 
 been in the past. As well legislate that the 
 water of all rivers shall flow up instead of 
 downl The ana-er of the public on account 
 of these consolidations has always reminded 
 me of the opposition of artisans and mechan- 
 ics to the introduction of new machinery. 
 Resistance is fruitless, and the only sensible 
 course is to recognize the inevitable and 
 malte the most of it; and much can 
 be made of it by the exercise of a 
 little common sense. Mr. Vanderbilt in ac- 
 quiring the West Shore was as truly effecting 
 an improvement In the processes of produc- 
 tion as tho one who introduces improved 
 machinery In manufactures, for he made It 
 thereby possible to perform certain services 
 for the public with a smaller expenditure of 
 labor and capital than would otherwise bo 
 possible. 
 
 Tho re are certain phenomena conne cted 
 with railroads in the United States which a t • 
 flrst aro likely to puzzle one who has ju3t be- 
 gun to doubt the efBcacy of competition in 
 the field of natural monooolles. These are, 
 for the most pare, intimately associated with 
 tho fact thtit our railroad development is 
 still incoraploto, and the consequencoa of 
 
various policies are, therofore, not so clearly 
 discernible as in an older country. Probably 
 Enjrland is the best country for an American 
 to study who desires to see the legitimate 
 effects of competition, for Enjfland started 
 out with our theory of private competition, 
 and under its influence two natural monopo- 
 lies— the telearraph and the railroad— w'ere 
 fully developed. I say developed, because 
 little remains to be done in either direction. 
 A few minor extensions may be made, and a 
 few branch roads constructed, but 
 the general features are complete. First, 
 just one word about the teletrraph policy of 
 England. Eupland tried to force competition, 
 and this was the result. Her telei?raph 
 system %ost her nearly as much as all 
 the other teleerraph systems of Europe put 
 tosreiher, for the e«tioiated cost of the Eupr- 
 lish telegraph Is 273.000.000 of frsftics, and of 
 all the other telegraphs of Europe put to- 
 cher only 2&5,ua),000 of francs. Probably 
 ..t' best work on EnwLsh railroads is that by 
 Prof. Gustav Cohn, and in this it is shown 
 that the ultimate effects of competition in 
 every case haye been higher charires. 
 
 It is said that rates have fallen in the 
 United States. This is true: bur has the cause 
 been competition? Competition has un- 
 doubted! v brou^tit about a reduction in 
 some cases sooner than it would otherwise 
 have happened, but as the country developed 
 .ji and became thickly populated it was natural 
 I forra'esto fall. Tbo principles which con- 
 trol monopoly charares are simple. A man 
 who ha?a complete monopoly will fix prices 
 at that point which will yield largest net 
 retun 9, and up to a certain point he will 
 steadily reduce charges, as he thereby in- 
 creases business and trains a larger total not 
 revenue. The most striking instance is 
 given by the history o£ the postofljoe 
 throughout the civilized world. A re- 
 duction of ov'T fifty per cent, in charges 
 hae ultimately lucrea>od net revenues. 
 Another Illustration is Riven by the Stand- 
 ard Oil monopoly. Newspaper organs of 
 monopoly tell us to admire thu mni^nanlmity 
 of the Standard Oil people, who have reduced 
 prices. This is a false statement. Prices 
 liave fallen in spite of their most strenuous 
 efforts to keep them up, and this a?aln illus- 
 (i-ates the importance of political economy as 
 //study for common schools. It is possible to 
 ihay such absurd things In regard to the price 
 'of oil simply on account of the dense popu- 
 lar ignorance about those forces which make 
 PBicos what they are. The production of oil 
 has increased enormously, and those amontr 
 my readers who are acquainted with theStand- 
 ard Oil men will probably have heard them 
 lament this. Now if they raised prices or 
 maintained them, they wouM be obliged to 
 keep their oil and waste it. They have 
 alwaysheldback vaatquantitiesof oil to main- 
 tain prici 8, and rumors reach us of a deter- 
 mined effort to diminish productioi}; but 
 nevertheless it has been necesj^ary to lower 
 prices time and time again to work off the 
 quantity on hand. Prices must be lowered in 
 order to increase demand for the commodity. 
 Apply this to railroads. They have enor- 
 mons fixed charges which are entirely inde- 
 pendent of the business they do, and the 
 greater their business the more active use 
 they make of their capital. In proportion as 
 a road is not used to its utmost capacity, its 
 capral is idle. Now,to helpbuild up the coun- 
 try and supply themselves with business, it 
 has been necessary for our railroads to re- 
 duce charges, otherwise they could not get 
 the business which they needed. A portion 
 of their business would simply not exist were 
 it not for lower charges than those of earlier 
 days. This tendency to lower pticas stops in 
 tit! case of private monopolies at precisely 
 that point where increased business Is not at- 
 tended with increased net profits. One point 
 to be observed is.tljis: Legislatures have a 
 control over rates? and could in many cases 
 l.uver them materially, had not the wastes 
 petition ^^xpenses of the ruil- 
 
 roaus. st3cond,it m ust Be remembered that th"e 
 number of even nominally competitive points 
 is and ever must remain sma;l. Accordmjf 
 to the chief of the bureau of aiatisiics, there 
 were January 1, 1887,3:3.694 railroad stations 
 in the United States, and of these only 3 778 
 were junction points, and many of these 
 junction points, t. e., places having more than 
 one road, were on railroads which had no 
 terminus in common. 
 
 More important is the real competition of 
 natural water routes, Which sometimes exists, 
 though there is a determined effort to crush 
 it out. Last summer, at Chautauqua. I wit- 
 nessed a typical instance. The Chautauqua 
 Lake Railroad bought every line of steamers 
 on the lake. Artificial waterways, namely, 
 canals, are also important where the people 
 of a State have had the good sense to retain 
 and improve them. This has happened In 
 New 1 ork fctate, which now proposes to spend 
 a million on the Erie canal. This Erie canal 
 has helped to make Now York the powerful 
 Empire State she is, and its maintenance wus 
 due to the democratic statesman, Horatio 
 Seymour. 
 
 A few years ago New York was bound hand 
 and foot like Maryland by a senseless, iron- 
 clad constitution, which threatened to hand 
 her over to the clutches of the corporations, 
 but Horatio Seymour aroused the people, 
 '^"t the State constitution amended and, 
 abolishing tolls, made the Erie canal a/ree 
 waterway. A further consideration of rail- 
 roads will lead us back to the subject of 
 federal financiering, after we have touched 
 1 upon several other Important topica. 
 
 The Pendins Problem in Maryland DIs 
 cussed by Prof. Richard T. Ely, of 
 JohnA Hopkins University. 
 
 LWrltten for the Baltimore Sun.l 
 
 ARTICLK XXIII. 
 
 I suppose nothing is more thoroughly a 
 problem of today with us in Maryland than 
 the fate of the Chesapeake and Ohio canal. 
 The subject has been muoh discussed, but 
 the discussion has not been of a nature to 
 inspire the patriot with enthusiasm for the 
 future of his country. There has been suoh 
 an absence of any clearly defined purpose, 
 of any manifestation of enlightened views in 
 regard to the various means of communica- 
 tion and transportation and their relations to 
 one another, such an utter lack of large and 
 generous statesmanship, that one is reminded 
 of the expression "peanut politics" rather 
 than of the activity of those two democratic 
 leaders, Horatio Seymour and the earlier and 
 still greater DeWitt Clinton, whose names 
 stand out so prominently in the history of 
 canals in the United States. There are a few 
 points in regard to canals in general which 
 should be carefully considered before action 
 Is taken. 
 
 It is commonly said that the day of canals 
 la past. Thi3 is only a little less rai ional than 
 to gay that the day of the ordinary highways 
 Is past, because we have the steam railroad. 
 Each means of communication has its own 
 use, and the office of each is not to displace 
 the others, but to supplement the others. 
 
 It was a misfortune for us that we began to 
 neglectour public roads when the era of rapid 
 railroad construction began, and in this one 
 respect at least It would have been a blessing 
 for the United States had the age of railroads 
 been somewhat delayed. A distinguished 
 American, who has recently passed some 
 time in Baltimore, said that our public roads 
 In the United States wore the poorest 
 which existed in any civilized country, so 
 far as he had observed, and he has traveled 
 extensively. The loss which this entails upon 
 
 1 
 
 
tJieasrioultural community and theTsottima- i 
 nity at lareo l3 onormous. It reqnirps more ? 
 horse power to pull a iriven load a jriven dls- ( 
 tance, and the waste resulilnor from the wear , 
 and tear of ivaffons and vehicles every year 
 must amount to many millions of dollars. It 
 was estimated some years afro that improved 
 - - mentsin Berlin would save owners of 
 s on nn avoraffe for each horse consid- 
 erabiv over $25. There are over ten millions 
 of horses In the United States, and if to be 
 quite within bounds we place the annual 
 Bavin? which would result from flrst-class 
 roads throujrhout the country at $10 
 per horse, it would amount to over 
 one hundred millions of dollars, which 
 is interest on two billions. This is probably 
 moderate, for in cities like Baltimore flrst- 
 class streets In which onlv proper street-oar 
 rails were allowed would save easily $35 per 
 horse, and the farmers will bear me out, I am 
 confldenr, when I say that in this part of the 
 United States, at least, «15 per horse is a very 
 low estimate for the annual saving which 
 would result from excellent roads. The 
 Bavinj? to vehicles and to harness must he 
 added to the saving of horseflesh, and when 
 It 18 remembered that with erood roads one 
 horse would often suffice where two are now 
 necessary, and always two where three are 
 nowrequired, it will be admitted that fSO a 
 horse is not an extravagant estimate for the 
 i country. However, contentintr ourselves 
 I with the low estimate of one hundred mil- 
 ^ lions per annum, which is equal to 
 f interest ou two billions of dollars, 
 it will be seen how serious our 
 loss in neglecting adequate provision for 
 highways. The great French reformer. Tur- 
 got, who did so much for the province of 
 which he was governor, elevating it from 
 the condition of one of the poorest to one of 
 the wealthiest provinces in France, turned 
 his attention first of all to the ordinary public 
 roads, and demonstrated by just such calcu- 
 lations the advantacre of first-class highways. 
 There can be no doubt that the excellent 
 roads he constructed were one important 
 {cause of the prosperity of Limoges. 
 - ' Now, as we have neglected public roads, so 
 we are also overlooking the importance of 
 canals, and the result is in many ways more 
 serious, for we can go to work the moment 
 we will and Improve our roads, but the value 
 of vast expenditures is forever lost by a falao 
 policy with respect to canals. England 
 allowed her canals to fall into the hands of 
 the railroad corporations, and It is now as 
 live a question there to know how to get them 
 "out of the clutches of the corporations" and 
 restore them to their proper uses, as with us 
 to know how to take certain great work^ 
 "out of politics," all of which proves that 
 1 there is no "royaUroad" to good admlnistra- 
 Itlon, and least of all by reducing govern- 
 ment to insignificance. However, Ii seems 
 Ifonerally to bo agreed in England that 
 the conclusion that the era of canaU had 
 gone was over-hasty, and Eocrland proposes 
 , row to spend millions on canals. France 
 finds Its its canals still useful, and they art) 
 able to carry largo classes of freight for two- 
 thirds what it coats by rail. Germany, al- 
 ( thouffh the various German States own the 
 railroad, contemplates extensive Improve- 
 meutft^ln canals. Why? B oauso what wo 
 
 want in our nationni industrial life is lo ac- 
 complish our ends with the smallest expendi- 
 ture of labor and capital, and this purpose 
 is attained by giving the canals a place in the 
 various means of communication and trans- 
 portation. 
 
 American States offer ua valuable testimony 
 from experience as well as these foreign 
 countries. It is instructive even now to go 
 back to the construction of the Erie canal- 
 finished In J82o— and examine the circum- 
 stances under which the undertaking was 
 brought to a successful termination. 
 
 Politicians are of two classes— those who 
 subserve special interests, and thi^ renew 
 day by day their life of deception, fraud and 
 perjury, for In their oath of ofilcetbey have 
 called Almighty God to witness that they 
 will not do that very thing— and those whoso 
 acts substrintiate their professions of dev.o-^ 
 tion to general and public interests. It is 
 rather discouraging that under the influende 
 of a high protective tariff and corporations 
 imanaifing natural monopolies, politicians 
 of the former class have gained such 
 an ascendency that all our various 
 governments have become so depraved 
 that the term "government by spe- 
 cial interests" la applicable to them. 
 DeWitt Clinton, however, was a man who 
 was always askine himself. What can I do to 
 promote the general welfare, and he ac- 
 quired a habit of looking at measures from 
 that lar^e and patriotic standpoint. Thus it 
 was that he pushed through his canal 
 project against great opposition. And what 
 was the nature of this opposition? Such as 
 always attends public improvements. It 
 •was a "visionary" scheme, as a public under- 
 taking it could not succeed, and the like, nnd 
 it was called "Clinton's Bi? Ditch." How- 
 ever, it was finished, and if our politicians 
 could be induced to give somo attention to 
 DaWitt Clinton's life and writings, it would 
 be most fortunate. This Erie canal 
 has probably done more for New 
 York State and city than any other one 
 public enterprise, and today it is a powerful 
 factot in determining freight rates all over 
 the Union. It was in 1883 that the canal was 
 imperiled by an iron-clad State constitution, 
 and then it was that Horatio Seymour came 
 to the rescue and brought about changes 
 making it a free water-way. Asainst what 
 senseless opposition did he not have to con- 
 tend also? Perhaps not so much » senseless 
 ODposition, however, for these vei j' railroads 
 which claim that the day of canals Is past 
 some way seemed to be very anxious to kill 
 this useless Institution, as they called it. The 
 question naturally arises, li" canals are of no 
 use why do railroads dread them and goto 
 the expense of buying them and filling them 
 up? Why not let them die a natural death? 
 
 But all the corporations in the world could 
 not govern the people were it not for their 
 i own apathy, indifference, narrowness, selflsh- 
 I ness and apparent desire to be saddled, 
 ^ bridled and ridden. Our fate rests with our- 
 selves. There was an attempt to array the 
 j people of one part of the State against an- 
 lother. Especially did opposition manifest 
 Itself in those counties not adjacent to the 
 canal, and the railroad organs suddenly dis- 
 played an unwonted affection for the poor 
 farmers wh^ —o—. to be 'taxed to support. a 
 
caiml in whioH they had'n^Ihteresta; Hora- 
 tio Seymour demonstrated rhat the canal had 
 so increased ttio taxable baeia of the State 
 that the tax rate was lower than would oth- 
 erwise bo possible. All had thus trained, and 
 no one lost a penny. Ho also rebuked the 
 petty spirit which could imagine that the 
 intereeta of all parts of the State 
 wero not harmonious. "The spirit which 
 prompts opposition to the amendment," said 
 Seymour, '-is best expressed by words which 
 import that if tbe counties which desire free 
 cana'iS, wish to have them made so. let tbem 
 ,pay the cost. If this f eelimr Is made mani- 
 fest, to what end will it lead? It will," he 
 said in return, if such counties wish to 
 have their schools supported, 'let them pay 
 the costs;' If ihey desire that their members 
 of the Lefirislature or their judiciary should 
 receive their salaries let them pay the 
 costsi This will throw upon such coun- 
 ties a great sum of taxation, many 
 times more in amount than tbeir share ot 
 makinpr free canals. I deplore a result which 
 would go 80 far to impair the honor and in- 
 teresti of New York. I should regret the 
 defeat of the amendment, because if it is 
 adopted it will lessen taxation upon all sec- 
 tions and pursuits. Canals are the routes 
 most needed by our farmers and mechanics. 
 Every dollar of tax or tolls lilted off of their 
 commerce adds to the value of their pro- 
 ducts and lessons the charges they have to 
 pay to get them to market." 
 _ Hon. O. B. Potter, of Nevy_ York, "who_ Is 
 now IntereltlnBr himsel f In favor or the nsIF 
 lion-dollar appropriation for the Improve- 
 ment of the Erie canal, said in an argument 
 before the joint committee of the Senate and 
 Assembly in February 2. 1886. "However im- 
 portant and beneficial the railways, now or 
 hereafter, they.will never supersede the ne- 
 cessity for or the usefulness of these canals," 
 and speaking of projects for, canals in other 
 States he said: "There is not one of them 
 that will not repay the State in which it is 
 located, and of the; wealth of {which, when 
 done. It forms a part mar.yfold." 
 
 With what truth it is said that canals pan 
 do nothing is seen in the fact that the canals 
 alone brought to New York city last May, 
 June and July (to the 23i) over two millions 
 more bushels of grain than the total amount 
 received ai:. Boston, Baltimore and Philadel- 
 phia. Horatio Seymour, Jr., in a pamphlet 
 entitled "The Canal Age," and dated March 
 33, 1886, undertakes to show that railroads 
 cannot transport so cheaply as canals, 
 
 A few facts must be borne in mind. One ts 
 the day for canals owned by private corpor- 
 ations has passed, and that for two reasons. 
 The first Is that the gain of canals is of a pub- 
 lic nature, rather than individual. There 
 always have been public works which would 
 not remunerate an individual, and yet are of 
 the greatest advantage to the people at large. 
 The streets of a city like Baltimore are an 
 example. Should we try to derive a direct 
 revenue from our streets we would ruin the 
 city and grass would grow on Baltimore and 
 Charles streets. These undertakings, which 
 are only indirectly remunerative, are often 
 most profit able. The second is that private 
 parties sellout to the railroads, and all agree- 
 ments and contracts to do otherwise are not 
 worth the paper on which they are written. 
 
 Should the C. and O. be retained alFhope ot" 
 direct profit ought to be abandoned. It haS 
 been suggested that the canal be extended to 
 Baltimore. Whether this is wise or not I do not 
 know. It would require the opinion of those 
 better acquainted with the cost of oonstruc- 
 tloa and with the advantages of cheap com- 
 munication to Washington and then by canal 
 to the coal regions to decide. However, the 
 advantage to the State in the canal can only 
 be of an indirect nature in extending its busi- 
 ness and in reducing the prices of commodities 
 to consumers. It must be expected to keep it 
 up at an annual outlay, as other public enter- 
 prises are maintained.This was what NewYork 
 deliberately resolved to do. Inamass-meetinar 
 in Cooper Union, in New York city, it was 
 was said, "We have a'oew school of narrow- 
 ness that wants to choke the canals because 
 they do not earn enough to support them- 
 selves, but they earn enoueh to support or 
 help support the millions of people that 
 live in this State." It is noteworthy 
 thHt Pennsylvanians regret their short- 
 sighted policy in selling their canals. 
 The Philadelphia Record said last year 
 on this subject:" While other States 
 were disposing of their public works and 
 artiflclal waterways. New York retained 
 possession of the Erie Canal. * ♦ Every 
 wage-worker and small consumer, East and 
 West, is a crainer by It. * * * The State 
 of Pennsylvania transferred its public works 
 to a railroad corporation thirty-eight years 
 ai?o, and today nearly all thy canals in the 
 Stat? are useless. The Pennsylvania Rail- 
 road applies to the Legislature every session 
 to abandon an additional section of the canal 
 system, which it obtained under a pledge to 
 maintain forever." 
 
 It is to be noticed further that It seems to 
 be awepted that the more extensive a canal 
 system is the greater its relative advantacres. 
 A email strip of canal by itself may be worth 
 little, but when part of a larger system it 
 may be invaluable. Further, it is the opinion 
 of those best qualified to speak, that no fed- 
 eral assistance for the Erie canal is desired, 
 j because that would Involve federal Interfer- 
 ence. The Union for the Improvement of 
 Canal?! In New York Is strongly opposed to 
 federal aid. 
 
 Finally, nothing can be gAned by a tempo- 
 rary and uncertain policy with reference to 
 canals. It is proposed to give the Chesapeake 
 and Ohio a trial for two years still! Can 
 anything more futile be imagined? It cannot 
 be utilized until people know what to expect. 
 Who will build new boats and encrage In 
 canal business while this uncertainty lasts? 
 The experience of Ohio is Instructive. As 
 soon as it was decided. to retain the canals as 
 the property of the State basiness began to 
 improve. The Ohio board of public works 
 reported a gain of over $30,000 in the income 
 from canals for 1886, and that was attributed 
 to the hope that the canals were not to "be 
 abandoned or allowed to fall into decay and 
 disuse." The Governor of Ohio says: "They 
 constitute a valuable public property. The 
 State should not dispose of any part of | 
 
 them." 
 The "two-year trial" scheme is predestined j 
 
 to failure, and the canal mightas well be sold 
 at once. If that Is not already clear, it I.s to 
 be hoped that the quotation f r«m Horatio Sey- 
 
 / 
 
mour about the* Erfe ^ ... ...„ w fit bo 
 
 auflacieot* "This hostile and monacin? atti- 
 tude of our State toward canals and boatmen 
 prevents the bulldiner of vessels and their 
 use. It has lessened the receipts for tolls, 
 fur men will not ea(ras?o In a business where 
 they are liable to be ruined by an accident 
 or by the design* of rich competitors. These 
 will find it profltable to carry for losinnr rates 
 foroneyear If tboy can destroy forever the 
 boatmen or the canals which keeodown their 
 own rates for carryinpr the products of our 
 own people. When they have destroyed 
 their competition they can ever after put up 
 their own chars-es to suit their own interest." 
 
 THE FUTURE OF BALTIMORE. 
 
 The Forces Productive of Municipal 
 Greatness Discussed by Prof. Riclxard T. 
 Ely, of Johns Hopkins University. 
 
 rWritton for the Baltimore Sun.l 
 ARTICLE XXIV. 
 
 The articles which have appeared in The 
 Sun on openings in Baltimore for business 
 men have very naturally attracted a good 
 deal of attention and awakened a spirit of 
 hopefulness and enterprise. Who can set 
 any limit to the possible future develop- 
 ments of our favored city? President Oilman, 
 in his address before the Johns Hopkins 
 University on the 23d Instant, showed what 
 had been done in a very short time to elevate 
 Baltimore in all those things which go to 
 make up a hisrh civilization, and hinted at a 
 possible future growth of the city in remind- 
 ing the audience that London, with all Its 
 millions of people, was at the beginning of 
 the century but a little larger than Baltimore 
 at the present time. It has always been a 
 favorite theory of mine that in Baltimore 
 there are opportunities for the unfolding of a 
 fuller and richer civilization than tne new 
 world has yet seen;not only that.but that there 
 are opportunities here which exist nowhere 
 else. This opinion has not been carelessly 
 formed, but is the result of careful reflection 
 upon the nature of the various elements 
 which are working together to promote the 
 advancement of Baltimore. Baltimore is situ- 
 ated on the border line between North and 
 South, and here are brought together the 
 peculiar excellences of each section, and 
 here they will blond together indistinguish- 
 ably In our municipal life. The charm of 
 Southern social life, the high social culture 
 which distinguishes the South, will be sup- 
 plemented by the Indomitable push and 
 energy of the hardy sons of New England. 
 Music, paintinc", literature, fand learning in 
 ail Its various branches, are progressing 
 favorably, while the economic basis of a high 
 modern civilization is found In an expand- 
 ing Industrial life, as seen in our growing 
 commerce and enlargini; manufactures. 
 
 One thing to be borne in mind In refleotions 
 upon our future is that modern cities are to 
 an unprecedented extent artificial products, 
 the work of men's genius and energy. For- 
 merly nature decided wh^re a great city could 
 grow up, and a hitfh civilization was possible 
 only on the seacoast or on the banks of great 
 river?. Now man has subjugated nature to 
 such an extent that bo is, comparatively 
 speaking, independent of her whim and 
 caprice. If natural water-ways fail, ho may 
 construct artificial wator-ways,and even with- 
 out the aid of navigation at all a city may 
 
 spring up In the heart ofacbntioentT Beirlin, 
 nearly the size of New York, is in the centre 
 of a great open plain on the continent of 
 Europe, and may bo regarded as a work of 
 art. Only by canals can navigable rivers be 
 reached, while the modern iron highway, the 
 railroad, still more an artificial product, is a 
 far more important element in developing 
 Berlin, which has become an important rail- 
 road centre. It is the will of man which has 
 made Berlin more important than the sea- 
 ports Bremen and Hamburg. 
 
 Perhaps a better illustration can be foutid 
 in two small cities in Western ivow York- 
 Dunkirk and Jamestown. Dunkirk is a port 
 on Lake Erie, and is advantageously situated 
 in a fruitful plain, extending along the shores 
 of the lake. Jamestown, on tho other hand, 
 is O'j the top of the Chautauqua hills, and its 
 onlv naviirable body of water is Chautauqua 
 lake, scarcely more than a great pond. The 
 next most important place on the lake is 
 Mayvilie, a village with perhaps ten or fif- 
 teen hundred inhabitants. Who would sup- 
 pose that Jamestown would leave Dunkirk, 
 its rival, and otice its superior, far in the rear 
 in the race for supremacy in Chautauqua 
 county? Yet such has been the case, 
 and Jamestown will probably soon be 
 twice the size of Dunkirk. Now, more 
 or less acquainted with both cities, I am 
 unable to find any other explanation 
 for this than tho greater energy and en- 
 terprise of the people of Jamestown. James- 
 town is, in other words, an artificial product. 
 Two of the chief disadvantaijes of Jamestown 
 which the people see— tor they have tried to 
 correct them, and have been defeated by con- 
 stitutional quibbles— are their dependence on 
 private gas and water companies, for in these 
 respects they allowed things to take their own 
 course, and did not keep in their own hands 
 control of two of the essential elements of 
 progress. 
 
 The application is suflScieDtly obvious. Na- 
 ture has blessed us and done more for us than 
 
 for some other great cities. These advan- 
 
 tatres are not to be despised, but they cannot 
 
 be relied upon. It rests with us to say what 
 
 the future shall be. If we, the people of Bal- 
 
 timc^re, WILL it, we can make Baltimore as 
 
 big as London. Not only that; we can make 
 
 Baltimore a happier, bettor and more truly 
 
 civilized city than London today with all its 
 
 squalor and misery. 
 
 When the question Is asked. How shall we 
 outstrip our rivals In true trroatness? it will 
 be at once seen that all the previous papers 
 In this series have a bearing on tho answer. 
 It is now proposed to stop and apply some of 
 the principles which have already been de- 
 veloped. 
 
 Those humnn forces which produce na- 
 tional or municipal greatness may be divided 
 into two classes. The first are individual; 
 the second may be crtlled social. The indi- 
 vidual forces are so obvious and have been 
 80 often elaborated in an age characterized by 
 excessive individualism that it is not worih 
 while to dwojl long on them. The Importance 
 to each citizen and to the community of in- 
 dividual temperance, thrift, intelligence and 
 energy cannot be overestimated. Nothing 
 can be done without Individual excel- 
 lence. A mistake Is otily made when it 
 is •supposed that individual superiority 
 alone Is suflQclent. The Individual by 
 himself is powerless. Wealth is only 
 
 h^ 
 
possible in 4 oommunit,, „ud m 
 this community no (one livo3 for' himself 
 alone. Can art flourish where hut one loves 
 art? On the contrary, the artist must be 
 stimulated by a public which appreciates and 
 encouraues art, and, other things belntr 
 equal, the more widely diffused the love and 
 knowleaee of arc among- the people the 
 higher the excellence wnich artists will at- 
 tain. What hope is there Tor architecture 
 among a people who prefer the cheap and 
 R-audy to the eternal beauty of sublime and 
 simple creations? What hope for music 
 amonar those who turn away from the great -^ 
 masters to applaud the rattlinir waitz of a 
 fifth-class composer? What hope for litera- 
 ture where there are none to prefer Gaorse 
 Elior, Thackeray and Dickens to Ouida, Miss 
 Braddon and Huj?h Conway? Ic "Is readily 
 admitted by all who know what they are 
 talking: about that iu all these pursuits the 
 social atmosphere is of vital Importance. 
 It is likewise in business. What does the-^ 
 enerp-y of a merchant amount to if there are 
 none who have the means to purchase his 
 commodities? Can he develop a commerce 
 by himself alone and unaided? But how shall 
 would-be customers provide themselves with 
 means for lar^e purchases without energy on 
 their part? The energy of the merchant 
 must then be supplemented by the energy of 
 his fellows if he would develop any com- 
 merce. Thus is he dependent on others. 
 "None of us llveth to himself." 
 
 Take a manufacturer, let us say, for ex- 
 ample, of shoes. It will do him no R-ood to 
 produce shoes unless others havs valuable 
 things to fifive in exchansre. The manufac- 
 turer desires a vast market, but this is im- 
 possible unless the masses are ambitious and 
 industrious. They must have wants, and 
 energy must accompany these wants. A 
 laboring populace poor and indolent and con- 
 tented with little Will make few purchases, 
 for they will not have valuable tbintfs to offer 
 in exohanee. Thus the manufacturer can 
 only hope to thrive in a prosperous commu- 
 nity. The larger the earnings of the 
 artisan and mechanic the more can he 
 extend his business with advantage. But 
 his dependence does not cease here. The 
 quality of the labor whlcn ho employs is a 
 chief factor in success. Labor of hand and 
 brain Is the most important element in pro- 
 duction, and a highly qualifled and moral 
 population Is an indispensable condition 
 of permanent national and municipal 
 prosperity. The more closely a community 
 follows Christian principles and its members 
 concern themselves with the welfare of 
 others, the more generally will its prosoerity 
 be diffused and the more rapid will be its ad- 
 vance in wealth. "Am I my brother's 
 keeper?" If in any nation at any time there 
 Is a general inclination to answer that ques- 
 tion in the negative, that nation has already 
 entered upon a course which leads to anarchy 
 and barbarism. 
 
 There are, however, some more special and 
 particular applications of these principles to 
 the problems of municipal life. There are 
 certain fundamental conditions of our future 
 prosperity which no Individual as such can 
 supply, but which must be provided by us In 
 our orsanic capacity as a city and as an im- 
 portant part of a commonwealth, or not at 
 all. These will be considered In a following 
 article. 
 
 PEOBLEMS OF TODAl. 
 
 THE FUTURE OF BALTIMORE. 
 
 BAD TAXES BLIGHT A CITY'S GROWTH. 
 
 Frof. Ely Urees That Business Ought Not 
 to toe Taxed. 
 
 [Written for the Baltimore Sun.l 
 
 ARTICLE XXV. 
 
 Taxes are levied to enable our State and 
 city srovernments to perform their various 
 important functions, and the burden which 
 they imiwse upon us is by no means a light 
 one. The total State and city tax rate 
 for the residents of Baltimore is $1 18M 
 on the $100 of property. This does 
 not appear to be so hitrh a rate of 
 taxation as it really is. Taxes are paid out of 
 Income, and the important question is to 
 know what ratio exists between taxation of 
 property and its income. When we reduce 
 our rate of $1 78,^ 'O a percentacre on income 
 it will be found that it is often equivalent to 
 an income lax varying from 15 to 40 percent., 
 a tax rate almost unknown iu European 
 countries. 
 
 Taxes are one of the chief elements in de- 
 terminlncr price in nearly all branches of busi- 
 ness which are not mooopoiie-:, to which 
 totally different principles apply. The pro- 
 Qortion of expenditure which is caused by 
 taxation is larger than is generally realized, 
 oven by business men, for they do not stop to 
 reflect upon the effect of taxes on commodi- 
 ties, and other taxes, which are shifted from 
 the shoulders of the one who originally pays 
 them to the shoulders of somebo'ly else. We 
 have, then. In taxes one of those fundamental 
 conditions of industrial life which are beyond 
 the control of the individual as such. 
 
 Inconsiderate people who know nothing 
 about the nature of business talk as if it 
 made little difference how taxes were laid. 
 To them the problem appears very simple. 
 Tl jre is so much money to be raised, and let 
 us, say they, collect it indiscriminately in 
 proDortion to the actual selling value of 
 their property. Inasmuch as there is just so 
 much money and no more to be paid to the 
 public treasury, it seems to them to make 
 very little difference how it gets there, pro- 
 vided each one bears what is assumed to be 
 his fair share. This is why our antiquated 
 system of taxation is still maintained in 
 Maryland. 
 
 We live in an age of sharp competition— 
 always excludinjj the growing number of 
 monopolies— and the addition of a small 
 burden to the loa J already carried by a man 
 ensrajred in this competitive strugtrle may 
 bear him down completely, while the les- 
 sening of his load may enable him to go 
 ahead and outstrip others. A small percent- 
 aire on the expenses of business may make all 
 the difference to the business community 
 between prosperity and ruin. Now, nothing 
 can be further from the truth than the state- 
 ment that it makes no difference how the 
 taxes are laid, since they must be laid some 
 way. A man who acts upon that principle is 
 like a man who should apply the principles 
 and methods of blacksmithing to watch- 
 makinar. The machinery of taxation ought 
 to be adjusted to the actual life of modern 
 jcojmmunitiysjvlth the utmost delicacy by 
 
H 
 
 d both 083 and the 
 
 principles of taxation. This ia another reason 
 why active members of the community 
 should (Jive careful att Mition to economic 
 Paud social problems. Their success in so far 
 as it depends upon such a matter as taxation 
 ia conditional upon what others do. as well as 
 upon what they themselvea do, aometimes 
 even more than upon what they themselves 
 do; and Jf I were called qpon to name the 
 most serious mistake ot American business 
 men, I should say It was the failure to jflve 
 sufficient attention to the social forces which 
 produce prosperity. 
 
 There are certain things which can neither 
 leave us nor come to us. City lots will serve 
 as an example. It is manifest that taxes upon 
 city lots will not injure business. There is a 
 certain amount of land accessible, neither 
 more nor less, and no taxation will alter this 
 circumstance. City lots in New York are not 
 compeiinjf with oily lots In Baltimore. More 
 than this is true. If city lots are taxed on 
 all that ihey are worth— up to the last dollar 
 of their sellin? value, as they should be by 
 our law as It stands— Instead of discoura^ini? 
 enterprise it will encourage it; for it will 
 make it harder for speculators to withhold 
 the land from those who wish to improve it. 
 Let us ta^e shinplog as an illustration of 
 a business which may come to us or which 
 may leave us. Elsewhere, shlppinjf Is either 
 not taxed at all or is taxed only on earninKs, 
 and shippintr conducted by foreigners is 
 often positively subsidized. Shipping may 
 either leave this port or other ports, and it 
 ■will be determined by relative advantages. 
 Can, then, anything more absurd be imasrined 
 than to tax a dwindling shipping at a high 
 rate, as it is now actually proposed to do in 
 the Maryland Legislature? Will our ship- 
 ping be improved If ships and other vessels 
 are taxed on their full selling value? Can it 
 be doubted that if a burden is laid upon ship-^ 
 ping the business of our port will continue 
 to decline? If so, who will derive the benefit 
 from the attempt to apply a cast-Iron system 
 of taxation? Oiher taxpayers will lose, be- 
 cause they will derive no relief from an un- 
 successful attempt to lay taxes, and they 
 will be poorer on account of the loss of busi- 
 ness which mieht have been theirs. 
 
 A larere part of our manufacturing and 
 mercantile business is of a similar nature, 
 and It can be completely prostrated by a bad 
 policy of taxation on our part. Retail mer- 
 chants and dealers in manufactured articles 
 will not come to Baltimore If they can do 
 much better elsewhere, and they will be able 
 to do better elsewhere if the necessary ex- 
 penses of business are heavier here than in 
 other places. It is consequently to our interest 
 to render these necessary expenses of active 
 business hs smnll as possible, tor in that way 
 prices will bo lowered and business attracted. 
 We render these expenses smaller when we 
 place a light burden of taxation on business. 
 Who loses thereby? No one, because in- 
 creased competition lowers prices and all 
 consumers get the advantage of cheaper 
 prices. The problem is to extend the busi- 
 ness of Baltimore: and to extend this busi- 
 ness Implies lower prices. This is sufficiently 
 simple. As business extends, the demand for 
 _4 real estate increases, and real estaio owners 
 i If certainly do nut lose. The differ- 
 Hence between real estate and business, 
 i"wiih respect to taste s, may be brought 
 
 } 
 
 out by - ...- - , which seems paradoxi- 
 cal until one has reflected upon it. If all taxa- 
 tion should be removed today in Baltimore 
 from real estate and placed on active busi- 
 ness, particularly on commerce and manu- 
 factures, it would cause a sudden and unpre- 
 cedented fall in real estate. Business would 
 be crippled and so many would leave Balti- 
 more that owners of houses and lots would 
 almost be glad to give them away. Should all 
 taxes be removed from actlce business and 
 ,pl8iced on real estate, on the other hand, it is 
 I doubtful whether it would produce any per- 
 imanent depreciation of real estate. The 
 measure might Indeed so improve business as 
 to bring about higher prices for real estate, 
 and Increased activity in building. The ex- 
 perience of New Tork city goes to confirm 
 this, for there business, althoujrh legally 
 subject to taxation. Is practically well-nigh 
 exempt, and real estate nowhere sells for so 
 high a price. It Is to be noticed, further, that 
 there is a deliberate, systematic attempt on 
 the part of New York to draw business 
 away from Baliimoreby lower taxes. The 
 mayor of New York practically re- 
 fuses to trv to enforce the laws as he finds 
 them— for there they have the same anti- 
 quated laws which we have here— and urges 
 their rei)eal on the ground that they are the 
 outcome of impracticable theories and ham- 
 per business. He ursres the repeal of all ex- 
 isting taxes on busitiess, in order to swell the 
 commerce of New York, It is such consid- 
 erations as these which led a writer on taxa- 
 tion to frame a practical rule which he wished 
 to "have cut into the stone at the Capitol (in 
 large letters and have them gilded) in the 
 Senate chamber, the hall of the House of 
 Kepresentatlves, and in the Governor's office." 
 The rule reads as follows: *'Never tax anything 
 that tvovld b4 of value to your State^ that could 
 and would run away, or that could and would 
 come to you." 
 
 While this rule may be too sweeping, it is 
 worthy of careful consideration. The more 
 one reflects upon the nature and the con- 
 •equencea of taxation, the more profoundly 
 one is impreseed with its far-reaching impor- 
 tance. Taxation may create monopolies, or it 
 may prevent them; it may diffuse wealth, or 
 it may concentrate it; it mar promote liberty 
 and equality of rights, or it may tend to the 
 establishment of tyranny and despotism; It 
 may be used to brlnar ab )Ut reforms in indus- 
 trial society, or it may tie so laid as to aggre- 
 gate existing grievances and foster dissension 
 and claiS-hate; taxation may be so contrived 
 by the skillful hand as to give free scone to 
 every opportunity for the creation of wealth 
 and the advancement of all true' Interests of 
 the clty,or It may be s^i shaped by Ignoramuses 
 as to place a dead 'velght on Baltimore la the 
 race for municipal supremacy on the Atlantic 
 coast. 
 
 The single business man, as an individual, 
 is helpless in this matter. It rests with us, 
 oiti»t«i8 ot Baltimore and Maryland, to estab- 
 lish tho«e social conditions wolch will allow 
 every man the fullest and freest opportunity 
 to do his best to m. ke Baltimore what we 
 wish Baltimore to become. Shall wo wait 
 until all our neighboring cities move in this 
 matter, and lay behind with our abominable 
 and barbarous system of business licenses 
 and personal property taxes, or shall we be 
 the first to strike out boldly in the establish- 
 I mentof a_railonal system of taxation, a :d 
 
J 
 
 thus have the advantaire over others of a 
 start In I he race? It ia a cheerinar sign that 
 our husiness men have moved in this matter, 
 and passed resolutions petltloniDe the Leg-isf 
 lature to submit a constitutioDal amendment; 
 to the people makipg possible a new system 
 
 of taxation. The move liaa been maae none 
 too soon, and it should be followed up by 
 vicorous action. 
 
 Other social forces which produce munici- 
 P'l greatness must be reserved for future 
 contideration. 
 
 S£IX FRANCHISES AT AUCTION. 
 
 Pay the Taxes— 
 
 to Discuss tbe 
 
 Make the Monopolies 
 Prof. Kly Continues 
 Future of Baltimore. 
 
 I Written for the Baltimore Sun.l 
 
 ARTICLE XXVI. 
 
 The importance of a ritrht placing of taxes 
 has been considered. The amount of taxes 
 raised Is obviously an essential element in 
 determining the future of a city. Our munici- 
 pal taxes have become truly exorbitant. 
 Much as we talk about them, few realize it. 
 In my last article it was sugarested that the 
 burden misht perhaps be better appreciated if 
 our proporty tax were translated into a tax on I 
 the income which property yields. Compara- 
 tive statistics help us also to understand 
 how great the load of taxation in American 
 cities. Consider this fact, which I discovernd 
 a few years ago in comparing the budgets of 
 New York and Herlin. The interest on the 
 debt of C^ow York was then nearly sufficient 
 to defray all the expenses of Berlin, nearly as 
 larjre a city and one more dis^dvaatugeou=ly 
 situated with respect to sanitation and keep- 
 ing the etreeTs clean. Berlin is governed, it 
 mar be remarked, by those who make it their 
 business to understand tbe principles of 
 municipal administration; that is, so-called 
 theonstsi It is said to be the best governed 
 city in the world, and so may not be a fair 
 example; but this entire article could be filled 
 up with statistics to show bow undue a bur- 
 denwe are susiaining in taxation in Ameri- 
 can cities. 
 
 It is the commonest thing In the world for 
 worthy citizens to write to their daily papers 
 exhorting the city fathers to keep down ex- 
 penses and reduce tbe tax rate, and the 
 newspapers from rime to time come out with 
 head lines like this, **lletrenohment a Neces- 
 sity.*' Yet what good does It do? Expendi- 
 tures continue to swell in our cities relatively 
 faster than in our Stat 'a or at Washington. 
 While State expenditures double, municipal 
 expenditures Increase fourfold or more. 
 Ohio may serve as an illustration. The ex- 
 penses of the State increased about forty-six 
 times in sixty yeras, and the local expenses 
 one hundred times. T have yet to find one 
 exception to this treneral rule that municipal 
 expenditures increase faster than any other; 
 perhaps I should say local expenditures, for 
 I mean to include villages and other local 
 political units as well as great cities. 
 
 It is well to say "reduce taxes," but it is 
 said to no purnose unless It can be shown 
 HOW taxes are to be reduced. Let us clear 
 the (rround— not by theorizing, but by exam- 
 , intng a few facts which can be established 
 beyond controversy. 
 It is a general supposition that the increase 
 
 . .i. VUM S. ^M . I I " l|li m | l l| 
 
 In the burden of taxa^ 
 
 ^o^. 
 
 io3 13 aui 
 
 to corruption. This is doubtless a partial ex- 
 planation, but very incomplete and imper- 
 fect. There are two European countries at 
 least where municipal admi'jlstration Is above 
 reproach In respect to integrity of officials, 
 and these are England and Germany, whereas 
 it may be said trenerally that in Europe mu- 
 nicipal corruption is hardly one of the prob- 
 lems of the day. Nevertheless, it is true that 
 the expenditures of Euronean cities have in- 
 creased in recent years with greater relative 
 rapidity than those of American cities. This 
 has been satisfactorily demonstrated by Dr. 
 Simon N. Patten, of Illinois, In a monograph 
 on the finances of American States and cities. 
 This must not be misunderstood. The 
 statement is not that the expenditures 
 are as large as ours, but that the 
 rate of increase for ten or fifteen 
 years at least has been more rapid. This 
 also is diflferent from saying that the rate of 
 taxation has increased correspondingly, for 
 there are many other possible sources of 
 revenue than taxes. Dr. Patten has also 
 shown some other interesting facts bearing 
 on this problem. One is that democracy is 
 not the cause of increased expenditures, as 
 superficial observers so often suppose. Eu- 
 ropean cities generally have at least some 
 restrictions on the rlarht of suflfrage, yet 
 their expenditures have Increased more rap- 
 idly than our own. But there are American 
 facts of still more striking character. It is 
 said that universal suffrage eives a vote to 
 those who have no economic Interests at 
 stake in the community, and that they con- 
 sequently vote away other people's money 
 with reckless prodicality. Dr. Patten has 
 shown, however, that In small Northern 
 towns, where the vast majority of voters are 
 taxpayers, the tax rates have increased more 
 rapidly than in the large cities; further, he 
 has given evidence to show that real estate 
 speculators, by urging on untimely improve- 
 ments, like sewers running into the coun- 
 try—as recently happened in Buffalo— have 
 done more to raise taxes than tbe ignorant 
 voter. The object of the real estate specu- 
 lators Is, of course, to keep a boom alive. 
 Now. these are no fanciful theories; they are 
 hard facts. What do they show? They show 
 at least this: The general public has not gone 
 deep enousrh in its attempts to explain the 
 growing burden of taxation. 
 
 The true causes for the growth of munioi- 
 pal expenditures are after all not difficult to 
 discover. The functions of the local political 
 unit have been Increasing more rapidly than 
 those of either State governments or our fed- 
 eral governmnet. We hear a great deal about 
 centralization. The truth is that, relatively 
 speakinsr, we live in an age of decentraliza- 
 tion. Our local political units are gaining in 
 importance fa8ter than our sovereign States 
 or our sovereign federal government. I do not 
 say that there is no tendency in our central 
 governments to extend their functions. I say 
 merely that relatively they do not hold their 
 own in importance. 
 
 Sanitation and public schools are two great 
 items in the budgets of cities. Light and 
 water are two more, and in all these respects 
 what satisfied us once is no longer tolerable. 
 Publicparks. cost hundreds of thousands and 
 even millions in cities* New York city, for 
 
Mb 
 
 example, oroDOsea to spend one million dol- 
 lars a year to provide small parks In the most 
 crowded purtlous of the metropolis, a meas- 
 ure demanded on sanitary no less than 
 humanitarian flrrounds. Public libraries are 
 maintained byaprowlnar number of cities, 
 and the expense of maintainlnsr these is not In- 
 sl^nifloant. Boston spent over $160,001) on 
 her public library in a singlo year recently. 
 Public baths are among iho hundred 
 and one other Items which misrht be 
 mentlone<3. Go through the tyhole list 
 of thinifS for ^hich the modern oiiy 
 spends money and it will be found that 
 many items are quite new, while the ex- 
 penditures forne rly ail have Increased enor- 
 mously. We have now discovered the chief 
 cause of Increased municipal expenditures. 
 Extravai?aniJe and dishoneaty have after all 
 been minor causes, and their Importance has 
 been unduly magnified. Many an American 
 municipality Is manasred without fraud, and 
 in only a few firreat cities has the dishonesty 
 been what the people have imagined. It has 
 been bad enousrh, it is true, and it is a burnintr 
 shame and disgrace to us that there hns been 
 so much municipal corruption in America. 
 Nevertheless, that is not the chief cause of 
 large expenditures of public money. 
 
 It is further safe to say that we have not 
 got to the end of the era of increasing local 
 expenditures. When one reflects upon cer- 
 tain current phenomena, one must be rather 
 inclined to thinfc at times that we have 
 scarcely more than entered upon it. The 
 public demands on the municipal adminis- 
 tration grow steadily year by year. Better 
 pavements, improved sewerage, more small 
 I)ark3 and manual training in schools are 
 among the pressing needs of the hour, and a 
 demand for other public expenditures is just 
 hecinning to be heard. Play grounds for 
 children and opoortunitieg of physical cul- 
 ture, that the rising generation may grow up 
 strong and healthy, are among the things 
 which people want. The housing of the poor 
 is a matter over which English cities are 
 exiendintr their care, and who is wise enough 
 to say that the common welfare may not yet 
 compel American ciaes to move in this di- 
 rection? It is needless to continue the enu- 
 meration. The growth of municipal expendi- 
 ture is B part of the srrowth of civilization, 
 and is likely to continue for an indefinite 
 period. We cannot stop it without lagging 
 behind in the march of proeress. Whining 
 and complaining do no good. To write arti- 
 cles containing nothing but the ceaseless re- 
 frain, "reduce tuxes," is folly. Yes, we must 
 reduce taxes, but how? 
 
 There Is a very simple way, and the Ameri- 
 can city which first enters upon it and keeps 
 to it persistently and systematically is going 
 to have a tremendous advantage over its com- 
 potitors. It la the fuU and complete utilization 
 of alt natural monopolies for the benefit of the 
 public. This is the way, and the only way. to 
 reduce taxes. If our business men will turn 
 their serious attention to this, and endeavor 
 to force rleht action upon our municipal 
 councillors aid our leglslatora, they will see 
 a most gratifying reduction in their tax bills, 
 una will witness a new and unparalleled period 
 of prosperity in Baltimore. It is, I believe, 
 perfectly practicable to reduce the tax rate 
 to one dollar on the hundred of property in 
 ourcjty, and that is quite enough. 
 
 I The principle which should guide us is very 
 1 simple, and will readily occur to those who 
 have read the previous articles in this series. 
 It 18 to exact from tvery natural monopoly using 
 public property full compensation. What does 
 rull compensation mean? It means this: 
 Making Just as good terms for the public as 
 a private man oould make for himself. Let 
 us imagine for the moment that a private 
 man owned absolutely the streets of Balti- 
 more. How would he manage the street-car 
 business? He would give no favors to any- 
 body. He would either operate the street 
 Ciirs himself or lease the privilege to the one 
 who would give the most, and never under 
 anv circumstances — I take it for granted that 
 the man is saue;— would he give a perpetual 
 lease. Short, terminable leases are the kind 
 private men give, and thus keep complete 
 control of their own property. Yet witness 
 the carelessness and indifference of our busi- 
 ness men and the general public about this 
 matter. Every one of us has an interest, and 
 the Interest of a single family is very consid- 
 erable, but no one seems to concern himself 
 about his own Share in the public property. 
 Take the case of street-car fares. A certain 
 public policy would ultimately lead to the 
 establishment of three-cent fares, which 
 would easily be worth forty dollars a year to 
 a family of five persons living a little dis- 
 tance from the centre of Baltimore. Forty 
 dollars a year is interest on one thousand dol- 
 lars. Now, if the head of an ordinary family 
 heard that there was a chance for him to 
 come into an inheritance of a thousand dol- 
 lars how eater would he he! How actively 
 would he follow up all his legal claimsl Yet 
 he scarcely will turn on his heel to influence 
 the Lesisla'uro in the matter of some most 
 astounding street-car bills now before that 
 body. On the contrary, when you begin talk- 
 ing with him on this matter he will make 
 such petty and trivial objections to a sound 
 policy— in successful operation elsewhere— 
 that one is tempted to believe that three men 
 out of four lose their common sense when 
 they begin talking about public measures. 
 
 Our merchants may be said to have a still 
 greater interest in this matter. If fares are 
 reduced, the surplus Income of every man 
 and woman in Baliimoro will thereby be in- 
 creased and their sales will grow in amount. 
 On the other hand, if franchises are sold at 
 auction taxes may be reduced, and thfere 
 they will gain. Who in our Lecrislatures sug- 
 gests proper restrictions on franchises for 
 natural monopolies? Is it not time for our 
 business men to move in this matter? New 
 York city has already moved, and will obtain 
 Increased revenues from franchises in the 
 future, there is nason to believe, for under 
 Mayor Hewitt a halt has been called in the 
 prodipal waste of public resources, and his 
 last message to the council of New York 
 abounds in suggestions analogous to those in 
 this article. Will Baltimore be the last to 
 move? WJll Baltimore business men delay 
 aotioh until opportunity to save what public 
 property yet riiroalns Is lost? 
 
 The same principle holds good with regard 
 to railroads operated by steam. Let them pay 
 for every piece of public property its full 
 value to the last cent. To exact less is to rob 
 "the forgotten millions." North street, pub- 
 Uc property, is occupied by a railroad. How 
 
mucti annual compensation does the city 
 receive therefor? It ought to be worth many 
 thousands of dollars a year rent to use a 
 street in a great city. If it were ray prop- 
 erty I sbould demand for It what it was 
 wortb. Why should the city do less? Or is 
 It not time to stop taidns a^ay the property 
 of the many and glviaer it to the few? 
 
 Gas supply and electric lights are of the 
 same nature, save that the city ought to 
 make provision as soon as possible to acquire 
 works of its own. Yet we hear a good deal 
 of foolish talk about competition in electric 
 lighting stilll Experience will teach us bet- 
 ter. But why wait until we have paid the 
 dear tuition which experience charges be- 
 fore we act? The correct meljhod in such 
 cases is simple enough. Existing companies 
 should bo bought out If they will sell at a 
 reasonable price; otherwise they sbould be 
 brought to terms by a vigorous municipal 
 competition. No legal monopoly should ever 
 be] granted a , private oorjKjration, for that 
 is worth a great deal of mont;y. As a legal 
 monopoly can only be conferred by public 
 authority, the public ought to derive the ad- 
 vantage therefrom, and what this advantage 
 is, previous papers have shown. I will again 
 only remind tbe readers of The Sun that 
 Berlin now defrays eighteen per cent, of lis 
 expenditure from tbe pronts on gas works 
 with gas at less than one dollar a thousand. 
 Since I wrote%]y article on gas supply the 
 American consul at Leeds has told me that 
 the people of that city are well supplied lor 
 forty-four cents a thousand. 
 
 The next article will didcuss a few remain- 
 ing social forces which have a bearing on tbe 
 future of Baltimore. 
 
 PKOBLEMS OF TODAY. 
 
 THE YALUB OF PUBLIC SPIRIT. 
 
 WE MUST REGAIN SQUANDERED RIGHTS. 
 
 The Future of Baltimore Discussed Fur- 
 ther by Prof. Richard T. Ely, of Johns 
 Hopkins Dniversity. 
 
 I Written for the Baltimore Sun. I 
 
 ARTICLE XXVII. 
 
 A recent trip to New York city and to Vas- 
 sar College, near Poughkeeosie, gave me an 
 opportunity to observe certain phenomena 
 of importance to a student of municipal life, 
 and also to examine with care the three re- 
 cent messages of Mayor Hewitt to the board I 
 
 of aldermen of New York on the future of ' 
 that city. 
 
 The manufacture of gas at Vassar College 
 Interested me. The gas is of a superior 
 quality, as good as it has ever been my lot to 
 burn. Less than t«renty thousand feet are 
 manufactured a day, and the coal must b« 
 catted two or three miles from the Hudson 
 river. I was told that it was worth sixty 
 ceiits a ton to cart the coal to this college. 
 Yet even on tbis small scale and under these 
 disadvantageous circumstances, it costs the 
 college only eighty cents a thousand to man- 
 ufacture its gas, •^■tjUe the people in the 
 neighboring city of l^oawbkeepsie pay S3 50 
 for an Inferior quality ov yas. As sras is 
 manufactured on a large scale >.i tfte city, 
 which comprises over twenty thousand lu- 
 habitants, and as coaV ia mor e read ily ac- 
 
 cessible, it can be seen that the people of 
 Pougbkeepsle ought lo have cheaper ga? 
 whereas they pay over three times as much 
 as Vassar College. 
 
 Possibly mayors of American cities have 
 written abler messages than those of Mayor 
 Hewitt, but it has never been my good for- 
 tune to read one of them. The rigorous 
 defense of the public welfare and apprecia- 
 tion of the true nature of the needs of New 
 York city revealed by these messages re- 
 mind one of the patriotism of a man lite 
 DeWirt Clinton. It seems to me that Mayor 
 Hewitt ranks facile princeps among all 
 mayors of American cities for the past twenty 
 years or more. 
 
 An Important question for all our States 
 and cities is to know how to recover public 
 rights which have been thoughtlessly allowed 
 to pass into private hands, and to safeguard 
 such public property as still exists after the 
 reckless prodigality with which Legislatures 
 and municipal councils have squandered 
 other people's money during the past genera- 
 tion. The 6dn has already published edito- 
 rials on constitutional changes which are 
 needed to accomplish this desirable end, and 
 the recommendations made in these edito- 
 rials are in keeping with the teachlntrs of po- 
 litical science. The chief of them ia to pro- 
 vide by constitutional amendment that any 
 corporation which seeks or accepts any new 
 legislation thereby places itself under tbe 
 reserved rights of the people to control all 
 grants of privileges to corporations. Thus 
 the effect of the unfortunate Dartmouth 
 CoUesre decision Is to a certain extent ob- 
 viated, and artificial persons are rendered 
 subject to the law more nearly like natural 
 persons. The recommendations of Mayor 
 Hewitt contain similar provisions for muni- 
 cipal franchises. He would make natural 
 monopolies pay for every new privilege, and 
 thus gather up the fragments of public prop- 
 erty that nothing further may be lost. The 
 time appears to have come for a substitution 
 of cable or electric traction, for horses on 
 street railways. This Is desirable on many 
 accounts, and is recommended by the 
 mayor. But he adds the following remarks 
 \ to bis approval of tbe change: ^'Inasmuch as 
 this change will be profitable, however, to 
 tbe railway companies, a portion of the sav- 
 ing should be secured to the city treasury. I 
 recommend that a careful investigation be 
 made as to tbe amount of this saving, in order 
 that the necessary consent of the common 
 council may be given upon conditions which 
 shall be fair to both parties, 
 tbe franchise will depend, of 
 upon the volume of the business, and there- 
 fore the ea:ne percentage o: the receipts 
 could hardly be exacted in every case. But 
 tbe companies should oompeusate the publio 
 for the use of the streets upon an equitatle 
 basis of division, and the Legislature shot Id 
 carefully guard the rights of the oiiyand tbe 
 interests of the taxpayers in any legislation 
 authorizing tbe use of cable traction." 
 
 Suggestions in regard to rapid transit aro 
 made which are of value to us in Baliimore 
 in shaping our future, and particularly in 
 view of the proposition to utilize Jones's 
 Pall for rapid transit. It is recommended by 
 Mayor Hewitt that the city provide rapid 
 transit, which it can do cheaper than private 
 parties, for it can borrow money j^t three per 
 
 
 Tbe value of 
 course, lararely 
 
A 
 
 Qk/' 
 
 ceDt., while private individuals caust pay five. 
 
 It is here suirsrc^sted tbat the rapid transit 
 
 roads be leased for thirtf-flve years for Ave 
 
 p«r cent, of their cost. Tl^d oity would not 
 
 two per cent., which in thJrty-flve years 
 
 would redeem the principal, and thus the 
 
 road would become public property without 
 
 jthe expenditure of a, O'-nt in ta.Tation. 
 
 This is anulofiroua to principles which 
 
 have, without di^Qoulty, been applied in 
 
 other coumries, and seems to be favored by 
 
 men most competent to speak on this subject , 
 
 I In New Yorlt» althoujrh some evidently ihiak 
 
 I that tbe city should manag'e the entire en 
 
 terprise without the intervention of a co 
 
 poration. The lucoess of the Brooklya 
 
 Bridge Street-Car Line, operated by puWio 
 
 authority, has been cited a^ a proof of Jhe 
 
 superiority of public management. / 
 
 Public spirit should be cultivated by as in 
 Baltimore if we would make our future What 
 we would like it to be. Pubiio spiri^ leads 
 people to reflect on the publio welfare, 
 and to consider measures from the stand- 
 poiatof the (greatest jjood to the greatest 
 cumber. A correct course of action is 
 an inevitable result; public risrhts and 
 public property are watched with Jeal- 
 ous care, public enemies are exposed, and 
 expensive errors in municipal measures are 
 avoided. New York city now finds it neces- 
 Bary to sro to an enormous expeuse in tearinir 
 down buildlnjfs in the crowded parts of the 
 city to provide small parks as breatbintr 
 places for the poor people. It would have 
 practicable to have reserved frequent 
 open squares years a?o, and it would not 
 hare cost the hundredth part of what it now 
 does to construct these little parka. It was 
 well known by those who thouRrht about 
 iuch matters that they would be needed, but 
 there was not publio spirit enoutrh to induce 
 action. Open squares are needed In Balti- 
 more in various sections now destitute* of 
 them, and to acquire them today will involve 
 a far smaller burden than to wait until popu- 
 lation is denser in these sections. Alittle 
 forethought and public spirit are the only 
 requisites. New York now finds it advan- 
 tajfeous to acquire water front. Thif involves 
 an enormous outlay. How muoA easier it 
 would have been to reserve aF the water- 
 front at the besrinnlnarl Lack o^ public spirit 
 led again to an expensive mlg^ke. 
 
 There are various ways /n which publio 
 spirit can be measured. Th/amountof publio 
 enterprise is a good test/ The provinces of 
 Quebec and Ontario, /h Canada, may be 
 profliably compared/ The Canadians in 
 Quebec have so littl/public spirit that it is 
 impossible to main«tin good roads by public 
 authority, conseq/ootly highways are banded 
 over to private Q/rporatlon8,who collect high 
 tolls and thu^' obstruct business by what 
 amounts to a svstem of indirect taxation. 
 Publio spiritls more active in Toronto, and 
 there are t^^ if any toll roads In thut 
 province. This difference In publio 
 spirit Is a chief cause of difference 
 In wealth. One of my earliest recol- 
 lections— I can only just remember it- 
 was a toll road in New York 8tate, but for 
 many years I have not seen one in New 
 York or Massachusetts. One of the first con- 
 ditions of prosperity is the freest exchange 
 of services and commodities, and In a very 
 wealthy community toll roads will hardly be 
 
 found. This is but one Illustration. Where 
 publio. spirit is in a low ooiidiiion public au- 
 thori(y id unable to perform its proper func- 
 tions, and they are with loss handed over to 
 private Individuals. 
 
 Huxley's article on '*The Struggle for Ex- 
 istence" in the Nineteenth Century is valuable 
 reading for those interested In the future of 
 Baltimore. Huxley shows that hishly quail- 
 fled labor, both as respects physical develop- 
 ment arid training of hand and head,are to be 
 the first condi'ioos of success in the future 
 Btrucgle for national and municipal pre-emi- 
 Itenoe. On this ground he favors the restric- 
 tion of child labor and generous provision 
 for technical education. Huxley regards a u 
 Ignorant person as a "burden upon, and, so 
 far, an infringer of the liberty of his fel- 
 lows." So profoundly, indeed, is he im- 
 pressed with the necessity for education as a 
 condition of survival that ho places a tax 
 for education in the same category as '*a war 
 tax levied for purposes of defense." It was, 
 }n fact, when Eoirland saw her industrial 
 supremacy threatened by the better edu- 
 cated German that she began to act viiror- 
 ously In this matter, just as France, when 
 She saw her military power overthrown by 
 •*the schoolmaster at Sedan," began to intro- 
 duce universal and compulsory education. 
 Would we in Baltimore hold our own with 
 oitiea like Boston, New York, Chicago and St. 
 JLouls doing so much more than we for edu- 
 oatlon, we must bestir ourselves. 
 
 Similarly Huxley shows that a temporary 
 Buccess gained by starvation wages and child 
 labor is Illusory because in lowering the 
 efficiency of man, the chief factor in pro- 
 duction, power to bold|one's own in the strug- 
 irle for existence 18 lost "A population," 
 says Huxley, ''whose labor is Insufficiently 
 remunerated muse become physically and 
 morally unhealthy, and socially unstable, 
 mod though it may succeed for a while in in- 
 dustrial competition by reason of the cheap- 
 ness of its produce, it must lathe end fall, 
 through hideous misery and degradation, to ; 
 Utter ruin." Huxley emphaaiaea the (act J 
 that he speaks as a naturalist, and as such his 
 pre-eminent ability will not be questioned. 
 It is incomprehpnslblehow aman can appre- 
 ciate the advantages to a country of improved 
 breeds of horses and cattle and at the same 
 time fail to see that a strong, viuorous and 
 Intelligent population is a thousand tlmeg 
 more important in the race for wealth. 
 
 What we want to do in Baltimore is to de- 
 velop our strong points. A city is like an in- 
 dividual. Formerly every man did every 
 thing, taught school, preached, practiced 
 medloino, made shoesi, built houses, and I 
 know not what else besides. Now the condi- 
 tion of success for States and cities, as well 
 as men and women, is to find out their strong 
 points and to do some things better than any- 
 body eUe. 
 
 It is often asked what makes Baltimore 
 grow? Where do the people come from to oc- 
 cupy all these new houses? One reason for our 
 growth is that Baltimore is a delightful city 
 to live In, and also, comparatively speaking, 
 a cheap one. People come here in vast num- 
 bers on these two account?, for there is in 
 modern society a largo class of people who 
 are so situated that they can easily change 
 their residences. A little inquiry will 
 probably oouvince any one of the impor- 
 tance of these two facts. These are strong 
 
:: 
 
 points, and they oufirht to be-,deyelopea pru- 
 dentlV but visorously. Public improve- 
 ments should g-o forward as fast as the 
 municipal flnances will warrant; public prop- 
 erty should be fully utilized for the benefit 
 of the public; cheap water, cheap lijrht and 
 chetrp ifansDortation should be provided. 
 Tbe cheaper the&o indispensable elements of 
 life, the more will people toe attracted to 
 Baltimore. The indispensable conditions of 
 life are also elements in the cost of business, 
 and to reduce them eives us a superior ad- 
 vantagre in the struKsle for existence. 
 
 As to waarea, the real question is not how 
 much are watres in money, but what will 
 money wages buy? Baltimore has in this an 
 advantage over a place like New York. The 
 Johns Hopkins University, for txample, has 
 thus an ad vautajre over Columbia College in 
 New York city. Other things being equal, 
 Baltimore can, for the same salary, get a 
 better man than New York. For my part, 
 having lived in both cities, I should prefer a 
 salary of $3,000 in Baltimore to one of 14,000 
 in New Tork. The cheaper the cost of livinar, 
 the better the clasa of employes business 
 men can get for a given rate of wages. This 
 was why the manufacturers in England 
 worked so hard to get the duties off imported 
 food products forty years ago, and the 
 cheaper cost of living made possible the 
 Industrial expansion of England. 
 
 The educational advantauea of Balti- 
 more are a cause of increased popu- 
 lation of considerable moment. It is 
 probable that the Johns Hopkins 
 University alone will lead to an expenditure 
 of a million dollars a year by prof t-ssors, stu- 
 dents and families who are by it brought to 
 Baltimore, and the present expenditures con- 
 nected in the one way and another with this 
 institution are sufficient to support a small 
 town. The Hopkins Hospital will similarly 
 help Baltimore, as will the new Maryland Col- 
 lege for Women. The Peabody Institute, the 
 Pratt Library, and even a private gallery like 
 that of Mr. Walters, do their shar» to bring 
 money and people to Baltimore, and thus to 
 keep the city alive. Yet it has actually been 
 proposed to cripple all these Institutions- 
 save the Pratt Library, which ranks as a pub- 
 lic institution— by taxation! 
 
 CHABT£BS MUST BB LIMITBD. 
 
 Government 0-wner»hip of Bailvrays — 
 Prof. Bly, of Jubng JUopkius University, 
 Discusses tbe Corporation Probleui. 
 
 LVVritten for the Baltimore Sun.l 
 
 ARTICLB XXVni. 
 
 The severe storm which we have experi- 
 enced this week In Baltimore has as:ain em- 
 phasized the importance of electrical sub- 
 ways. The fact that there can never be any 
 real competition in the matter of these sub- 
 ways Is eo self-evident that no attempt has, 
 so far as I know, been made to apply the 
 principles of competition to them. There is 
 a choice between two courses of action only, 
 namely, rellanoa upon a private monopoly 
 and a public undertaking. New York city is 
 tryfng a private monopoly, and valuable les- 
 sons may be derived from the experience of 
 that city. The private company was strongly 
 resisted by the companies which it was pro- 
 posed to force to bury their wires, and tiually 
 the people were startled one morning to see 
 in thelr_new82apers the InteUIgettce that Jay 
 
 Gould, of the Western Union Telegraph 
 Company, against which the law author- 
 izing the subways was e8i>ecially directed, 
 had acquired a controUiug interest in the 
 subway company. Something like this may 
 always be expected to happen. It is similar 
 to what railronds have always done with 
 privat« competing canals. Again, it is seen 
 that one private company is not strong 
 enough to coerce powerful electrical corpora- 
 tions of one kind and another, while a private 
 monopoly encounters an obstacle in the 
 odium which always attaches lo private 
 moaopolies. Mayor Hewitt speaks of this 
 system as "certainly very objectionable." It | 
 would be supposed that the experience of ' 
 New York would b3 suffioient to convince 
 any one that it is the function of a dty to pro- 
 vide electrical subways. These can readily be 
 made to yield an income if constructed on the 
 plan outlined in tbe last article for rapid 
 triinsit. Money can be borrowed at three per 
 cent, or a trifle over that, and then a rental 
 can be collected from the various electrical 
 companies which |vill yield more than the 
 percentage paid by the city on borrowed 
 money. It would seem that very moderate 
 rentals ought to yield ttjn per cent, on the 
 investment in a city like Baltimore, and this 
 would soon pay off the principal of the debt. 
 Municipal problems must now be left in 
 order to devote the remaining papers in this 
 series to other subjects. 
 
 Railroads have already been discussed In 
 one paper in this series, but certain aspects 
 of the problems oonuecteiJ wiih railroads 
 were then reserved for future consideration. 
 Probably among German statesmen of re- 
 cent years no one has had a hitrher apprecia- 
 tion of America than Edward Lasker, and 
 probably no one has entertained general 
 views more In harmony with prevailing sen- 
 timent in this country. It will be remem- 
 bered that Congress passed resolutions of 
 sympathy on occasion of his death, which Bis- 
 marck was requested to transmit to the Ger- 
 man Parliament, and that the great German 
 statesman refused to comply with the request 
 to assist in honoring his bitter political oppo- 
 nent. Lasker had relatives in America, and 
 shortly before his death visited our country, 
 and in various ways seems to have acquired 
 some familiarity with our Institutions. I met 
 I Lasker lo 1880 In Berlin at a reception given 
 by the American minister, and talked with 
 , him about the railroad problem, then nearlng 
 ! its solution in Prussia by the purchase of the 
 private roads. Lasker had couducted a re- 
 markable parliamentary investigation into 
 the affairs of the private railroads in 1873, and 
 expused their moral rottenness so thoroughly 
 that public opinion began to react in favor 
 of state railroads. It was natural, then, that 
 he should bo found on the side of the govern- 
 ment in the proposed acqulsiilon of the rail- 
 roads, although on other occasions so bitter 
 an opponent of the government. T was, how- 
 ever, specially struck by his remark about 
 American ruilroads. He 8aid,'*Youio America 
 must sooner or later acquire your railroads 
 and place them under public mauagemeut. Tt . 
 will come as a necessity, for natural forces 
 are at work which will compel you to take this 
 course." This would have been a less sur- 
 prising statement from other members of the 
 Parliament, but coming from him, it deserves 
 careful atteutionjL^Js Lt. true that forces ar* 
 
^ 
 
 iTat work whicb will brioff abouc public owd- 
 ersbip and tnaDaKemeDt of railroads in th« 
 U (J tted Stales? Who can read the future? 
 (Jertaioly it svemed as improbable tea years 
 affo that a mayor of New yoric ciiy Bbould 
 advocate raunicipai ownerdhip of a eystem 
 of rapid transit as it now does th^t a Presi- 
 dent of the United States should ever oast 
 bis inHueuce in favor of a federal railroad 
 
 Isysiem. It must be taid, too, that the proper 
 railroad system for Germany was still an 
 open question ten years airo, whereas 
 now it is no lonirer a problem of the day. It 
 is settled, and the settleraeot is indorsed by 
 an overwhelming majority of the German 
 people of all shades of political opinion. One 
 of luy professors while a student in the Uni- 
 versity of Halle questioned, in 1877, seriously, 
 the expediency of state railroad3,and brought 
 asramst them precisely those anruments 
 which we hear today in America; but actual 
 experience has made him even an enthusi- 
 astic adherent of the Prussian system, wnile 
 another recent and competent writer says 
 the suitability of srovernment for railroad 
 manajremeni is no longer open to question, 
 since it has been settled by the test of actual 
 experience. 
 
 These facts deserve careful consideration, 
 and while the correct course for us in the 
 United States is by no means clear, it seems 
 like a wise thins: so to regulate our policy as 
 to enable us to give that shape to our railroad 
 system in the future which will best answer 
 the demands of the situation. Those who 
 have read the previous articles on natural 
 monopolies will at once be able to state what 
 should be done at present. It is a very 
 simple thintr to limit charters and to provide 
 for the acquisition of railroad property at 
 their expiration at an appraised valuation. 
 It forces no new railroad system upon a 
 people, but simply leaves a country free in 
 the future to determine upon a suitable policy 
 without well-nigh insurmountable obstacles 
 of vested interests. This is the old Jeffer- 
 Bonian principle. It leaves each generation 
 to manage its own affairs in its own way. We 
 have been j^iving perpetual charters and 
 grants, and have thus squandered tn« rlghta 
 of those who are to come after us. He has 
 read history to little purpose who cannot 
 foresee trouble in perpetual grants. The 
 Almighty has set a limit to human life, and 
 evidently did not intend that the dead should 
 by acts, which profesa to be forever binding, 
 rule the living by hampering them in their 
 freedom of movement. Efforts to do so are 
 not likely to be successful, but they are likely 
 to produce endless harm. What has been 
 trained by perpetual grants of charters? 
 Nothing, while It is easy to see 
 how many existing evils would have 
 been obviated by limited charters. All 
 French and Austrian charters for railroads 
 expire before- 1950, and no one yet has ever 
 shown that this limitation has worked harm 
 to the public, while it is certain that these 
 two countries will then come into an enor- 
 mous possession. France expects the rail- 
 roads to pay the present vast public debt. 
 ^ Limitation of charters may prevent much 
 I stook-wfttering and issues of enormous quan- 
 ll titles of bonds, but It has never been found 
 T to check entwrprise. Suppose we had limited 
 I charters, and, as a consequence, the Vander- 
 I bilts and Goulds had been able to make only 
 
 tenortwelv;. ....ilions of dollars from Tail- I 
 road enterprise instead of three or four hun- 
 dred millions, would they not still have been j 
 willing to go on with their rail- 
 roading? How oould they have done 
 better? The pica that suoh vast fortunes are 
 necessary for railroad construction is dis- 
 proved by the fact that excellent railroads 
 have been built without the assistance of 
 men of enormous wealth. The excellent 
 railroad system of Wurtcmberg was con- 
 structed under the supervision of a man who 
 received some 13,000 a year for his services, 
 and seems to have been quite contented. 
 
 Much that has been done cannot readily be 
 undone, but there Is no reason why future 
 charters should not be limited and means 
 provided for the acquisition of the railroads 
 which they authorize, should it be thouirht 
 desirable. The Western Maryland Kailroad 
 deflires to lease a part of the Cm sapcake and 
 Ohio canal, and perhaps under the circum- 
 stances nothing better could be done than to 
 band the part of the canal in question over 
 to this corporation; but can any one give any 
 reason why the lease should read for 99 years, 
 "renewable forever?" Is it not enough if 
 we bind three generations? Great teachers 
 like Bluntsohli and John Stuart Mill said we 
 had no rlfrht to bind more than one. If it is 
 provided that the State shall at the expira- 
 tion of 99 years have power to acquire the 
 property at an appraised valuation, all inter- 
 ests are satisfactorily protected. 
 
 One diflBculty in tne way of reforms of this 
 character is that a class of men among us 
 have become accustomed to bulldoze the 
 public. So in many iStates railroads would 
 threaten to go around towns unless they con- 
 tributed for their construction. It is largely 
 through such means that our local political 
 units have contributed some two hundred 
 millions of dollars for the constuction of 
 private railroads. This has been prevented 
 by constitutional amendments to many State 
 constitutions, which forbid any public con- 
 tributions to private corporations. This has 
 not been found to prevent railroad building 
 but it has forced private parties to 
 use private money, and then left them 
 free to select natural routes. If our 
 federal constitution prevented any charter 
 for any purpose whatsoever from being 
 granted for over fifty years, and compelled 
 the reservation of right to repurchase, and 
 of other rights in behaif of the general pub- 
 lic, it would be a reform worth talking about. 
 The English Parliament has gone oven 
 further than this with respect to certain 
 classes of charters, rendering it impossible to 
 grant for over twenty-one years. 
 
 The federal government ought to embrace 
 every opportunity to acquire railroad prop- 
 erty—to be leased. perhap», for the present. 
 What proprlf'ty was ther* in the construction 
 of the Feciflc railroads at the public expense 
 and then turning them over to private par- 
 ties? Would not the people have been better 
 served If irovernment had kept the riarht of 
 property la thoin and leased the roads for a 
 limited period, under stringent conditions, to 
 the highest bidder? 
 
 The course for Congress to pursue at the 
 present time in regard to these roads is suffi- 
 ciently clear, and if pursued would be the 
 first step towards reform. It is to foreclose 
 the mortfl-aces, acquire .the property and lease 
 
It for twenty years. Should the federal ffov- 
 ernmentfiruard properly all public property 
 and all public riffbts, ii would find itself in 
 the possesglon of very considerable annual 
 revenues from other sources than forms of 
 taxation which involve restrictions on the 
 free movements of commerce and Industry. 
 A federal tax which is needed is one which 
 will yield a steady revenue, and a revenua 
 which can be increased if need be. A tax on 
 the jrross revenues of all railroads engagred in 
 Interstate commerce mltrht uot be an unde- 
 sirable form of taxation, an4 mi^ht remove 
 the possibility of a recurrence of past finan- 
 cial embarrassments. 
 
 PROBLEMS OF TeDAY. 
 
 THE INNOCENT SHAREHOLDER. 
 
 THE PROPERTY RIGHTS OP THE PUBLIC. 
 
 Prof. Ely Points Out How the People are 
 Forgotten When the Corporations are 
 Concerned. 
 
 [Written for the Baltimore Sun.1 
 
 ARTICLE XXIX. ^ 
 
 We hear much in these days of the inno- 
 cent purchaser of railroad shares and other 
 property with which fraud has been con- 
 nected. The innocent shareholder has been 
 made to cover a multitude of sins in the dis- 
 cussions on the Pacific Railroad In the 
 United State Senate, and this same character ; 
 fieured largely in the arguments on the I 
 Jacob Sharp Broadway franchise before the 
 Court of Appeals in New York State. It 
 must bo acknowledeed that the innocent 
 stockholder, especially in the person of the 
 widow and orphan, has done excellent serv- 
 ice in the past, and Is likely to become 
 more prominent in the future. The Court of 
 Appeals rer.'dered a decision in the Broad- 
 way street-car case which must strike the 
 economist aa a little startling:, and which I 
 mil venture to assert will come to be recojf- 
 cized as bad law inside of twenty years. 
 
 The charter was revoked, but the franchise 
 and all the rig-hta of this corporation, after it 
 had met with log-al death, p issed over to the 
 directors of the railroad, to be used for the 
 benefit of the various claimants, and of 
 course claims for all it was worth had been 
 established at the earliest possible moment. 
 The people grot the law— the shell of the nut 
 — but the thieves arot the property— the meat 
 of the nut. History will surely have some- 
 thing to say about this lepal hair-splittinsr. 
 Suppose thf? public has rights like private in- 
 dividuals, what must necessarily result there- 
 from? Those who receive prooerty stolen 
 from the public, must bs treated like any 
 other innocent receivers of stolen coocls. We 
 may feel very sorry for them, but we 
 take the property away nevertheless, 
 and restore it to the ricrhtful owner. 
 But let us consider the case of the 
 innocent shareholder a little more carofuUy- 
 A recovery of public property miRhi work 
 hardship in some cases, but is the Innocent 
 shareholder the only person to be considered? 
 By no means— the millions comprised in the 
 term "the sreneral public" are aeain for- 
 Rotten. A very few persona mi»ht have suf- 
 fered If the property which Jacob Sharp 
 
 stole had been restored to its riphtful owners, 
 the public, but over a million people suffer In 
 New Yorfc on account of this theft, and some- 
 of them are widows and orphans and day- 
 laborers. No one will for a moment deny— 
 provided he knows anythinj? about the facts 
 at all— that passengers can be carried at a 
 large profit on Broadway in New York city 
 for three cents each. The franchise could 
 have been sold for a small percentage of gross 
 receipts on condition that passengers should 
 be carried for three cents. This would have 
 been a slight relief to the taxpayer and a very 
 great one to all poor people. Many a poor 
 widow and orphan and thousands of worK- 
 ingmen trudge the streets of New York 
 wearily for miles today who might ride if 
 fares were three cems. Every day of tho 
 year sorrow and hardship are inflicted upon 
 thousands of innocent and worthy people 
 because they were forgotten, while a few 
 other innocent people, receivers of stolen 
 goods, were remembered. I submit that this 
 is an iniquity. Those who bad money enough 
 to buy shares and bondswere not the mosthelp- 
 less class in the community. It is easy enough 
 for one who thinks the rights of the many 
 equal to the rights of tho few to say what 
 ought to be done. It is to defend public prop- 
 erly just as private property is defended. This 
 is the way to root out the anarchists, and the 
 only way to make a permanent impression on 
 them. Not an abolition of property rights is 
 wanted, but an extension of property ritrhts 
 and vigorous measures to defend the rights, 
 of the property of the many as well aa of tho 
 few. Property is sacred, and when all prop- 
 erty, that of the public as well as at the in- 
 dividual, that which resides in one's own 
 person, one's strength— the labor power and 
 the health, bodily vigor and mind of the 
 workingman — ire properly guarded, attacks 
 on private property need never be dreaded. 
 So long as public thieves can crawl behind 
 the intoceut stockholder and place the 
 widow and orphan between themselves and 
 public wrath, public property has no ade- 
 quate defense, and can have none, because 
 those who get it at once begin to dispose of 
 it. If, however, we as a people begin to 
 show a higher appreciation of our own 
 rights and treat our enemies wi h 
 less gentle consideration, people will hesitate 
 about purchasing property fradulently ac- 
 quired, and this will produce a wholesome 
 habit on the part of purchasers of stocks and 
 bonds of making 'inquiry about methods 
 whereby alleged rights were secured. The 
 proper method for protecting really innocent 
 purchasers of stocks and bonds is easy 
 enough. It is to provide civil as well as 
 criminal remedies against the thieves. It is 
 not diflicult to give those who suffer at the 
 hands of a man like Jacob Sharn ample civil 
 remedies whereby they can recover damages. 
 It is a thing which has already been done in 
 other places, and for which precedent in 
 somewhat similar cases can probably be 
 found in the legislation of every American 
 State. I think the Et)giiBh law of corpora- 
 tions already provides ample remedies for 
 a case li^e that of Jacob Sharp, and I 
 am very sure that the German law— the 
 latest and most admirable law for private 
 corporations— is all that coula be desired in 
 this respect. As for the rest, people will soon 
 become disgusted with the "widow and or- 
 
pdan" plea, for U ia made to do duty so often ; 
 by scoundrels. It haa been said we should 
 nhtpayofC tbe public debt of the United 
 States because the widow and orphan might 
 suffer, and a irood deal of pathc^a haa been 
 evolved on their account, Henry C. Adams, 
 however, tikes up tbe public debt and ana- 
 lyzes It in bis work "Public Debts." He 
 shows that out of $(564,000,000 of retflsterod 
 bonds $410,000,000 are held in sums of $50,000 
 and over, and he expresses the not unnatural 
 conclusion, "It seems a Utile lualcrous to 
 urjje the mainienanoe of a federal debt as a 
 measure of charity to dependent persons." 
 Over seven y-three thousand persons held 
 rcRlsterod bonds, but of these about 1,500 
 hold two-thirds of the total amount. It Is 
 not enough for corporations to come before 
 the public wlih statements of the number of 
 holders of stock and their wide distribution. 
 We want to know more than that. We want 
 an analysis of the wealth of the corporation 
 in question, and if ihe information is to be of 
 value, we must be told just what percentaRe 
 of stock is owned In small amounts, what in 
 moderate quantities, and what percentage in 
 large blocks. Should one ol our States or 
 our federal go\%rnment begin from ihis 
 time forth a vigorous defease of public prop- 
 erty and public rights, a few persona of 
 undoubted innocence and integrity would 
 suffer at first, but only at first, for 
 people would soon be more circum- 
 spect than heretofore in purchases of stocks 
 and bonds; and as for the few real sufferers. 
 we could well afford to indemnify them out 
 of the public purse. As this would be bad 
 policy on many accounts, it would be better 
 to raise money needed for this purpose by 
 private and voluntary offerings. When it 
 happens that members of the dependent 
 classes, lik« widows and orphans, are injured 
 by a recovery of public property which haa 
 been stolen,! am willing to put my name down 
 o nasubscripiion list for their relief for a gen- 
 erous sum, and to use all the Influence I have 
 in inducing others to do likewise. 
 
 ABTIFICIAI. MONOPOI^IES. 
 
 The Standard Oil Company as an Illas- 
 tration DiscusBed by Prof. Kly. 
 
 [Written for the Baltimore Sun.] 
 
 ABTICLK XXX. 
 
 The man of one idea is in some respects a 
 useful man, for he sees a portion of the truth, 
 and the inten.-ity of his conviction in regard 
 to its importance leads him to become an 
 apostle on its behalf. Tariff reformers who 
 find an explanation of all the evils with 
 which America is inflicted m pnjtoctionism 
 are doubtless blind to the re^ signiflcance of 
 innumerable classes of phenomena, but they 
 are often oil this account the more ardent in 
 the propagation of the truth which they do 
 see Doubtless fanatics are needle 1 to help 
 on in tho world's work. Neverthele-ss, one- 
 sided advocacy of true principles has its dis- 
 advantages, for an exposure of tne exaggera- 
 tions into which men are thereby drawn 
 leads many to overlook tho kernel of truth 
 about which so much error has k'athered. 6r, 
 to use a different figure, those who perceive 
 the vast amount of chaff which incloses the 
 wheat are too often inclined to reject th« 
 chaff and the wheat alike rather than to take j 
 tbe trouble to separatethe two. 
 
 ^ 
 
 Much nonsense Is wri .oout the tariff \ 
 
 and monopoly, and the Chicago gas trust has 
 even been connected with protectionism, with 
 v\hich in reality it has about as much connec- 
 tion as the rainfall of Baltimore with the 
 length of the riv- ' •. It seems to me de- 
 sirable for us to !_.._. -lear notions about the 
 actual workings of a protective tariff, and 
 the consequences which li> renlity may be 
 attributed to it. I think that we will thus, on 
 the whole, contribute vastly more to true and 
 permanent progress than by a blind advocacy 
 of we know not what. 
 
 It has been attempted In previous articles 
 to show that certain pursuits* are In their 
 own inherent nature monopolies. These 
 have been enumerated and described. They 
 have become of vast Importance during tho 
 pist fifty years, but, nevertheless, thoy in- 
 clude only the minor part of our industrial 
 life. The great majority of men are engaged 
 in pursuits which are n )t natural tnonopolies, 
 and if these men contrive to make of them 
 business monopolies, it shows at once that f 
 etjinehing is wrong. Commerce, agriculture, \ 
 
 mining and manufacture arc only In rare an<i 
 exceptional cases natural monopolies. Yet 
 we eee a great many monopolies which 
 may be placed in one of these classes. They 
 are all artificial monopolies, and consequently 
 are evils which should be suppressed. They 
 violate the fundamental prlncioles of oux ex- 
 isting social and economic order, and are, as 
 has been already stated, socialistic and revo- 
 lutionary. 
 
 There are two causes of artificial monop- 
 olies. The first is legislation in beha'f of 
 men engaged in a pursuit not a natural 
 monopoly. The second is the connection of 
 a pursuit not a natural monopoly with one 
 which is a natural monopoly, so that the 
 two become, to a certain extent, one. I lay 
 it down as a general proposition that arti- 
 ficial monopolies are buslue8?e8 which have 
 become monopolies only by an alliance with 
 a business which Is a natural monopoly. 
 What legislation, as seen in a protective tariff, 
 does is simply to aid this alliance, to render 
 It easier to form it, and to make it more Im- 
 pregnable when formed. He who tbinKS that 
 tariff reform alone would remove monopolies 
 and trusts has not grasped the A 
 B C of political economy. I ask the 
 readers of Thk Sun to remember this. 
 I believe that political economy is suffi- 
 ciently advanced to enable me to predict this 
 with almost a"* great certainty as an astrono- 
 mer can predict a coming eclipse, and I am 
 willing to take up(tn myself whatever risks 
 to my reputation as a scientific man are In- 
 volved in this prediction. A reform in the 
 field of natural monopolies must accompany 
 tariff reform in order to uproot artificial 
 monopolies. 
 
 Tho transfei of bagsrage from houses and/ 
 hotels to railroad stations and from railroaa 
 stations to houses and hotels is not a natural 
 m- v. but it is a business ■■' in every 
 
 one . uur great cities has b. a partial 
 
 monopoly. How did tho business beconio an 
 artificial monopoly? How has competition 
 been well-nigh cruphod? Uucause in eacn 
 gieat city one or two companies form alli- 
 ances with railroad companies and obtain ex- 
 clusive privileges on the trains and in the 
 stations, tho railroad companies obtaining 
 some quia pro guc^the railroad com- 
 
 / 
 
I padies or 'some of their officials, for^ 
 I think it is not so often the 
 stockholder who receives the benefit as vari- 
 ous oflacials who are let in on the around 
 floor. Thus it was that in 1879 the Erie Rail- 
 road was found covered with barnacles, but 
 on the whole there has been an improvement 
 in this respect in recent years. But this la 
 merely said "by the way." 
 
 As railroads are natural monopolies, those 
 dependent upon them are often made monop- 
 olies by their action. 
 
 The Standard Oil Company serves as an- 
 other fllustration. That obtained a monopoly 
 throufirh an alliance witn the railroads of the 
 country, and this srave it special freight rates 
 which DO one else could secure.. The report 
 of the special committee appointed to in- 
 vestigate the railroads in New York in 1879 
 showed that the Standard Oil Company had 
 received in rebates ten millions of dollars in 
 eighteen months. It was impossible for 
 competitors to stand up B{rainst such fritrht- 
 f ul odds. Quite recently a railroad in Ohio 
 was found to have given the Standard Oil 
 Company an advantage of three hundred and 
 fifty per cent, over George Rice, of Macks- 
 bur^ and Marietta, their chief competitor in 
 that part of Ohio. Itwas this alliancewith a nat- 
 ural monopoly, and, his alone, which enabled 
 the Standard Oil Company to secure a mo- 
 nopoly. The competitors of this concern 
 have not retired before its superior business 
 ability, but before its cheaper freight rates. 
 It is by pursuing a shrewd policy in this 
 respect that Mr. Rice has been able to main- 
 tain an existence as an oil refiner. Wher- 
 ever f relgat rates are too much against him 
 he retires from the field and seeks another 
 market where he can contend on an equal 
 footing. The competitors of the Standard 
 Oil Company have never complained of the j 
 superior skill or superior business ability of 
 the Standard Oil men, but of the favoritism 
 which has been shown them by the railroads; 
 and how close the alliance is can be seen In 
 freight classifications and changes therein in 
 order to secure special favors for the monop- 
 oly, and by hook and crook to make competi- 
 tors ani impossibility. 
 
 The curious will find the story well told 
 under the title of "A Commercial Crime," in 
 "Hudson's Railways and the Repiblic." 
 
 The production of coal furnishes another 
 Illustration. This ought not to be a monopoly, 
 but as to anthracite coal it has become such 
 by its connection with railrc^ad compnnies. A 
 group of men intereste i in mines control the 
 roads, and are thus able to dictate to other 
 operators and rule ihem with a rod of iron, 
 which renders the trades-union tyranny, of 
 which we hear so much, insignificant 
 in comparison. Men living in Mary- 
 land know full well that they are not 
 at liberty to pay their men what they 
 will to mine coal where they will, and in 
 quantities which suit their own convenience. 
 They must do what they are told to doorsuffer 
 financial ruin. A pursuit nor a natural mo- 
 nopoly has become an artflclal monopoly 
 through an alliance with a business on which 
 it depended, and which is in its own nature a 
 monopoly. It is on this account that the 
 constitution of Pennsylvania renders it ille- 
 gal for a railroad to engage in any other 
 lines of business than those connected 
 with transp irtation. It is an entirely 
 _gorrect poli ■ ' > demand ,^th at 
 
 railroads shall be held riaidly tc their own 
 proper functions, and that they shall serve 
 all alike in order to avoid artificial monono- 
 lies. This was also the purpose of the Inter- 
 state commerce law. The aim is correct, but 
 there is no reason to think that the purpose 
 of the Pennsylvania constitution or the inter- 
 state commerce law will be accomplished by 
 present methods. The State constitutional 
 provision and the federal law are of value as 
 establishing a principle, but that alone is their 
 chief sigiiiflcance. ^v 
 
 There may be rare and exceptional cases in 
 which the taritf alone will enable men to 
 secure a motiopoly, but the approved method 
 is to get control of the home market by alli- 
 ances with natural monopolies, and then to 
 keep foreign competition out by a high-tariff 
 wall. The tSiUEP handJjT_hand. _ 
 
 PROBLEMS OF TODAY. 
 
 tne 
 
 THE PROTECTED IN POLITICS. 
 
 GOVERNMENT BY SPECIAL INTERESTS, 
 
 How a Protective Tariff Corrupts Politics 
 Discussed by Prof. Richard T. Bly. 
 
 [Written for the Baltimore Sun.l 
 
 ARTICLK XXXI. 
 
 Government is cieated to promote the gen- 
 eral welfare, anl when it is u-el to advance 
 special interests which are nor at the same 
 time fireneral interest^, it is perverted from 
 itsorii^inal purpose. Our federal, Stae an ' 
 local governments ar" now com rolled by 
 men who hold their offices in trust for pow- 
 erful private partes, and they view public 
 measures, not from the standpoint of the 
 general puiilic, but from the standpoint of 
 thost^ in whose employ they are. This has 
 b:>en previously mentioned in this (series of 
 Mrtiolfes and reed not be enlarged upon, for 
 it is Buflicleiitly obvious to those who 
 "have eyes to see." O.ie proof of this 
 is . the way in which leirislativo favors 
 are exchano-ed. A pr mises to support 
 ti's bill if B in turn will vow for some meas- 
 u e which interests A. This occurs daily, 
 and would of course be an impossibility if 
 A and B both voted simply for measures 
 which they reirarded as d^sizned to benefit 
 the public. Another evidence of the influ- 
 ence of private interests i^ seen in the ques- 
 tion so often asked by legislators of the 
 powerful when they visit the lei-islativc 
 ^jalls. "Well, what can I do for you today?" 
 The power held as a trust f. r the people is in 
 return for some bribe, direc or indinct, 
 placed at the disposal of a private person. 
 The lobbies which exist everywhere are a 
 further proof. These are maiotalned to in- 
 struct legislators in regard to private iptei- 
 ests and to make it worth while for 
 them to help forward some scheme for 
 pl'indering the people. Again and again 
 have citizens found it an absolute impossi- 
 bility t> secure any attention for measures 
 designed simply to benefit the general public. 
 Leirigl itures and lity councils will not even 
 take time to give them superficial attentii)n. 
 Consequently the practical man does not go 
 in a siraightf.irwarJ ma mer to anyone of 
 our legislative bo lies and say: "I have de- 
 vised plans for public iaiprovements which 
 will be of great benefit to our city, and I 
 desire to explain them to you." On the d n- 
 trary, he goes t>i some one who has influence 
 and brings hi-^ plans forward in this indirect 
 manner. Jt jook a scandal ]\jfj^ the Jacob 
 
X' 
 
 i 
 
 >haTv c&ae to iovov a bill throuff^ the New 
 York L'trisiature readerinjr the sale 
 of street-car franchnes compulsory, and 
 when in ihe Leirislaiure It was sug- 
 gested that charters be limited as to 
 ientrih of time as In Louisana, the Influence 
 of boodle was too atronsr. I sar this b cause 
 I hold that there was no laoK of kn )wlo (fe 
 tiS to correct me hods of dealincr with the 
 problem. It Is simply Impossiblb to find any 
 tfiounds for unH'Tiited street-oar franchl-es, 
 and had public interests been d cislve the 
 frunchisea would have bee i limitod in time. 
 We have the fact of srovernmo t by special 
 interests knowa to all men. Now what is 
 the cause? 
 
 The more carefully I examine the facta of 
 the case, and the more I reflect upon the 
 nature of the pn.blem, the more inclined I 
 feel to apree with those who find a chief 
 cause in the protective tariff. The moment a 
 tax is placed on imported troods that moment 
 those enfirae- d In its production at home 
 have an interest In the control of leffisiation 
 to suit their private ends. It is unavoidable. 
 The tempation to do wrong: is absolutely in- 
 sepirabi.- from protectionism. Thosa who 
 are protected form an association and keep 
 nsrents at Washintrton, whose business it is 
 on the one hand to raise the tariff, on the 
 other to prevent a reduction in the tax 
 on imported commodities. Special private 
 interests are thus created by legislation, 
 and these make free use of money. 
 A^sesments are levied on producers of 
 taxed commodities to support a lobby at 
 "Wasblngion, and in cenaii branches of pro- 
 ductions manufacturers have come to look 
 uix)n these assessments as a mere matter of 
 course. The money goes to Wasbinp-ton, and 
 no account is ever rendered of the mode in 
 which it is expenied. Legislaiors get in the 
 habit of looking for remuneration of some 
 kind for the performatice of their legislative 
 functions, ad the most unscrupulous use 
 pflBce for what it will bring. There are two 
 ways in which money qaii be made by legisla- 
 tors. They can receive money for their aid 
 in gettitisr throusrh bills in which pri- 
 vate parties arQ interested, and they can 
 bring forward unjust bills designed to 
 Injure private parties purpose y to 
 be bought off. Proper bills, designed 
 to guard the public intQrests, are also fre- 
 quently brouKbt forward, and then a shrewd 
 lejrisiator can ob ain credit with the public 
 for his service at the same time that he re- 
 ceives boodle for secretly killing his own 
 bill. There is every reason to believe tnat 
 such things happen at Albany, but of course 
 not in connection with the tariff. The cor- 
 ruption of State Legis aiures and municipal 
 councils is the work of those in possession of 
 natural monopolies. The natural monopo- 
 lies must be Qontr lied, because it has been 
 demonstrated by actual experience that it is 
 impossible to turn over irunsportation. lltfht, 
 
 vater and the like to private corporations 
 without regulation. Now the moment regu- 
 lation begins a diversity of interest between 
 the public and private parties is created, and 
 a wide door Is opened for corruption. 
 
 It is easier to see this in a small town. Let 
 UB, therefore, acrain take the case of water- 
 works in two place-i already mentioned. 
 Fredonla, New York, has public works. No 
 corporation exists to o Trupt tho village 
 
 irtstees; no p )werful private Interests ad-» 1 
 vers© to those of the general public exist, I 
 The only source of corruption iif the civil 
 service, and the appointment of one or two 
 officials has never been found to De appreci- 
 ably demoralizing. Let U8 leave Fredonla 
 and go to Jamestown in New York, where a 
 private water company exists. This corr- 
 pany has from the start been engaired in litl» 
 jration with tne city. N »w can «nv one fail 
 to see bow ihia at once introduces a corrupt 
 and debasing: influence in muaicipAl 
 politics? What has taken place in 
 Jamestown I will no- attempt to 
 say; but the usual course Is for the private 
 corporation first to get control of the pres9« 
 or a portion of It. then to send men to the 
 council to decide all disputed quustions be- . 
 tween the corporation and the city I » favof 
 of the former, also to effect a repeal of any 
 reserved public rights. The corporHtionp 
 have a tremendous advantage because they 
 are utterly unscrupulous. Parties are to 
 them merely tools. "In republican districts ' 
 I am a republican, in democratic districts I | 
 am adem< cr.t." is the assertion of a notori- 
 ous railr aa president. I might name a 
 Western city in which there is reason to 
 believe tnat the street-ear corp rations elect 
 every municipil oounoilor, whether a demo ■ 
 orator republican, because in all the wards j 
 they control both parties. When I used to 
 live in New York city I was in a posltio i 
 to know that nothing was so effectual in se- 
 curing employment on the street-car lines as 
 "a political pull," and there is reason to sup- 
 pose that the same condition of things ex- 
 ists today. The street-car conductors and 
 (fivers were practically in the employ of 
 politicians, and were a worse cause of de- 
 fBoralizationibanthepamenumbr of munic- 
 ipal employes, as there was not the ; same 
 opportunity for exposure and improvement 
 In methods of appointments. 
 
 3oth cans '8 of corruption and eovernment 
 by sped 1 interests are something insepara- 
 ble trom present policy. What should be 
 done with respot to natural monopolies has 
 alreaiy been explained tt sufBcient lendfth. 
 It may be well to add a word ahout tariff 
 reform. 
 
 Did free trade already exist, there is reason 
 to believe that it would be a «ood thln»f for 
 the country. We have superior advantages 
 over other countries, and the strontro-it is not 
 the one to suffer in competition. Fanners 
 and workingmon arc the last ones to stain by 
 protection, and I have no doubt thai both 
 would gain were trade as free between 
 Europe and America as between our States. 
 However, the fact of the tariff exists, and 
 the fact is of vast imp lit nee. Our industries 
 have grown up unier it for over seventy 
 years, and have itecome moro or less adjusted 
 to an artiflolal s'aie of thintrs. Good f ith 
 requires that wo should in dealinflr with manu- 
 facturers bear this fact in romd, and move 
 carefully in readjusting trade relations. 
 This is not saying that we should 
 jlo nothing, but simply that rash. 
 hasty movement shoul i be avoided. No one 
 has received any pleage that tariff aws would 
 not be changed, yei it seems only fair that 
 those who have reli d upon a traditional 
 policy should have a little time in which to 
 adjust themselves to a new state of tilings. 
 W hile it is true that the fears entertained in 
 
many quarters in re«:ard lo the effects nf 
 l?V.'''T^ tariff reform are ^reatfyeluef 
 jerated, there can be no doubt that immel 
 diat^ free tride would ruia a D-no,i ^ 
 mauufacturers. Now ou/iidustS' ifTh's 
 one m? V'^'"*'"' ^"'^ y°" cannot .Jure 
 uuuy. ihia i3 -j^eji established. Iidustriai 
 
 facttir^'^^^'"^^"'- ^° injuryto Z?^i 
 f jcturers may mvolve bank., tbese In turn 
 
 Farmers have nothing whfltpv#:.r ♦« h^ 
 
 rr-STr^ """• *'"■»' " "'vlZrlt tariff 
 reform free raw raaterials will be likPirl 
 benefit the general Public and to ^roaui. no 
 iDdu8.nal Shock. Free raw material should 
 be accompanied by corre.podiX lower 
 dunes or even by duties a little more tr«n ' 
 proportionately lower. Whenever aTar fcle 
 '8 place>i on the free list it is a clear Ziu and 
 oiie temptation to_^oyernment by spediui 
 te^ests i8 remoVid. A steady? pSterft^ 
 effort should bo made to tax as few thinps as 
 possible, as thus interference with tr.de and 
 temptation to corruptlo:. will be re- i 
 duced. A fruitful gource of fraud and 
 injustice as b.tween various p^rts is caqsed 
 Dy difficultipi attendinir valuations. It is 
 desirable to simplify administration bv sub- 
 stituting: in every praciicable case ppeciflc 
 ror ad valorem duties. For the re^t, the bill 
 revlslm? the tariff prepared by the majority 
 or the ways and means committre, while not 
 all that could be desi-ed. seems to be a move- 
 in the rifirht direction, and one which de8> rves 
 tho earnest support of tho^e who are chiefly 
 coucerDed at out the ireneral welfare. 
 
14 DAY USE 
 
 RETURN TO DESK FROM WHICH BORROWED 
 
 LOAN DEPT. 
 
 This book is due ofl the last date stamped below, or 
 
 on the date to which renewed. 
 
 Renewed books are subject to immediate recall. 
 
 LD 21A-50m-4,'59 
 (A1724sl0)476B 
 
 General Library . 
 Uaiversity of California 
 Berkeley 
 
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i\^-a^^ffe.