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 PREMISES OF FREE TRADE EXAMINED; 
 ALSO REVIEWS 
 
 OF 
 
 BASTIArS ''SOPHISMS OF PE0TECTI02^," 
 
 OF 
 
 PEOFESSOR SUMNER'S ARGUMENT AGAINST ^ 
 "PROTECTIVE TAXES," 
 
 OF 
 
 PROFESSOR PERRY'S "FARMERS AND THE TARIFF," 
 
 OF 
 
 PROFESSOR SUMNER'S SPEECH BEFORE THE 
 TARIFF COMMISSION, 
 
 AND OF 
 
 "PROGRESS AND POVERTY." 
 
 BY 
 
 GEORGE BASIL DIXWELL! 
 
 CAMBRIDGE : 
 JOHN WILSON AND SON. 
 
 ilUmbcrsitg ^rcss. 
 
 1883.
 
 '^K 
 
 Copyright, 1883, 
 By Geoege Basil Dixwell. 
 
 <^>, 

 
 THE PREMISES OF FREE TRADE EXAMINED. 
 
 As the text-books from which political economy is taught in 
 most of our colleges are generally by English authors, or by 
 Americans who have adopted the English views, it is not 
 surprising that we should meet with a great many highly 
 educated men who believe the trans- Atlantic ideas to be 
 invulnerable. They have been taught that economical phe- 
 nomena are too complex to be investigated by the a posteriori 
 method, and that nothing can be relied on but reasoning from 
 assumptions ; and they have accepted with delight certain 
 most attractive argumentations, in which the wasteful futility 
 of protection appears to be demonstrated, just as the mathe- 
 matician demonstrates that the three angles of a triangle are 
 in all cases equal to two right angles. But deductive rea- 
 soning has its own liability to error. Very eminent authors 
 may change the subject or change the premises or reason from 
 an apparent axiom, which upon careful examination is found 
 little better than a blunder, or an identical proposition. The 
 writer believes that all these logical faults are to be found in 
 the supposed demonstrations above alluded to ; and he pro- 
 poses in this paper to point out a few of them, in the hope 
 that some able minds may be led to review their conclusions, 
 and to read or read again, with a candid spirit, what lias been 
 urged by Rae, Phillips, Carey, List, Bowen, Seaman, Thomp- 
 son, Greeley, E. P. Smith, Kelly, Elder, and many others 
 who have written in favor of protection. 
 
 Let us first examine Mr. J. R. McCulloch's apparent dem- 
 onstration that absenteeism is not financially injurious to a 
 country. He argued in this way : —
 
 1st. "We get nothing from abroad except as an equivalent for 
 something else ; and the individual who uses only Polish wheat, Sjtxon 
 cloth, and French silks and wine, gives, by occasioning the exportation 
 of an equal amount of British produce, precisely the same encourage- 
 ment to industry here as he would give were he to consume nothing 
 not directly produced among us. The Portuguese do not send us a 
 single bottle of port, without our sending to them, or to those to whom 
 they are indebted, its worth in cottons, hardware, or some sort of 
 proiluce ; so that whether we use the wine or its equivalent is, except 
 as a matter of taste, of no importance whatever." 
 
 But if it be indifferent whether an Irish landlord resid- 
 ing in Dublin consumes an Irish or a foreign product, it is 
 evidently indifferent whether he consumes the one or the other 
 in Dublin or in Paris. Therefore, absenteeism, as far as its 
 financial effects are considered, is a matter of entire indiffer- 
 ence to the Irish people. 
 
 If the premises be correct, the conclusion appears to be in- 
 evitable ; but in this, as in other cases, where the result of 
 reasoning contradicts the almost universal opinion of man- 
 kind, it is well to look again very closely at the premises. 
 Let us do this, and, in order not to perplex ourselves by in- 
 terposing money, let us suppose that the annual produce of 
 the land of Ireland is equivalent to 30,000,000 bushels of 
 wheat, and that the landlord's portion for rent is ten per cent, 
 or 3,000,000 bushels of wheat. If this ten per cent of the 
 rude product of the land be sent off in the form in which it is 
 raised, it is evident that it might as well be burned, as far as 
 the people of Ireland are concerned. The people will have 
 raw products to consume equivalent to 27,000,000 bushels of 
 wheat. This we will call case first. 
 
 Now, alter the supposition, and let the 3,000,000 bushels of 
 wheat be exchanged for Irish manufactured products, and 
 these last be exported. Then, clearly, the people of Ireland 
 will have available for consumption one-ninth part more of 
 the products of the land than they had under the first suppo- 
 sition. This is case second. 
 
 Now, vary the supposition yet again. Bring home the 
 landlords, and confine them and their dependents to the use
 
 of Irish manufactures. The people of Ireland will then have 
 for consumption the same quantity of wheat as in the last 
 case, and also the manufactured products which are exported 
 under case second. This we will call case third. 
 
 In the first case, the raw produce constituting rent is sent 
 abroad. It might as well have been burned. In the second 
 case, it is given to productive laborers, who give in exchange 
 manufactured products, which are exported. Here the Irish 
 people get 3,000,000 bushels of wheat to consume in addition 
 to what they had under case first. In the third case, the 
 Irish people, altogether, have for consumj^tion the additional 
 3,000,000 bushels of wheat (the same as in case second), 
 and also an equal value of other products, subject only to a 
 deduction of what the landlords and their Vives and children 
 actually use themselves ; and, if we go through the expendi- 
 tures of a wealthy family, we shall find this deduction to be 
 very trivial. A very large part of their incomes are ex- 
 changed for professional and personal and commercial ser- 
 vices. Those who render such services constitute, according 
 to the census of the United States, more than one hundred 
 and thirty distinct classes, and are over one-fourth part of 
 the whole working population. 
 
 Mr. McCuUoch saw very clearly that the landlords living 
 in Paris would only obtain services and commodities by ex- 
 changing for tliera their rents or other Irish products into 
 which their rents were^ converted: what he appears to have 
 overlooked is that the landlords, when living in Dublin, would 
 obtain Irish commodities and services only in exchange for 
 their rents or other Irish products into which those rents were . 
 converted. The producer of Dublin stout will not give a 
 single bottle of it, except in exchange for other commodities, 
 any more than will the Portuguese producer of port. It 
 would appear, then, that the premises of Mr. McCulloch were 
 quite inaccurate, and that the conclusion drawn from them 
 must be abandoned. Mr. J. S. Mill, in his " Logic," in book v. 
 chapter iv., end of paragraph 4, has a similar error. He says 
 it is indifferent whether an Englishman buys British or French 
 silks, because British commodities must be produced and ex-
 
 •ported to pay for the French silks. He forgets that the 
 necessaries, conveniences, &c., of the British weavers are as 
 much British commodities and employ as much industry to 
 produce them as do the commodities which pay for the 
 French silks in the other case. The only difference is, that 
 in one case the British weavers are deprived of their support, 
 and in the other case they are not. Everything else remains 
 the same, except that the consumer may get the French silks 
 a trifle cheaper, — a matter altogether too trivial to be com- 
 pared with the national loss. 
 
 Professor Cairnes, in his book entitled "Some Leading 
 Principles of Political Economy," repeats this mistake, and 
 props it up with the remark that if it be an error, " we seem 
 to have made a mistake in repealing our protective laws ; nor 
 were protectionists, after all, so very wrong in seeking to en- 
 courage native industry by compelling expenditure towards 
 domestic productions ! " See part ii. chap, i., note at the end. 
 
 Mr. Mill makes use of the error to prop up the free-trade 
 doctrine, and Professor Cairnes makes use of the free-trade 
 doctrine to prop up the error. 
 
 Let us now examine another specimen of reasoning : the 
 doctrine that a universal glut of all commodities is impos- 
 sible, — not a permanent glut, but aw?/ glut. This doctrine 
 makes a business man open his eyes wide with astonishment. 
 They get at it in this way : — 
 
 1st. " Human desires are unlimited. 
 
 2d. " Commodities are paid for by commodities. 
 
 3d. " He who has produced a commodity has therefore the means 
 of purchasing the other commodity he desires. Double the number of 
 products, and everybody would bring a double demand as well as sup- 
 ply. It is a sheer absurdity that all things should fall in value, and 
 that all producers should, in consequence, be insuificiently remun- 
 erated." 
 
 Thus says Mr. John Stuart Mill ; and Professor J. E. 
 Cairnes, in his work entitled " Some Leading Principles of 
 Political Economy," before alluded to, maintains that with 
 regard to commodities, demand and supply, as general phe- 
 nomena, as aggregates, cannot be discriminated. He says :
 
 " An article is produced and is offered in the market : it is now sup- 
 ply ; but the possession of the article confers upon the owner a pur- 
 chasing power, and this power being exercised, the article becomes a 
 source of demand ; nor is there any other source from which demand can 
 spring. Demand as an aggregate cannot increase without supply, nor 
 supply without demand. This," he says, " is fundamental in the 
 theory of exchange ; and all assumptions to the contrary must be 
 regarded as baseless and absurd." 
 
 Now, every business man knows that the aggregate demand 
 for commodities is sometimes greater and sometimes less ; so 
 much so, that the quantities in stock are sometimes greatly 
 reduced and sometimes greatly increased, — even to the ex- 
 tent that is called a glut. What, then, has perplexed the 
 abstract reasoners ? The doctrine of value appears to be the 
 culprit. The value of anything, they say, is what it "will 
 exchange for in other things ; it is a ratio ; and so, of course, 
 it is absurd to say that all values can rise or all fall together. 
 Hence Mr, Mill and Professor Cairnes maintain that the 
 supply of commodities cannot outrun the demand. But it is 
 just here, in applying to commodities the arguments appli- 
 cable to values, that the reasoning breaks down, and is found 
 to consist in changing the subject. That all values cannot 
 rise or fall together may be perfectly true ; but it does not 
 follow that all commodities — the total annual product — 
 may not rise or fall in exchangeable value ; because the total- 
 ity of commodities does not constitute the totality of values. 
 Besides commodities, there are the rights to incomes, and the 
 totality of fixed capital, the possession of which gives incomes. 
 The annual product in the United States being taken at 
 6,000,000,000, those other values are estimated at 30,000,- 
 000,000 ; and, in fixing their minds upon commodities alone, 
 the eminent authors in question overlooked five-sixths of the 
 values which the money power has constantly to measure. 
 Let no one suppose that Messrs. Mill and Cairnes intended to 
 include all these under the term " commodities." They meant 
 to include nothing beyond the annual product, as would be 
 abundantly evident if there were space to copy their argu- 
 ments in extenso. They argued the case as if there existed
 
 8 
 
 nothing besides commodities, and as if men had no desires for 
 anything else, — overlooking that most pervasive and per- 
 sistent instinct of man to increase his income or better his 
 condition, of which Adam Smith remarks, " that it comes 
 with man when he issues from the womb, and continues with 
 him until he enters the grave." 
 
 Now, the action of this instinct sometimes causes " an in- 
 creased demand for commodities, and sometimes a great 
 diminution and a glut. When many possessors of property 
 yielding an income arrive at the conclusion that the coun- 
 try has outgrown its fixed capital, — that it needs more 
 houses, farms, mills, forges, &c., — they can descend into the 
 market, sell or pledge a portion of their bonds, shares, or 
 other property, and proceed to the construction of new rail- 
 roads, houses, cities, mills, forges, &c. ; and this movement 
 will involve the fuller employment of the community, a con- 
 sequeht diminution in the stocks of commodities, and an ad- 
 vance in their exchangeable value. It seems to be of the 
 nature of such movements to run to excess, as each onward 
 step causes a larger and larger demand and stimulates more 
 and more to an increased production by making the earlier 
 enterprises profitable ; but, finally, just as the most prudent 
 give up looking for a crash, it comes. It suddenly reveals 
 itself to the community that more fixed capital has been 
 formed than can for the time being be profitably used. Then 
 comes a violent reflux of opinion. Men rush into the belief 
 that more has been done in that direction than tho country 
 will require for twenty years. Every new enterprise falls into 
 discredit ; the population which was engaged in converting 
 floating into fixed capital, — that is, engaged in converting a 
 portion of the annual product into instruments designed to 
 increase the future product, — this portion of the population 
 is dismissed into idleness, and is thereby forced to diminish 
 enormously its demand for commodities ; and here we find 
 ourselves face to face with a glut. The productive energies, 
 which had adapted themselves to meet the effective demand 
 of a fully employed community, find themselves in excess in 
 presence of the diminished demand of a community only par-
 
 tiallj employed. There is over-production or under-consump- 
 tiou ; and, as a necessary consequence, the exchangeable 
 value of the whole annual product suffers a great diminution. 
 Those who had been producing upon borrowed capital find 
 themselves unable to meet their obligations ; there are fail- 
 ures, panic, forced liquidations. The possessors of fixed capi- 
 tal next find their incomes diminished. They, for the time 
 being, are no longer able to save ; no longer able even to 
 maintain their previous scale of expenditures. These are 
 next diminished, with the effect of throwing more people out 
 of employment, diminishing still farther the aggregate de- 
 mand for commodities, and consequently their aggregate ex- 
 changeable value. Next, or coincidently, all instruments of 
 production decline ; the productive energies adapt themselves 
 after a while to the new conditions ; a new scale of exchange- 
 able values is evolved ; a smaller gross annual product, in- 
 volving a smaller average annual net individual income, 
 issues, and the community gradually and slowly settles itself 
 upon a lower level, from which in time to take a fresh start. 
 To trace the steps of recovery, and see how a progressive 
 community, after a number of years, works back to its former 
 level and beyond it, might or might not be interesting, but 
 would exceed the limits and go beyond the object of this 
 paper, which in this portion is simply to show, not that gluts 
 do occur, for this everybody knows, but that just reasoning 
 ought to have anticipated them, — ought to have seen that in 
 the present state of our knowledge they are inevitable and 
 likely to be of considerable duration. The panic of 1873 
 was not entirely over before 1879. 
 
 The next specimen of abstract reasoning is the free-trade 
 argument published by Adam Smith in 1775, and repeated in 
 a somewhat modified form by Mr. J. S. Mill three quarters of 
 a century later. 
 
 It will shorten the examination if we first establish one or 
 two preliminary points. 
 
 Between 1860 and 1865 the Northern States supplied the 
 government with commodities or money, which, directly or 
 indirectly, was converted into commodities of the value of 
 
 a
 
 10 
 
 about 84,000,000,000 in currency, or say 13,000,000,000 gold 
 value, in four years. The inducement was government 
 bonds promising a continuous income. Suppose, now, that 
 instead of government bonds issued to carry on a war, there 
 had been offered to the community new industries promising 
 to yield as great an income. It is evident that in the same 
 time $3,000,000,000 would have been forthcoming for the de- 
 velopment of those industries, — a sum greater than the whole 
 fixed and floating capital employed in 1860 in the manufac- 
 turing and mechanical industries of the United States. The 
 country, then, could have doubled those industries in four 
 years. That the annual product of commodities does not in- 
 crease with this rapidity is not, then, because of the inability 
 to find capital, but because men do not discover mutual wants 
 so rapidly. Perhaps more than one-third of the annual prod- 
 uct falls to the share of those who desire to save rather than 
 increase their annual consumption. They must be tempted 
 to spend by the discovery of new products or new services, or 
 by the gradual growth of a more liberal scale of living. 
 Failing this, a portion of tlie annual product remains in stock, 
 diminishing profits and holding in check the expansion of the 
 known industries. This it is which limits the field of indus- 
 try in a community still possessed of a vast amount of unde- 
 veloped resources. Industry, then, as a matter of fact, is not 
 held in check by the want of capital, but by the want of a 
 sufficiently profitable field of employment, and by the accu- 
 mulated stocks of finished products and of materials awaiting 
 conversion. The legitimate loans of banks of issue are made 
 chiefly upon these ; and these loans in the United States, we 
 all know, exceed $1,000,000,000. 
 
 Mr. Mill recognized that these stocks of goods were unem- 
 ployed capital ; but, in spite of this, he, as well as Adam 
 Smith, argues the free-trade question upon the assumption 
 that, in a normal condition of things, every atom of the actual 
 and potential capital of a country is and must be fully em- 
 ployed upon productive industry, so that anything taken for 
 new industries must be taken or withheld from the old. 
 
 We come now to the argument of Adam Smith, contained
 
 11 
 
 in the second chapter of the fourth book of his " Inquiry into 
 the Nature and Causes of the Wealth of Nations." The 
 limits of space forbid the quotation of his whole chapter, 
 which contains a great deal of rhetorical repetition ; but 
 nothing shall be passed over which demands reply. 
 
 In his first paragraph he calls protected industries monop- 
 olies. This they may have been in his time, when almost 
 every trade and manufacture was a close guild ; but this they 
 are not in our time and country, with 50,000,000 of people 
 free to exercise them. To use the word now is anything but 
 complimentary to the intellect of the listener or reader. 
 
 His third paragraph maintains that 
 
 *' The general industry of the society never can exceed what the 
 capital of the society can employ. As the number of workmen that 
 can be kept in employment by any particular person must bear a cer- 
 tain proportion to his capital, so the number of those that can be con- 
 tinually employed by all' the members of a great society must bear a 
 certain proportion to the whole capital of that society, and never can 
 exceed that proportion. No regulation of commerce can increase the 
 quantity of industry in any society beyond what its capital can main- 
 tain. It can only divert a part of it into a direction into which it 
 might not otherwise have gone ; and it is by no means certain that 
 this artificial direction is likely to be more advantageous to the society 
 than that into which it would have gone of its own accord." 
 
 But the number of workmen that can be kept in employ- 
 ment by any particular person does not bear a certain propor- 
 tion to his capital. When the market for his products is 
 dull, a large part of his capital is locked up in unsold goods; 
 he must then lessen his production and dismiss some of his 
 workmen. Quicken the demand for goods, and his ability to 
 employ workmen increases ; and the same is true of society 
 taken together. In a normal condition of things there may 
 be, for instance, a stock of goods equal to two months' con- 
 sumption of the whole community, — a value in the United 
 States at the present time (1881) considerably exceeding a 
 thousand millions of dollars. And observe that these stocks 
 of commodities are the very things — the food, the raiment, 
 'the tools, &c. — which are requisite, and in fact used, in
 
 12 
 
 carrying out any new undertakings. The proposition, then, 
 that " industry never can exceed what the capital of the soci- 
 ety can support " is totally irrelevant* One-half of the capi- 
 tal normally unemployed is ample for the inauguration of 
 gigantic enterprises, and these, if within the strength of the 
 community, will not prevent anything being done which 
 would otherwise have been done. On the contrary, the pre- 
 viously existing industries will be stimulated to larger pro- 
 duction. 
 
 Let us suppose that the United States at the end of 1879 
 were producing and consuming commodities equal to a value 
 of $6,000,000,000 for the year, and with a surplus stock equal 
 to a value of $1,000,000,000. If at that time they commenced 
 forming new instruments (mills, forges, farms, houses, and 
 railroads) to an annual value of $300,000*000 over and be- 
 yond the regular and normal movement, there would be, as we 
 see, $1,000,000,000 of unemployed floating capital out of which 
 to take the funds ; but these funds would go to recompense the 
 producers of the new instruments, and would be by them ex- 
 pended for the most part for commodities, thus relieving the 
 capitalists of a portion of their stocks and placing them in a 
 position to employ more labor for the sake of enlarging their 
 production of commodities. But whatever they thus expend- 
 ed for labor would lead to the production of more than twice 
 the value expended in labor,! and it might well have happened 
 that at the end of 1880 the gap made in the stock of unem- 
 ployed floating capital was quite repaired, and the country as 
 ready to continue a similar movement in 1881 as it was to 
 commence it a year before. Meanwhile, the extra recom- 
 pense to labor during the year would have been not less than 
 $600,000,000. 
 
 Vary the amounts if you please, but you will find that any 
 
 * It never can, for any considerable time, be nearly as great as the capital 
 can support ; for, if it were, there would be no stock of commodities, which 
 would cause such high prices and such high rates of interest as must inevitably 
 moderate the industrial movement. 
 
 t The census of 1870 gave, as the total value added to materials by the me- 
 chanical and manufacturing industries, $1,744,000,000, of which $776,000,000 
 went to labor.
 
 13 
 
 new enterprise not out of proportion to the existing surplus 
 stock of commodities will result, 1st, in an enlarged em- 
 ploj^ment of laborers ; and, 2d, in the creation of new subsidi- 
 ary capital, or say rather of new instruments of production, 
 which would not otherwise have come into existence. But a 
 free-trader may say, How do you know that there is any 
 surplus stock of commodities? and we should reply that, in 
 the first place, we know it as a matter of fact, which can be 
 verified, any day you please to take evidence, in State Street 
 or Wall Street or anywhere else. But as our free-trade 
 brethren do not like facts, nor believe in them unless they 
 agree with conclusions deduced from postulates admitted by 
 their own authors, we will try to show that in an industrial 
 community there must be normally a stock of commodities or 
 of unemployed capital. 
 
 First, then, take industry A. Those who commenced it 
 did so for the sake of profit. But, so long as they obtained a 
 satisfactory profit, the same motive would lead them to en- 
 large their production. If one man did not, another would ; 
 and so the increase of the industry would go on until it over- 
 ran the demand. A stock would then accumulate, bringing 
 down profits and locking up a portion of the producer's capi- 
 tal at the same moment. But what is true of industry A is 
 true of B, C, D, &c. ; and we thus arrive at the conclusion 
 that each carries along a surplus stock. When this stock is 
 diminished by a novel or increased demand, prices rise, and 
 the industry is stimulated ; when the stock is increased, prices 
 fall, and the industry is checked. 
 
 No economist, so far as we know, has noticed the vast ag- 
 gregate amount of these stocks, nor the mannep in which they 
 regulate the play of the industrial forces ; and yet, without 
 knowing about them, it is impossible to understand what hap- 
 pens upon the commencement of a great war, or of a great 
 industrial movement. When we have ascertained what the 
 ordinary average stock is, — whether equal to two or three 
 or more months' consumption, — it will become possible to 
 form a rational opinion as to how far any industrial move- 
 ment can be pushed without bringing on a scarcity of floating 
 capital and a stringency in the money market.
 
 14 
 
 But, meanwhile, it is something to have satisfied ourselves 
 that such stocks must and do exist, and that systems framed 
 in ignorance or disregard of them are necessarily erroneous. 
 Such a system is that of Adam Smith in his third paragraph 
 above quoted. He starts with a self-evident axiom that 
 " the general industry of the society never can exceed what 
 the capital of the society can employ." He then repeats the 
 idea in different words three several times ; and then, mis- 
 taking apparently this rhetorical artifice for logic, he draws 
 his conclusion that " a regulation of commerce can only di- 
 vert a portion of the capital of the society into directions into 
 which it might not otherwise have gone." This conclusion 
 will follow from his axiom, whenever an industrial commu- 
 nity shall be found in which there exists no unemployed cap- 
 ital, and no funds, which, though originally intended for 
 private expenditure, are capable of being diverted to the sup- 
 port of productive labor the moment a protective law affords 
 a sufficient motive for doing so. Until such a community be 
 found, the conclusion does not follow from the premises. 
 His argument, if it can by any stretch of courtesy be called 
 an argument, does not cohere. 
 
 In the next four paragraphs he argues from the supposed 
 interests and motives of men that they would in certain cases 
 act in accordance with the public interest, and he thence 
 concludes that they are "led by an invisible hand to promote 
 an end which was no part of their intention." 
 
 This is a stupendous generalization to be jumped at from a 
 few \evj uncertain coincidences. Had he inquired, after the 
 inductive method laid down by Bacon, as to whether the sel- 
 fish private acts of men coincided generally with the interests 
 of the society, he would have found that innumerable nega- 
 tive instances forbade any such conclusion. 
 
 His next paragraph argues that men can judge what is for 
 their own interest better than any statesman can. This does 
 not seem to be very evident, in light of the fact that over 
 ninety per cent of business men fail ; and, if it were evident, 
 it has been noted already that there is no scientific basis for 
 the assumption that individual private interests generally
 
 15 
 
 coincide with those of the public. All that is evident is, that 
 a statesman cannot undertake to attend to the private affairs 
 of each individual, who, therefore, is left to manage for him- 
 self, under the restraint of general laws. These, however, 
 forbid him to build unsafe ships or houses, to encroach upon 
 or prevent the laying out of a public way, to set up lotteries 
 or gambling-houses, to tie up property indefinitely, to use 
 other than certain weights and measures, &c., ad infini- 
 tum. Uninstructed common sense recognizes everywhere 
 that the immediate interest of the individual is, in an im- 
 mense number of instances, quite opposite to the interest of 
 the community ; and one of the instances is, when the indi- 
 vidual buys of the foreigner at the smallest difference of 
 price, while his fellow-citizen, who could make the article, 
 sits idle or becomes a charge upon the society. 
 
 In the next two paragraphs Adam Smith argues that 
 
 " It is the maxim of every prudent master of a family never to at- 
 tempt to make at home what it will cost him more to make than to 
 buy," and that " What is prudence in the conduct of every private 
 family can scarce be folly in that of a great kingdom. If a foreign 
 country can supply us with an article cheaper than we can make it 
 ourselves, better buy it of them with some part of the produce of our 
 own industry, employed in a way in which we have some advantage. 
 The general industry of the country, being always in proportion to the 
 capital which employs it, will not thereby be diminished, no more 
 than that of the above-mentioned artificers, but only left to find out the 
 way in which it can be employed to the greatest advantage." 
 
 Here are two fallacies, of confusion. The first is in com- 
 paring a nation which, by his own supposition, is not fully 
 occupied, with an individual who, by his own supposition, is 
 fully occupied. Let us correct this by supposing the individual 
 to have employment only four days out of six. He will then 
 be a very z'wprudent and thriftless master of a family if he sits 
 idle two days in the week, because somebody else excels him in 
 all save his special trade. He will set himself about some- 
 thing, will gradually acquire skill and become more indepen- 
 dent ; and his income all the time will be augmented. The 
 second fallacy is introduced by the use of the word cost. We
 
 16 
 
 immediately figure to ourselves what the article would cost, 
 calculating his labor at what he earns during his four occu- 
 pied days ; but what he makes w^hile he would otherwise be 
 idle costs him nothing ; and what a nation makes with labor 
 otherwise idle and with capital which would otherwise be 
 lying unemployed, or which perhaps would never have 
 come into existence, costs the nation nothing. By producing 
 the article it would otherwise import, it adds to the national 
 revenue the total gross value of the article produced, or 
 rather the total value of what would have otherwise been 
 exported. The argument that industry will not be dimin- 
 ished because it is always in proportion to capital, would be 
 good if true, but is good for nothing after we have found out 
 that industry is held in check, not by the want of capital, but 
 by the want of a field of employment sufiQciently profitable to 
 attract capital. 
 
 Adam Smith continues : — 
 
 " Though for the want of such (protective) regulations the society 
 should never acquire the proposed manufacture, it would not, on that 
 account, necessarily be the poorer in any period of its duration. In 
 every period of its duration its whole capital and industry might still 
 have been employed, though upon different objects, in the manner that 
 was most advantageous at the time. In every period its revenue 
 might have been the greatest which its capital could afford, and both 
 capital and revenue have been augmented with the greatest possible 
 rapidity." 
 
 This would be correct, were the facts as to capital such as 
 he imagined. He knew nothing of the normal existence of 
 unemployed capital ; nothing of the rapidity with which new 
 capital can be taken from income ; nothing of the impetuosity 
 with which the savers rush upon and occupy every field of 
 emplo3'ment which promises a profit. 
 
 But the world has learned something in a hundred years ; 
 and in the light of the newly observed facts, we know that in 
 consequence of such regulations the nation will in every 
 period of its duration enjoy a larger revenue and acquire a 
 larger capital.
 
 17 
 
 We come now to the an ti -protectionist argument of Mr. 
 John Stuart Mill. He says : — 
 
 " There can be no more iudustry than is supplied with materials to 
 work up and food to eat. Self-evident as the thing is, it is often for- 
 gotten that the people of a country are maintained and have their 
 wants supplied, not by the produce of present labor, but of past. They 
 consume what has been produced, not what is about to be produced. 
 Now, of what has been produced, a part only is allotted to the support 
 of productive labor ; and there ^ill not and cannot be more of that 
 labor than the portion so allotted (which is the capital of the country) 
 can feed and provide with the materials of production. 
 
 " Yet, in disregard of a fact so evident, it long continued to be be- 
 lieved that laws and government, without creating capital, could create 
 industry." 
 
 This is Adam Smith's argument over again, and is, in 
 brief : — 
 
 1st. Industry cannot exceed what capital can maintain. 
 
 2d. Industry, therefore, cannot increase until new capital 
 has been created. 
 
 3d. Laws and governments cannot create capital. 
 
 4th. Therefore laws and governments have no power to 
 increase industry. 
 
 But to make the later propositions flow from the first, a 
 vast gap has to be filled up : it requires to be proved that 
 in a normal condition of things there is no unemployed capi- 
 tal, and no funds, which, although intended for unproductive 
 consumption, are capable of being instantly turned to the 
 support of production the moment that a new industry, in- 
 trenched by a protective law, presents a profitable field of 
 employment. 
 
 This is a question of fact ; and the moment we inquire into 
 the facts, we find that the unemployed capital in the United 
 States is vast, probably much exceeding $1,000,000,000 ; and 
 that the ability to reinforce this out of the funds intended 
 for unproductive consumption within the year is also vast, 
 probably a good deal over 1700,000,000. Before these facts 
 the whole argument falls to pieces. 
 
 Mr. Mill continues as follows : — 
 
 3
 
 18 
 
 " Not by making the people more laborious, or increasing the effi- 
 ciency of their labor : these are objects to which the government can 
 in some degree contribute. But, when the people already worked as 
 hard and as skilfully as they could be made to do, it was still thought 
 that the government, without providing additional funds, could create 
 additional employment." 
 
 These are wonderful words, as showing how far the most 
 conscientious man may be led in misrepresenting his oppon- 
 ent's positions. The protectionist does not maintain that the 
 government can increase the industry of a people who already 
 work as hard and as skilfully as they can be made to ; but 
 that of a people who do not already work as hard and as skil- 
 fully as they can be made to. Indeed, to suppose that they 
 who already did all they could might still be made to do 
 more (whether the government provided additional funds or 
 not), seems to be one of those blunders or bulls which one 
 would hai'dly expect to find in the deliberate composition of 
 one who has written so admirably upon logic. 
 
 Mr. Mill continues : — 
 
 " A government would, by prohibitory laws, put a stop to the 
 importation of some commodity ; and when by this it had caused the 
 commodity to be produced at home, it would plume itself upon having 
 enriched the country with a new branch of industry, would parade in 
 statistical tables the amount of produce yielded and labor employed in 
 the production, and take credit for the whole of this, as a gain to the 
 country, obtained through the prohibitory law. Although this sort of 
 political arithmetic has fallen a little into discredit in England, it flour- 
 ishes still in the nations of continental Europe. Had legislators been 
 aware that industry is limited by capital, they would have seen that, the 
 aggregate capital of the country not having been increased, any por- 
 tion of it which they by their laws had caused to be embarked in the 
 newly acquired branch of industry must have been withdrawn or with- 
 held from some other, in which it gave, or would have given, employ- 
 ment to probably about the same quantity of labor which it employs in 
 its new occupation." 
 
 Here the cat jumps out of the bag, and we see how Mr. Mill 
 made out his proposition, which he called invulnerable. He 
 translates his original proposition that industry cannot exceed
 
 19 
 
 what capital can maintain, into the words, " industry is lim- 
 ited by capital," which are ambiguous. In one sense they are 
 identical with his original and fundamental proposition ; but 
 his conclusions, as we have seen, cannot be deduced from this. 
 In the other sense they mean that, in point of fact, industry 
 does not increase because there is not any unemployed capital 
 nor any other funds wliich can be at once turned into capital. 
 His conclusions would logically follow from this proposition ; 
 but this proposition, as we have seen, is not true. But, by 
 converting his first and fundamental proposition into an am- 
 biguous form, he misled himself and his readers, and seemed 
 to prove that, when millions of practical men believed they 
 had been enriched by a protective law, they were only as 
 many millions of idiots for thinking so. In doiug this, he 
 committed precisely the error which he denounced in his 
 " Logic," chap. vi. sec. 4, where he says : — 
 
 " The commonest and certainly the most dangerous fallacies of this 
 class, are those which do not lie in a single syllogism, hut slip in be- 
 tween one syllogism and another in a chain of argument, and are com- 
 mitted by changing the premises. A proposition is proved, or an 
 acknowledged truth laid down, in the first j^art of an argumentation ; 
 and in the second a farther argument is founded, not on the same 
 proposition, but on some other resembling it sufficiently to be mis- 
 taken for it. Instances of this fallacy will be found in almost all the 
 argumentative discourses of unprecise thinkers," &c. 
 
 But here an instance is found in his own argument : a great 
 logician, when closely examined, is seen committing a capital 
 error in logic, and thereby teaching us how signally unreliable 
 is the purely abstract system of reasoning, and how constantly 
 it requires to be checked and verified by comparison with 
 facts. 
 
 The absurdities into which abstract reasoning may run by 
 overlooking" important economical facts is curiously shown by 
 another doctrine, enforced at great length by Mr. J. S. i\Iill. 
 This is the doctrine that a demand for commodities " does not 
 and cannot create any em])loyment, except at the expense of 
 other employment which existed before." This flies in the
 
 20 
 
 face of two economical facts. First, that people are con- 
 stantly striving to save ; and, second, that there always, in a 
 normal condition of society, exists a stock of unsold goods or 
 of materials awaiting transformation, — in short, a vast ag- 
 gregate of unemployed capital. He argues thus : — 
 
 " A consumer may expend his income either in buying services or 
 commodities ; he may employ part of it in hiring journeymen brick- 
 layers to build a house, or excavators to dig artificial lakes, or laborers 
 to make plantations and lay out pleasure-grounds ; or, instead of this, 
 he may expend the same value in buying velvet and lace." 
 
 If he does the latter, Mr. Mill concludes that the additional 
 quantity of velvet which his demand causes to be produced 
 could not be produced at all were it not that the bricklayers, 
 &c., being now without work, their demand for necessaries, 
 &c., ceases, and hence the production of those necessaries, &c., 
 ceases ; and hence the precise amount of capital necessary for 
 a larger production of velvet is set free. " There was," he 
 says, " capital in existence to do one of two things, — to 
 make the velvet or produce necessaries for the bricklayers, — 
 but not to do both ! " 
 
 Imagine the case of a young man, who, being imbued with 
 these doctrines, is thrown into practical life in the United 
 States, and obliged to consider business problems into which 
 enters as a factor the probable amount of the capital unem- 
 ployed at the moment, he being utterly ignorant of the fact 
 that the aggregate is generally very large and sometimes 
 enormous. What grave blunders he would make, and at how 
 fearful an expense would he unlearn what he had been taught 
 at school or college ! If we take Mr. Mill's consumer as 
 merely the embodiment of the totality of consumers, we know 
 that in one phase of the revolving phenomena of society he 
 may have been saving until the general glut of commodities 
 has reduced all profits so low that there is no longer a suffi- 
 cient inducement to save. If, then, he sets his bricklayers at 
 •work and buys his velvet, his purchases will relieve the velvet 
 maker of a portion of the stock of goods which held his in- 
 dustry in check, and will enable him to make more velvet ;
 
 21 
 
 and the bricklayers, now employed, will purchase a portion of 
 the overstock of necessaries, and enable their producers to 
 augment their production. And this can go on until the pro- 
 duction of commodities has become so profitable that it may 
 appear desirable to increase the aggregate of productive in- 
 struments ; and the employment of men to construct these 
 will cause a further demand for commodities, a further dimin- 
 ution of the unemployed capital, a further rise in profits, con- 
 current with a greatly increased demand for labor. 
 
 Bat our young man has been taught that an increased 
 supply of commodities is impossible, unless at the same time 
 there is an equal diminution in the demand for services, or 
 for other commodities ; that a glut is impossible ; that demand 
 cannot in the aggregate increase beyond supply, nor supply 
 beyond demand ; that no new industry can be introduced 
 except by diminishing or preventing some other industry ; 
 that the demand for labor cannot increase suddenly, but only 
 gradually and slowly, as capital is, little by little, saved out 
 of income. Pie has been taught these and other errors, which 
 tend to seriously mislead him in practical life, and may ruin 
 him, if he wants that quick perception and almost intuitive 
 interpretation of facts which are needed to place him where 
 he would have been had he never studied these subjects 
 abstractly. 
 
 In Professor Cairnes's book, entitled " Some Leading Prin- 
 ciples of Political Economy," already alluded to, we have an 
 elaborate work, designed evidently to affect public opinion 
 in the United States and on the continent of Europe in favor 
 of free trade. Let us examine its logic. lie says, part iii., 
 chapter i., paragraph iii. : — 
 
 " Secondly, when it is said that international trade depends on the 
 difference in the comparative, not in tlie absolute, cost of producing 
 commodities, the costs compared, it must be carefully noted, are the 
 costs in each country of the commodities which are the subjects of ex- 
 change, not the different costs of the same commodity in the exchang- 
 ing countries. Thus, if coal and wine be the sul)jects of a trade between 
 England and France, the comparative costs on which the trade de- 
 pends are the comjmrative costs of coal and wine in Friuicc as com-
 
 22 
 
 pared with the comparative costs of the same articles in England. 
 England might be able to raise coal at one-half the amount of labor 
 and abstinence needeil in France ; but this alone would not render it 
 profitable for France to obtain her coal from England. If her disad- 
 vantage in procuring other commodities was as great as in producing 
 coal, she would gain nothing by an exchange of products, and the con- 
 ditions of a trade between the two countries would not exist. But, 
 supposing she was, in the case of some other commodity, under a less 
 disadvantage than in that of coal, still more,' if she had, with regard to 
 that other, — as in wine, — a positive advantage, it would at once be- 
 come her interest to employ this commodity as a means of obtaining 
 til rough trade her coal from England, instead of producing coal di- 
 rectly from her own mines." 
 
 All that this proves is, that in some cases it will be advan- 
 tageous for France to get its iron from England in exchange 
 for wine. That it will not be so in all cases is easily shown, 
 as follows : Let the utmost requirements of England for wines 
 be .£2,000,000 sterling; let the requirements of France for 
 iron be £10,000,000 sterling. She (France) can in this case 
 obtain from England iron somewhat more cheaply, — we say 
 someivhat, because the advantages would be divided between 
 the two countries, — but she would have to go without four- 
 fifths of the iron she required. Her saving of labor and ab- 
 stinence upon the iron she did get from England would be a 
 considerable percentage, of the value of, let us say, 100,000 
 tons of iron ; her loss would be the enormously greater value 
 of 400,000 tons of iron. 
 
 Professor Cairnes's reasoning, then, leads only to a jjarticu- 
 lar conclusion^ and can be used, only as a particular, not as a 
 universal, premise. 
 
 Further on in the same paragraph Professor Cairnes quotes 
 the instance of Barbadoes buying to advantage its food in 
 New York, and paying in tropical products, notwithstanding 
 that it could raise food also more cheaply than New York. 
 
 Here is another particular instance from which no general 
 conclusion can be drawn. It may or may not be well for a 
 small island inhabited by a handful of people to purchase 
 their food and clothing and other conveniences, by giving for
 
 23 
 
 them sugar and coffee and spices; but scarcely even a lunatic 
 would propose to 100,000,000 of people to do the same thing ; 
 because the quantity of sugar and coffee and spices which 
 they could find a market for would not procure them a twen- 
 tieth part of what they required in other things. 
 
 We come now to Professor Cairnes's chapter iv., entitled 
 " Free-Trade and Protection." Unfortunately he based the 
 main portion of his argument upon the statistical deductions 
 of Mr. David A. Wells. The Professor probably did not 
 know how roughly these had been handled in Congress ; but, 
 being a prominent economist, he ought, one would think, to 
 have distrusted the accuracy of figures which appeared to 
 prove that the real wages of the people of the United States 
 had declined twenty per cent between the years 1860 and 
 1868. However, he accepted them in full faith, and based 
 upon them his main argument, which amounts to this: — 
 
 So great a deterioration in the condition of the people must 
 have a cause. I look about in every direction, and cannot 
 find anything to attribute it to, except the Morrill Tariff. 
 Here we have a suflacient cause. It puts on duties averaging 
 forty-seven per cent. 
 
 *' Every article, therefore, produced in the United States, wliieh 
 would not have been produced theie but for the protective tariff, rep- 
 resents an expenditure of labor and capital greater than would have 
 been necessary to obtain the same article had it been obtained under 
 free trade. In a word, American labor and capital, as a whole, have, 
 effort for effort and outlay for outlay, been producing smaller results 
 since 1861 than formerly; and, this being so, what other exf)lanation 
 do we need of the actual facts which we encounter, — of diminished 
 returns on American industry, of a fall in the real wages of labor ? " 
 
 Scores of times it has been shown by American writers 
 that, when an industry has been raised up by protective 
 duties, its products have been often cheapened and scarcely 
 ever augmented by the amount of the duties. Scores of 
 times the free-trader has replied, Wliere, then, was the neces- 
 sity for the duty? and scores of times they have been told,. 
 The duty was necessary in the first place to establish the
 
 24 
 
 industry, and afterwards to prevent it from being maliciously 
 overwhelmed by English goods sold at a loss, which was to 
 be more than made np by the higher prices obtainable when 
 we no longer were able to help ourselves. 
 
 It by no means follows, then, that forty-seven per cent was 
 added to the cost of articles caused to be produced by the 
 Morrill Tariff. It is almost certain that with the tariff we 
 have still to offer in foreign markets as great a surplus of the 
 commodities " in raising which we have an advantage " as can 
 be well sold ; that, if we offered a larger quantity, the net re- 
 turns would be less in the aggregate than they are now ; and, 
 if so, the commodities produced by reason of the tariff are just 
 so much clear gain. The question was, " Are protective laws 
 a burthen to the country imposing them ? " and the Pro- 
 fessor surely made a grave slip in undertaking to prove they 
 were, by assuming that they were ! K the statement of Mr. 
 Wells had been a fact, and the average real wages of the in- 
 habitants of the United States had actually been reduced 
 twenty per cent, there are many other conceivable causes be- 
 sides a tariff. In 1874 to 1879 there was a serious fall in the 
 rate of wages as measured b}^ money, and also probably as meas- 
 ured by commodities ; but there has recently (1881) been an 
 enormous advance. Did the tariff cause both the decline and 
 the advance ? We certainly are not called upon to draw any 
 such absurd conclusion. The fall in 1873-74 was sufficiently 
 accounted for by the sudden cessation by the community 
 from the construction of new instruments of production, and 
 the recent advance is sufficiently accounted for by the move- 
 ment in the opposite direction now going on. When the 
 community is fully employed, the gross annual product is 
 large : there is much to divide, and wages and profits advance 
 together. When a portion of the community is dismissed into 
 idleness, the annual product is diminished: there is less to 
 divide, and wages and profits fall together. 
 
 Professor Cairnes feels great anxiety about the Illinois 
 farmer, lest he should not get enough for his corn, and have 
 to pay too much for other things. He and J\I. Mongredien 
 would like to have us confine ourselves to that in which we
 
 25 
 
 have an advantage, and take the other things from England. 
 The farmers could take 81,000,000,000, and the rest of the 
 community converted into farmers could take another $1,000,- 
 000,000 ; and, twenty-five years hence, when we number 
 100,000,000 of people, we could take twice as much, or say 
 84,000,000,000 of other things. What would be the price of 
 the other things under such circumstances, — whether double 
 or treble what it is now, — and what the price of the corn, — 
 whether two-thirds or half of what it is now, — ought not 
 to trouble political economists ! 
 
 On looking further, I see I am in error, and that Pro- 
 fessor Cairnes does not agree with M. Mongredien. He does 
 not expect us all to become farmers ; on the contrary, he tells 
 us that — 
 
 " (1) As regards the industries of raw produce, protection does not 
 call into existence a single branch of production which would not 
 equally have existed under free trade, — it merely alters the propor- 
 tions in which such industries are carried on, hindering their natural 
 and healthy development ; (2) in the domain of manufacturing indus- 
 try it is equally inefficacious as a means of creating variety of pursuits, 
 
 — for if on the one hand it secures a precarious existence for certain 
 kinds of manufactures, on the other, by artificially enhancing the price 
 of raw material, it discourages other kinds which in its absence would 
 grow and flourish ; while (3) over and above all these injurious effects, 
 it vitiates the industrial atmosphere by engendering lethargy, routine, 
 and a reliance on legislative expedients, to the great discouragement of 
 those qualities on which, above all, successful industry mainly depends, 
 
 — energy, economy, and enterprise. To conclude, having regard to 
 die geographical position, extent of territory, and extraordinary natural 
 resources of the United States, as well as to the character of its 'people, 
 trained in all the arts of civilization, and distinguished beyond others by 
 their eminent mechanical and business talents, there seems no reason 
 that they should not take a position of commanding influence 'in the 
 world of commerce, — a position to which no other people on earth could 
 aspire. . But, to do this, they must eschew the miserable and childish 
 jealousy of foreign competition which is now the animating principle of 
 their commercial policy. If they desire to command a market for 
 their products in all quarters of the world, they must be prepai-ed to 
 admit the products of other countries freely to their markets, and must
 
 26 
 
 learn to seek the benefits of international trade, not in the vain ambi- 
 tion of underselling other countries, and so making them pay tribute in 
 gold and silver to the United States, but in that which constitutes its 
 proper end and only rational purpose, — the greater cheapening of 
 commodities and the increased abundance and comfort which result to 
 the whole family of mankind." 
 
 But the " world of commerce " in which we are invited to 
 partake is a world in which Great Britain, by immense efforts, 
 — warlike, industrial, diplomatic, social, and literary, — has 
 been able to find markets for only about twelve hundred mil- 
 lions of dollars in value of the products of her mechanical and 
 manufacturing industries ; while our own market, which we 
 are invited to share with Great Britain, is now some four or 
 five times as great, and pretty sure to be ten times as great in 
 twenty-five years. The invitation has a humorous aspect, 
 and might be passed over with a good-natured smile, if the 
 matter were not one of such transcendant importance. Any 
 attempt to put his recommendations in practice would place 
 in peril a large proportion of our capital and industry, and 
 also the high rate of real wages which we have thus far been 
 able to sustain. The farmer is not very likely to sanction it. 
 He knows too well what protection he gets from the removal 
 of nearly half the population from the soil ; and he knows 
 too well how his farm rises in value when the mill or the 
 forge settles down beside him. No ! the men who thought- 
 lessly favor such movements are professional and literary 
 men and the possessors of incomes. All tliese are apt to 
 think it would be well if they could get their clothing and 
 other conveniences cheaply from England. They forget that 
 with a diminution of the rate of wages must also come a 
 diminution of fees, salaries, profits, and incomes. When the 
 incomes from mills, forges, railroads, houses, all fell off, they 
 would lament the day that they assisted to inaugurate so 
 perilous, so pernicious, an experiment. 
 
 Professor Cairnes tells us that protection does nothing to 
 diversify industries. His reasoning has been found exceed- 
 ingly liable to error in other instances, and is exceedingly 
 unsubstantial in this. Facts all over the world confute him.
 
 27 
 
 Let us now turn over the leaves of a livelier author, M. 
 Bastiat. He, at all events, entertains us. He gives us a 
 most amusing petition from the manufacturers of gas for the 
 abolition of sunshine. We laugh ; but we remember that 
 no one proposes to employ labor to produce an inferior substi- 
 tute for what can be had for nothing. Nor does anybody 
 propose to raise pineapples under glass as a substitute for the 
 tropical product. The climate is too much against us, except 
 indeed when the article to be produced is of sufficient im- 
 portance to make it worth our while to set civilization against 
 sunshine, as was done in the case of sugar from the beet, and 
 done with complete success. 
 
 Another point which Bastiat urges with great wit and 
 vivacity is that our object in building railroads and steam- 
 ships and telegraphs is to facilitate intercourse, — to re- 
 move impediments to intercourse. But the moment we have 
 done this we set- about undoing it, by enacting protective and 
 prohibitory tariffs, which are equivalent to breaking up the 
 railroad or burning the steamship, or at least the equivalent 
 of a serious diminution of their utility. But when we build 
 a railroad or a steamship we know that these beneficent in- 
 struments, like most others, may be perverted to pernicious 
 uses. They are excellent for carrying passengers ; but it 
 does not follow that they should be used by every passenger. 
 A thief, a spy, a murderer, a person afflicted with the small- 
 pox, may surely be refused a passage, without subjecting the 
 directors to a charge of absurdity. They are also excellent 
 for carrying freight ; but they do not become any less excel- 
 lent when their managers forbid infectious or dangerous or 
 injurious commodities being conveyed by them. 
 
 We form these instruments of locomotion to promote such 
 commerce as for good and sufficient reasons we deem advan- 
 tageous, and the multiplication of railroads and steamships 
 and their good dividends bear witness to the fact that there is 
 plenty for them to do, in spite of the wicked and absurd pro- 
 tective laws. Men have not yet found reason to adopt the 
 general proposition, that Whatever traffic is carried on by 
 railroads or steamships is ipso facto and necessarily beneficial !
 
 28 
 
 Nor yet this other general proposition, To forbid any traflBc 
 which is carried on by means of a raih'oad or steamship is 
 absurd and ridiculous. Such arguments, when stripped of 
 the wit and rhetoric by which Bastiat and his imitators have 
 covered them up, need no refutation. To show them as they 
 are is sufficient. 
 
 One who reads Bastiat's admirable chapter upon Capital 
 and Interest is filled with wonder at the venerable blunders 
 found in other parts of his work. As one example, he says : 
 
 "On what depends the demand for labor? On the quantity of 
 disposable national capital. And the law which says, ' Such or such 
 an article shall be limited to home production and no longer imported 
 from foreign countries,' can it in any degree increase this capital? 
 Not in the least. This law may withdraw it from one course and 
 transfer it to another, but cannot increase it one penny. Then it can- 
 not increase the demand for labor." 
 
 Let us see. A nation is, as before supposed, producing an- 
 nually commodities worth $6,000,000,000, and it has normally 
 in stock $1,000,000,000, being commodities in the hands of 
 producers or dealers and advanced upon by banks or moneyed 
 men. 
 
 Now the law steps in and says : There is an article (say 
 woollen goods) for which there is a large demand in the 
 country, but which has hitherto been brought from abroad. 
 "We are under no disability as to climate. When we have 
 acquired the requisite skill, we can produce with as little 
 cost (in labor and abstinence) as any other country. Let 
 there be a duty placed upon importations sufficient to amply 
 protect the new industry. 
 
 Under these encouragements capitalists all over the coun- 
 try subscribe to establish woollen mills, to build the mills 
 and furnish the floating capital, and then to proceed to 
 work. Let the movement be of large dimensions, say to 
 the extent of $300,000,000 the first year paid away to work- 
 men. The $1,000,000,000 of unemployed capital is ample 
 without disturbing any previous industry. It is more than 
 three times what is ample. So far, so good ! But the
 
 29 
 
 money paid out for labor will nearly all be spent by the 
 laborers — for what? For the very commodities which con- 
 stitute the unemployed capital. The producers of these, 
 finding an extra demand to the extent of nearly a third of 
 their stocks, are all along in condition to increase their pro- 
 duction by employing more labor and paying more wages. 
 They may do this to nearly the extent of '$300,000,000, with 
 the result of producing commodities worth more than twice 
 the wages disbursed. Here, then, the community at the end 
 of the year finds its floating capital about the same as at the 
 beginning, and its fixed capital increased $300,000,000 ; and 
 its laborers have had and used during the year $600,000,000 
 more than they would have had without the law. But M. 
 Bastiat, as we have seen above, lays it down as the indubi- 
 table teaching of his science, that the law cannot increase tho 
 capital disposable for the payment of wages a single penny. 
 This is the patriarch of free-trade sophisms or blunders, 
 having been born in the house of Adam Smith more than a 
 hundred years ago. 
 
 As another example of venerable blunders, take the follow- 
 ing. He says ; — 
 
 " France, according to our supposition, manufactures 10,000,000 of 
 hats at fifteen francs each. Let us now suppose that a foreign pro- 
 ducer brings them into our market at ten francs. I maintain tliat 
 national labor is thus in no wise diminished. It will be obliged to 
 produce the equivalent of the 100,000,000 francs which go to pay for 
 the 10,000,000 of hats at ten francs, and then there remains to each 
 buyer five francs, saved on the purchase of his hat, or, in total, 50,- 
 000,000 francs, which serve for the acquisition of other comforts and 
 the encouragement of other labor." 
 
 Let us see, France, according to his first supposition, pro- 
 duced 10,000,000 of hats selling for 150,000,000 francs; but 
 the recipients of these 150,000,000 francs did not eat or drink 
 or live in them. They exchanged them for other 150,000,000 
 francs of products. Here, then, were 300,000,000 francs of 
 French products, every franc of which (see M. J. B. Say) 
 was net income to some Frenchman. Total net income, then, 
 under this supposition, 300,000,000 francs.
 
 30 
 
 Under the other supposition, foreigners bring in 10,000,000 
 hats and receive French products worth 100,000,000 francs. 
 The French consumers get their hats the same as before ; 
 and, if they spend the whole of the 50,000,000 francs saved 
 by the change to a foreign producer, there will be an addi- 
 tional demand for 50,000,000 francs of varied products. The 
 total French product, then, under this supposition, will be 
 150,000,000 francs, every franc of which will be net individ- 
 ual income to somebody. Total net income, then, under this 
 supposition, 150,000,000 francs. The aggregate of the French 
 incomes, then, has been reduced 150,000,000 francs by the 
 change from a French to a foreign producer. 
 
 But the hat-makers, you may say, will do something else. 
 But in saying this you introduce a new element into the 
 question ; and, moreover, you are by no means warranted in 
 your assumption. Mr. John Stuart Mill ought to be a good 
 enough authority for free-traders, and he says, in regard to a 
 similar case (see book i. chap. v. sec. 9) : — 
 
 " The very sum which the consumer now employs in buying velvet 
 (for velvet, read English hats) formerly passed into the hands of jour- 
 neymen bricklayers (for journeymen bricklayers, read French hat- 
 makers), who expended it in food and necessaries, which they now 
 either go without or squeeze^ hy their competition, from the shares of 
 other laborers." 
 
 The change of the demand for hats from France to, say, 
 England does not increase the demand for other French prod- 
 ucts a single franc, even on the supposition that the hat con- 
 sumers spend all they save in the price of hats upon other 
 products. If they capitalize any of their savings, the gross 
 demand for other French products will be less than before. 
 The hypothesis, then, finds no funds for the support of the 
 displaced French hat-makers. They must starve, or squeeze 
 a living (by competition) out of the remuneration of other 
 laborers. 
 
 This is not only a venerable blunder ; but worse still, it is 
 a dead blunder. It was killed by Sir John Barnard Byles in 
 the " Sophisms of Free-Trade," in 1849, and witness was 
 borne to its peaceful interment by William Lucas Sargant in
 
 31 
 
 the "Science of Social Opulence," a -work favoring free trade, 
 published in 1856. But this ghost of a blunder so long 
 buried was produced afresh as a valid argument in j\I. Bas- 
 tiat's " Sophisms of Protection," translated for the instruction 
 of the American public under the auspices of " The American 
 Free-Trade League." 
 
 A large proportion, however, of American converts to free 
 trade become so really through influences which are quite 
 natural and amiable, but which are perfectly innocent of 
 logic. A vast host of wealthy and cultivated persons every 
 year visit Great Britain, where they find almost every man, 
 woman, and child a free-trade missionary, ready to ten- 
 derly influence and instruct their less fortunate cousins from 
 the western side of the Atlantic. Every man, woman, and 
 child is completely possessed with the conviction that polit- 
 ical economy is already a science, but one, alas ! only under- 
 stood in England. Our ignorance is gently forgiven, our 
 wayward perversity is borne with, any wavering in our convic- 
 tions is greeted with encouragement and suitable applause, any 
 symptoms of actual conversion are received with unmeasured 
 caresses. The stateliest doors fly open to the truly repentant 
 protectionist; and the highest talent of the land can find 
 time to pause approvingly and to recognize that the individ- 
 ual who, having been born in utter darkness, can still thus 
 bare his eyes to the almost overpowering glare of truth, miist 
 possess not only a good heart, but also a commanding intel- 
 lect ! A large portion of the beliefs and opinions of men are 
 rather, as it were, inhaled or absorbed from the social atmos- 
 phere around them, than arrived at by any process of rea- 
 son. We find it easy and pleasant to agree with those who 
 treat us with delicacy and attention, and almost anything 
 seems logical which brings us into accord with the great, the 
 wise, and the good. We do not reflect tliat Bacon, in his 
 time, could not easily have avoided believing in witchcraft ; 
 that Samuel Johnson was ready to be scared out of his wits by 
 reports of a ghost ; and that the present opinion of Mr. Glad- 
 stone or other great thinkers and scholars in favor of free trade 
 has intrinsically no more value than had theirs in favor of the
 
 32 
 
 beliefs -which the world has now so entirely outgrown. The 
 universality of an opinion is so far from being proof of its 
 correctness, that it should rather inspire a fear of erior, — a 
 fear that only one side of the question liad been heard. 
 
 It is really curious to observe the unanimity with which 
 our English cousins believe themselves masters of political 
 economy ; but one of themselves, an author who has made 
 valuable additions to the materials of political economy, 
 declares, in reference to Great Britain, that 
 
 " Political economy is little understood, even by educated men. A 
 few of its doctrines, indeed, — those, for example, relating to the divi- 
 sion of labor and free trade, — have taken their place in the familiar 
 philosopliy of Western Europe. Men learn them, however, by rote, 
 not by study." 
 
 But the traveller is not aware of this. He is in contact 
 continually with free-trade opinions, and gradually acquires 
 them by contact or by infection, just as he would catch the 
 small-pox or a malarial fever ; and, in this condition of mind, 
 he returns, to be vexed and worried and made to pay out 
 money by the custom-house authorities. Here personal irri- 
 tation comes in to complete the conversion. He sees very 
 clearly what he has to pay ; he does not see by any means so 
 clearly that the ample income which made his travels possible 
 had sprung from the system of which the custom-house an- 
 noyances were a necessary portion. He becomes a- hater of 
 all tariffs, as obstructions to intercourse, and a ready listener 
 to such sophistries as the following, put forth by Mr. David 
 A. Wells since his conversion to free trade during a visit to 
 England. He says, in his '• Creed of Free-Trade : " — 
 
 " The highest right of property is the right to freely exchange it 
 for other property. Any system of laws which denies or restricts this 
 right, for the purpose of subserving private or class interests, reaffirms 
 in effect the principle of slavery. "Whatever facilitates or cheapens the 
 interchange of commodities or services — good roads, the locomotive, 
 the steamship, or the telegraph — promotes abundance, and conse- 
 quently the aggregate of human comfort and happiness. Whatever, 
 on tlie other hand, restricts or makes costly the exchange of commodi-
 
 33 
 
 ties or services — be it in the nature of bad roads, high mountains, 
 tempestuous oceans, swamps, deserts, or restrictive laws — increases 
 scarcity, and consequently the aggregate of human poverty and dis- 
 comfort." 
 
 This seems admirable reasoning to one whose preconceived 
 opinions are all in favor of free trade. Let us see whether it 
 is so. 
 
 The first sentence contains a proposition altogether foreign 
 to political economy, which concerns itself solely with ques- 
 tions relating to social opulence. This proposition belongs to 
 the domain of law and to the domain of social science, of 
 which political economy is only a portion, a portion in which 
 this question has no place. That it is dragged into a discus- 
 sion regarding free trade shows a consciousness of weakness. 
 But a lawyer or a professor of social science would meet with 
 a smile the assertion that " the right of every possessor of 
 property to exchange it for other property is so full, uni- 
 versal, and sacred, that the whole community must abstain 
 from any regulation thereof " ! 
 
 Even if the pecuniary interests of some individuals were in- 
 /wrec?, these ought to give way to the interests of the whole com- 
 munity ; and to liken such pecuniary interests or rights to the 
 rights to life and liberty invaded by slavery, is a monstrous 
 sophism. The insinuation that the restriction of the right of 
 exchange by protection is made in order to subserve private or 
 class interests, is to carry the discussion entirely out of the do- 
 main of truth, as the whole aim and object of protection is to 
 increase the total annual product for the benefit of the com- 
 munity as a whole. That good roads, the locomotive, the 
 steamship, and the telegraph promote abundance in all cases 
 is not true. They promote abundance when they are re- 
 stricted to beneficent exchanges ; they promote scarcity when 
 used to carry on a commerce which, after destroying our 
 means of helping ourselves, can only give us a fifth or a tenth 
 of what we enjoyed before. We have a natural advantage in 
 producing cotton, tobacco, wheat, and a few other products 
 which are salable abroad ; but the market for these products 
 is not sufficiently great, nor can it become sufficiently great, 
 
 6
 
 34 
 
 to warmnt the employino;' upon them one-half our present or 
 a fourth of the population we shall have in 1905. To endea- 
 vor to confine ourselves to these would be to transfer the 
 vrhole of our natural advantages to the foreigner, and to re- 
 duce ourselves to the condition of Ireland, Turkey, India, 
 and other countries which are prevented from helping them- 
 selves and compelled to look to England for mechanical and 
 manufactured products. This is an eminently practical ques- 
 tion, upon which the rhetorical sentences quoted from Mr. 
 Wells have no bearing whatsoever. The following is equally 
 irrelevant. He says : — 
 
 "In the absence of all freedom of exchange between man and man, 
 civilization would obviously be impossible ; and it would seem to stand 
 to reason that to the degree in which we impede or obstruct the 
 freedom of exchange, — or, what is the same thing, commercial in- 
 tercourse, — to that same degree we oppose the develojDment of civili- 
 zation." 
 
 But this is reasoning from a " particular " proposition as if 
 it were universal. Some exchanges are necessary conditions 
 of civilization, but others may be highly prejudicial to civili- 
 zation ; there may be many exchanges which must be sup- 
 pressed in order to reach the highest civilization. The 
 suppression of some foreign exchanges may bring into exist- 
 ence many times the number of more advantageous exchanges 
 at home. 
 
 Mr. Wells thinks it strange that the American people, who 
 insist upon free trade among themselves, should object to 
 free trade with foreign countries, and thinks that " foreign 
 trade presents no element peculiar to itself." 
 
 This is a strange assertion. It would seem that foreign 
 trade is subject to foueign legislation, and not to domestic 
 legislation ; that foreign trade is especially liable to inter- 
 ruption from war ; that foreign trade (especially with Eng- 
 land and Europe) is more distant as to markets ; that 
 foreign trade is carried on with nations having very differ- 
 ent conditions of production, and haviug both the will and 
 the ability to greatly injure and even crush our industries by
 
 35 
 
 selling products at a loss, for the very purpose of driving us 
 from our own markets and then making us pay high prices. 
 It would seem that an exchange with the foreigner provokes 
 only one production, where a domestic exchange provokes 
 two ; and that this alone is of supreme importance, inasmuch 
 as the whole price of everything produced constitutes net in- 
 dividual income to somebody, as is proved by J. B. Say. 
 
 Volumes could be filled with examples of the errors com- 
 mitted by economists of the English school in their deductive 
 reasoning. We have seen that Mr. J. S. Mill, who gave the 
 world an admirable treatise upon the science of logic, could 
 yet amaze his own scholars by giving them one of the best 
 possible specimens of the fallacy called " Changing the Pre- 
 mises," and thus arrive at a false conclusion upon a vital 
 question in political economy. Both he and Professor 
 Cairnes, we have seen, apply to commodities the argumenta- 
 tion which is only true with respect to all values, of which 
 commodities form only a small portion. By this error they 
 come to the conclusion that a glut is impossible, — a conclu- 
 sion which is contrary to fact, and contradicted by all correct 
 deductive raasoning. Every economist of the English school 
 enjoins upon us to buy in the cheapest market with some 
 portion of our own products in raising which we have an 
 advantage. We reply, that the products in which we have 
 an advantage are not salable abroad to an extent which 
 would pay for one-third part of the other products that we 
 now make for ourselves. We are 50,000,000, we say, and 
 require, and actually obtain and enjoy, annually, commodi- 
 ties produced by the mechanical and manufacturing arts of 
 the value of at least $4,000,000,000. In twenty-five years 
 we shall be 100,000,000.; and, if we continue the protective 
 policy, we shall no doubt then annually obtain and enjoy 
 similar commodities to the value of $10,000,000,000, — a sum 
 equal to about three times the total annual consumption of 
 the British Islands, of which consumption, be it noted, only 
 a small fraction could, under any possible circumstances, be 
 taken from the United States. Great Britain cannot supply 
 our wants ; but she can, and, if we will allow her to do so,
 
 36 
 
 she will, prevent our supplying them by our own industry. 
 She would give us a comparatively small quantity cheap, and 
 we could go without the balance. This is the only kind of 
 abundance (!) which free trade ever can produce for the 
 United States. 
 
 This is the abundance which free trade gives to India. In 
 that country are to be found 200,000,000 of people of a highly 
 acute and industrious race. To be on a par with the United 
 States, their annual product should be about 125,000,000,000 
 in value. It is in reality far less than a tenth of that sum ; 
 and every few years there is (now in this, then in that 
 province) a famine that carries off from one to two millions 
 of human creatures. And what advantage does Great Brit- 
 ain obtain from this deplorable condition of affairs? The 
 pitiful advantage of selling in India some $120,000,000 worth 
 of English products, and making thereon perhaps a profit of 
 $25,000,000. Where England profits a dollar, India foregoes 
 producing a thousand. 
 
 Similar has been the effect of English free trade upon Ire- 
 land, Portugal, and Turkey, and upon her own colonies. 
 Deductive reasoning leads directly to the conclusion that the 
 only way in which the British Islands, with 30,000,000 of 
 people, can be the workshop of the world, is by preventing 
 the world from helping itself; and, on the other hand, the 
 imagination would fail to picture the magnificence of her 
 empire after a period of fifty years, should she set herself 
 resolutely to the task of developing in Ireland, in India, and 
 in the colonies the arts and sciences which she herself pos- 
 sesses. She has a heart large enough to adopt so beneficent a 
 policy. She does not do so, 'because sophistical arguments 
 have fixed upon her a belief which future ages will wonder 
 at, as we now wonder at her once equally unanimous belief 
 in the existence of witchcraft.
 
 REVIEW 
 
 OF 
 
 BASTIAT'S SOPHISMS OF PROTECTION. 
 
 The preface tells us that " the primary object of the League 
 is to educate public opinion, to convince the people of the 
 United States of the folly and wrongfulness of the protective 
 system." It quotes Senator Morrill as saying that " the year 
 1860 was a year of as large production and as much general 
 prosperity as any, perhaps, in our history " ; but these words 
 would probably bear a different aspect if read with the con- 
 text, as the condition of that year was very differently de- 
 scribed by H. C. Carey as follows : — 
 
 " "What it is which may be positively affirmed in reference to that 
 Jlucluation of policy which struck down the great iron manufacture, at 
 the moment at which it had just begun to exhibit its power for good, 
 would seem to be this : that in the British monopoly system which 
 thereafter followed, we added something less than forty per cent, to our 
 population ; seventy, to our machinery for water transportation ; and five 
 hundred, to that required for transportation by land ; meanwhile ma- 
 terially diminishing the quantity of iron applied to works of production. 
 When you shall have carefully studied all this, you may perhaps find 
 yourself enabled to account for the facts, that in the closing year of 
 the free trade period, railroad property that had cost more than a 
 thousand millions could not have been sold for three hundred apd 
 fifty ; that ships had become ruinous to nearly all their owners ; that 
 factories, furnaces, mills, mines, and workshops had been everywhere 
 deserted; that hundreds of thousands of working men had been 
 everywhere seeking, and vainly seeking, to sell their labor; that
 
 4 REVIEW OP BASTIAT'S SOPHISMS OP PROTECTION. 
 
 immigration had heavily declined ; that pauperism had existed to an 
 extent wholly unknown since the great free trade crisis of 1842 ; that 
 bankruptcies had become general throughout the Union ; that power 
 to contribute to the public revenue had greatly diminished ; and 
 finally, that the slave power had felt itself to have become so greatly 
 strengthened as to warrant it in entering on the Great Rebellion." 
 
 So much for one of the premises of the preface. Another 
 of the premises is a quotation from Miss Martineau made to 
 show that the superiority of Great Britain in manufactures 
 was not attained by means of protection, but that protection 
 had brought Great Britain to the verge of ruin in 1842. 
 
 But the superiority of Great Britain was gained long before 
 1842. The troubles at that time were the result of over- 
 trading, of over-pushing of the manufacturing industries. 
 Sir Robert Peel afterwards lost his head, and yielded to the 
 Free Trade League, who were waging war upon the land- 
 owners, and seeking to make the prosperity of England 
 hang, as Carlyle forcibly said, upon being able to manufac- 
 ture cottons a farthing a yard cheaper than other people. 
 The millocracy triumphed over the landowners, and, for- 
 tunately for England, the gold of California and Australia 
 brought about a general improvement in trade, which post- 
 poned the consequences for a long period. But they are 
 seen now in Ireland, and may soon be seen in England. 
 Meanwhile free trade has not prevented scenes in England 
 quite equal to those pictured by Miss Martineau. They 
 occurred from 1866 to 1870 ; but quotations would need- 
 lessly swell this article. 
 
 The preface adds, — 
 
 " Again, it is said there is need of diversifying our industries, as 
 though industry would not diversify itself sufficiently through the 
 diverse tastes and predilections of individuals, — as though it was 
 necessary to supplement the work of the Creator in this behalf by 
 human enactments founded upon reciprocal rapine." 
 
 The " work of the Creator " and " reciprocal rapine " are 
 good rhetoric : they are not logic. They take for granted the 
 question which is to be proved. The pretty alliteration
 
 REVIEW OF BASTIAT S SOPHISMS OF PROTECTION. 5 
 
 might delight a doctrinaire : it would produce no effect 
 upon the masculine judgment of a Napoleon, against whom 
 Bastiat modestly puts himself. 
 
 We come now to Chapter I., entitled, "Abundance, — 
 Scarcity." 
 
 Throughout this chapter M. Bastiat supposes that abun- 
 dance and cheapness are necessarily coexistent. He does not 
 know, or he does not appear to know, that a low price is 
 perfectly compatible with great scarcity ; that abundance 
 exists only where a large supply is co-existent with a large 
 effective demand ; that it is in vain to offer things for a little 
 money to one who has no money, and no work by which to 
 earn money. At the end he says : — 
 
 " But it is answered, if we are inundated with foreign goods and 
 
 produce, our coin will leave the country Well, and what 
 
 matters that ? Man is not fed with coin. He does not dress in gold, 
 nor warm himself with silver. What difference does it make whether 
 there be more or less coin in the country, provided there be more 
 bread in the cupboard, more meat in the larder, more clothing in the 
 press, and more wood in the cellar ? " 
 
 Yes ! provided ; but how would it be provided there was 
 much less of all these things ? 
 
 Did not M. Bastiat know that the very fact of the coin 
 leaving the country proved that the home industries were 
 not adequate to pay for the importations, and that these 
 must therefore cease as soon as the coin was exhausted ? 
 A coijintry has perchance four thousand millions of mechani- 
 cal and manufactured products, the result of its own industry. 
 It hankers after cheapness, and opens its ports. It is deluged. 
 It gets products at first more cheaply. But the industries 
 in which it has an advantage furnish only, OR can be taken 
 only to the extent of, one thousand millions. When its 
 treasure is gone, it must satisfy itself with one thousand 
 millions. These it may or may not thereafter get cheaply. 
 Probably it will get them very dearly b}^ reason of the low 
 price at which it will have to sell what [)rcviously, wilh a 
 fully employed population, it could use itself. But whether
 
 6 REVIEW OF BASTIAT's SOPHISMS OP PROTECTION. 
 
 it gets its small pittance cheaply or dearly, it must go without 
 the other three thousand millions. This is what it will get 
 for mistaking cheapness for abundance. 
 Bastiat concludes as follows : — 
 
 " To restrictive laws I offer this dilemma, — Either you allow that 
 you produce scarcity, or you do not allow it. If you allow it, you 
 confess at once tliat your end is to injure the people as much as 
 possible. If you do not allow it, then you deny your power to dim- 
 inish the supply, to raise the price, and consequently you deny having 
 favored the producer. You are either injurious or inefficient. You 
 can never be useful." 
 
 M. Bastiat evidently thought he had used brilliant logic. 
 But restrictive laws have for their object to produce abun- 
 dance, and they effect their object : if they raise the price, 
 they increase in a much greater degree the effective demand, 
 — the ability to pay the price. The limitation of the for- 
 eign market makes it simply impossible to employ the whole 
 working force of the United States upon those industries 
 in which it has a decided advantage. The rest must be 
 employed upon fields, less advantageous perhaps, but infin- 
 itely more advantageous than living in the poorhouse or 
 helping somebody do what he can perfectly well do alone. 
 
 Napoleon hit the mark when he said that " if an empire 
 were made of adamant, the economists would grind it to 
 powder." 
 
 Bastiat desires the consumer to have everything offered to 
 him at a cheap rate ; he is entirely indifferent about his 
 having or not having the means of buying. In fact, the 
 consumer of the free trader was described by Homer, under 
 the name of Tantalus : — 
 
 " Then Tantalus along the Stygian bounds ; 
 
 Pours out deep groans ; with groans all hell resounds. 
 From circling floods in vain refreshment craves, 
 And pines with thirst amidst a sea of waves ; 
 "When to the water he his lip applies, 
 Back from his lip the treacherous water flies.
 
 BEVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 7 
 
 Above, beneath, around his hapless head, 
 
 Trees of all kinds delicious fruitage spread ; 
 
 There figs, sky-dyed, a purple hue disclose ; 
 
 Green looks the olive, the pomegranate glows ; 
 
 There dangling pears exalted scents unfold, 
 
 And yellow apples ripen into gold. 
 
 The fruit he strives to seize ; but blasts arise, 
 
 Toss it on high, and whirl it to the skies." — Pope's Odyssey. 
 
 For nineteen twentieths, nay the whole of the commu- 
 nity, production is the condition precedent of consumption. 
 That which a nation can consume in a year is its annual 
 product. Strike to the earth a third part of its industries, and 
 you by the very act strike off a third of the average indi- 
 vidual income. The economist who is not aware of these 
 things has studied to little purpose either Adam Smith or 
 J. B. Say : he has gathered in their chaff, and left the wheat 
 untouched. Abundance is impossible to the man of the 
 empty purse. 
 
 After the Bastiat fashion, I will offer a dilemma to the 
 free-traders. Either they know tlie above, or they do not 
 know it. If they know it, they must cease preaching free- 
 trade ; if they do not know it, they should come to the 
 people of the United States to learn, but not to teach, politi- 
 cal economy. 
 
 Chapter II. is entitled " Obstacle — Cause." 
 In this chapter Bastiat misses entirely the perception of 
 the protectionist doctrine, which is not that wants are riches, 
 or that labor is riches, but that the ability to satisfy wants 
 is riches. The gross annual product of the nation being A, 
 will not be diminished by the introduction of machinery. It 
 will be diminished by substituting a foreign for a domestic 
 product, unless the foreign product is so much cheaper as to 
 immensely increase consumption in spite of the diminished 
 means of purchase, and unless also the relations of the two 
 nations financially are such that the imports will be paid 
 for by exports: and even then the new arrangement leaves 
 the country less independent ; withdraws from it the possi-
 
 8 REVIEW OF BASTIAT S SOPHISMS OF PROTECTION. 
 
 Lility — nay, probability — of afterwards reducing the cost by 
 increased skill and by invention ; lessens the diversification 
 of industries ; and takes from the nation the incidental advan- 
 tages which often spring from the stimulating effect of one 
 industry upon others. Who can measure the effect in the 
 United States of the introduction of the cotton manufacture 
 upon the other industries in which machinery assists labor ? 
 If we had never had the cotton manufacture, it is not likely 
 that even our agriculture would have reached anything like 
 its present efficiency ; and many other arts would probably 
 not have been acquired at all up to the present day. 
 
 In this chapter Bastiat says, with italics, that " labor is 
 never without einployment.'''' This is flying in the face of facts 
 with a vengeance. What can be the value of the method of 
 reasoning which conducts a clever man to such a conclusion 
 in spite of his eyes and ears? 
 
 Chapter III. is entitled " Effort — Result." 
 
 In this chapter Bastiat quotes a number of French legis- 
 lators ; and if he quotes them correctly, the reasons they 
 gave for their votes or measures were not very wise, and 
 furnished an opportunity for an easy victory. But it often 
 happens that practical men are not introspective, not accus- 
 tomed to put into words the real reasons which underlie their 
 actions. When called upon to do so, they fumble about in 
 their minds, and end in producing, not their real reason, but 
 some very inadequate substitute of it. A " smart " writer 
 like M. Bastiat at once falls upon their alleged reasons, 
 demolishes tl^em, and concludes that their authors were 
 fools, when very likely they were in reality far wiser than 
 he who felt himself entitled to sit in judgment. It may well 
 be, taking all -things into consideration, that the opulence of 
 France, altogether, is increased rather than diminished by 
 herself producing iron at sixteen francs which she could buy 
 of England at eight : her safety and independence are cer- 
 tainly promoted. 
 
 Chapter IV. is entitled " Equalizing of the Facilities of 
 Production."
 
 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 9 
 
 M. Bastiat first quarrels with the phrase, which has not 
 certainly mathematical exactitude, but which can easily 
 enough be understood by any one whose object is to get at 
 ideas, and not to triumph over words. It means that where 
 one nation has an advantage over another as to cheapness of 
 production, — such as Great Britain has over the United 
 States by reason of cheaper labor, not yet compensated by 
 greater skill upon our part, — she can beat down and annihi- 
 late our efforts to help ourselves and to acquire greater skill. 
 She has been prevented from doing this by our protective 
 duties ; and in many articles we have already acquired a 
 skill sufficient to give us here at home the articles, even at a 
 cheaper monied price than we could import them. In some 
 we have not succeeded as yet so well ; and in some we prob- 
 ably never shall, so long as we strive to keep up among us 
 that higher rate of real wages which is our chief hope for the 
 future. But the higher price will be much more than com- 
 pensated to the nation by the double production provoked by 
 a home exchange, as against the single production provoked 
 by a foreign exchange ; as also by our greater security botii 
 in peace and in war, and also by the incidental stimulus 
 which one industry gives to others. 
 
 Bastiat says that in this case, as in all, " the protectionists 
 favor the producer, while the poor consumer seems entirely to 
 have escaped their attention." He seems to forget that nearly 
 all of the p)oor consumers are consumers only in consequence 
 of their being able to produce ; and that those few who do 
 not produce themselves are dependent upon the profits of 
 productive instruments, which would cease to yield a profit 
 if the producing consumers could not produce, and therefore 
 could not consume. If the consumers' means of buying 
 were rained down miraculously from the sk}', tlie Bastiat 
 philosophy might be excellent ; but as long as their means of 
 buying are entirely dependent upon their first producing, it 
 would seem that the individual should be considered in both 
 relations. 
 
 Bastiat contends, first, that equalizing the facilities of pro- 
 duction is to attack the foundations of all trade.
 
 10 REVIEW OP BASTIAT'S SOPHISMS OF PROTECTION. 
 
 To attempt to equalize all facilities — say, rather, to counter 
 balance all advantages — might be open to his objection. But 
 the American protectionist, for whose conversion the volume 
 under review was published, does not propose to compensate 
 great differences growing out of soil and climate. He does 
 not propose to grow pineapples under glass at ten times the 
 cost of importation, nor to do any other of the like absurdities 
 imagined by Bastiat. What he does propose is, to balance 
 the altogether artificial advantages arising out of accidental 
 superiority in skill until we can ourselves acquire the like 
 skill ; to balance the difference arising out of our dearer 
 labor and capital ; and to protect our industries from the 
 mischievous attacks in which products are sold under cost 
 for the very object of destroying competitors. We have fuU 
 faith that the competition of fifty millions of people will suf- 
 fice to bring as low prices and as much skill as are possible 
 under the circumstances ; and that the result will be that we 
 shall produce everything which our climate and soil permit 
 at considerably less sacrifice of labor and abstinence than 
 the same things cost when brought from abroad. 
 
 M. Bastiat says, second, that it is not true that the labor 
 of one country can be crushed by the competition of more 
 favored climates. 
 
 But it is quite true that domestic arts and manufactures, 
 which are most important to possess, can be crushed by the 
 competition of countries having cheaper labor and equal or 
 greater skill. If he meant his No. 2 to assert or insinuate 
 the contrary, the hardihood of the assertion or insinuation 
 would hardly require an answer. Deductive reasoning shows 
 that it can, and history shows that it does. 
 
 He says, third, that protective duties cannot equalize the 
 facilities of production ; fourth, that freedom of trade equal- 
 izes these conditions as miich as possible ; and, fifth, that 
 the countries which are the least favored by nature are those 
 which profit most by freedom of trade. 
 
 In all this he chooses to misunderstand what is meant by 
 equalizing the facilities of production. This is simple trifling. 
 Next he exemplifies his position by supposing a case of Pari-
 
 EEVIEW OP BASTIAT'S SOPHISMS OF PROTECTION. 11 
 
 sian speculators producing oranges at ten times the cost of 
 importing them from Portugal, and being protected by a duty 
 of nine hundred per cent. This is also trifling : it has noth- 
 ing to do whatever with any actual question as to protection. 
 Then follow several excellent paragraphs, showing how any 
 improvement in production spreads itself to the advantage of 
 the whole community, and showing how natural advantages, 
 and also, finally, the advantages arising from inventions, come 
 to be enjoyed by consumers gratis, they paying only the 
 necessary wages of labor and abstinence. But after all those 
 excellent and really eloquent paragraphs comes this : — 
 
 " Hence we see the enormous absurdity of the consuming country, 
 which rejects produce precisely because it is cheap. It is as though 
 we should say, ' We will have nothing of that which Nature gives you. 
 You ask of us an effort equal to two, in order to furnish ourselves with 
 articles only attainable at home by an effort equal to four. You can 
 do it because with you Nature does half the work. But we will have 
 nothing to do with it ; we will wait till your climate, becoming more 
 •inclement, forces you to ask of us a labor equal to four, and then we 
 can treat with you upon an equal footing.' " 
 
 This is one of Bastiat's extreme cases, but under certain 
 circumstances it would not be altogether so absurd as he ap- 
 pears to imagine, e. g. : — 
 
 The products in which the United States have an advantage 
 are agricultural. They can produce enough for themselves 
 and as much more. Call the possible product 2 A. Suppose 
 that what they cannot produce except at a double effort are 
 mechanical and manufactured products. Call these M. There 
 is a foreign demand for | A. Under free trade there can be 
 produced and imported 1|- A; M imported being equal to 
 ^ A; and the country will have for consumption A -f- ^i- 
 Now remove one half of the population from agriculture to 
 the mechanical and manufacturing arts. The half who are 
 left can still produce 1 A, or enough agricultural products 
 for the whole population ; and the other half can produce ]M 
 by a double effort. There will then be for consumption 
 A -f- M, notwithstanding the double effort. But suppose
 
 12 REVIEW OF BASTIAT'S SOPHISMS OF PROTECTION. 
 
 the required effort not double, but 1^. The product will 
 then be A + I M. The whole population, both agricultural 
 and mechanical and manufacturing, will then have one third 
 more of M under protection than under free trade, even if the 
 effort necessary be 50 per cent greater to produce M. If the 
 effort (measured by labor and abstinence) be the same, then 
 the product under protection will be A -|- 2 M. 
 
 The mechanical and manufacturing arts then which are 
 introduced under a duty of 50 per cent in such circum- 
 stances, will at once give the whole country one third more of 
 their products than can be had under free trade ; and, as skill 
 increases, they will give more and more ; and their skill will 
 react upon agriculture, rendering its processes more effectual, 
 and enabling a still greater withdrawal of men from agricul- 
 ture to the arts. And the home market will be always safe 
 against war and against excessive foreign crops; and, more- 
 over, it will grow step by step with the population, which the 
 foreign market never can. 
 
 M. Bastiat makes a great friend of Nature : but it is not 
 against Nature that the American protectionist raises his bul- 
 warks. He imports many tropical products free of duty, but 
 he intrenches against the foreign skill which is not natural 
 but purely artificial, and which is speedily overtaken by our 
 own ; and he intrenches against the lower wages current 
 abroad, which we do not wish to imitate here. In spite of a 
 50 per cent duty, the whole country is richer immediately, and 
 gains more and more as skill is acquired. 
 
 M. Bastiat says that we call the free traders theorists, and 
 he retorts the accusation ; but he mistakes us. We do not 
 complain of them for being theorists, but for being bad the- 
 orists, blundering theorists, theorists who use arguments in 
 every case wdiich are only applicable in one of all possible 
 cases, to wit, in the case where the whole population can be 
 fully occupied in those industries in which it has an advan- 
 tage, and where, also, their whole surplus can find steady, 
 sure, uninterrupted markets. In this very exceptional case, 
 to buy in the cheapest market is best in a purely financial 
 aspect. Their proposition is not universal, not one of even
 
 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 13 
 
 frequent application. To argue from it as if it were a uni- 
 versal proposition, as the free traders do, is to violate one of 
 the fundamental maxims of logic. 
 
 Chapter V, — " Our Productions are overloaded with 
 Taxes." 
 
 Here is more bad theory. We are taxed heavily, he says. 
 How absurd, then, to add another tax which makes France 
 pay twelve francs for iron which it can get from England for 
 eight. The blunder here consists in not perceiving that, 
 although the extra price of iron may in a certain sense be 
 called a tax, yet it is of an entirely different nature from the 
 other things called by the same name. Suppose, for instance, 
 that France is using 2,000,000 of tons of iron produced in 
 France and costing twelve dollars a ton. Here are 824,000,000 
 of products which are paid for by other 824,000,000 of various 
 French products. The result is commodities worth 848,000,000, 
 every dollar of which is net individual income to some French 
 citizen, as has been well shown by J. B. Say. The totality 
 of French industries is in equilibrium. Each employs all the 
 capital and all the industry it can, and carries along its nor- 
 mal surplus stock. The expansion of each industry, both as 
 to capital and quantity of labor employed, is limited by the 
 extent of the market. Now open the ports and bring in the 
 2,000,000 tons of English iron at eight dollars. The imme- 
 diate effect upon the consumers of iron is that ih.ej save 
 88,000,000 : but the general demand for French products is 
 diminished 832,000,000. The importation of iron selling for 
 816,000,000 provokes a French production of 816,000,000. 
 The home production of the iron, on the contrary, gave a total 
 home product of 848,000,000, — a difference of 832,000,000. 
 It is true that the community saves 88,000,000 in the price of 
 the iron, but on the other hand its aggregate ability to con- 
 sume is reduced 832,000,000; and under these circumstances 
 it may well happen that its ability to consume imported iron 
 at eight dollars will be less than its ability to consume home- 
 made iron at twelve dollars. The free-traders call the sums 
 collected to pay the interest on the national debt and the ex-
 
 14 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 
 
 penses of government taxes, and they call the extra price 
 (when there is an extra price) paid for home-made products 
 also taxes. But they are entirely different; almost as different 
 as the files of a carpenter and the files of a regiment. The tax 
 arising out of protective laws, in the instance under examina- 
 tion, takes from the French consumers four dollars a ton ; 
 but it gives them twelve : the net result is that they are 
 better off by eight, or twice the amount of the so-called tax. 
 This flows inevitably from Say's proposition that the whole 
 price of everything produced in a country is net individual 
 income to some citizen of that country. If the free-traders 
 would make the other " taxes " produce a similar result, we 
 would all clamor for more taxes. 
 
 Chapter VI. is called "Balance of Trade." He begins as 
 follows : — 
 
 " Our adversaries have adopted a system of tactics which embar- 
 rasses us not a little. Do we prove our doctrine ? They admit the 
 tcuth of it in the most respectful manner. Do we attack their princi- 
 ples? They abandon them with the best possible grace. They only 
 ask that our doctrine, which they acknowledge to be true, should be 
 confined to books ; and that their principles, which they allow to be 
 false, should be established in practice. If we will give up to them 
 the regulation of our tariffs, they will leave us triumphant in the do- 
 main of theory." 
 
 I\I. Bastiat was in error as to the attitude of protectionists 
 generally. They do not admit that the theory of the free- 
 traders is correct, nor their own practice wrong ; but when 
 worried by much beating of gongs — represented to be logical 
 instruments — and by much assumption of superiority in 
 reasoning, they have often been inclined "to reply : " You 
 puzzle us with sophistical riddles. We feel them to be 
 wrong, but have not the time, perhaps not the ability, to 
 show wherein they are wrong. We have seen your own 
 chiefs perplexed with the fallacy of Achilles and the tortoise, 
 and some of them declaring it to be insoluble, — that being an 
 argument known to be erroneous, but one of which no one
 
 REVIEW OF BASTIAT's SOPHISMS OP PROTECTION. 15 
 
 has ever yet given a wholly satisfactory explanation. Now, 
 we feel that your arguments are sophistical ; we are so sure 
 of it that we are ready to risk our fortunes upon the belief. 
 We are not able to talk you down, and are willing you should 
 theorize to your hearts' content, so long as you will confine 
 yourselves to theory." Such is the feeling of many. It is 
 not the feeling of the writer. It is as absurd as anything 
 well can be to say, " So and so may be very wellin theory, 
 but it will not do in practice." If it will not do in practice, 
 it most assuredly is not good in theory. It may be good in 
 pseudo-theory ; but true theory must explain practice, or be 
 in accord with it. Sound theory and sound practice are 
 Siamese twins. As was said before, we do not, as you have 
 the presumption to say, object to you as theorists : we only 
 object to you as bad theorists. 
 
 M. Bastiat gives us examples in which every merchant will 
 find errors ; upon which, however, it is not worth while to 
 expend time, and patience, — the main object of the chap- 
 ter being to show, what everybody knew before, namely, 
 that an unusually successful voyage brings into a country a 
 much larger value than it takes out. But there are also very 
 unsuccessful voyages, which bring in much less than they 
 take out ; and everybody who knows anything of commerce 
 is aware that the average result is cost, expenses, — and a 
 profit not greater than what is usual in other kinds of busi- 
 liess. This is fact ; and this also is the result which the 
 reasoning of all respectable economists, from Adam Smith 
 down, points out as what must necessarily be fact. The 
 balance of trade in our days is so complicated by the transfer 
 of securities, and by the remittances of the profits upon 
 foreign investments, that no certain conclusion can be drawn 
 from custom-house statistics ; but for all that, an exportation 
 of treasure, exceeding greatly the product of the country, 
 indicates an adverse balance of trade, which cannot exist 
 many years without financial convulsion. 
 
 Chapter VII. is entitled " Petition from the Manufacturers 
 of Candles, Wax-lights, Lamps, Chandeliers, Reflectors,
 
 16 REVIEW OP BASTIAT's SOPHISMS OF PROTECTION. 
 
 Snuffers, Extinguishers ; and from the Producers of Tallow, 
 Oil, Resin, Alcohol, and generally of Everything used for 
 Lights." 
 
 This is a petition against sunshine, and regarded as per- 
 siflage, it is excellent. Considered as an economical argu- 
 ment, it can impose upon no one who has the least com- 
 mon-sense, or the least logic, which is only common sense 
 put into a formula. As the sun does not give us light, 
 through the twenty-four hours, artificial light must be had 
 and can be had only through labor. If the circumstances 
 are such that by procuring it from abroad the gross annual 
 product is greater than it is by producing it at home, then, 
 financially considered, it is better to procure it from abroad. 
 But this case seldom occurs, as has already been sufficiently 
 shown. 
 
 Chapter VIII. is entitled " Discriminating Duties." 
 This is a particular case, made up with just such circum- 
 stances as might lead a poor wine-grower to draw from it 
 illegitimately an universal conclusion. As rhetoric, intended 
 to deceive, it is ver}'^ good. It is entirely unworthy of one 
 who is seriously investigating national interests. 
 
 Chapter IX. is entitled " Wonderful Discovery." 
 In this, M. Bastiat discovers that a railroad has been made 
 between Paris and Brussels in order to obviate or overcome 
 natural obstacles to trade, but that the duty on goods be- 
 tween the two places was an artificial obstacle, and conse- 
 quently absurd. The answer is, that the railroad was built 
 with the intention of removing obstacles from desirable and 
 beneficent communication. It was not built to facilitate the 
 passage of foreign soldiers to Paris, nor to facilitate the 
 invasion of the markets of France by produce that is not 
 desirable. Whether the introduction of the produce be 
 desirable or not, must be determined b}'' other reasons than 
 the fact that a railroad exists by which it can be conveyed. 
 Distance is an obstacle to every sort of communication. 
 That we take measures to overcome the obstacle does not
 
 BEVIEW OP BASTIAT's SOPHISMS OP PROTECTION. 17 
 
 prove that every sort of communication is productive of 
 opulence. 
 
 M. Bastiat says : — 
 
 " Frankly, is it not humiliating to the nineteenth century that it 
 should be destined to transmit to future ages the example of such 
 puerilities seriously and gravely practised ? " 
 
 We reply, Frankly, it will he humiliating to the nineteenth 
 century to have to transmit to future ages Bastiat's puerilities 
 in reasoning as examples of what could be thought worthy of 
 being presented to France, England, and the United States 
 by a person claiming to be, and by many even highly edu- 
 cated persons held out to be, an eminent logician. 
 
 Chapter X., entitled " Reciprocity," is in the same vein. 
 A swamp, a bog, a rut, a steep hill, stormy oceans, etc. are 
 veritable protective tariffs. By the railroad, the steamship, 
 etc. we do all we can to remove the other obstacles ; but the 
 artificial obstacle, which it will cost nothing to remove, we 
 suffer to remain. Why do we suffer it to remain ? Because 
 we believe that this particular obstacle to intercourse is not 
 an obstacle, but an aid, to acquiring opulence. Whether it 
 is or is not so cannot be determined by giving it the same 
 name, putting it in the same class, with other things which 
 we recognize as pernicious. If there were a tunnel formed 
 between England and France, it would not be absurd to take 
 such measures as would prevent its being used for the pas- 
 sage of hostile forces. When we build railroads and steam- 
 ships, we do not logically bind ourselves to allow them to be 
 used for every conceivable purpose, whether useful or per- 
 nicious ; and the fact that the railroad or the steamship may 
 be made to subserve a certain purpose, affords no ground for 
 inferring that such purpose is or is not desirable. This must 
 be ascertained by quite another sort of logic. Opium and 
 rum, the smallpox and the yellow fever, are not necessarily 
 beneficial because distributed by steamships and railroads. 
 
 Chapter XI. is entitled " Absolute Prices." lie says : — 
 
 3
 
 18 REVIEW OP BASTIAT's SOPHISMS OF PROTECTION. 
 
 " If we wish to judge between freedom of trade and protection, to 
 calculate the probable effect of any political phenomenon, we should 
 notice how far its influence tends to the production of abundance or 
 scarcity. We must beware of trusting to absolute prices ; it would 
 lead to inextricable confusion." 
 
 -He assumes throughout the chapter that protection pro- 
 duces scarcity, and free-trade abundance. Cases might exist 
 where it would do so. Generally it does the reverse, and it 
 is notably so in the United States. Why is this ? Because, 
 when the population is fully occupied, much is produced ; 
 there is much to divide. When a considerable proportion is 
 unoccupied, little comparatively is produced ; there is less to- 
 divide. We saw the latter from 1873 to 1879 : wages and 
 profits were both low. We see the former now in 1881 : 
 the people are more fully occupied, and both wages and 
 profits are higher. But the tariff also is higher. The 
 difference has arisen from the abandonment in 1873 of the 
 active formation of instruments, and from the resumption of 
 the movement in 1880. But the larger production is con- 
 comitant with high prices, and the smaller production was 
 concomitant with low prices. Cheapness, then, may exist 
 without abundance, and abundance may exist without cheap- 
 ness, however much this may astonish the free-trader. 
 
 Chapter XII. is entitled, " Does Protection raise the Rate 
 of Wages ? " 
 
 M. Bastiat says to the working-man: — 
 
 " But justice, s,imY)\Q justice, — nobody thinks of rendering you this. 
 For would it not be just that after a long day's labor, when you have 
 received your little wages, you should be permitted to exchange them 
 for the largest possible sum of comforts that you can obtain voluntarily 
 from any man whatsoever upon the face of the earth.?" 
 
 M, Bastiat put himself forward as a logician, and also as a 
 sincere expositor of truth. He desired and intended, so he 
 implied, to teach the truth, the whole truths and nothing but 
 the truth ; and yet we here have him commencing his argu- 
 ment from the middle of the economical fact he was examin-
 
 EEVIEW OF BASTIAT'S SOPHISMS OF PROTECTION. 19 
 
 ing. He commences with the poor laborer when he has got 
 his little wages : then, truly, it would be well for him to get 
 as much in exchange for them as possible. But M. Bastiat 
 carefully keeps out of sight that it is the protective policy 
 which has given the man his employment, and consequently 
 his wages. M. Bastiat may have believed that the man 
 would get as good or better employment under a regime of 
 free-trade ; but if so, that was the point at issue. To assume 
 it would seem to show M. Bastiat to have been more anxious 
 to gain his point than to ascertain the truth. 
 M. Bastiat continues : — 
 
 " Is it true that protection, which avowedly raises prices, and thus 
 injures you, raises proportionately the rate of wages?" 
 
 Here is the same rhetorical trick repeated. It is assumed 
 that the man will get work under free trade the same as 
 under a protective policy. To assume this is to take the 
 whole free-trade theory for granted, without any proof or 
 argument. M. Bastiat, however, to give everyone his due, 
 seems really to believe he is right ; and he sometimes does 
 argue the question effectively from the premises which he 
 assumes. These, however (unfortunately for free-trade phil- 
 osophy), are simple blunders. They are venerable blunders, 
 it is true, as they can claim the respectable paternity of 
 Adam Smith more than a hundred years ago ; but they are 
 very evident blunders for all that. We may borrow here 
 Quinctilian's charitable remark about Homer, and say, " Some- 
 times the good Adam Smith nods." Unfortunately, he nod- 
 ded at a very important point ; and he did the sleeping scene 
 so naturally and effectively in his pages that every free- 
 trade economist for a century and over has fallen into a 
 slumber just where he did. 
 
 Bastiat says : — 
 
 " The rate of wages depends upon the proportion which tlie supply 
 of labor bears to the demand." 
 
 Very true. He continues thus : —
 
 20 REVIEW OF BASTIAT'S SOPHISMS OP PROTECTION. 
 
 " On what depends the demand for labor ? On the quantity of dis- 
 posable national capital. And the law which says ' Such or such an 
 article shall be limited to home production, and no longer imported 
 from foreign countries,' can it in any way increase that capital ? Not 
 in the least. The law may withdraw it from one course, and transfer 
 it to another ; but cannot increase it one penny. Then it cannot in- 
 crease the demand for labor," 
 
 This is the fundamental position of the free traders. It was 
 taken by Adam Smith more than a hundred years ago, was 
 repeated by Mr. John Stuart Mill some thirty years ago, 
 again repeated by M. Bastiat, and is now presented to the 
 American people by the Free Trade League of New York 
 in the translation of M. Bastiat's " Sophisms of Protection " 
 now under review. If this position can be maintained, the 
 free-trade doctrine stands. If it cannot be maintained, the 
 free-trade doctrine falls. It has been already examined as 
 presented by Adam Smith, and again examined as presented 
 by Mr. Mill. Let us now examine it as put forward by M. 
 Bastiat. He, of course, uses the word " capital " in the 
 French sense, as signifying everything which can be used to 
 assist or support labor ; and his proposition is therefore 
 somewhat broader than that of the English authors, who 
 limited the words to the funds set apart for the support of 
 productive labor. 
 
 To get at the bottom of this question, we must see what 
 is the normal condition of an industrial community. Evid- 
 ently it must be possessed of certain industries. A, B, C,* 
 D, etc. Let us examine industry A. It was commenced for 
 the sake of profit. The same motive led to its increase con- 
 tinually, so long as the satisfactory profit was attainable ; 
 but, finally, it over-ran the market, as was evidenced by 
 a portion of its products remaining unsold (or a portion of 
 its materials remaining unconverted into finished products) 
 by reason of a lack of demand. The producers then find a 
 portion of their capital locked up, either in finished products 
 or in unconverted material, or in both, and are compelled to 
 cease augmenting their production. Some stock they find it, 
 upon the whole, convenient to carry rather than be uupre-
 
 REVIEW OF BASTIAT'S SOPHISMS OF PROTECTION. 21 
 
 pared for fluctuations in the demand ; and they naturally 
 carry as large a stock as they can without reducing profits 
 below the point which satisfies the existing " effective de- 
 mand for accumulation." Industry A, then, normally car- 
 ries on a certain stock of products, and this stock locks up a 
 portion of the capital employed in the industry. This stock 
 is unemployed capital, and is recognized as such by Mr. John 
 Stuart Mill, who, however, failed to observe the significance 
 of the fact, or its important bearing upon economical reason- 
 ing. What is true of industry A is true of B, C, D, and 
 all the others acquired by the community, which thus is seen 
 to contain a multitude of industries, whose aggregate stocks 
 of finished products and materials compose the aggregate 
 unemployed capital of the community. It is the function of 
 this unemployed capital to regulate the movement of in- 
 dustry. When the stocks increase, they enforce a slower 
 movement ; when they are diminished, prices rise, and the 
 industrial movement is stimulated to greater activity. We 
 come, then, inevitably to the conclusion that in an industrial 
 community the increase of industry is not limited by capital, 
 but that the increase of both industry and capital is limited 
 by the " field of emploj^ment." 
 
 But what limits the field of employment? Evidently, the 
 limits which exist to effective demand. Let us confine our 
 attention to a single industry, say the shoe manufacture. 
 The desire of men for shoes is in itself limited. If they 
 could be had without effort or sacrifice, a certain number of 
 human beings would use only a certain number of shoes. 
 Interpose a difficulty of attainment, the necessity for effort 
 or sacrifice, and less will be used. There is, then, a limit to 
 the shoe manufacture, even in a community where every 
 person could find a sale for his labor if he desired to find 
 one ; and the field is narrowed still further if a i)ortion of 
 the community is not able to find employment. Evidently, 
 only a certain number of shoes can be profitably made at 
 any cost you choose to fix upon. Reduce profits ever so 
 low, and still the manufacture has its limits. Increase now 
 the aggregate means of the community fur the purchase of
 
 22 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 
 
 shoes, whether by increasing the population or hy increasing 
 the proportion of the population which can find a sale for its 
 labor, and the demand for shoes will increase, their exchange- 
 able value will rise, the profits of the manufacture will 
 augment, and it will be enlarged to meet the changed con- 
 ditions. It will find its new limits in the production which 
 again reduces the exchangeable value of shoes to that point 
 where the profits fall to the rate usual in the community. 
 The moment profits are such as to enable the manufacturers 
 to save, and add to their capital an annual percentage, 
 greater than that by which the population increases, they 
 will increase their production faster than the population 
 increases ; when profits are less, they will allow the popu- 
 lation to gain upon the production. There is, evidently, a 
 limit to the field of employment open to this industry. It 
 will be wider under certain circumstances, narrower under 
 others. But it is this limit, — the limit of the field of employ- 
 ment, — which regulates both the quantity of labor and the 
 quantity of capital which will be employed in it. But what is 
 true of shoes is true of every other commodity, and of every 
 service known to the community. It would seem, then, that 
 the normal condition of an improving community was this. 
 Skill, dexterity, judgment, machinery are constantly dimin- 
 ishing the sacrifice at which men can procure the commodities 
 produced by its industries ; but they are also constantly in- 
 creasing the mass of unemployed capital, and forcing it to 
 search for new commodities and new services, which may 
 tempt the capitalists, great and small, to increase their con- 
 sumption, so as to keep pace with the increasing capacity for 
 production. Each new commodity, convenience, and amuse- 
 ment furnishes a new market for the existing industries, and 
 enlarges the effective demand. The field of employment is 
 increased, the people are more fully occupied, the gross 
 annual product is augmented, and the purposes to which an 
 additional fixed and floating capital can be applied are mul- 
 tiplied. This is a society in which the introduction of a new 
 industry finds ample unemployed capital for its development, 
 and in which its products immediately enlarge the market
 
 REVIEW OF BxiSTIAT'S SOPHISMS OF PROTECTION. 23 
 
 for the products of the old industries, and enable them to 
 increase their production and the capital employed by them. 
 
 The normal condition of the society imagined by Adam 
 Smith, and by John Stuart Mill in his first volume, and by 
 Bastiat, is one where the field of employment is checked by 
 the want of capital. Deductive reasoning leads us to the 
 conviction that they put the cart before the horse ; to the 
 conviction that, on the contrary, it is capital which is limited 
 by the limitation of the field of employment. Introduce the 
 new industry, and the capital necessary for its development 
 will be found waiting for the work, and will be rapidly repro- 
 duced and more than reproduced by the augmented activity 
 of the previously acquired industries. There will be a de- 
 mand for more labor, and the increased annual product will 
 reward the labor with higher wages. 
 
 Pure reasoning would have led to the conclusion that in a 
 community possessed of a considerable variety of industries 
 there must be an enormous aggregate of commodities unsold 
 or unconverted, or, in other words, of unemplo3'ed capital ; 
 and an inquiry in Wall Street or State Street would have re- 
 vealed that such was the fact. The free traders missed the 
 fact, because they did not stop to reason, but preferred to 
 jump at conclusions. 
 
 M. Bastiat's assertion, then, that a protective- law, which 
 says such or such an article shall be limited to home produc- 
 tion, cannot increase disposable capital a single penny is simply 
 a blunder. It can increase it in the United States many hun- 
 dred millions of dollars a year. The surplus stocks of the 
 existing industries will immediately supply the capital re- 
 quired, and will be replaced in an exceedingly short time by 
 the stimulated activity of those industries; and, meanwhile, 
 the people will have had paid to them for labor about twice the 
 amount of capital invested in the new industry. Take the 
 following as an illustration. Let us suppose that a country 
 exists (call it, if you please, the United States) where the 
 annual product is six thousand millions of dollars, and tho 
 normal surplus stock of commodities is equal to a consump- 
 tion of sixty days, — a value of about one thousand millions.
 
 24 REVIEW OF BASTIAT's SOPHISMS OP PROTECTION. * 
 
 We will suppose that it uses largely of woollen goods pro- 
 cured from abroad. The people, looking round, perceive that 
 the climate is in no way unfavorable to the woollen industry ; 
 that they themselves are by no means wanting in general 
 aptitude to mechanical and manufacturing industries; that 
 there is every reason to suppose the requisite skill can be 
 attained ; and that well-directed efforts to import the industry 
 will end in our producing, here, close at hand, as good or 
 better cloths at a somewhat lower cost of labor and abstinence 
 than they cost when imported from abroad. Accordingly the 
 people say, let a law be passed giving a protection of say fifty 
 per cent to woollens. The law is passed, and here and there 
 all over the country woollen mills are commenced by the 
 combined capital of a multitude of individuals. Gradually, 
 as the mills are built, they pay in their subscriptions. Some 
 draw out of the savings banks, which hold over a thousand 
 millions ; some have money with other banks or bankers, the 
 deposits with whom exceed another thousand millions ; some 
 sell stocks or property. Twenty millions a month over the 
 whole country will not make a ripple in the money market. 
 Suppose, then, the operations are to the extent of twenty 
 millions a month. As soon as gathered in they are paid out 
 for labor and spent by labor in buying commodities. The 
 producers of commodities now find their stocks diminishing, 
 — that is, a part of their unemployed capital is set free. They 
 will know this if the free-trade philosophers do not, and they 
 will employ more labor to meet the increased demand for 
 commodities. They will be able to pay out twenty millions 
 a month more for labor, and this will bring about an addi- 
 tional production of more than forty millions, — more than 
 sufficient to pay for the additional labor and the construction 
 of the woollen mills besides. This is warranted by the facts 
 given in the United States Census for 1870, which showed 
 that the mechanical and manufacturing industries in the 
 United States added $1,744,000,000 to the value of the mate- 
 rial used, and that of this $770,000,000 went to labor. It 
 would seem, then, that $240,000,000 a year would be invested 
 in woollen mills in the year without diminishing the floating
 
 REVIEW OF BASTIAT'S SOPHISMS OF PROTECTION. 25 
 
 capital of the country a cent. At the end of the year the 
 country will have woollen mills which cost 8240,000,000 as 
 an addition to its fixed capital, and the laboring classes will 
 have had $480,000,000 additional to spend. The investors 
 in mills will have withdrawn $240,000,000 from the monied 
 reserves, but the master mechanics and manufacturers will 
 have added an equal or somewhat larger amount. The nation 
 altogether will be richer by $240,000,000 in the shape of 
 woollen mills, although it has had and spent $480,000,000 
 more within the year; and this is the result of giving fuller 
 occupation to the people. More commodities are made and 
 there are more consumed. 
 
 This is the effect of the law which Bastiat says cannot 
 add a single cent to the wages of labor. Let business men, 
 •who understand accounts, examine the above theory of the 
 protectionists, and compare it with the theory of the free- 
 traders, and then decide which represents and explains the 
 actual course of financial aifairs as they go on continually 
 before our eyes, and which ought to be taught to young men 
 who are preparing for practical life. 
 
 Bastiat says that " when a nation isolates itself by the pro- 
 hibitive system, its number of industrial pursuits is certainly 
 multiplied, but their importance is diminished. In propor- 
 tion to their number they become less productive, /or the same 
 capital and same skill are obliged to meet a greater number 
 of difficulties. The fixed capital absorbs a greater part of 
 the circulating capital ; that is to say, a greater part of the 
 funds destined to the payment of wages. 
 
 Was this a man capable of teaching the people of the United 
 States? "iso?a^e " is a good piece of rhetoric. The abomi- 
 nable, absurd, suicidal, ridiculous, impoverishing tariff of the 
 United States has so "isolated" the nation that it sends 
 abroad for sale an annual value of about nine hundred mil- 
 lions, and keeps five or six times as much at home. It is so 
 poor that its average annual individual income exceeds that 
 of any other country in the world, not even excepting Great 
 Britain. It has on its hands no starving Ireland, no starving 
 Orissa, no starving Behar ; nor would it have were those 
 
 4
 
 26 REVIEW OF CASTIAT's SOPHISMS OP PROTECTION. 
 
 countries transferred to its dominion. For " starving " would 
 then have to be substituted in every case the words "flour- 
 ishing," "contented," "prosperous;" for they would be 
 protected from hostile industries as much as from hostile 
 armies. 
 
 M. Bastiat imagined that a new industry would be estab- 
 lished by capita] drawn from the old industries, which would 
 be thus cramped and diminished, whereas the new industry 
 would be established and equipped by capital already existing, 
 and replaced during the period of its introduction by labor 
 which w^ould otherwise have been unemployed ; and its prod- 
 ucts, when established, constitute an additional market for 
 the products of the old industries, enabling them all to increase 
 their production. 
 
 Chapter XIII. is called "Theory — Practice." 
 In this chapter M. Bastiat claims for each individual the 
 "/ree disposition of his own property.'''' 
 
 This' is a proposition in law or in social science. It has 
 nothing to do with political econom}^ \vhich is an inquiry 
 into the means of increasing national opulence. If it were 
 shown that protection was one means, it would be no answer 
 to say that protection invaded natural rights. Either legal 
 or social science would laugh at any such pretension.^ A cer- 
 tain society has come to the belief that the opulence of all 
 and each of its members will be promoted by a regulation 
 that while A is employed by B, C, D, etc., he shall in turn 
 use the products of B, C, D, etc. A does not like the regula- 
 tion. His particular industry is such that B, C, D, etc., must 
 employ him, while he has discovered that D's product can 
 be got a little cheaper outside the society. A would like to 
 work for the society and enjoy all the advantages of their 
 custom ; but he would prefer not to give any custom in re- 
 turn. He maintains that by an opposite arrangement the 
 society altogether will grow rich. B, C, D, etc., reply that if 
 the industry of D be abolished, D will have to be supported 
 by the -rest ; and that in the particular circumstances of their 
 society it is vastly cheaper to get the products through D than 
 
 1 See note 1, page 79.
 
 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 27 
 
 to get them from abroad, and let D sit idle. " But D is a 
 monopolist ! " cries A. " No ; " reply the rest of the alphabet, 
 " D is faithfully working in his special field, and he is gaining 
 skill yearly. It is our will that his field, although not the most 
 fertile the society possesses, shall be cultivated. We believe 
 that in this way we shall altogether be a wealthier society 
 than if we follow A's suggestion. Let A convince us to the 
 contrary, and we will do as A proposes ; but calling D a monop- 
 olist does not seem to us to have any bearing upon the cal- 
 culation. It is simply the throwing of mud. It would seem 
 that A's arguments must be weak and few, if he finds himself 
 reduced to such expedients." " But," says A, " it is the natural 
 right of ever}^ man to do what he pleases with his own prop- 
 erty." Again reply B, C, D, etc., " This is not the question 
 before us. The question is. How shall we all enjoy the greatest 
 abundance ? If you fly away from the question we shall con- 
 clude that you have nothing relevant to offer." " But," rejoins 
 A, " political economy and common sense tell us that to secure 
 the greatest abundance we have only to buy in the cheapest 
 market. It is absurd to buy of D at four dollars what you 
 can have from abroad for three dollars." " This," say B, C, D, 
 etc., " may be your political economy and your common sense ; 
 but it is not ours. D will take payment in that which we 
 have to give ; he pays his landlord, his butcher, his baker, his 
 tailor, his clergyman, his lawyer, his physician, his laborers, 
 with our products, or with money which is expended for our 
 products ; whereas, the foreign producer of D's commodity can 
 consume, or cause to be consumed, only a tenth part as much 
 of our products. We can, therefore, have from D more of 
 his products than we can have from D's foreign competitor, 
 and we enable D to support himself ; whereas, in the other 
 case, he must be supported by us. D is not producing pine- 
 apples under glass, nor doing any other absurdity : he is only 
 producing something which nominally costs perhaps a third 
 more than it is offered at by your foreign friends, but which 
 really, taking all things into account, costs less, and will cost a 
 great deal less when D has ac([uired greater skill. This is our 
 political economy. Convince us that we are wrong and we
 
 28 EEVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 
 
 ■will act accordingly ; but you will never convince us we arc 
 wrong by calling D a monopolist, a robber, a thief, a liver 
 upon public charity, a man actuated by the spirit of a slave- 
 holder, etc. ; nor will you convince us by talking about the 
 shame of preventing our poor laborers from spending their 
 hardly earned wages as they please. We recognize all such 
 twistings and turnings as the tricks of the rhetorician. If 
 you cannot convince us by good sound logic and common 
 sense, you are at liberty to depart out of our prosperous 
 society. There are plenty of people who will be glad to buy 
 you out." 
 
 M, Bastiat writes : — 
 
 " You, Messrs. Monopolists, maintain that facts are for you, and- 
 that we, on our side, have only theory. You even flatter yourselves 
 that this long series of public acts, this old experience of Europe 
 which you invoke, appeared imposing to M. Say ; and I confess that 
 he has not refuted you with his usual sagacity. 
 
 " I, for my part, cannot consent to give up to you the domain of 
 facts ; for, while on your side you can advance only limited and special 
 facts, we can oppose to them universal facts, the free and voluntary 
 acts of all men. 
 
 " What do xoe maintain ? And what do you maintain ? 
 
 " We maintain that ' it is best to buy from others what we can our- 
 selves produce only at a higher price.' 
 
 " Toil maintain that ' it is best to make for ourselves, even though 
 it should cost us more than to buy from others.' 
 
 " Now, gentlemen, putting aside theory, demonstration, reasoning 
 (things which seem to nauseate you), which of these assertions is 
 sanctioned by universal practice ? " 
 
 M. Bastiat was in error. Nothing would delight us more 
 than sound theory and reasoning ; nothing more than a real 
 demonstration ; but theory which is built up by drawing uni- 
 versal conclusions from particular premises, reasoning which 
 violates every canon of logic, a demonstration drawn from an 
 identical proposition, — these certainly do turn our stomachs. 
 
 We deny that " it is always best to buy from others what 
 we can ourselves produce only at a higher price." The dis- 
 tribution of the individuals in a community, under the regime
 
 REVIEW OF BASTIAT'S SOPHISMS OF PROTECTION. 29 
 
 of the division of occupations, is not found to be so perfect 
 that each person finds employment all the time in his peculiar 
 calling. Many find themselves out of work much of the 
 time ; and this leisure those who are thrifty employ to the 
 best advantage they can. The product, if sold in the market, 
 might not net more than half as much per day as they earn 
 at their occupations when they are at work ; but it is clear 
 gain. They are good economists in so employing themselves 
 rather than sit idle and repine at the want of work. 
 
 We protectionists do not maintain the general proposition 
 which you thrust upon us. We do not maintain that " it 
 is best to make for ourselves, even though it should cost us 
 more than to buy of others." The proposition, by an artful 
 misuse of words, begs the whole question. Costs us more 
 than to buy of others ! What does this mean? What is the 
 cost to an individual of a piece of work done when he would 
 otherwise have done nothing ? What is the cost to a nation 
 of work done by labor otherwise unoccupied assisted by cap- 
 ital otherwise unemployed ? What we do maintain is, that 
 for an individual it is best to do something for himself or 
 others during the -days when his special trade or art leaves 
 him unoccupied ; and that, for a nation, it is best to promote 
 that distribution of labor and capital which evolves the 
 greatest gross annual product ; for the gross annual product 
 is the sum of the net individual incomes, as has been re'cog- 
 nized both by Adam Smith and J. B. Say. The individual 
 must be left, in his local position, to find out what is best for 
 him to do. He will do one thing under free trade — quite 
 another thing under protective laws. What he does under 
 one system affords no evidence of the goodness or badness 
 of the other ; nor can the fact that he does this or that afford 
 any evidence that this or that will promote the general in- 
 terest. Adam Smith, indeed, after adducing a few instances 
 in which he thought individuals acting solely with a view to 
 their own interests would, nevertheless, unintentionally pro- 
 mote that of the society, added the words, — " and he (the 
 individual) is in this, as in many other cases, led bj' an in- 
 visible hand to promote an end which was no part of his
 
 30 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 
 
 intention ; " but it will be observed that Adam Smitli had not 
 the folly to put this forth as a true induction. He threw it 
 out as a rhetorical flourish, knowing well that a thoughtless 
 crowd Would seize upon it as a general proposition revealing 
 the deep plans of Providence ; and that, having so seized upon 
 it, they would be too innocent of logic to be shaken in their 
 faith by any number of negative instances. But fortunat-ely 
 all men are not imposed upon by a rhetorical flourish. Indeed, 
 Adam Smith did not thus impose upon himself, for he advo- 
 cated government restraints upon the issues of banks, and 
 defended it in Book II., Chapter 11., of the " Wealth of Na- 
 tions " (towards the end), in the following words : — 
 
 " To restrain private people, it may be said, from receiving in pay- 
 ment the promissory notes of a banker, for any sum, whether great or 
 small, when they themselves are willing to receive them ; or to 
 restrain a banker from issuing such notes, when all his neighbors are 
 willing to accept them, is a manifest violation of that natural liberty 
 which it is the proper business of law, not to infringe, but to sup- 
 port*. Such regulations may, no doubt, be considered as in some 
 respect a violation of natural liberty. But those exertions of the 
 natural liberty of a few individuals, which might endanger the security 
 of the whole society, are, and ought to be, restrained by the laws of 
 all governments, — of the most free as well as of the most despotical. 
 The obligation of building party walls, in order to prevent communi- 
 cation of fire, is a violation of natural liberty, exactly of the same 
 kind with the regulations of the banking trade which are here 
 proposed." 
 
 But if it did not impose upon Adam Smith himself, it did 
 upon many others, as may be inferred from the following 
 extract from Mr. John Stuart Mill's " Political Economy," 
 Book v., Chapter XL, paragraph 12 : — 
 
 " Mr, "Wakefield therefore proposed to check the premature occupa- 
 tion of land, and dispersion of the people, by putting upon all unap- 
 propriated lands a rather high price, the proceeds of which were to be 
 expended in conveying emigrant laborers from the mother country. 
 
 " This salutary provision, however, has been objected to, in the 
 name and on the authority of what was represented as the great prin- 
 ciple of political economy, that individuals are the best judges of their
 
 REVIEW OF BASTIAT S SOPHISMS OF PROTECTION. 31 
 
 own interest. It was said that when things are left to themselves, land 
 is appropriated and occupied by the spontaneous choice of individuals, in 
 the quantities -and at the times most advantageous to each person, and 
 therefore to the community generally ; and that to interpose artificial 
 obstacles to their obtaining laud is to prevent them from adopting the 
 course which, in their own judgment, is most beneficial to them, from a 
 self-conceited notion of the legislator, that he knows what is most for 
 their interests, better than they do themselves. Now this is a complete 
 misunderstanding, either of the system itself, or of the principle with 
 which it is alleged to conflict. The oversight is similar to that which we 
 have just seen exemplified on the subject of hours of labor. However 
 beneficial it might be to the colony in the aggregate, and to each individ- 
 ual composing it, that no one should occupy more land than he can 
 properly cultivate, nor become a proprietor until there are other laborers 
 ready to take his place in working for hire, it can never be the interest 
 of an individual to exercise this forbearance, unless he is assured that 
 others will do so too. Surrounded by settlers who have each their 
 thousand acres, how is he benefited by restricting himself to fifty ? or 
 what does he gain by deferring the acquisition for a few years, if all 
 other laborers rush to convert their first earnings into estates in the 
 wilderness, several miles apart from one another ? If they, by seizing 
 on land, prevent the formation of a class of laborers for wages, he will 
 not, by postponing the time of his becoming a proprietor, be enabled 
 to employ the land to any greater advantage when he does obtain it ; 
 to what end should he place himself in what will appear to him and 
 others a position of inferiority, by remaining a laborer when all 
 around him are proprietors? It is the interest of eacli to do what is 
 good for all, but only if others will do likewise. 
 
 " The principle that each is the best judge of his own interest, 
 understood as these objectors understand it, would prove that govern- 
 ments ought not to fulfil any of their acknowledged duties, — ought 
 not, in fact, to exist at all. It is greatly the interest of the community, 
 collectively and individually, not to rob or defraud one another ; but 
 there is not the less necessity for laws to punish robbery and fraud ; 
 because, although it is the interest of each that nobody should rob or 
 cheat, it cannot be any one's interest to refrain from robbing and 
 cheating others when all others are permitted to rob and cheat him. 
 Penal laws exist at tdl, chiefly for this reason, because an even unani- ^ 
 mous opinion that a certain line of conduct is for the general interest, 
 does not make it people's individual interest to adhere to that line of 
 conduct."
 
 32 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 
 
 By parity of reasoning, we must say that w^hen it is the 
 interest of the community, collectively and individually, to 
 build up a home market by buying " each of the other," there 
 is not the less necessity for protective laws ; because although 
 it is the interest of each that nobody should buy some article 
 abroad, it cannot be any one's interest to refrain from buying 
 abroad when all others are permitted to do so. 
 
 It will be seen that both Adam Smith and Mr. Mill take 
 the pretty little dream of the invisible hand, and the doctrine 
 that individuals can judge best about their own interests, at 
 their true value. They may be used to support a position 
 which they wish to establish ; but they are really of no im- 
 portance. They neither of them put forward Bastiat's 
 absurdity that each individual by the right of property is 
 invested with power to veto the action of the whole com- 
 munity. 
 
 M. Bastiat continues: — 
 
 " You are not then sustained by practice, since it would be impossible, 
 were you to search the world, to show us a single man who acts accord- 
 ing to your principle." 
 
 As we have seen that every prudent and thrifty individual 
 acts contrary to the principles laid down by M. Bastiat as 
 those of free trade, and in accordance with the real principles 
 of the protective theory, the intrepidity of the above assertion 
 is marvellous. 
 
 The rest of the chapter is full of similar intrepidity ; im- 
 puting admissions and arguments which protectionists never 
 make, and then securing to himself an easy victory over his 
 men of straw. He concludes as follows : — 
 
 " And all this for what ? To prove to us that we consumers, — we 
 are your property ; that we belong to you, soul and body ; that you 
 have an exclusive right on our stomachs and our limbs; that it is your 
 right to feed and dress us at your own price, however great your 
 ignorance, your rapacity, or the inferiority of your work ! Truly, then, 
 your system is one not founded upon practice ; it is one of abstraction 
 — of extortion."
 
 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. S3 
 
 Pray who are these obstreperous consumers, in whose name 
 ]\I. Bastiat presumes to speak ? Nineteen twentieths of the 
 consumers, as already shown, are also producers, either of 
 commodities or services, with whom the onlj^ means of pur- 
 chase are their products ; with whom to produce is the con- 
 dition precedent of consum]3tion. He certainl}^ had no reason 
 to speak for them. Nor is the case au}^ better with the re- 
 maining twentieth. The gross annual product of commod- 
 ities must be consumed or there will ensue immediate glut 
 and stagnation. In the long run and upon an average of 
 years it is consumed ; being distributed in wages, profits, and 
 rent, in proportion to the relative importance to the com- 
 munity of the labor and the capital which each brings to the 
 service of the community. An augmented annual production 
 must then issue in an augmented recompense to both labor 
 and capital. The totality of consumers is benefited ; and 
 each is benefited in proportion to the importance the con- 
 tribution which his labor or his capital makes to the gross 
 product which has to be divided. The manufacturer, then, 
 who, in these United States, is secretly sighing for a reduction 
 of wages which will enable him to compete in the " great 
 market of the world " with Great Britain, is in reality sighing 
 for a gain which must bring with it a much greater loss in 
 the diminution of the vastly more extensive home market ; 
 and the clergyman, lawyer, physician, literary man, and all 
 receivers of salaries, etc., labor under a similar hallucination, 
 when they long for the cheaper products of cheaper labor 
 from across the Atlantic ; for with such cheaper products 
 must come less employment for the home population, and a 
 diminution in the gross annual product which pays not only 
 all labor but all salaries, all fees, all incomes. This might not 
 be true if the whole of our productive population (actual 
 and potential) could be employed upon the branches of 
 production in which we have an advantage, and employed 
 without overstocking the markets of the world ; but it appears 
 to be indubitably true in the actual situation in which the 
 United States and other nations are now i)laccd. 
 
 Possibly a world might exist where it would promote the 
 
 6
 
 3-i REVIEW OP BASTIAT's SOPHISMS OF PROTECTION. 
 
 opulence of eacli nation, and of all nations, were each to con- 
 fine itself to those fields of production in which it has an 
 advantage ; but we are only concerned with the world as it is ; 
 and in this neither inductive nor deductive reasoning leads to 
 the conviction that the best possible arrangement springs 
 " naturally " from the unregulated strife of individual com- 
 petition, — the clash of chaotic cupidities. The laws of 
 nature are manifold. Man studies them ; and, by artificial 
 collocation of materials and forces, brings those into play 
 which promote his ends. He does this in every other depart- 
 ment. Why should he not do it in the department which 
 aims at social opulence, at abundance ? H^ sees in other 
 nations arts which give a prodigious power over nature ; why 
 should he not seek to acquire them ? Nature invites and re- 
 wards study with a most liberal hand in all other fields ; has 
 she forbidden him to study this ? No ; it is not nature that has 
 forbidden him, but only Adam Smith ! — a very sagacious and 
 eminent author indeed, but one hardly justified in warning off 
 the human mind from a most important field of investigation, 
 — perhaps, indeed, the most important so far as material well- 
 being is concerned. That individual interest can rarely lead 
 to the acquirement of those arts has been admirably shown 
 by John Ray in a work which the writer has just referred to 
 with delight and instruction. That is the work of a philoso- 
 pher and seeker after truth : everywhere cool logic, veracity, 
 dignity ; earnestness, indeed, but earnestness to discover what 
 is right, not earnestness to prove this or that preconcep- 
 tion to be right. There is no appeal to the passions, to anger, 
 to pity, to envy, to greed, nor even to religious prejudices. 
 He never misrepresents the arguments or ideas of Adam 
 Smith, with whom he differs ; never puts into his mouth what 
 he did not say ; never bursts into passionate rhetorical spasms, 
 like Bastiat. He neither disgraces himself nor affronts his 
 readers by the exercise of any such arts. If a similar work 
 is to be found upon the free-trade side of political economy, 
 it is a pity the League should have paid so poor a compliment 
 to the good sense of the American people as to have preferred 
 presenting them with the " Sophisms " of Bastiat.
 
 REVIEW OF BASTIAT'S SOPHISMS OF PROTECTION. 35 
 
 Chapter XIV. is entitled " Conflicting Principles." 
 In this M. Bastiat starts from this premise: — 
 
 " The disposing by law of consumers, forcing them to the support 
 of home industry, is an encroachment upon their liberty, the forbid- 
 ding of an action (mutual exchange) which is in no way opposed to 
 morality. In a word, it is an act of injustice" 
 
 Under the regime of the division of employments, each 
 individual produces a certain article or articles with which to 
 buy whatever he requires. The greater the value of what he 
 produces, the greater the amount that he can consume. If 
 by buying of A he gets more than by buying of B, he does 
 so. His interests as a consumer are identical with his interests 
 as a producer. 
 
 But has a nation no rights ? There is a nation called the 
 United States : fifty millions of persons, soon to be a hundred 
 millions. It possesses vast resources still undeveloped. It 
 says to all the world, " Come over and share our pros- 
 perity. All we ask is that you should live like men as we 
 do ; and that, being furnished with work by us, we taking 
 your products and services, you shall in turn consume the 
 products and services of others among us so far as our laws 
 and customs require. We have become convinced that this 
 system promotes the general good, and that under it you will 
 yourselves enjoy a greater abundance than under any other." 
 " But," says A, " this is not what I desire. I would like to 
 have you give me high wages ; but, when I have got them, I 
 have a right to buy of whomsoever I please ; and C, across the 
 Atlantic, being wilHng to live a great deal cheaper than B, 
 can give me considerably more for my wages than B will" 
 The United States might reply : " If you have any such right, 
 then one individual can veto the action of fifty millions, mak- 
 ing their interests give way to what he supposes to be his, but 
 which we are satisfied are not his, because if A is to be 
 allowed to act in this way every other citizen must be allowed 
 to do so ; and then, a large proportion of our industries being 
 transferred abroad, higli w^ages will disappear, and with them 
 the ability to buy the cheap foreign goods." " But this is not
 
 36. REVIEW OF BASTIAT'S SOPHISMS OF PROTECTION. 
 
 SO," cries A. " Adam Smith and all the illustrious and learned 
 foreign economists down to M. Bastiat agree that it is best to 
 allow every man to buy where he can buy cheapest. They 
 assure me tliat they have demonstrated the doctrine, and that 
 none but ignorant people have any doubt upon the subject." 
 The fifty millions might reply : " Protectionist writers have 
 gone over those reasonings and pointed out gross blunders in 
 them ; blunders that would ruin the reputation of any of us 
 ignorant people. Moreover, we see clearly enough that where 
 much is produced there is much to consume. If half of us, 
 working in the industries where we have a decided advantage, 
 can produce as much as we all require, and as much as can find 
 a good market abroad, it needs no philosopher to see that the 
 other half of the population had better be employed, even 
 upon less productive fields. This is our theory ; and under 
 it we have always prospered, except during the years 1873- 
 1879, when other sufiicient causes produced depression.^ 
 Whenever we have faltered in this policy we have suffered, 
 even during the years following 18-19, when Australian 
 and Californian gold favored prosperity everywhere. We 
 believe that both inductive and deductive reasoning war- 
 rant our practice ; and if A does not think so he had better 
 go to England and .stay there. To allow him to remain and 
 do as he likes, to the detriment of the community which 
 gives him his opportunity of gaining a living, — this^ in- 
 deed, would be an injustice. His demand is opposed to 
 morality. Every moral teacher from Socrates down would 
 so declare it." 
 
 There is no ground then for M. Bastiat's deduction that 
 according to protectionist reasoning utility is incompatible 
 with the internal administration of justice or incompatible 
 with the maintenance of external peace. These are M. Bas- 
 tiat's conclusions, indeed, but they cannot be worked out from 
 any sound premises. As to the foreign consumer, we have no 
 charge of his interests. By looking after those of the United 
 States we shall do all we have any title to do. By taking 
 good care of our own affiiirs, we may very likely promote 
 those of the rest of the world as effectually as if we assumed 
 
 1 See note 2, page 79.
 
 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 37 
 
 the role of general philanthropist. A multitude of opulent 
 nations would still have avast international trade, — probably 
 much larger in actual volume (though less, perhaps, in pro- 
 portion to the total annual products) than can be supported 
 between the same nations impoverished by free trade. 
 
 There is no call, then, for M. Bastiat's rhapsodies and dec- 
 lamations about horrible blasphemy, liberty, utility, justice, 
 peace, and the manifestation of the wisdom of God as shown 
 in the sublime harmony of material creation. The sober and 
 clear-headed American people are not likely to be fooled in 
 this way. 
 
 Chapter XV. is entitled "Reciprocity Again." 
 This chapter argues that an individual in a nation having 
 no external relations sells his product for money, " casts his 
 product into tlie national circulation," and by means of money 
 withdraws a like value ; that if thereafter the exchanges of 
 the nation be opened — made free — with other nations, the 
 individual will in like manner cast his product into the larger 
 market, that of the world. 
 
 Bat induction from facts and deductive reasoning alike 
 show that the individual may find the universal market 
 smaller than the national. The farmer may have an advan- 
 tage not only in growing wheat, cotton, and tobacco, but also 
 in growing green crops and market products not susceptible 
 of distant conveyance. He wishes to exchange these for 
 manufactured goods which can be brought from the ends of 
 the earth. He throws them into the market of the world ; 
 but the world market for them is bounded by a radius of a few 
 tens of miles. He can produce of them (his most in-ofitable 
 crops) only what can be taken by the population occupying 
 the limited area. Put a cotton or woollen mill or any other 
 manufacturing establishment near the farmer and his possible 
 production of salable articles, and consequently his possible 
 consumption is increased greatly. The laissez-faire system 
 produces here a smaller product for the individual, for his 
 immediate vicinity, for his nation, and for the world. If he 
 buys that which comes from a great distance, he must raise
 
 88 DEYIEW OF BASTIAT's SOPHISMS OF PROTECTION. 
 
 that which can be carried to a great distance, — that is, a few 
 articles, for which the distant marlcets are very limited. 
 
 Bastiat next reasons from individual action to national, 
 forgetting that nations are few and individuals many. A 
 casts liis individual product into the national market, and sells 
 it. Innumerable producers compete to supply him with what 
 he needs. Frequent combinations among them to fleece him 
 arebej^ondthe range of probability ; and any occurrence which 
 should stop his supply is scarcely possible. It is not so with 
 nations. They are few, and the possible events which might 
 stop a foreign supply are very many. 
 
 Finally, Bastiat says that if the supply and demand from 
 abroad should stop, we should only be forced upon isolation, 
 to reach which is the ideal of the protective system. 
 
 But it has been already observed that protection does not 
 aim at nor tend to isolatiori. It aims at and accomplishes a 
 comparative independence as to the great necessaries of life, 
 and brings about a great increase of opulence, from which 
 springs the ability to enjoy a thousand luxuries which can 
 really be got to better advantage elsewhere. The products 
 which the United States throws into the market of the world 
 are thirty times greater (per head) than free-trade India 
 throws ; they are many times greater than those of Portugal, 
 Turkey, Ireland, and nearly equal to those of Great Britain's 
 American colonies, being $16.70 per head to $19.04 per head. 
 This last is a remarkable fact. The United States makes for 
 herself vastly more, per head, than those colonies consume, 
 and still sells in the market of the world a surplus as great, 
 or nearl}' as great, as theirs under free trade. 
 
 We say that this is a fact. You cannot deny it. But you 
 deny that the fact has any connection with protection. We 
 reply that by deductive reasoning we show that such a fact 
 ought to occur under protection-; and by observations which 
 you cannot and do not deny, we show that it does occur. 
 You reply that you have shown by deductive reasoning that 
 no such fact could follow such a cause. We answer, in turn, 
 that we have pointed out errors in your deductions, errors 
 which absolutely annihilate them ; while you have not found
 
 REVIEW OF BASTIATS SOPHISMS OF PROTECTION. 39 
 
 any errors in our deductions, but answer thera only by a 
 rej^etition of your own (just as if they had never been con- 
 futed), and by a vast amount of declamation and rhetoric. 
 You do not prove the contradictory of our propositions, but 
 only the contradictory of some other propositions, which you 
 put into our mouths, but which we ourselves never dreamed of. 
 
 Chapter XVI., — "Obstructed Rivers pleading for the 
 Prohibitionists." 
 
 This is the case of the Doiiro, which, according to M. 
 Bastiat, neitlier Spain nor Portugal was willing to improve, 
 for fear that grain would j)ass between the two countries. 
 The chapter does not give sufficient facts to enable a protec- 
 tionist to decide whether, under the circumstances, it was or 
 was not desirable to expend money in removing the obstruc- 
 tions. To M. Bastiat the case appeared simple. He was for 
 removing all obstructions to individual action. To protec- 
 tionists, who do not believe that individual'action necessarily 
 leads to the best result for a community, the case is not so 
 clear. We believe that Adam Smith was right in advocating 
 the regulation by the society of individual action regarding 
 the currency, and that Air. John Stuart Mill was right in 
 advocating similar regulations regarding a variety of matters 
 touching the general good. We believe- that laissez /aire 
 and giving perfect freedom to individual action is not good 
 in theory, and has never 3'et anywhere been adopted in 
 practice. 
 
 Chapter XVIT. is entitled " A Negative Railroad." 
 This chapter is a good specimen of M. Bastiat's reasoning. 
 By diligent search or lively invention, he produces an absurd 
 proposal that a railroad should have a break or terminus at 
 Bordeaux, in order that goods and passengers should be thus 
 forced to contribute to the profits of the boatmen, porters,' 
 commission-merchants, hotel-keepers, etc. He then argues 
 that IF such profit be conformable to the public interest, there 
 ought to be similar breaks elsewhere, and tliese too would be 
 for the general good, and for the interest of national labor.
 
 40 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 
 
 " For it is certain that in proportion to the number of these 
 breaks or termini will be the increase in consignments, com- 
 missions, lading, unlading, etc." A protectionist would say at 
 once that the first break was detrimental, and that many would 
 utterly prevent all consignments, commissions, etc., coming 
 thus to a conclusion the opposite of that which M. Bastiat 
 says is certain, — a conclusion, by the way, which would not 
 be certain, even if the premises were sound. M. Bastiat, 
 however, insists — 
 
 " that the restrictive principle is identical with that which would 
 maintain this system of breaks ; H is the sacrifice of the consumer to 
 the producer, — of the end to the means." 
 
 This shows, out of M. Bastiat's own mouth, that he had no 
 conception of what protection does actually aim at. It aims 
 at the greatest possible consumption, but recognizes (what 
 M. Bastiat apparently did not) that, before an individual or 
 a nation can consume largely, he or it must produce. Pro- 
 tectionists are as anxious as free-traders — more anxious than 
 free-traders — to remove obstacles, to improve machinery, to 
 improve tools, to improve the arrangement and organization 
 of society. It aims at whatever will increase the gross annual 
 product. Evidently M. Bastiat never learned such a doc- 
 trine; but he might have deduced it by easy economical 
 reasoning from the sound parts of Adam Smith and J.B.Say. 
 The trouble with him was that he gathered in their errors, 
 and passed by their sound reasoning ; that he took in sober 
 earnest, and as universal generalizations, what they threw out 
 as rhetorical flourishes. Tinsel caught his eye quicker than 
 solid gold. So lie swallowed laissez faire, and thought to 
 build a science upon a proposition drawn from a few and 
 uncertain instances, and forbidden by innumerable negative 
 instances. M. Bastiat certainly profited little from the 
 " Novum Organum," or from Mr. John Stuart Mill's 
 " Logic." 
 
 Chapter XVIII., — " There are no Absolute Principles." 
 M. Bastiat scoffs at the idea that there are in political 
 economj'- no absolute principles, and reaffirms that the free- 
 
 I
 
 REVIEW OF BASTIAT's SOPHISJNIS OF PROTECTION. 41 
 
 dom of exchanges is an absolute principle. He deduces this 
 from the provisioning of a great city. lie says : — 
 
 " Contemplating this great city of Paris, I have thought to myself : 
 Here are a million of human beings, who would die in a few days if 
 provisions of every kind did not How towards this vast metropolis. 
 The imagination is unable to contemplate the multiplicity of ol)jects 
 which to-morrow must enter its gates, to prevent the Hfe of its inhabi- 
 tants terminating in famine, riot, or pillage. And yet, at this moment 
 all are asleep, without feeling one moment's uneasiness from the 
 contemplation of this frightful possibility. On the other side, we 
 see eighty departments who have this day labored, without concert, 
 without mutual understanding, for the victualling of Paris. How can 
 each day bring just what is necessary^ nothing less, nothing more, to 
 this gigantic market ? What is the ingenious and secret power which 
 presides over the astonishing regularity of such complicated move- 
 ments, — a regularity in which we all have so implicit, though thought- 
 less, a faith ; on which our comfort, our very existence depends ? This 
 power is an absolute principle, the principle of freedom in exchanges. 
 We have faith in that inner light which Providence has placed in the 
 hearts of all men, confiding to it the preservation and amelioration 
 of our species, — interest, since we must give its name, so vigilant, so 
 active, having so much forecast, when allowed its free action." 
 
 M. Bastiat then declares that no minister, however superior 
 his abilities, could arrange things so well, and that if he 
 should attempt it, the actually existing misery would be 
 infinitely increased, etc., etc. 
 
 This chapter may be good, considered as declamation or 
 rhetoric, but we fear it would hardly stand a test by Mr. 
 Mill's canons of inductive logic. What M. Bastiat under- 
 took to prove was that in political economy it was an absolute 
 (by which he must have meant a universal) proposition that 
 freedom in exchanges is, in every case, promotive of opu- 
 lence ; or that every constraint put upon the freedom of 
 exchanges is unfavorable to progress in opulence. 
 
 His method of proof was to present the case of a great 
 city provisioned regularly without any supervision. He rep- 
 resents that there is never too much, never too little, etc., 
 statements which it would be necessary to verify, and which 
 
 6
 
 42 REVIEW OF BASTIAT'S SOPHISMS OF PROTECTION. 
 
 could not be verified. On the contrary, it would be found 
 that at times there are short, and at times excessive, supplies ; 
 that much food perishes unused almost in the sight, nay, 
 quite in the sight, of hungry crowds ; that much clothing 
 wears out on the shop shelves in the sight of shivering myriads. 
 M. Bastiat alleges that matters would be much worse under 
 the management of a single head with suitable assistants, but 
 he does not prove this ; and a general proposition intended to 
 be the basis of an important science should not rest upon 
 opinion. As there is great irregularity of supply, so great 
 that some 90 per cent of the mercantile classes (who under- 
 take the management of such matters) fail and become 
 bankrupts, the results of free competition are evidently far 
 from perfect. Whether they could or could not be better 
 managed by a government bureau is a matter of opinion, not 
 a matter of certaint3\ To establish M. Bastiat's proposition 
 inductively, it is necessary to find not only instances in which 
 opulence attends freedom of exchange, but also to show that 
 poverty never attends it. How then about Ireland, Turkey, 
 Portugal, India ; and, to a minor extent, but still to a very 
 observable extent, all the American colonies of Great Britain ? 
 Freedom of exchange has not prevented millions from starv- 
 ing in Ireland and India in the midst of all the possibilities 
 of plentv. These are negative instances, any one of which 
 would be sufficient to forbid the proposed generalization. If, 
 then, it is to be proved that freedom of exchange is even one 
 among many causes of opulence, it must be proved deductively. 
 It cannot be proved a 'posteriori in the face of numerous nega- 
 tive instances. Let us then try the case deductively, and 
 first with regard to an individual. A produces something. 
 Free trade says, Stick to your particular business, and buy 
 with your products, in which you have an advantage, the 
 other things you desire which are produced by persons who 
 have an advantage over you in their production. Yes ; cer- 
 tainly, if A has occupation all the time. But if he has occu- 
 pation for only four days out of six, then most certainly 
 let him do something else during the two unoccupied days, 
 rather than call in a skilled artist to do it for him. He may
 
 REVIEW OF BASTIAT'S SOPHISMS OF PROTECTION. 43 
 
 not do it as well or easily at first, but he will do it after a 
 fashion, and better and better every time he tries ; and he 
 will save a portion of his four days' earnings, which would 
 otherwise be paid out for the work he now does for himself. 
 If he be thrifty he will do this of liis own accord ; if he be 
 unthrifty it would be better for him, so far as opulence is con- 
 cerned, if he were constrained to do so. But this is to invade 
 his liberty. True ; and upon other grounds than that of 
 procuring abundance, it may be better not to constrain him ; 
 but that is another question. The question we have before 
 us is, " How shall he obtain the greatest abundance ? " Tliere 
 can be no sound reasoning if we fly off from the point under 
 discussion. 
 
 Now let us consider a nation, say, the United States. It 
 possesses a decided advantage in growing cotton. Are we to 
 confine ourselves, fifty millions of us, to growing cotton ? It 
 is only necessary to ask the question to make the absurdity 
 apparent. We have also an abundance of cheap land, capable 
 of yielding agricultural products for seven hundred millions 
 of people, and at our present rate of increase we shall grow to 
 be a hundred millions in twenty-five years ; and to two hun- 
 dred millions in half a century. Some twenty-five millions of 
 people three thousand miles away are willing to take a few 
 agricultural products of us, and they say they will give us in 
 return manufactured products cheaper than we can make 
 them ourselves, while land is open to all at a nominal price. 
 
 Twenty-five millions of people (a minute portion of the 
 human race) propose to do the mechanical and manufacturing 
 work for a thousand millions. But a thousand millions of 
 people can raise raw agricultural products for three thousand 
 millions ; where are the other two thousand millions? Or, to 
 put it in another shape, three hundred and fifty millions can 
 raise raw agricultural products for the world ; what are the 
 other six hundred and fifty milHons to do while the English 
 Islands do all the mechanical and manufacturing labors ^ 
 England teaches free-trade doctrines, and these promise a 
 greater abundance than is practicable with protection. We 
 have a right, then, to assume that she promises the world at
 
 4-1 EEVIEW OP BASTIAT'S SOPHISMS OP PROTECTION. 
 
 least as great an abundance of mechanical and manufactured 
 products as are enjoyed by the people of the United States 
 who are so silly and unscientific as to help themselves. They 
 consume per head a value of $100 in such products. A hun- 
 dred dollars each for one thousand millions of people is one 
 hundred thousand millions. The remuneration of capital 
 and labor for converting the raw material, even at a low 
 rate, would be thirty thousand millions of dollars, or about 
 six times the total annual production and consumption of the 
 whole British Islands ! Here we come to an absurdity. The 
 dream of being the workshop to the world enjoying abun- 
 dance is seen to be only a dream. If those Islands were 
 called upon to supply the United States alone, profits and 
 wages would speedily be doubled or trebled there, and the 
 cheapness which exists during lack of demand would vanish. 
 But what she could give us of finished products would be 
 limited by the amount she could consume of our raw prod- 
 ucts ; and a very short calculation will show that the quantity 
 would be only a small fraction of what we get by helping 
 ourselves even now, and twice as inadequate twenty-five 
 years hence. 
 
 Any one who^has been taught simple arithmetic can see 
 that Great Britain cannot give us abundance at any price. 
 She can give us cheapness and scarcity if we will first allow 
 her to destroy our own industries and drive an undue 
 proportion of us on to farms ; but we can have an abundance 
 of finished products 07ily by manufacturing ourselves. In 
 this way we can have all we need without paying more in 
 labor and abstinence than we pay for raw products. 
 
 Chapter XIX., — "National Independence." 
 
 A chapter so full of inveracity, audacious misrepresentation, 
 
 and declamation as to be positively wonderful. It says in 
 
 substance that : — 
 
 " With free trade and mutual independence would come eternal 
 peace ! ' Interest ' — that is, the immediate selfish interest of the 
 unbridled individual — is the necessary, eternal, and indestructible 
 mover to the guidance of which Providence has confided human per- 
 fectibility. The 'spoliators' declaim against the beautiful harmony
 
 • REVIEW OF BASTIAT's SOPHISMS OP PROTECTION. 45 
 
 which God has been pleased to establish iu the moral world," etc., 
 usque ad nauseam. 
 
 The fact is that the most wicked wars of modern times have 
 been waged to promote free trade, and more would be waged 
 were it not that the great protectionist powers are too strong 
 to be attacked. 
 
 Chapter XX., — " Human Labor — National Labor." 
 
 M. Bastiat maintains that the destruction of machinery and 
 the prohibition of foreign goods are two acts proceeding from 
 the same doctrine. 
 
 This only proves that M. Bastiat was entirely ignorant of 
 political economy. He takes the case of machinery and shows 
 easily enough that its introduction is advantageous. The 
 gross annual product is not diminished, the immediate loss 
 which falls upon the displaced laborers is made good to labor 
 in general by the expenditure of the sum saved. Thus far, 
 all right ; but his next step is a blunder. 
 
 Ten millions of hats produced in France at fifteen francs 
 makes one hundred and fifty millions of francs. Import from 
 abroad at ten francs, and they will cost one hundred millions ; 
 and the fifty millions saved being spent for other articles or 
 services, M. Bastiat imagines that all will be serene the same 
 as in the case of machinery. But he overlooks the fact that 
 the one hundred and fifty millions' value of hats provoked 
 and remunerated other French labor, producing values of one 
 hundred and fifty millions ; the sum of products, then (the 
 whole price of which was net individual income to French- 
 men ; see J. B. Say), was three hundred millions. Bring 
 in the English hats, and the French products to pay for the 
 hats (supposing complete reciprocity) will be one hundred 
 millions. If the fifty millions saved on the hats be spent for 
 other products, or say for more hats, then the gross French 
 product will be one hundred and fifty millions. France 
 altogether will have lost one hundred and fifty millions. The 
 case is totally unlike that of machinery. If M. Bastiat had 
 been competent to instruct the American people, he would 
 not have made such a blunder.
 
 46 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 
 
 Chapter XXI. is entitled " Raw Material." 
 Here the blunder just noticed comes on the stage again. 
 M. Bastiat quotes M. de St. Cricq as saying : — 
 
 " ' Labor constitutes the riches of a nation, because it creates supplies 
 for the gratification of our necessities ; and universal comfort consists 
 in the abundance of those supplies.' 
 
 " Here," says M. Bastiat, " we have the principle. 
 
 " ' But this abundance ought to be the result of national labor. If 
 it were the result of foreign labor, national labor must receive an 
 inevitable check.' 
 
 " Here," says IVL Bastiat, " lies the error. (See the preceding 
 fallacy.)" 
 
 There are inaccuracies of expression in what is represented 
 to have been said by M. de St. Cricq, but it is plain enough 
 what he means, if one wishes to understand. Labor does 
 not constitute the riches of a nation; but labor produces or 
 causes the riches of a nation, because it creates supplies for the 
 gratification of our necessities, and universal comfort consists 
 in the abundance of those supplies ; and the labor must be 
 national labor. It cannot by any possibility be foreign labor, 
 for that will not give an atom of its products except in ex- 
 change for an atom of ours, or for bonds which are mortgages, 
 or for treasure. If nation A produces articles with less labor 
 than nation B, and nation B produces other articles with less 
 labor than nation A, it will be w^ell for them to exchange, pro- 
 vided the gross annual product of each nation remains undimin- 
 ished. If it be diminished in either nation, then clearly that 
 nation is the loser. How can this be when both are getting 
 things cheaper? Because the articles and services in demand 
 in each country are not infinite in number, but limited ; nor 
 are they in infinite demand as to quantity, but also in limited 
 demand. Nation A produced both articles, x and y, enough 
 for its demand at the cost price. Nation B also produced 
 both articles, x and ?/, enough for its demand at the cost price. 
 Nation A now transfers to nation B the industry producing z, 
 and nation B transfers to nation A the industry producing y. 
 The aggregate demand for products and services in general is 
 diminished in one or the other nation unless x and y balance.
 
 REVIEW OF BASTIAT S SOPHISMS OF PROTECTION. 47 
 
 If the demand in nation A for B's cheaper product ?/ be 1 
 and the demand in nation B for A's cheaper product x be 5, 
 the extra 4 can only be had by nation B so long as its treas- 
 ure and securities hold out.^ Thereafter it must be content 
 with one fifth of the article x that it had before, and this 
 dej^lorable result will be arrived at by an appreciation of the 
 valile of gold, making all debts, public and private, more 
 onerous, and reducing the exchangeable value of its whole 
 accumulated capital in the market of the world. The ac- 
 cepted theory of international exchange leaves out of sight 
 three not altogether insignificant facts, — the first, the fact that 
 there is such a thing as money in the world ; the second, that 
 nations can and do run in debt to other nations ; the third, 
 that the debtor nation must sell its products for what the 
 creditors are willing to give, Bastiat assumes falsely that, if 
 France gives up making hats and takes them from England, 
 then England will increase its consumption of French articles 
 to the same extent. The increase in the English field of 
 employment consequent upon the new demand for hats will 
 give England a greater power of consumption ; but this 
 power will be exerted in buying more of everything (com- 
 modities and services) which England habitually desires and 
 buys. Only a small portion of the increased consumption will 
 fall upon French products; the balance must be paid in 
 treasure. If this be recovered from other nations it will only 
 be by offering them French products cheaper than before. 
 
 Abundance then cannot be the result of foreign labor ; the 
 foreign products can only be obtained in exchange for national 
 products, or for money or for bonds, that is, by running in 
 debt ; and the introduction of the foreign product, even at a 
 two-thirds price, may lead to a marked impoverishment of one 
 or the other of the exchanging nations. One or the other may 
 have a greater power of purchase at the high price, than it 
 has at the lower price. 
 
 The rest of the chapter is a conversation between manufac- 
 turers who wish to have materials introduced duty free, and 
 M. de St. Cricq. 
 
 Manufacturers often wish their own individual interests, or 
 supposed interests, to be made the concern of the State ; but 
 ^ See note 3, page 79.
 
 48 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 
 
 no protectionist, properly so called, considers any but the 
 problem of how the nation may become wealthier, wiser, 
 and better. It is unnecessary to examine what M. Bastiat 
 puts into the mouths of the manufacturers any more than his 
 declamations about spoliation. These last are the arts of the 
 sophist, essentially dishonest and disreputable, and discredit- 
 able alike to the author and to those who have made them- 
 selves his sponsors to the American public. Nobody supposes 
 or affirms that labor itself, aside from its products, is the 
 desirable object, so far as direct effects upon opulence are 
 concerned ; and in combating such a proposition, M. Bastiat 
 simply makes a false issue. 
 
 Chapter XXII. is entitled " Metaphors." 
 
 In this chapter, M. Bastiat inveighs against the use of the 
 expressions : invasion of foreign products ; an inundation 
 of foreign goods ; j)aying tribute to a foreign nation. He is 
 quite right to inveigh against their use as arguments. They 
 are not arguments. Neither is the denunciation of their use 
 an argument. If the free-trade doctrine be right, they are 
 improperly used, not being descriptive of facts ; if the protec- 
 tionist doctrine be right, they are oftentimes very descriptive 
 of most calamitous facts. Which is right and which is wrong 
 can never be ascertained by declamation and much calling of 
 names. 
 
 CONCLUSION". 
 
 M. Bastiat says of his book : — 
 
 " Among the sophisms which it has discussed, each has undoubtedly 
 its own formula and tendency, but all have a common root ; and this 
 is the forgetfulness of the interests of men, considered as consumers" 
 
 M. Bastiat imagines that the interest of the consumer is 
 promoted by offering him commodities at a low price, regard- 
 less of whether he has or has not anything to buy with. 
 The protectionist maintains that the interest of the consumer 
 is best promoted by not only offering him commodities, but 
 seeing to it that he has the means of purchasing. If he can- 
 not buy, it is mere trifling to offer him an article for little
 
 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 49 
 
 money. Give liiiii the means of purchase, and the price is 
 comparatively unimportant. Scarcity to the consumer is often 
 accompanied by lowuess of price ; while abundance goes 
 often hand in hand with a high price. M. Bastiat concludes 
 that he will be satisfied if he has brought the reader to 
 doubt — 
 
 " 1. The blessings of scarcity. 
 
 " 2. The beneficial effects of obstacles. 
 
 " 3. The desirableness of effort without result. 
 
 " 4. The inequality of two equal values when one comes from the 
 plough and the other from the workshop. 
 
 " 5. The incompatibility of prosperity with justice, and of peace with 
 liberty, and of the extension of labor with the advance of intelligence ! " 
 
 The protectionist believes that in the existing state of the 
 world abundance cannot flow from free trade ; that to acquire 
 abundance a nation must erect an obstacle to the maliciously 
 destructive competition of a community, which, having re- 
 duced its own labor to misery, can and will, if permitted, 
 bring others down to its level. Protection does not maintain 
 that effort without result is desirable, but only that it is 
 desirable to enlarge the field in which effort is possible, so far 
 at least as to obtain the greatest possible gross annual product 
 for the nation. Protection has nothing to do with the prop- 
 osition that any two equal values are unequal, nor with any 
 other absurdity ; and, finally, protection maintains that under 
 its system, and only under its system, will prosperity and 
 justice, peace and liberty, labor and intelligence, be found in 
 accord. 
 
 To be sure, there is a difference in the meaning assigned to 
 justice and liberty by M. Bastiat and by the protectionist. 
 The latter considers it just that the individual, who prospers 
 with and through the prosperity of the society, should be 
 allowed to follow that private selfishness, which, if followed 
 by all, would destroy the prosperity of all, and wliich would 
 cease to be advantageous to tlie individual himself the moment 
 others followed his example ; but the protectionist under- 
 stands by liberty, the liberty of the whole community to 
 
 7
 
 50 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 
 
 pursue the course most advantageous to the Tvhole communitj, 
 the individual inchided ; it does not understand by libSrty 
 the right of one man to veto and prevent the efforts of the 
 whole for the good of the whole, the individual himself in- 
 cluded. We have conquered state rights when construed to 
 include nullification ; we are not likely then to allow individ- 
 ual rights to be pressed to the same extreme, 
 
 M. Bastiat concludes by charging upon protectionists spolia- 
 tion and robbery, which is rather cool in face of the facts. 
 Great Britain, at the instance of her manufacturing classes, 
 has found them markets by force wherever she could, — not- 
 ably, in China, India, Japan, and Ireland. She now is attempt- 
 ing the same thing by sophism in France, the United States, 
 and her colonies. She cannot use force in the latter cases ; 
 but she can scatter the specious fallacies of such writers as 
 Bastiat, and this she is doing with a free hand. 
 
 Part IL Chapter I. is entitled " Natural History of 
 Spoliation." 
 
 In this chapter the evils of war, robbery, slavery, and mo- 
 nopoly are enlarged upon, and the protectionist policy is tlieu 
 quietly classed with the rest as being monopoly. This, too, 
 addressed to thirty millions of Frenchmen ; and, now, ad- 
 dressed to fifty millions of Americans, every one of whom is 
 free to go into any of the trades or manufactures enjoying 
 the monopoly. Good rhetoric, only untruthful and deceitful. 
 
 Chapter II., — " Two Systems of Morals." 
 
 This chapter explains that economical morality (that is, 
 free trade) does not exclude religious morality, which may 
 still find something to do in the world ! This is fortunate 
 for religious morality ! 
 
 Chapter III., — " The Two Hatchets." 
 
 This is the same wearisome untruth once more : a car- 
 penter is represented as holding forth that by means of the 
 protective laws he is robbed of half his earnings, and so he 
 asks for a law that only dull hatchets be used so that the
 
 REVIEW OF BASTIAT'S SOPHISMS OP PROTECTION. 51 
 
 amount of carpenters' work should be doubled. In sucli 
 mixed fabrics of exaggeration and absurdity, M. Bastiat stands 
 easily first. Nobody proposes any sort of protection which 
 will diminish the efficiency of labor, or which will other than 
 augment the national gross annual product. Nobody believes 
 that half of a French carpenter's wages are taken away by 
 protection ; although it is very possible and probable that 
 free trade would diminish them one half. 
 
 Chapter IV., — " Inferior Council of Labor." 
 
 Here laborers, blacksmiths, and carpenters are represented 
 as declaring that they pay more for bread, meat, sugar, thread, 
 etc., on account of the tariff. 
 
 They would like to get their bread and meat, their sugar 
 and thread, everything they eat, drink, clothe, or warm them- 
 selves with, from foreign countries ; and suppose that, under 
 such circumstances, there would be abundant French cus- 
 tomers for tailors and blacksmiths. 
 
 The unmeasured and incredible audacity of M. Bastiat 
 makes any sober answer difiScult. 
 
 He pretends to believe that all laborers having carefully 
 considered their position might rationally come to the con- 
 clusion that they found relevancy in the proposition that 
 " It is better to support one's self, surrounded by well-to-do 
 neighbors, than to be protected in the midst of poverty." 
 He feigns to believe that well-to-do neighbors will be gen- 
 erated by a system which proposes to an idle population to 
 buy everything where it is cheapest. Buy ! What is a man 
 to buy with who has nothing to do ? He fancied that the 
 amount of labor employed depended upon capital. He did 
 not know that quite another cause mastered or limited first 
 the accumulation of capital and then the employment of 
 laborers. What other cause? The extent of the field of 
 mutually satisfying desires. The community as a whole offers 
 to the community as a whole — wheat. There are individ- 
 uals who desire more wheat than they use ; but they have not 
 the means of buying it. Why? Because they produce noth- 
 ing the community desires in exchange for wheat. Let these
 
 52 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 
 
 wishers for wheat discover a new convenience, or a new ser- 
 vice for which others have a desire, and the satisfaction of the 
 new desire will give wheat to those wlio before were sighing 
 in vain for it. More still ; the sale of an additional quantity 
 of wheat will enable the grower of wheat to satisfy perhaps 
 some before unsatisfied desire. The newly discovered or 
 invented want is seized upon by labor and by capital (both of 
 which are normally in excess in a community where diver- 
 sified employments exist), and the field of employment is 
 permanently enlarged. The community as a whole produces 
 more than before, and so there is more to divide. Wages, 
 jjrofits, rents, all rise together. Not so when the people, seduced 
 by witless manipulators of words, adopt the free-trade pana- 
 cea. " Let us buy in the cheapest market," say they. " Let 
 us get our cotton and metal fabrics from England, our woollen 
 goods from Germany, our coal from Nova Scotia, our sugar 
 from the West Indies, our hemp and tallow from Russia, our 
 lumber from Canada, our wool from Australia," Here are 
 industries which respond to what now (1881) amount to, say, 
 over twelve hundred millions of dollars of annual wants in 
 the United States, the satisfaction of which supports a pop- 
 ulation whose demand for the productions of other industries 
 creates a market to an equal amount. 
 
 Transferring these industries to foreign nations would re- 
 duce the purchasing power of the United States by twelve 
 hundred millions of dollars, would diminish the gross annual 
 product, the fund out of which all icages, all profits, all rents 
 are paid by that amount, which means by one sixth part. 
 But this is not the worst. The foreign markets, oppressed with 
 an additional twelve hundred millions of our products, would 
 refuse them, except at a greatly reduced price, and we should 
 find that many of the remaining unscalped industries would 
 gradually die out for want of a market. The over-anxious 
 manufacturer, clutching after a foreign market, would find 
 himself bereft of a market ten times greater at home ; the 
 clergyman, lawyer, physician, who coveted cheaj) clothes with 
 ample incomes, would find the people too poor to pay the ample 
 incomes. The carpenter, blacksmith, mason, painter, paperer,
 
 REVIEW OF BASTIAT's SOPHISMS OP PROTECTION. 53 
 
 etc., who had been told that " houses were never imported," 
 would find out, to their cost, that houses were built in propor- 
 tion- to the means of the community. The owner of railroad 
 stock, bank stock, manufacturing stock, of houses, of stores, 
 of forges, of farms, would find out at last that they were in 
 the same boat as the day laborer, and that they could not 
 thrive while he starved. 
 
 Chapter V., — " Dearness — Cheapness." 
 
 Here is only a repetition of the old fallacy which teaches 
 an individual who has work for only four days out of six, 
 that he will become rich faster by spending a portion of his 
 four days' earnings to buy than he will by keeping all his 
 earnings and doing for himself during the unemployed two 
 days that which he requires to have done ; and which teaches 
 a nation that it will become rich by buying at a cheap price 
 what its unemploj^ed labor and capital can make for nothing. 
 Here also, is a repetition of inveracious assumption, as fol- 
 lows: — 
 
 " Therefore the question, the eternal question, is not whether protec- 
 tion favors this or that special branch of industry, but whether, all things 
 considered, restriction is, in its nature, more profitable than freedom. 
 
 '■^■Now no person can maintain that proposition. And just this 
 exphiins the admission which our opponents continually make to us : 
 *ToM are right., on principle.' " 
 
 As before observed, some protectionists, feeling themselves 
 unable to unravel all the innumerable Protean, " Achilles and 
 Tortoise " puzzles which men like Bastiat propound, may have 
 found refuge in the absurdity of saying, " So and so may 
 be good in theory, but is not good in practice ; " but it is not 
 the refuge of any protectionist who has the time and patience 
 to follow up and refute a hundred times over the parroted 
 fallacies of free trade. 
 • There is nothing new in Chapter V. It is only a repetition 
 of positions and assumptions alreadj' over and over again 
 refuted. 
 
 Chapter VI., — " To Artisans and Laborers." 
 
 Here is more repetition. Tariff duties are a tax, therefore
 
 54 REVIEW of'bastiat's sophisms of protection. 
 
 they are of the same nature as all other taxes. This is like 
 the syllogism with four terms which runs thus : — 
 
 Files are instruments made of steel. 
 
 A regiment marching in regular order is composed of files. 
 Therefore a regiment marching in regular order is com- 
 posed of instruments made of steel. 
 
 Some taxes take money from the people and give nothing 
 in return. 
 
 Tariff duties are taxes. 
 
 Therefore tariff duties take money from the people and 
 give nothing in return. 
 
 Such is free-trade logic! Professors who write books upon 
 political economy would do well to have their manuscripts 
 examined by their fellow-professors who teach the science of 
 logic, before they stereotype their productions. 
 
 Again M. Bastiat says : — 
 
 " I believe that we can call that the natural rate of wages which 
 would establish itself naturally, if there were freedom of trade. Then, 
 when they tell you that restriction is for your benefit, it is as if they 
 told you that it added a surplus to your natural wages. Now, an 
 extra natural surplus of wages must be taken from somewhere : it does 
 not fall from the moon ; it must be taken from those who pay it. 
 
 " You are then brought to this conclusion, that, according to your 
 pretended friends, the protective system has been created and brought 
 into the world in order that capitalists might be sacrificed to laborers. 
 
 " Tell me, is that probable ? " 
 
 That is to say, M. Bastiat, whose work has been translated 
 from the French by the Free Trade League in order "to 
 educate public opinion ; to convince the people of the United 
 States of the folly and wrongfulness of the protective system," 
 — this M. Bastiat did not know that a fully occupied people 
 and capital would produce a greater mass of commodities 
 than they would produce if a third or a half of them were 
 unemployed. He did not know that a large annual product 
 gave much to be divided between wages, profits, and rent ; 
 and he did not know that the portions falling to profits and
 
 REVIEW OF BASTIAT S SOPHISMS OF PROTECTION. 55 
 
 rent were nearly all distributed again to labor. He did not 
 know that not only the recipients of profits and rent, but 
 still more the recipients of wages, were supremely interested 
 that the gross annual product should be the greatest possible, 
 and that this desirable result was not to be obtained by sitting 
 idle and buying cheap goods of other nations. 
 
 But in spite of this ignorance, M. Bastiat was selected as 
 the best teacher of political economy which the League 
 could find for the people of the United States. 
 
 One can imagine the grim humor with which the clear- 
 headed workmen of the United States no doubt contemplate 
 the condescension of the Leaq:ue. 
 
 Chapter VII., — " A Chinese Story." 
 
 This is the obstacle fallacy over again. 
 
 The free-traders discovered that obstacles, many of them, 
 were the cause of expense, or that their existence increased 
 the cost of commodities, without in any way increasing the 
 gross product, or means of payment. They then discovered 
 that a duty upon imported articles increased— -sometimes — 
 the price of similar articles produced in the country. We say 
 sometimes, for Bastiat himself admits that they do not always 
 do so ; and the fact is notorious that they do not do so for any 
 considerable length of time, to nearly the amount of the duty, 
 and that they often, by stimulating home skill and competi- 
 tion, cause a lower price than existed before. Never mind ! 
 the}'' are an obstacle to importation, so they are obstacles ; and 
 by simply calling them obstacles, pure and simple, it is made 
 to appear that they are not only obstacles to importation, Init 
 also obstacles to opulence. They are obstacles ; so also are fens, 
 mountains, stormy seas, distance, obstructed canals, bad tools, 
 etc., etc. The last being seen to be really obstacles to opulence, 
 the free-traders jump you to the conclusion that everything 
 called an obstacle is an obstacle to opulence. Several phe- 
 nomena called obstacles being seen to be really obstacles to 
 opulence, inasmuch as they raise the price without augment- 
 ing the national product, everything called by the same name 
 is inferred to be of the same effect. TJiose obstacles increase
 
 56 . REVIEW OP bastiat's sophisms of protection. 
 
 the cost in labor, say, 25 per cent ; this obstacle — the duty — 
 also (we will suppose for the sake of argument), raises the 
 cost in labor 25 per cent. They are, then, exactly alike ! 
 and so they are, thus far, or rather in these particulars ; but 
 in the important particular they are exactly opposite. Those 
 obstacles increase the cost in labor of everything, — of that 
 ■which it is desirable to import as well as of that which it is 
 not desirable to import. This obstacle does not lay a finger 
 upon the importation of tropical products which our climate 
 cannot produce, does not prevent or render more difficult 
 immigration, travel, the personal inspection of foreign arts 
 and sciences and social organization ; but it does prevent that 
 industrial competition which makes it impossible for us to 
 acquire such arts as we are perfectly able to acquire, and 
 which both during the process of acquisition and thenceforth, 
 forever, will add to the gross annual product of the nation, 
 which is the same thing precisely as the aggregate net indi- 
 vidual income. 
 
 This obstacle also discriminates and shuts out those prod- 
 ucts in which foreign nations excel only by reason of the 
 lower rate of wages and by the introduction of which our 
 own existing system of civilization (based as it is, upon a 
 high scale of remuneration to labor of every sor-t} would be im- 
 paired if not entirely overthrown. The duty is a discriminating 
 obstacle in which all that is good in the natural obstacles 
 is retained, and all that is bad is discarded ; this opposes 
 baneful intercourse ; those oppose alike every kind of inter- 
 course, the benignant as well and as much as the baneful; this 
 is an obstacle reared by human intelligence for a definite 
 purpose ; those are oV)stacles arising out of the constitution 
 of the world. A mind may be presumed to have been 
 given to man to enable him to discriminate between dif- 
 ferent things, even when called by the same name. Even 
 a free-trader can perceive that there is a difference between 
 a file of soldiers and a file of a carpenter ; by and by perhaps 
 they may develop sufficiently to see that there is a difference 
 between a tax which simply takes a dollar, and a tax which, 
 where it takes a dollar, gives five ; and they may grow to
 
 EEVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 57 
 
 see that there is a difference between an obstacle which 
 simply obstructs and an obstacle which overcomes and annihi- 
 lates a far greater obstruction. 
 
 Chapter VIII., — '•'■ Post hoc^ ergo propter lioc^ 
 
 The free-traders say, " See how prosperous England has 
 been since she adopted free trade ! " They exaggerate every 
 picture of her wealth, wink out of sight the panics of 1866 
 and 1873, with their attendant horrors, point to the indus- 
 trial troubles in the United States in 1873-1879, but say 
 nothing about the sufficient cause of a contraction in the 
 currency, the like of which worked far greater mischief in 
 1819 in England ; say nothing, either, of the wonderful re- 
 covery of the United States under a Jdgher tariff in 1879-80; 
 say nothing about the prosperity of France since 1845, — far 
 more astonishing than that of England. They say nothing 
 about the advantages that England has derived from invest- 
 ments in protectionist countries. No ! 
 
 England adopted free trade. 
 
 Post hoc, England showed some very decided evidences oi 
 prosperity. Ergo, the prosperity, such as it was, came from 
 free trade. 
 
 Chapter IX., — " Robbery by Bounties." 
 
 Here we have the public duped ; the public robbed, — 
 robbed by tariff, robbed by bounties, robbed by fraud, robbed 
 by force, etc. In fact, the chapter may be called a war-dance to 
 the tunes of robbing, cheating, pillaging, stealing, swindling, 
 monopoly, etc. Those who mistake abuse for syllogism can 
 read it, no doubt, with amusement. There are, moreover, two 
 really funny things in it. One where M. Bastiat says: "They 
 find my little book of Sophisms too theoretical, scientific, 
 and metaphysical ! " The other is where he says : " More 
 than sixty years ago Adam Smith said, ' When manufac- 
 turers meet it may be expected that a conspiracy will bo 
 planned against the pockets of the public' " 
 
 Did M. Bastiat suppose the world was ignorant of the fact 
 that the free-trade measures adopted in Great Britain were 
 
 8.
 
 58 REVIEW OP bastiat's sophisms of protection. 
 
 adopted at the suggestion of a cabal of manufacturers ; that 
 they were designed to forward the interests of that class at 
 the expense of the landed aristocracy and the people alike, 
 and that they were forced through by the most lavish use 
 of money to promote publications, meetings, addresses, dis- 
 tribution of pamphlets, etc., etc., and that they prolonged the 
 sacrifice of India, Ireland, and, for a time, the colonies, to 
 Manchester ? 
 
 The same system is now being applied to the United States. 
 Pamphlets and books are being distributed by the myriad, 
 and these wily manufacturers of Manchester, etc., would per- 
 suade us that they are taking all this trouble and going to 
 all this expense to free us from American monopolists ! If 
 there be an irrepressible contest between American monopo- 
 lists and English' monopolists, and if (as Adam Smith and 
 Bastiat would have us believe) they are all rascals, then the 
 American people are very likely to rally to the support of 
 their own rascals. These at least can be reached by the law 
 and by competition ; and whatever they do make must at all 
 events be either spent or invested in the United States, 
 and, in either case, gets at last into the hands of those who 
 work. 
 
 Chapter X.,— " The Tax Collector." 
 
 The tax collector takes six out of twenty hogsheads of 
 wine, which Jacques Bonhomme, wine grower, has produced 
 with much care and sweat. 
 
 The first goes to the creditors of the state, the second goes 
 to the civil service, two go to the army and navy, the fifth 
 goes to Algeria, the sixth goes in bounty to encourage man- 
 ufactures. There are fourteen hogsheads left, and Jacques 
 Bonhomme is assured that these will buy only half as much 
 as they would if he, good man, could be allowed to buy 
 everything from the foreigner. There is the same confusion 
 about taxes which do, and those which do not, lead to an 
 increase of the nation's annual product, which we have before 
 noticed, and the same exaggeration wdiich runs through the 
 whole book. English iron is cheap M'hen it is not in demand.
 
 REVIEW OF BASTIAT'S SOPHISMS OF PROTECTIOxV. 59 
 
 M. Bastiat assumes that it will be just as cheap when France 
 and the United States and all the rest of the world are 
 clamoring for it. The wine grower is advised to buy every- 
 thing abroad which can be made cheaper there, but he is not 
 told that there would soon under such a rcyhve be few able 
 to buy his wine. 
 
 Chapter XL, — " Utopian Ideas." 
 
 This chapter is based upon the assumption that the just and 
 the useful must agree. Very likely they must ; but never- 
 theless it may be that the author has a mistaken idea of 
 what is just and an equally mistaken idea of what is useful. 
 He assumes that an individual has an undoubted right to do 
 whatever he pleases with that which he acquires in the com- 
 munity. It is just, according to M. Bastiat, for him to benefit 
 by the advantages growing out of the association, but at the 
 same time to refuse to act in that manner which the association 
 finds to be essential to the interests of all, himself included. 
 It is just not only because a man has a right to do what he 
 pleases with his own, but also because by the providence of 
 God this world has been so arranged that the blind instincts 
 of every uninstructed individual, seeking only his own advan- 
 tage, necessarily lead him to the very acts which best pro- 
 mote the interests of the whole community. The individual 
 instinct of every man, however ignorant, selfish, and gross, is 
 surer than the judgment and reason of all men, including all 
 statesmen and philosophers. 
 
 This is an extraordinary proposition indeed. It is not self- 
 evident. It must then have been arrived at by induction, or 
 deduction, or both ; and in point of fact we find that it was 
 first put forth by Adam Smith in the second chapter of the 
 fourth book of the " Enquiry into the Nature and Causes of 
 the Wealth of Nations." He thought that men, in some cases, 
 when pursuing their own interests, did at the same time pro- 
 mote the interest of the nation. The cases he adduced were 
 very uncertain, it being by no means sure that men would act 
 as he imagined ; by no means certain that among the manifold 
 motives of man, Adam Smith did really select those which
 
 60 REVIEW OP BASTIAT's SOPHISMS OF PROTECTION. 
 
 would prevail in the cases imagined. But never miud ; they 
 suited his purpose, and he jumped his readers to the con- 
 clusion that in "these as in many cases the individuals were 
 led by an invisible hand to promote an end which was no part 
 of their intention." It will be observed that with Adam Smith 
 this was little more than a pretty piece of rhetoric ; and in 
 other parts of his work he affirms most -vehemently that the 
 private interests of large classes are adverse to the interests 
 of the community as a whole ; but a prett}^ piece of rhetoric 
 is as good as the strongest syllogism to the man who was not 
 born with the ability to reason, and has never acquired the 
 ability through education. Everybody who knows the can- 
 ons of inductive logic is aware that a single negative instance 
 absolutely forbids the forming of such a " general proposition ; " 
 and everj^body who has read enough of political economy to 
 warrant writing upon the subject, knows that the negative 
 instances with respect to this proposition are innumerable. 
 The proposition belongs to the domain of noodledom, — 
 
 *' A limbo large and broad, since called 
 The Paradise of Fools." Milton. 
 
 And yet such is the looseness with which political economy 
 is treated that writers of some authority refer to it as if it 
 actually carried weight into the discussions upon free trade 
 and protection. If, then, M. Bastiat is in error as to what is 
 useful, he may be equally in error as to what is just ; and it 
 may turn out that justice and utility do agree and go hand 
 in hand ; only they are not what he calls justice and utility, 
 but something very different. 
 
 Chapter XIII.,— " The Three Aldermen." 
 
 This is a delightful piece of persiflage. The introduction 
 into Paris of three industries totally unsuited to the place is 
 descril)ed, and to this absurd imagining are applied the argu- 
 ments which are justly and properly used in favor of the 
 introduction into a nation of industries for which it has 
 every natural advantage, and in favor of maintaining them so 
 long as their products will in the end cost less (in labor and 
 abstinence) than similar products brought from abroad. This
 
 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. Gl 
 
 is the case of the United States v. Great Britain, and it is as 
 an argument applicable to this case that the " Sophisms " of 
 Bastiat are presented to the people of the United States. 
 
 An individual becomes wealthy by acquiring from others 
 a portion of the already existing instruments of production. 
 He may acquire enough to support him a thousand years. A 
 nation can do nothing of the kind. It becomes wealthy in 
 proportion to the increase of its annual product of commod- 
 ities. But its annual product must be annually consumed, 
 even that portion of it which is saved ; that is to say, the 
 portion which is converted by labor into instruments to facil- 
 itate and enlarge future production and comfort. It must be 
 consumed, or else it lies in immoderate stocks, paralyzing 
 industry. Taking the average of years, it is consumed. The 
 richest nation then is the one which first produces and then 
 consumes the largest annual product of commodities; and 
 here we stumble headlong upon a most vital proposition, 
 which is, that the richest nation is that in which the great 
 bulk of the people, the workers with hands and the workers 
 with brains, enjoy the highest real wages. ^ 
 
 What, then, can come of the plans which are built upon 
 a reduction of the real wages of a people ? Inevitable 
 national impoverishment. The gross annual j^'^'oduct pays 
 all wages, all profits, all rents. Increase it, — they all in- 
 crease. Diminish it, and they all dwindle away together. 
 
 Chapter XIV., — " Something Else." 
 
 Here are twelve pages of puerilities whicli are, nevertheless, 
 specious, and must be dealt with, even at the risk of weary- 
 ing the reader. 
 
 " Restriction and prohibition," says M. Eastiat, " bear the same 
 relation to one another that an arc bears to a circle. One cannot he 
 bad and tlie other good, any more than an arc can be straight if tlie 
 circle be curved." 
 
 Straight and curved, mathematical terms signifying the 
 same things under all possible circumstances, cannot, accord- 
 ing to M. Bastiat, be predicated with any more certainty of 
 a line, than the words good and bad can be predicated of 
 restriction and prohibition in political economy. 
 
 1 See note 4, page 79.
 
 62 REVIEW OP bastiat's sophisms of protection. 
 
 It is only necessary to show a single class of cases in 
 ■which prohibition would be bad and restriction good, and 
 the thinness of M. Bastiat's supposed logic will be apparent ; 
 and it is not necessary that the case adduced should abso- 
 lutely exist. It is sufficient that it might exist. 
 
 Well, then, there might be two countries which produced 
 silk piece goods. Call the countries A and B. In A the 
 rate of wages is only one half what it is in B, but for reasons 
 which seem satisfactory to the people generally it is con- 
 sidered to be both desirable to maintain the rate of wages in 
 B and also to maintain the manufacture of silk goods. Evi- 
 dently the manufacturers must be protected sufficiently to 
 offset the difference of wages. This is one case ; and, to 
 prevent the free-trader from making a specious although 
 unsound cavil, let us look at another possible case. Nation 
 B, by reason of improvements in the application of its labor 
 and the efficiency of it, can weave silk even a little cheaper 
 than nation A ; but the manufacturers in nation A, being 
 vastly richer than those in nation B, can (and do, whenever 
 they have a chance) sell at a loss, in order to destroy the 
 manufacturers in nation B, and thereafter be free to charge 
 their own prices. In this case, also, it would be necessary 
 to give such protection as would overcome the existing obsta- 
 cle to the maintenance of the silk industry in nation A. 
 Here, then, restriction would be good, while prohibition might 
 be good, bad, or indifferent, according to circumstances. IF 
 (as alleged by free-traders to be sometimes the case) the silk 
 manufacturers in nation B were lazy and unenterprising, 
 using inferior machinery, and consequently turning out silk 
 piece goods at an unnecessarily high price, — if, we say, this 
 were the case, then prohibition would be bad, and too high 
 a duty would be bad ; while some duty would be good, as 
 preventing the demolition by foreigners of an industry de- 
 sired by the people. 
 
 Let, now, the Free Trade League show a case where an 
 arc of a circle is a straight line, or else confess that M. 
 Bastiat's reasoning is flippant and unworthy to be offered to 
 the American people.
 
 REVIEW OF BASTIAT'S SOPHISMS OF PROTECTION. 63 
 
 Again, M. Bastiat declares that the definite effect of pro- 
 tection is to require from men harder labor for the same result. 
 Let us see how this is made out, in respect to the United 
 States, for the education (!) of whose people this and other 
 Looks of a similar character are distributed. Mr. Mongredien, 
 writing for the Cobden Club, shows us the method. The 
 cost of American manufactured products, he says, is 40 
 per cent above the cost at which similar products can be 
 imported. Why? Because the duty is 40 per cent and 
 over, and in spite of the duty some goods are imported. 
 That is, if some kinds of goods can be imported in spite of 
 a duty of 40 per cent, then the native goods (if there be any 
 of the same kind) must cost 40 per cent more than they 
 could be imported for. Then some goods (those of which 
 the like are imported) cost 40 per cent more by reason of the 
 duty. Therefore all goods on which there is a duty 
 (those kinds which are not imported as well as those which 
 are) must cost 40 per cent more than they could be imported 
 for! 
 
 From deductive reasoning one would have supposed that 
 the internal competition of fifty millions of people might, 
 perhaps, reduce prices considerably below the maximum 
 possible price ; and a little inquiry as to facts would have 
 shown that a large part of American products are actually 
 as cheap, or very nearly as cheap as they could be imported 
 for, even if there were no duty. 
 
 But Mr. Mongredien preferred to ascertain the cost by 
 logic ; and he told the American farmers they could have for 
 one thousand millions of dollars from England what they 
 paid fourteen luindred millions for to the native me- 
 chanics and manufacturers. The farmers being about half 
 the population, the whole country would save eight liundred 
 millions, getting from England for two thousand millions 
 wdiat they now pay twenty-eiglit hundred millions for ; 
 and all this built upon a syllogism in which a distributed 
 conclusion is drawn from undistributed premises. Would 
 it not be well for the Cobden Club to send Mr. Mongredien 
 to school for a year or two before allowing him to write
 
 64 REVIEW OF BASTIAT'S SOPHISMS OF PROTECTION. 
 
 another book for the instruction of the American people? 
 But to return to M. Bastiat. The Free Trade League, 
 through him, tell the American people that the definite 
 result of protection is to require from men harder labor for 
 the same result. This inference is founded upon the well- 
 known " Fallacy of Division," of which Archbishop Whately 
 observes : — 
 
 " This is a fallacy with which men are extremely apt to deceive 
 themselves ; for, when a multitude of particulars are presented to the 
 miud, many are too weak, or too indolent, to take a comprehensive 
 view of them ; but con6ne their attention to a single point in turn, 
 and then decide, infer, and act, accordingly ; e. g. the imprudent 
 spendthrift, finding that he is able to afford this, or that, or the other 
 expense, forgets that all of them together will ruin him." 
 
 M. Bastiat, referring to France, maintains that iron, being 
 produced in England for less labor and abstinence than in 
 France, had better be bought by France by means of some 
 product in which she has an advantage ; then clothing had 
 better be bought in a similar way of Belgium ; tlien food of 
 Hungary or the United States; and so on, forgetting that 
 all the needs of France together which could be supplied 
 more cheaply from abroad would come to many times more 
 than would the aggregate requirements of foreign nations 
 for the products of the remaining industries in which France 
 has a decided advantage. 
 
 With regard to the United States, the chapter has no rele- 
 vancy ; for almost everything we produce is produced with 
 as little labor and abstinence as anywhere in the world. Many 
 things can be brought here and sold for less money; but 
 this is because our wages are high, and our labor altogether 
 so much more productive that gold and silver are cheap with 
 us. Were we to open our ports and give up to the foreigner 
 a large portion of our " field of employment," — wages and 
 money-prices would doubtless decline; but nothing w^ould 
 be produced with less labor and abstinence than it is now. 
 Our foreign market miglit be increased a little ; but our home 
 market would be reduced many times as much ; and profits. 
 
 1
 
 REVIEW OF BASTIAT'S SOPHISMS OP PROTECTION. 65 
 
 rents, fees, salaries, and incomes of every description would 
 be diminished in proportion. Why so? Because the gross 
 annual product would be diminished enormously, and it is 
 this which pays all wages, profits, and rents. But why 
 would our gross annual product be diminished enormously ? 
 Because nowhere in this planet could be found markets for 
 four thousand — soon to be ten thousand — millions of the 
 products in whicli we have an advantage, in addition to what 
 we now export, nor could markets be found for even a third 
 part of those vast amounts. We should not only rob our- 
 selves of a large part of what we now get from the mechani- 
 cal and manufacturing arts, but we should transfer to the 
 foreigner all the advantages we now derive from agriculture. 
 The chapter consists chiefly of a conversation between 
 Robinson Crusoe and Friday, whose situation was not at all 
 analogous to that of an industrial community ; and afterwards 
 of the doctrine that, when one of the industries of a society 
 is given over to a foreign country the displaced labor will 
 occupy itself about 
 
 SOMETHING ELSE. 
 
 This conclusion is drawn from Adam Smith's doctrine " that 
 each industry is prevented from increasing by the want of 
 capital ; " it has no place in a world where each industry has 
 unemployed capital, and is prevented from increasing for 
 want of a " field of employment." In such a world the 
 displaced labor and capital can oidy — in the words of Mr. 
 J. S. Mill — squeeze out a living by competition with other 
 labor and capital. Both the wages and profits appertaining 
 to the remaining industries must be diminished whenever 
 one is given up to tlie foreigner, for the reason that tlie ex- 
 truded industry furnished a market to nearly its full value 
 for other products, while the substituted foreign industry 
 increases the foreign demand by only a small percentage of 
 its amount. 
 
 Let us represent the various industiies (both productive 
 and unjjroductive) by the letters of the alphabet. A, B, C, etc. 
 Then V A + V B + V C, etc., may represent the annual 
 
 9
 
 Q6 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 
 
 exchangeable value contributed by each description of in- 
 dustry and each description of service to the gross annual 
 exchangeable value, and VA-j-VB+VC, etc. = T A P ; or, 
 the total annual product. A purchases of B, C, etc., portions 
 of their annual products equalling in the aggregate VA, 
 and SO do B, C, and each of the others. Now transfer 
 industry A to another nation, and immediately TAP be- 
 comes TAP — V A ; that is, the capital and labor before 
 employed by industry A are in excess, and cannot find em- 
 ployment by spreading themselves through the other indus- 
 tries or classes of service already fully supplied. A portion 
 of the products of B, C, D, etc., must go abroad to pay for 
 the foreign products which have displaced industry A. If 
 these cost 25 per cent less than the native, then a value equal 
 to I V A will go abroad, and a value equal to ^ V A will 
 remain distributed among B, C, D, etc., as stock in addition 
 to their previously existing surplus stocks. There will be a 
 greater or less glut of commodities and services throughout 
 the societ}^ ; and the exchangeable value of B, of C, of D, 
 etc., etc., will each be found to be diminished, probably to a 
 greater amount, perhaps to a much greater amount, in the 
 aggregate, than the J V A expected to be saved by importing 
 from abroad. The eifective demand, then, of the whole com- 
 munity, less industry A, for the imported article at, say, three 
 dollars, will be less than was the effective demand of the same 
 persons for the native article at four dollars, and there will be 
 also a necessity for supporting the labor of industry A in idle- 
 ness. This labor cannot do "something else," for everything 
 else desired by the community was done before to the full 
 extent of the then effective demand which is ntnv diminished ; 
 and not only this, but production must be also lessened in each 
 of the remaining industries. So far from industry B having 
 more to spend for the products of C, D, E, etc., industry B 
 will find its own annual products selling for less money than 
 they did when A got four dollars for what the foreigner now 
 brings for three dollars. 
 
 France " has the advantage " of other nations in the pro- 
 duction of many articles of taste, and also in some kinds of
 
 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 67 
 
 ■wine. She exports these to the extent of about six hundred 
 millions of dollars. It is highly improbable that the opening 
 of her ports to other nations could cause any great increase 
 of consumption of her products upon their part ; while the 
 products which she produces for herself at no advantage or 
 at a disadvantage come probably to three thousand millions. 
 Evidently she could not obtain any considerable increase of 
 the articles she produces at a disadvantage, except by paying 
 out of her accumulations of treasure. M. Bastiat thought 
 she would get the needed treasure from Peru ; but this only 
 shows that his education had been neglected in the branch of 
 arithmetic. The whole of the annual production of precious 
 metals added to the whole of the large amount accumulated 
 by France during the whole period of her existence would not 
 suffice to purchase abroad for a single year the commodilies 
 which France makes for herself at more or less disadvantage, 
 compared with this, that, or the other foreign country. As 
 he suggests, she might import treasure from Peru, and this 
 would suffice to buy this article, or it would suffice to buy 
 that article, or it would suffice to buy the other article ; but 
 when it comes to adding all the articles together, the insuf- 
 ficiency of the proposed resource becomes so manifest as to be 
 ridiculous. It is the fallacy of division fooling Avith the lives 
 and fortunes of thirty-four millions of people. 
 
 Chapter XV. is the " Little Arsenal of the Free-Trader." 
 These are short sentences embodying the fallacies already 
 sufficiently answered. 
 
 Chapter XVI. proposes a number of funny absurdities, 
 which M. Bastiat imagines to be of the same nature as pro- 
 tectionist arguments ; but which only show that he either 
 did not understand or did not choose to understand the pro- 
 tectionist arguments. 
 
 To work with the left hand rather than the right, to pre- 
 vent the use of machinery, to dull the axes, to fill u}) canals, 
 etc., etc., would not increase the gross annual product. To 
 employ a portion of the population upon industries in which
 
 68 REVIEW OF BASTIAT'S SOPHISMS OP PROTECTION. 
 
 the nation stands at no advantage, or even at disadvantage, 
 when the whole population cannot be employed upon the 
 industries in which it has an advantage, or cannot be so em- 
 ployed without throwing away the natural advantage, would 
 increase the gross annual product. That is just what M. Bas- 
 tiat did not know ; and that is why his teachings should not 
 have been offered to the American people. 
 
 Chapter XVII., — " Supremacy by Labor." 
 It is impossible to do justice to the sophistry of this chapter 
 without quoting. It says : — 
 
 " As, in time of war, supremacy is obtained by superiority in arms, 
 can, in time of peace, supremacy be secured by superiority in labor ? 
 
 " This question is of the greatest interest, at a time when no one 
 seems to doubt that, in the field of industry, as on that of battle, the 
 stronger crushes the weaker. 
 
 " This must result from the discovery of some sad and discouraging 
 analogy between labor, which exercises itself on things, and violence, 
 which exercises itself on men ; for how could two things be identical 
 in their effects, if they were opposed in their nature ? 
 
 " And if it be true that, in manufacturing, as in war, supremacy is 
 the necessary result of superiority, why need we occupy ourselves 
 with progress, or social economy, since we are in a world where all 
 has been so arranged by Providence that one and the same result, 
 oppression, necessarily flows from the most antagonistic principles? 
 
 " Referring to the new policy towards which commercial freedom 
 is drawing in England, many persons make this objection, which I 
 admit occupies the sincerest minds : 'Is England doing anything more 
 than pursuing the same end by different means ? Does she not con- 
 stantly aspire to universal supremacy ? Sure of the superiority of 
 her capital and labor, does she not call in free competition to stifle 
 the industry of the Continent, reign as sovereign, and conquer the 
 privilege of feeding and clothing the ruined peoples ? ' 
 
 " It would be easy for me to demonstrate that these alarms are 
 chimerical ; that our pretended inferiority is greatly exaggerated ; 
 that all our great branches of industry not only resist foreign competi- 
 tion, but develop themselves under its influence ; and that its infallible 
 effect is to bring about an increase in general consumption, capable of 
 absorbing both foreign and domestic products."
 
 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 69 
 
 This is the language of the Anti-Corn-Law League, of the 
 Cobden Club, of the Manchester manufacturers, — of the 
 spider to the fly. 
 
 Labor in its nature is opposed to war. Labor produces; 
 war destroys. Labor employs itself on things ; war employs 
 itself upon persons. Opposite causes cannot produce identi- 
 cal effects. Does this, O reader, persuade you that there is 
 no valid analogy between the struggles of opposing armies 
 for the possession of a province, and the struggles of compet- 
 ing industries for the possession of a market ? To seriously 
 ask the question would be to insult you ; and yet the trash 
 is persuasive to the hasty reader. When he pauses for a 
 moment and reads again he sees that he is trifled with. 
 
 That which moves to war is the desire to overcome an 
 opponent. That which moves to industrial competition is the 
 desire to overcome an opponent, — to overcome one who pre- 
 vents your selling as much or as dearly as you would. The 
 causes are similar. It is only the methods of procedure which 
 differ. The paragraph about manufacturing, supremacy, Pro- 
 vidence, oppression, and antagonistic principles is a similar 
 logical puzzle, which any intelligent reader can solve for him- 
 self. It assumes that there are antagonistic principles wher- 
 ever the methods of procedure, the instruments used to obtain 
 the end, are dissimilar. The paragraph commencing, " It 
 would be easy for me to demonstrate," is a bundle of asser- 
 tions, pure and simple. There is not a particle of argument 
 in it. The " proof" comes afterwards and consists in this : — 
 
 " If we see in any product but a cause of labor, it is certain that 
 the alarm of the protectionists is well founded. If we consider iron, 
 for instance, only in connection with the masters of forges, it might be 
 feared that the competition of a country where iron was a gratuitous 
 gift of nature would extinguish the furnaces of another country, 
 where ore and fuel were scarce. 
 
 " But is this a complete view of the subject ? Are these relations 
 only between iron and those who make it ? Has it none with those 
 who use it ? Is its definite and only destination to be produced ? And 
 if it is useful, not only on account of the labor which it causes, but on 
 account of the qualities which it possesses, and the numerous services
 
 70 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 
 
 for which its hardness and jnalleability fit it, does it not follow that 
 foreigners cannot reduce its price, even so far as to prevent its produc- 
 tion among us, without doing us more good, under the last statement 
 of the case, than it injures us under the first? 
 
 " Foreign superiority prevents national labor only under some cer- 
 tain form, and makes it superfluous under this form, but by putting 
 at our disposal the very result of the labor thus annihilated." 
 
 Tins is wonderful ! What earthly relevancy has the second 
 paragraph? Is not French iron hard and malleable? The 
 French have iron in either case. The only question is whether 
 they shall have it at one price made at home or at another price 
 made abroad ; and in a former chapter M. Bastiat put the 
 price at twelve francs for French and eight francs for English 
 iron. But he argues that to procure the English iron, France 
 will have only to "detach" from her general labor a smaller 
 portion than she would require to produce it herself. France 
 would save one third of the labor before used in making iron. 
 The careful reader will see that he assumes that the whole 
 labor power of the country is employed in either case ; while 
 the fact is, and must be, that the whole is not employed in 
 either case. Even when France makes her own iron, every 
 industry within her borders is limited by the limits of the 
 field of employment. There are so many desires known to 
 her people which they have found out means of gratifying 
 with such expenditure of effort as they are willing to pay, — 
 so many and no more. Their desires even are not infinite ; but 
 even if they were, the desires they know how to gi'atify with- 
 out more exertion than they are willing to make, are very far 
 from infinite ; they are quite limited. Their aggregate of 
 these constitutes the field of employment, outside of which 
 there are always (except during peiiods of abnormal excite- 
 ment and perhaps even then) many unemployed persons, 
 many half employed persons, many persons helping others to 
 do what they can well enough do alone. This unemployed 
 labor is constantly striving to find something to do, and the 
 unemployed capital of the country is constantly striving to 
 find something to do, — some means of gratifying a desire at 
 such price as the community will be willing and able to pay.
 
 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 71 
 
 The community, then, does not " detach " a portion of its 
 previously employed labor to make iron, but a portion and 
 only a portion of its previously unemployed or half emploj^ed 
 labor, and the then more fully employed labor has the means 
 of buying from all the other industries ; their field of employ- 
 ment is increased. According to M. Bastiat's philosophy, if 
 iron and its products should suddenly be rained down out of 
 the sky already shaped for use, the United States would 
 immediately have set free an amount of labor that would pro- 
 duce " something else " to the value of, say, three hundred 
 millions of dollars. But " everything else " for which the 
 people have a desire is already produced to a somewhat greater 
 extent than can be sold, as is evidenced by the existing sur- 
 plus stocks of commodities. The total industry of the com- 
 munity is kept up by motives, and one of these motives is the 
 desire for iron. The immediate effect, then, of iron dropping 
 down ready fashioned from the skies would be "to diminish 
 the field of employment to the extent of, say, three hundred 
 millions ; but as iron is only a means towards procuring other 
 things, notably, food, clothing, shelter, and transportation, 
 the getting iron for nothing might make it possible to procure 
 a greater supply of food, clothing, shelter, and transportation, 
 with the same effort, and the ultimate result might be that 
 as great or even a greater field of employment would be found 
 in producing a greater supply. But meanwhile, during the 
 growth of a larger demand for food, clothing, shelter, and 
 transportation, between two and three millions of people 
 would have to go without food, clothing, shelter, and trans- 
 portation, or squeeze them by competition out of the balance 
 of the community. The immediate effect would certainly be 
 a great diminution of the effective demand of the community 
 for food, clothing, shelter, and transportation, — a glut. 
 There would be much more of all these than the community 
 as a whole had means of buying. There would be a period 
 of distress and depression, and political econom}^ does not 
 perhaps, at present, possess the means of saying how long 
 such depression would continue, nor even of saying decis- 
 ively that it would not end in a permanent deterioration of
 
 72 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 
 
 the condition of the community ; in which case the seem- 
 ing gift would prove to be a gigantic evil, somewhat analo- 
 gous to the fortune with which a fond father paralyzes the 
 powers and prevents the development of his children. It is 
 to be hoped that political economy will not always be incom- 
 petent to solve such problems ; but it certainly will be as long 
 as it remains innocent of all knowledge of their existence ; 
 so long as, with M. Bastiat and Mr. J. S. Mill, it supposes that 
 displaced labor and capital always find "something else " to do. 
 The writer feels guilty for having mentioned so upright 
 and serious a writer as Mr. J. S. Mill in the same sentence as 
 M. Bastiat; but they agreed in supporting the same doctrine 
 as to capital and its effects upon industry, and in the deduc- 
 tions from that doctrine ; in all else they are very wide apart. 
 In reviewing Mr. Mill, one would be spared the disagreeable 
 task of combating the arts of the rhetorical sophist, the 
 appeals to prejudice, to anger, to pity, to greed, to supersti- 
 tion, to misguided or affected philanthropy. He would meet 
 with some very important errors in reasoning, strange as this 
 is in an unquestionably pre-eminent logician ; but everything 
 is honest, straightforward, and such as the spirit of the great 
 reasoner, looking back upon life, need not blush to have 
 written, M. Bastiat closes his " Sophisms of Protection " as 
 follows : — 
 
 " Let us decide that supremacy by labor is impossible and contra- 
 dictory, since all superiority which manifests itself among a people is 
 converted into cheaj^ness, and results only in giving force to all others. 
 Let us, then, banish from political economy all those expressions bor- 
 rowed from the vocabulary of battles : to struggle with equal arms, to 
 conquer, to crush out, to stifle, to be beaten, invasion, tribute. What do 
 these words mean ? Squeeze them, and nothing comes out of them. 
 "VVe are mistaken ; there come from them absurd errors and fatal 
 prejudices. These are the words which stop the blending of peoples, 
 their peaceful, universal, indissoluble alliance, and the progress of 
 humanity." 
 
 So writes M, Bastiat. Now compare with his words those 
 of Horace Greeley, Speaking of some strictures upon the 
 effects of reckless competition, he says : —
 
 REVIEW OP BASTIAT's SOPHISMS OP PROTECTION. 73 
 
 " The justice of these strictures I have at least twice seen realized 
 on a gigantic scale, in the general prostration of the manufacturing 
 industry of my countrymen under the pressure of European, mainly 
 of English, competition. That industry was thus crushed out after the 
 peace, of 1815, when the eminent Henry Brougham (after\yards Lord 
 Brougham) remarked (when Great Britain was pouring out the goods 
 that crushed our then infant manufactures) that ' P^ngland can afford 
 to incur some loss ybr the purpose of destroying foreign manufactures in 
 their cradle ; ' and the noted economist and free-trader, Joseph Hume, 
 made a similar remark in 1828. Our tariff enacted in that year 
 rendered all efforts to cripple and prostrate our manufacturing industry 
 temporarily fruitless ; but it was otherwise after the compromise 
 tariff of 1833 began to take full effect, in the reduction of the duties 
 to a (presumptively) revenue standard which culminated in the collapse 
 alike of industry and revenue in 1840-42. 
 
 " A report on strikes made to the British Parliament in 1854 sig- 
 nificantly said : — 
 
 " 'Authentic instances are well known of (British) employers having 
 in such times (of depressed prices), carried on their works at a loss 
 amounting to three or four hundred thousand pounds in the course of 
 three or four years. If the efforts of those who encourage the com- 
 bination to restrict the amount of labor, and to produce strikes, were 
 to be successful for any length of time, the great accumulations of 
 capital could no longer be made which enable a few of the most 
 wealthy capitalists to overwhelm all foreign competition in times of 
 great depression^ and thus to clear the way for the whole trade to step 
 in when prices revive, and to carry on a great business before foreign 
 capital can again accumulate to establish a competition in prices, with 
 any chance of success. The great capitals of this country are the 
 great instruments of warfare against the competing capitals of other 
 countries, and are the most essential instruments now remaining, by 
 which our manufacturing supremacy can be maintained ; the other 
 elements, cheap labor, abundance of raw materials, means of communi- 
 cation, and skilled labor being rapidly in [jrogrcss of being equalized.' " 
 
 It will be seen that Mr. Greeley bears witness to our indus- 
 tries having been twice prostrated by their English competi- 
 tors in his time, and it is matter of general knowledge also 
 that the same thing happened to the Portuguese industries 
 after the treaty of Methuen, and to the Irish industries after 
 the union, and so with Turkey and India; 
 
 10
 
 7-1 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 
 
 The reader can then form his own opinion about the hardi- 
 hood of JNI. Bastiat when he attempted to prove that such 
 things cannot happen, by a process of false logic which has 
 been the somewhat disagreeable task of the writer to expose. 
 The rest of his book is made up chiefly of rhetorical sophisms, 
 in which taxes and obstacles which do increase the productive 
 power of the community are classed with the taxes and 
 obstacles which do not increase it ; of appeals to our pity that 
 the '-'■poor worhman^'' after getting his wages from his fellow- 
 citizens, should not be allowed to spend them among foreign- 
 ers, and in appeals to class prejudices by abuse of every descrip- 
 tion poured out upon everybody who is protected from the 
 English manufacturer. They are cheats, swindlers, robbers, 
 monopolists, oppressors, thieves ! 
 
 Now it has been held by every respectable economist, from 
 Adam Smith down, that it is impossible for any industry to 
 long obtain a profit above that usual in the community ; and 
 it would seem, therefore, that all this abuse is as unjust as 
 it is unseemly ; hut if there be in any case reason to fear that 
 manufacturers may combine to exact a higher profit, our own 
 are within reach of control. Let the fact be proved, and 
 nothing is easier than to bring them to reason, by simply 
 reducing the duty to what will give them an adequate and 
 not an excessive protection. We should have no such power 
 over the foreigners. When they have once ruined our own 
 industries they can, if they combine, charge us whatever 
 they please. 
 
 If, then, there be any foundation for the cry of monopoly, 
 the possibility of such a combination is the best of all reasons 
 for standing by our own and not the alien manufacturers. 
 These can be ruled. The others cannot. 
 
 Part III,, — " Spoliation and Law." 
 
 This supremely sophistical chapter endeavors to connect, in 
 the mind of the reader, the totally different matters of pro- 
 tection and communism. At the time it was written, society 
 in France was alarmed at the pretensions of communism, and 
 the endeavor to make out some similarity between it and
 
 EEVIEW OF BASTIAT's SOPHISMS OF PROTECTION. 75 
 
 protection was as shrewd as anj'thing- can bo wliicli is abso- 
 lutely dishonest. The same attempt has been made by the 
 unscrupulous upon this side of the Atlantic. 
 
 Civilized men everywhere recognize, either consciously or 
 unconsciously, the fact that, without the aid of tools, machines, 
 improved farms, mills, forges, railroads, stores of food, mate- 
 rials, and shelter, etc., — without, in short, the aid of instru- 
 ments of production, the gross annual product of labor 
 would be incomparably less than it is ; they recognize, also, 
 that these instruments of production cannot come into exist- 
 ence nor be kept in repair, except through abstinence, which 
 is, therefore, entitled to such portion of the increased product 
 as demand and supply determine to be the just value of 
 their use ; they recognize, also, that to allow individuals to 
 possess these instruments and enjoy said portion of their 
 fruits is the most economical and efficient method for bring- 
 ing them into existence and keeping them in repair, utility 
 being here completely at one with justice ; they recognize 
 even tliat those proprietors who do nothing except to live 
 within their income do, nevertheless, thereby render a most 
 essential service to society, for living within their income is 
 nothing less than keeping in repair the " instruments " which 
 furnish them with incomes ; and in recognizing, consciously 
 or unconsciously, these facts, all men of common sense j)er- 
 ceive the rights of property to be based upon the all-sufScient 
 foundation of the greatest good to the whole society, — not 
 the greatest good only for to-day, or this year, but for aU 
 time. But the common sense of mankind also recognizes 
 that, while the greatest good of the whole is the foundation 
 of the rights of property, it also puts limits to those rights. 
 As they are founded and justified by the good of tlie wliole, 
 they must logically be restricted to that which in the long 
 run is beneficial to all. No man is allowed to use his prop- 
 erty to found a college for teaching what the community 
 generally accounts to be vice, nor to run gambling-houses or 
 lotteries, nor to erect unsafe houses, nor to sail ships which 
 have become unseaworthy, nor to establish anything which is 
 a nuisance or a source of disease, nor to run a bank except
 
 76 REVIEW OF BASTIAT's SOPHISMS OF PROTECTION 
 
 under conditions protecting public interests, etc., ad infinitum. 
 Property is not weukened by these necessary and proper re- 
 straints, bat only prevented from weakening its own just and 
 legitimate claims, and becoming in some respects a nuisance, 
 instead of a great blessing to the community. Indeed, he is 
 no friend of property, but its dangerous enemy, who maintains 
 that each single possessor has the indefeasible right to veto the 
 decisions of the whole society, and that, too, in the cause of a 
 pseudo-theory composed of a vast mass of bad logic and of 
 totally irrelevant rhetoric. The argument that " the highest 
 right of property is the right to exchange it for other property ; " 
 that, therefore, any restraint or regulation of this right, — in 
 short, the forbidding of any exchange, however detrimental, 
 — is an unwarrantable invasion of the rights of property, and 
 therefore akin to communism, — this argument can only be 
 used by one who has the incredible folly to suppose that the 
 American people are a nation of unmitigated noodles. 
 
 In the first place, the right to exchange it is not the highest 
 right of property. A higher right still is the right to an 
 unmolested enjoyment either of the property itself or of the 
 income thereof. Second, another higher right is the right to 
 protection against foreign attacks, whether civil or military. 
 Third, if even it were the highest right, this, like every other 
 right of property, must give way before the vastly higher 
 and more important rights of the whole community. Com- 
 pensation is given where the case requires it ; compensation 
 is not given where the interference produces no damage, but 
 a great benefit, as when protective laws are passed. 
 
 " But," exclaim the free-traders, " protective laws are not 
 a benefit, but an injury." 
 
 Ah, gentlemen, you undertook to bolster the doctrine of free 
 trade by an argument from the rights of property ; but we 
 now find that the argument about the rights of property breaks 
 down unless we first assume the free-trade doctrine to be cor- 
 rect. You are attempting to make two doctrines hold each 
 other up, when neither the one nor the other can stand alone. 
 
 Jf the free-trade doctrine were sound, the interference with" 
 foreign exchanges would be unwise, but by no means beyond
 
 REVIEW OF BASTIAT's SOPHISMS OP PROTECTION. 77 
 
 the restrictive rights of the whole people ; if the protection- 
 ist doctrine be sound, the interference is eminently beneficial ; 
 but, in either case, there is nothing resembling the proposed 
 communistic abolition of property which would be ruinous 
 alike to individual owners and to the public. 
 
 The attempt, then, to smooch protection by coupling it 
 with communism is simply a dishonest rhetorical artifice, dis- 
 graceful to tlie author and insulting to the readers whom he 
 addresses. It is precisely equivalent to calling them fools. 
 
 And here we come to the end of a book which shows 
 much wit, vivacity, ingenuity, and audacity, but which 
 stands almost alone among transatlantic productions for the 
 entire absence of that serious, earnest desire for truth which 
 political economists usually display. Others may involve 
 themselves in logical puzzles ; but they appear to do so unin- 
 tentionally. Possibly this may have also been tlie case with 
 M. Bastiat, and the semblance of llippancy and insincerity 
 may be rather apparent than real ; but, at all events, one 
 cannot rise from a diligent study of him without a profound 
 conviction that no member of the Free Trade League can 
 have carefully perused the book which they translated and 
 printed in order " to educate public opinion in the United 
 States, and convince the people of the folly and wrongfulness 
 of the protective system." 
 
 Any other conviction would involve the gross insult of 
 supposing them to be eitlier exceedingly flat or exceedingly 
 dishonest, or both. 
 
 Bastiat's sophistries are based chiefly upon the following 
 erroneous propositions : — 
 
 *' 1. That industry is limited by capital, whereas both are limited by 
 the tield of employment. 
 
 " 2. That human labor is never without employment. 
 
 " 3. That the wages fund is a fixed amount, equal to the existing cap- 
 ital, and the whole of it always employed. 
 
 " 4. That protective laws, which cause more people to be employed 
 with increased production, are the same in effect as dull axes, ob- 
 structed canals, working with the left hand, amputating one hand, 
 etc., which would cause more people to be employed without 
 increased production.
 
 78 REVIEW OF BASTIATS SOPHISMS OF PROTECTION. 
 
 " 5. That inasmuch as many obstacles to exchanges are also obstacles 
 to opulence, therefore all^ obstacles to exchanges are obstacles to 
 opulence." 
 
 In short, the argumentative portion of the book displays 
 a neglect of every canon of logic, both inductive and deduc- 
 tive. The rest is rhetoric, and is good of its kind, — witty, 
 vivacious, impressive, and well suited to impose upon those 
 who are not clever enough to see that it proves nothing, and 
 is totally inapplicable to any existing society or to any society 
 which could exist while man is constituted as he is. 
 
 Common sense is unconscious logic ; logic not yet intro- 
 spective ; logic which has not yet named its processes, but 
 which sees and casts aside a blunder intuitively ; and there 
 is too much of this sort of logic in the brains of the working 
 people of America to allow much harm to come from such a 
 book as Bastiat's " Sophisms of Protection."
 
 REVIEW OF BASTIATS SOPHISMS OP PROTECTION. 79 
 
 1 My friend, Mr. David H. Mason, observes here : " That, in point of fact, 
 individuals do not possess the claimed riglit, and have least of it where civili- 
 zation is greatest. The disposition of one's own property is not a natural right, 
 but a conventional riglit, — a right limited by law or by custom, based on the 
 views taken of the individual's obhgations to the society of which he is a unit. 
 Whatever may be said theoretically about the right of each individual to the 
 free disposition of his own property, he does not in any civilized community 
 possess such claimed right. Restraint, in a multitude of forms, confronts every 
 member of the community in the disposition of his property. No person can 
 legally dispose of his property in such a way as to interfere with the rights of his 
 fellow-citizens. He cannot use his capital to erect a frame-building within the 
 limits of a municipal fire-district. He cannot spend his money so as to commit 
 a public nuisance ; as, for example, by locating a bone or soap factory, with its 
 noisome stench, amid the residence quarter of a town. He cannot, without 
 incurring heavy penalties, invest his means in publishing clearly immoral news- 
 papers or books, which operate to debauch public sentiment. If he is an apothe- 
 cary, he cannot sell poisons indiscriminately, but is therein subjected to various 
 restrictions. K he is a manufacturer, he cannot purchase for use in his business 
 any machinery which infringes a patent, without making himself liable for 
 exemplary damages. If he is a publisher, he cannot, without violating the law 
 and incurring its punishment, print a book for sale which has been copyrighted 
 in his country, and for which printing he does not possess the imprimatur of tlie 
 author or the permission of the owner. If he is a shipmaster, he cannot sail 
 his vessel into the harbor of destination according to his own separate will, but 
 according to the will of the health-officer of the port, who may force him into 
 detention at quarantine quarters. Formerly in the Soutliern States it was legal 
 to dispose of negroes as property. That was then a conventional right ; now it 
 is a conventional wrong. A protective tariff rests upon the same general prin- 
 ciple, that society is injured by permitting to individuals the free disposition of 
 their property in purchase of or exchange for imported property." 
 
 2 Much protection was taken from pig-iron, the base of our iron and steel 
 industries in 1870, and there was a heavy reduction of duties on a wide range 
 of manufactures in 1872. But for these changes the country might perhaps 
 have escaped the panic of 1873 in spite of the contraction of the currency, &c. 
 
 3 After all the treasure it can possibly spare is gone, government bonds, rail 
 road bonds and stock, mortgages, &c., will go, and during all this process B will 
 be unable to compete with A by manufacturing for herself. The industries in 
 which she is inferior will be destroyed, and she will be kept continually in the 
 condition of treasure-famine. She will never have enough of the precious 
 metals to suffice as a basis for a safe and stable currency. 
 
 * There is an exception when the individuals of a rommunity invest largely 
 in other lands ; but this kind of wealth, as Adam Smith has observed, is of a 
 very unstable and fugitive character.
 
 REVIEW 
 
 Of Professor Sumner's article in the March number of the Princeton Review, entitled, — 
 
 «'The Argument against Protective Taxes." 
 
 A PROTECTIONIST cannot even pass by the title without ob- 
 jection. A tax is not necessarily a burden. If the money 
 be well and economically expended, and gives us good roads, 
 good water-works, good police, and good government at what 
 they ought to cost, then a tax is a great blessing and sav- 
 ing; but, unfortunately, the money is often expended reck- 
 lessly and foolishly, and so, through abuses, the very name 
 of tax becomes offensive. The free-trader who writes 
 about "Protective Taxes" avails himself of this existing pre- 
 judice, with the effect of disgusting the reader with protection 
 at the outset, in advance of all argument in respect to it. 
 The word tax also gives two false impressions : first, that 
 all protected articles cost the consumer more than they would 
 if not protected ; and, second, that when they cost more, the 
 consumer gets no counterbalancing or greatly overbalancing 
 advantage. In this sense Professor Sumner writes that, — 
 
 " Every cent paid in protective taxes lessens the power of the cit- 
 izen to pay revenue taxes for the discharge of the pubhc burdens. 
 Hence the fact that we have heavy public burdens is just the reason 
 why we cannot afiford to squander our means in paying taxes to our 
 neighbors for carrying on (as they themselves allege) unproductive 
 industries." 
 
 This argument was i\sed by Adam Smith one hundred and 
 thirty years ago in the lectures which afterwards were thrown 
 into the form of the famous '' Enquiry into the Nature and 
 Causes of the Wealth of Nations j " but the human race ought
 
 2 EEVIEW OF PROFESSOR SUMNER'S 
 
 to have learned something in one hundred and thirty years, 
 and it has been many times shown, or at all events is easily 
 shown, that where a protective law causes labor and capital, 
 otherwise not occupied, to produce an article for 81.25 which 
 could be imported for ^1.00, the nation does not lose twenty- 
 five cents but gains the dollar. The tax gives to the totality 
 of consumers five times what it takes from them. To this 
 it may be replied that labor never need be unoccupied where 
 there is much land to be had for the asking, that it can 
 always go to farming ; but here comes in the fallacy of sup- 
 posing that when we all went to farming there would be the 
 same favorable market for our products that exists now. 
 Agriculture, it is true, is the field in which we have the 
 greatest advantage over Europe ; but we might easily have 
 so pressed the cultivation of this field as to have transferred 
 the whole advantage to Europe and have kept no part of it 
 for ourselves, — to have been compelled to eat Indian corn 
 and rye, while we exported our wheat to buy a very small 
 modicum of conveniences. We have had wisdom enough 
 to stop short of this supreme folly, by turning a portion 
 of our population upon other fields in which we are at some 
 disadvantage as compared to Europe ; and, by doing so, we 
 have made the whole body of our labor vastly more produc- 
 tive, — more productive per man than that of anj'- other coun- 
 try in this planet. Here a free-trader would point out some 
 particular article which — perhaps only for the moment, but 
 jjerhaps even permanently — costs in wheat, at the present 
 price of wheat, more than it could be imported for ; and he 
 says to the individual farmer: " See how much more cheaply 
 3'OU could get this from abroad ! " and he persuades the farmer 
 (and himself too) that the fact is the same with regard to 
 every article ; and, even then, he does not see that he is mis- 
 leading himself and the farmer by means of the "fallacy 
 of division." Farmer A, things being as they are, could 
 get what he wants through wheat somewhat more cheaply 
 than he now does ; so could Farmer B ; so could each one 
 of the others ; but they all of them together cannot, for wheat 
 would fall to perhaps half its present price and, with twice as
 
 " ARGUMENT AGAINST PROTECTIVE TAXES." 3 
 
 many farmers, only a very small portion of the surplus of 
 wheat would be salable at any price. Such questions are prac- 
 tical questions, depending upon the possible foreign demand 
 and the population of the country in question ; and no man 
 who carefully considers the subject, will come to the conclusion 
 that the people of the United States, if confined to those in- 
 dustries in which we have an advantage, could produce any- 
 thing like the gross annual exchangeable value they are now 
 producing. Here it may be urged that when farming ceased 
 to be profitable, the other industries would establish them- 
 selves naturally and healthfully by the action of individual 
 interests ; but this assumption was disposed of fifty years ago 
 by John Rae.* 
 
 In his opening paragraph Professor Sumner shows very cor- 
 rectly that it is absurd to say that free trade may be good 
 in theory but not in practice. Theory must be competent 
 to explain observed facts, or it is no true theory ; or at all 
 events lies under grievous suspicion of being faulty in some 
 undiscovered point. Professor Sumner reads it the other 
 way, namely, that no one can be sure of facts unless he be able 
 to disentangle every train of argumentation, claiming to be 
 theory, which seems to contradict the facts or show them 
 to be impossible. Adam Smith, more than a hundred years 
 ago, argued thus: — 
 
 " The general industry of the society never can exceed what the 
 capital of the society can employ. As the number of workmen that 
 can be kept in employment by every particular person must bear 
 a certain proportion to his capital, so the number of those that can 
 be continually employed by all the members /)f a great society must 
 bear a certain proportion to the whole capital of that society, and 
 never can exceed that proportion. No regulation of commerce can 
 
 * Rae shows very conclusively that an individual acting wisely for his own 
 interests could never undertake the introduction ot foreign arts except in the 
 very rare cases where, with assistance, such arts might have been domesticated 
 with advantage at a much earlier date. 
 
 Besides, it seems certainly wiser to gain the foreign arts by a system which 
 keeps agriculture profitable, than to wait until stern necessity forces the ruined 
 farmer to betake himself to other euiploymeuls.
 
 4 EEVIEW OF PROFESSOR SUMNER'S 
 
 increase the quantity of industry in any society beyond what its capital 
 can maintj^in. It can only divert a part of it into a direction into 
 which it might not otherwise have gone ; and it is by no means cer- 
 tain that this artificial direction is likely to be more advantageous 
 to the society than that into which it would have gone of its own 
 accord." 
 
 Thirty years ago Mr. John Stuart Mill repeated this argu- 
 ment, with variations, thus : — 
 
 " There can be no more industry than is supplied with materials 
 to work up and food to eat. Self-evident as the thing is, it is often 
 forgotten that the people of a country are maintained and have 
 their wants supplied, not by the produce of present labor but of past. 
 They consume what has been produced, not what is about to be pro- 
 duced. Now of what has been produced, a part only has been allotted 
 to the support of productive labor; and there will not and cannc.t 
 be more of that labor than the portions so allotted (which is the 
 capital of the country) can feed and provide with the materials of 
 production." 
 
 " Yet, in disregard of a fact so evident, it long continued to be be- 
 lieved that laws and governments, without creating capital, could 
 create labor." 
 
 In the article under review, Professor Sumner repeats and 
 varies the argument thus : — 
 
 " Any favor or encouragement which the protective system exerts 
 on one group of its population must be won by an equivalent oppres- 
 sion exerted on some other group. To suppose the contrary is to deny 
 the most obvious application of the conservation of energy to economic 
 forces. If the legislation did not simply transfer capital it would have 
 to create capital out of nothing. Now the transfer is not simply an equal 
 redistribution ; there is loss and waste in the case of any tax whatso- 
 ever. There is especial loss and waste in the case of a protective tax. 
 We cannot collect taxes and redistribute them without loss ; much 
 less can we produce forced monopolies and distorted industrial relations 
 without loss." 
 
 This is the theory which has, for one hundred and thirty 
 years, deterred men from trusting either their eyes and ears, or
 
 " ARGUMENT AGAINST PROTECTIVE TAXES.'* 5 
 
 that intuitive reason which conducts nine tenths of human 
 affairs. Let us examine the reasoning. First, capi talis defined 
 to be those funds allotted to the support of productive labor; 
 then it is said that there cannot be more industry than this 
 capital can support. These two propositions together affirm, 
 then, that industry never can be greater than it can be, — an 
 identical proposition, which nobody can deny to the end of time, 
 but which does not and cannot convey any information what- 
 soe\ jr. It leaves the whole question still unsolved before us. 
 It IS very true that the industry of the society cannot 
 be greater than its capital, real and potential, can support ; 
 but what we are concerned to know is whether the industry 
 of the society cannot be greater than its capital does support. 
 If the normal condition of an industrial community be one 
 in which a considerable portion of its capital is locked up in 
 unsold goods, in which there are large amounts also capable 
 of being turned on the instant from unproductive to produc- 
 tive purposes, then a protective law will find ample means 
 for the inauguration of its new industry. 
 
 To Adam Smith's argument above quoted it has been 
 replied that — 
 
 The number of workmen that can be kept in employment 
 by any particular individual does not bear a certain pro- 
 portion to his capital. When the market for his products 
 is dull, a large part of his capital is locked up in unsold 
 goods ; he must then lessen his production and dismiss some 
 of his workmen ; and the same is true of society taken all to- 
 gether. In a normal condition of things there may be, for 
 instance, a stock of goods equal to two months' consumption 
 of the whole community, — a value in the United States 
 at the present time (1881) considerably exceeding one thou- 
 sand millions of dollars ; and observe that these stocks of com- 
 modities are the very things — the food, the raiment, the tools, 
 &c. — which are requisite, and in fact used, in carrying out 
 new undertakings ; and, besides these, there are also immense 
 sums lying in the banks awaiting investment. The proposition, 
 then, that industry never can exceed what the capital of the 
 society can support, is totally irrelevant. It never c^n, for
 
 6 REVIEW OF PROFESSOR SUMNER S 
 
 any considerable time, be nearly as great as the capital can 
 support ; for, if it were, there would be no stock of commod- 
 ities, and this would cause such high prices and such high 
 rates of interest as must check consumption on the one hand, 
 and quicken production on the other. 
 
 One half of the capital normally unemployed is ample for 
 the inauguration of gigantic enterprises ; and these, if within 
 the strength of the community, will not prevent anything 
 being done which would otherwise have been done. On the 
 contrary, the previously existing industries will be stimulated 
 to larger production. 
 
 Let us suppose that the United States at the end of 1879 
 was producing and consuming commodities equal to a value 
 of six thousand millions for the year, with a surplus stock 
 equal to the value of one thousand millions. The bank de- 
 posits of money are known to exceed one thousand millions. 
 If, at that time, they commenced forming new instruments 
 (mills, forges, farms, houses, railroads, &c.) to the annual 
 value of three hundred millions over and beyond the regular 
 and normal movement, there would be, as we see, one thousand 
 millions of unemployed floating capital, and immense moneyed 
 reserves, to answer to the subscribed funds ; but these 
 subscriptions would go to recompense the producers of the 
 new instruments, and would be by them expended, for the 
 most part, for commodities, — thus relieving the capitalists of 
 a portion of their stocks, and placing them in a position 
 to employ more labor for the sake of enlarging their produc- 
 tion of commodities. But whatever they thus expended 
 in labor would lead to the production of more than twice 
 the value expended in labor, as is shown by the returns of the 
 census of 1870. This gives the total value added to materials 
 by the manufacturing and mechanical industries of the 
 United States as 1,744 millions, of which 776 millions went 
 directly to labor. It might well, then, have happened that 
 at the end of 1880 the gap made in the stock of unemployed 
 floating capital was quite repaired, and the country as ready 
 to continue a similar movement in 1881 as it was to com- 
 mence it a year before. Meanwhile the extra recompense
 
 " ARGUMENT AGAINST PROTECTIVE TAXES." 7 
 
 to labor during the year might have been not less than six 
 hundred millions. 
 
 Vary the amounts as you please, but you will find that 
 any new enterprise, not out of proportion to the existing sur- 
 plus stock of commodities, will result, first, in an enlarged 
 employment of laborers ; and second, in the creation of new 
 subsidiary capital, — or, say rather, of new instruments of pro- 
 duction, which would not otherwise have come into exist- 
 ence. But a free-trader may ask: How do you know that 
 there is any surplus stock of commodities ? And we should 
 reply that, in the first place, we know it as a matter of fact, 
 which can be verified in State Street any day when produc- 
 tion and consumption are in their normal condition. But, 
 as our free-trade brethren do not like facts, nor believe 
 in them unless they agree with conclusions deduced from 
 postulates admitted by their own authors, we will try to show 
 that in an industrial community there must be normally 
 a stock of commodities or of unemployed capital. 
 
 First, then, take Industry A. Those who commenced it 
 did so for the sake of profit. But so long as they obtained 
 a satisfactory profit, the same motive would lead them to en- 
 large their production. If one man did not, another would ; 
 and so the increase of the industry would go on until it over- 
 ran the demand. A stock would then accumulate^ bringing 
 down profits and locking up a portion of the producers' 
 capital at the same moment. But what is true of Industry 
 A, is true of B, C, D, &c. ; and we thus arrive at the conclu- 
 sion that each carries along a surplus stock. When this 
 stock is diminished by a novel or increased demand, prices 
 rise ; when the stock is increased, prices fall, and the indus- 
 try is checked. 
 
 No economist, as far as we know, has noticed the vast 
 aggregate of these stocks, nor the manner in which they 
 regulate the play of the industrial forces ; and yet, without 
 knowing about them, it is impossible to understand what 
 happens upon the commencement of a great war or of a great 
 industrial movement. When we have ascertained what the 
 ordinary average stock is, whether equal to two, three, or more
 
 8 REVIEW OF PROFESSOR SUMNER S 
 
 months' consumption, it may become possible to form a 
 rational opinion as to how far any industrial movement can 
 be pushed without bringing on a scarcity of floating capital 
 and a stringency in the money market ; but, meanwhile, 
 it is something to have satisfied ourselves that such stocks 
 must and do exist, and that systems framed in ignorance or 
 disregard of them are necessarily erroneous. 
 
 Such a system is that of Adam Smith in his third para- 
 graph above quoted. He starts with the self-evident axiom 
 that " the general industry of the society never can exceed 
 what the capital of the society can employ." He then repeats 
 the idea, in different words, three several times ; and then, 
 mistaking apparently this rhetorical artifice for logic, he 
 draws his conclusion that " a regulation of commerce can 
 onl}^ divert a portion of the capital of the society into direc- 
 tions into which it might not. otherwise have gone." This 
 conclusion will follow from his axiom whenever an industrial 
 community shall be found in which there exists no unem- 
 ployed capital, and no funds, which, though originally in- 
 tended for private expenditure, are capable of being diverted 
 to the support of productive labor, the moment a protective 
 larW affords a sufficient motive for doing so. 
 
 Professor Sumner's argument appears to be only a varia- 
 tion of that of Adam Smith and Mr. J. S. Mill. He urges 
 that if a law can do anything more than transfer, to the pro- 
 tected industry, capital that was or would have been applied 
 to some of the old industries, then the law must create capital 
 out of nothing. 
 
 This would be true if in civilized communities there were 
 no capital seeking investment (a portion of the one thoiisand 
 millions of bank deposits), and no capital locked up in com- 
 modities awaiting a demand, or materials delayed in conver- 
 sion into commodities on account of the dulness of the de- 
 mand ; but it would seem to be untrue in the actual world 
 we live in. 
 
 I respectfully invite Professor Sumner to examine this 
 matter to the bottom, and see whether, in his theory, he does 
 not overlook facts which, when taken into account, will neces-
 
 *' ARGUMENT AGAINST PROTECTIVE TAXES." 9 
 
 sitate another and very different theory. It is true that the 
 argumentation on which his theory is built has stood more 
 than a century without being picked to pieces ; but the doc- 
 trine that the world was flat stood a great many centuries. 
 The antiquity of an argumentation, the fact that it had been 
 found satisfactory by three or four generations, was sufficient 
 to warrant its acceptance by a teacher and its communica- 
 tion to pupils ; but if it has been shown to be erroneous, 
 both it and its corollaries ought surely to be abandoned 
 forthwith. 
 
 The writer has no pecuniary bias in this matter, and no 
 desire except to arrive at the truth ; and he abhors, as much 
 as Professor Sumner can, whatever is mystical, misty, indis- 
 tinct, — everything in short which will not stand the test of 
 the most minute and searching examination. 
 
 This leads me to object (without any disrespect to Pro- 
 fessor Sumner) to such sentences as the following : — - 
 
 " "We cannot collect taxes and redistribute them without loss ; much 
 less can we produce forced monopolies and distorted industrial rela- 
 tions without loss." 
 
 Such words appear to me to mislead both writer and 
 reader. They assume that under the regime of free compe- 
 tition in a nation of fifty millions there can be monopolies, and 
 they assume that industrial relations, different from what 
 would arise by themselves, are productive of national loss ; 
 and these assumptions appear to me to take for granted the 
 doctrines of free trade, which are the very things under 
 discussion. 
 
 Again, Professor Sumner remarks that — 
 
 " The notion that the Legislature hns a wisdom greater than that of 
 the people, and can point out the industries they ought to pursue, has 
 been often refuted; but the protective theory assumes more than that; 
 it assumes that the law can enlighten the desire for profit, and make 
 it a more trustworthy guide than it would be under freedom." 
 
 Bat the question does not seem to be whether the Legis- 
 lature has greater wisdom than the people, but whether the
 
 10 REVIEW OF PROFESSOR SUMNER'S 
 
 untrammelled action of each individual necessarily produces 
 the best possible result, — such as cannot be improved by the 
 collective wisdom ; whether, in short, in this one field of 
 human affairs, judgment and observation and study are 
 utterly impotent lo improve the accidental or, if you please, 
 the natural course of events. I am not aware that the 
 opinion that the collective action of the whole nation may 
 produce advantageous results has been often or ever refuted. 
 The most persuasive argument in favor of a negative decision, 
 that I have seen, is contained in the Enquiry into the Nature 
 and Causes of the Wealth of Nations, Book IV. chap. 11, 
 § 4, et seq., and it is very persuasive ; but if Professor Sum- 
 ner will examine it narrowly, and apply to it the logic which 
 the article under review shows him to be master of, he will 
 see the supposed demonstration crumble to pieces. To 
 examine it in this article would exceed the limits of space 
 and the patience of readers. Protection does not, I think, 
 presume to enlighten the desire for profit, but only to place 
 within the reach of unoccupied capital and labor an addi- 
 tional field of employment which they can take possession of 
 with benefit to the zvhole community. 
 
 In the foregoing I have endeavored to show where and 
 how protection exerts an effect on production, to increase it. 
 I must now ask the indulgence of the reader, and of Professor 
 Sumner, while I endeavor to show where and how free trade 
 may exert an effect on production, to diminish it. 
 
 Let us take the three industries of cottons, woollens, and 
 iron, and let us suppose, for the sake of illustration, that 
 their aggregate product sells for one thousand millions ; and 
 let us farther suppose, for the sake of illustration, that the same 
 products could be purchased abroad for seven hundred mil- 
 lions. The gross annual product of the United States I find 
 set down in a Free-Trade Book, " The Balance Sheet of 
 Nations," at ,£1,400,000,000 sterling, or say seven thousand 
 millions of dollars, which appears to be not an unreasonable 
 estimate. 
 
 It would seem that this seven thousand millions must pay all 
 rents, all profits, all wages ; must pay all productive laborers,
 
 " ARGUMENT AGAINST PROTECTIVE TAXES." H 
 
 so-called, and all recipients of salaries, fees, or wages for ser- 
 vices which do not issue either in commodities or in instru- 
 ments of production. It would seem that the proportion of 
 the gross product which would fall to any capitalist for the use 
 of his particular instrument of production, or which would fall 
 to any salaried man for the services he renders, must depend 
 upon supply and demand ; e. g. upon the number of per- 
 sons offering to give instruction, compared with the demand 
 of the community for that much-honored service. Let us call 
 the share of the gross product falling to any one, X. Now in 
 the cases of the instructor, the clergyman, the lawyer, the 
 physician, or any other recipient of fees or salaries, it would 
 seem that they must be benefited by the drawing off, into tiie 
 cotton, woollen, and iron industries, of a multitude of men who 
 would otherwise be pressing into the professions. It would 
 seem that for each person in those professions the share repre- 
 sented by X must be greater by reason of the existence of 
 those industries, unless, upon their suppression, an equal field 
 would be found for that class of persons. 
 
 But the three industries in question produce (by the sup- 
 position) one thousand millions, or one seventh part of the 
 total annual product ; that is, they support something over 
 seven millions of people. Every dollar gets into the hands of 
 either the producers of commodities and instruments of pro- 
 duction (capital), or else into the hands of those who render 
 services — every dollar, save and except the comparatively 
 small sum expended for foreign products. Substantially, the 
 whole one thousand millions are expended for other American 
 products and services, and the amount expended for services 
 would be again expended for commodities or for capital ; so 
 that in the end the thousand millions of those three indus- 
 tries would be paid for by one thousand millions of other 
 American products. 
 
 But, by the supposition, seven hundred millions of the other 
 American products would, at present prices, procure, if sent 
 abroad, the same amount of cottons and woollens and iron now 
 enjoyed and consumed. Suppress the cotton and woollen and 
 iron industries and — if the exchangeable value of our own
 
 12 REVIEW OF PROFESSOR SUMNER'S 
 
 products remained undiminished when offered abroad in such 
 greater quantities, and if also the exchangeable value of foreign 
 cottons, woollens^ and iron remained unenhanced when called 
 for in such great quantities — we should thereafter get the cot- 
 tons and woollens and iron as much as we now get them, but 
 the seven millions of people, supported directly and indirectly 
 by the three industries, would be without means of support ; 
 they would then have, as Mr. Mill expresses it, either to go 
 without food and necessaries, or squeeze them by competition 
 from the shares of other laborers. 
 
 But, to bring about even this result, we have had to sup- 
 pose that the addition of seven hundred millions (to our pres- 
 ent export of eight oi'nine hundred millions) would not depress 
 the exchangeable value of the whole. If it did depress it, even 
 fifteen per cent, then our cottons and woollens and iron would 
 cost as much as now, and leave us our seven millions of unoccu- 
 pied people besides ; and, if the foreign iron and woollens and 
 cottons advanced in exchangeable value, we should be worse 
 off still. But it has been urged that the seven millions, or 
 those who support the seven millions, would find occupation 
 about " something else — " that they would build houses and 
 wagons^ &c. ; but the effective demand of the community for 
 houses and wagons, &c., will, by supposition, be diminished by 
 the seven hundred millions sent abroad to buy cottons and 
 woollens and iron before made at home ; and, although houses 
 and wagons " are never imported," their exchangeable value 
 depends upon the effective demand. 
 
 Let us now try again to imagine how salaried men would be 
 affected by the suppression of the tliree industries in ques- 
 tion. Evidently the educated men, now employed in and 
 about those industries, would become competitors over and 
 above those now competing for pulpits, professorships, seats 
 upon the bench, and other dignified occupations yielding 
 salaries. The X representing any particular salary must 
 then, after a while, come to be a smaller proportion of the total 
 annual product available for home consumption, as already 
 observed ; and this last being, by the supposition, reduced by 
 the one tenth part sent abroad, the particular salary would
 
 " ARGUMENT AGAINST PROTECTIVE TAXES." 13 
 
 soon come to be not only a diminished proportion of the 
 previous annual product, but a diminished proportion of 
 nine tenths of the previous product. In short, less being 
 produced in the country, there would be less to divide between 
 rent, profits, and wages. 
 
 It is only a couple of weeks since I became aware that 
 Professor Sumner had published in March the article now 
 under review ; and the present paper has been written in 
 response to his request conveyed in the following sen- 
 tence : — 
 
 " If this be not so, let some protectionist analyze the operation of 
 his system, and show, by reference to undisputed economical principles, 
 where and how it exerts any effect on production to increase it." 
 
 In return I have only to request that, if this paper has not 
 didy met his requisition, he will point out with precision 
 exactly where and how it is erroneous or defective. The sub- 
 ject is one of tremendous importance, and there are thousands 
 of honest and intelligent men who desire to be shown exactly 
 what is and what is not true with regard to it. 
 
 I have endeavored to avoid all side issues, and to go direct 
 to the chief point in which the scholastic political economy 
 appears to be erroneous. This is a small matter, indeed, when 
 once pointed out ; but it has been nevertheless sufficient to 
 paralyze the keen intellects of its professors, sufficient to 
 prevent their improving political economy into a real science, 
 and sufficient to force them to conclusions the reverse of 
 those drawn by the practical man from the industrial phe- 
 nomena which he is obliged every day and hour to interpret, 
 under the penalty of ruin if he fail to interpret correctly. 
 
 George Basil Dixwell.
 
 REYIEW 
 
 Of an article hy Prof. Arthur L. Perry, Williams College, Williamstown, 
 Mass., in the Journal of the American Agricultural Association for Juty 
 and October, 1881, entitled, — 
 
 " Farmers and the Tariff." 
 
 Professor Perry states substantially as follows (his state- 
 ments being merely condensed) that — 
 
 " the war of the American Revolution was waged mainly in the in- 
 terests of a free trade ; that one of the first acts of the thirteen colo- 
 nies, April G, 1776, was to establish free trade, which substantially 
 continued until the present government was established in 1789 ; that 
 no ill effects followed, and that the country was not flooded at that 
 time with the cheap goods of foreigners, because the only way that can 
 be brought about is for the natives to flood the foreigners with cheap 
 native goods in exchange. In 1789 shrewd members of the first Con- 
 gress, mostly from New England, at the instance and under the pres- 
 sure of certain men who thought thereby to raise the price artificially 
 of their own special home products, by means of lobbying and log- 
 rolling, caused to pass the first tariff bill, of which the preamble was : 
 ' Whereas, it is necessary for the support of the Government, for the 
 discharge o^ the debts of the United States, and the encouragement 
 and protection of manufactures, that duties be laid,' and so on. The 
 duties were low, but they introduced a false principle, — that a man's 
 neighbors may be taxed indefinitely to hire him to carry on an alleged 
 unprofitable business; and this utterly false principle has brought on 
 the protective system, which has grown so unjust, onerous, and abomi- 
 nable that no other free people would submit for a single year. ■ Jt 
 was well understood in 1789 that this system would be hostile to tho 
 interest of the farmers as such ; the fallacy that a home market in 
 some mysterious way compensates the farmers was not then invented, 
 and can now be exploded by a few words. These words are : ' Unless 
 it can be shown that protection — that is to say, rcstrictiou — increases
 
 2 REVIEW OF PROFESSOR PERRY 3 
 
 the number of births or diminishes the number of deaths, it is in vain 
 to claim that there are any more mouths to be fed by the farmers 
 than there would be under freedom.' 
 
 " Fisher Ames said in 1789 : ' From the different situation of man- 
 ufacturers in Europe and America, encouragement is necessary. In 
 Europe the artisan is driven to labor for his bread. Stern Necessity 
 with her iron rod compels his exertion. In America, invitation and 
 encouragement are needed. Without them the infant manufacture 
 droops, and those who might be employed in it seek with success a 
 comi^etency from our cheap and fertile soil.' 
 
 " This lets the protectionist cat right out of her bag. Our people 
 are not poor enough, and never were, to carry on unprofitable branches 
 of industry to support which the whole community has to be taxed, 
 and particularly the agricultural classes. What then is to be done ? 
 Why, drag down agriculture by abominable taxes to the level of the 
 alleged unprofitable infant manufactures. ' Protection assumed at 
 the outset, and has maintained to this day, an attitude of unceasing 
 hostility to the tillers of the soil. Protectionist manufacturers, who 
 are a mere fraction of the population, have cajoled the farmers, who are 
 one half the population, to consent to pay for their supplies prices artifi- 
 cially enhanced by law, and to sell their produce at prices artificially 
 depressed by law.' There never was a worse delusion than tliis on the 
 part of the farmers, and there never was a worse swindle than this on 
 the part of the party of the other part. But the manuflicturers as a 
 body are not benefited ; many of them lose two dollars by protection 
 for every one dollar which they gain ; so that the free-traders of this 
 country are fighting a battle in behalf of the manufacturers them- 
 selves (selfishness is always short-sighted) as well as in behalf of the 
 farmers. That protective duties are a great burden is shown by the 
 fact that the protectionist manufacturers never like to pay them them- 
 selves ; it seems that what is sauce for the asricultural goose is not 
 good for the protectionist gander. Whether the farmers see their true 
 interest or not the fact I'emains that they are the ass that bears most 
 of the burden and eats least of the hay of protection." 
 
 Let us first examine tlie historical portion of this document. 
 
 It is undouI)tedly true that one object of the War of the 
 Revolution was to free the trade of the colonies from the re- 
 strictions which Great Britain had placed upon it for the benefit 
 of her own commerce and manufactures. It was, therefore, in
 
 '' FA?.iIEUS AND THE TARIFF." 3 
 
 one sense waged " in the interests of a free trade." But it was 
 not waged in the interests of any sucli free trade as Professor 
 Perry advocates, — a free trade whicli denies the right of a 
 nation to place any restrictions having in view the encourage- 
 ment of industries deemed necessary or useful to the whole 
 community. On the contrary, the colonies strove for the riglit 
 to regulate their own commerce and industry as tliey pleased, 
 and, as soon as indepenaent, they proceeded to exercise the 
 right. It was found, however, that the action of Virginia was 
 ineffectual without the co-operation of Maryland, and that 
 those two could not act effectually without Pennsylvania, nor 
 those three without New York, and so on. Mr. Madison, 
 writing to Joseph C. Cabell, Sej^rt. 18, 1828, records these facts, 
 and adds in illustration the following : — 
 
 "There is a passage in Mr. Necker's work on the finances of France 
 which affords a signal ilhistration of the difficulty of collecting in con- 
 tiguous communities indirect taxes when not the same in all, by the 
 violent means resorted to against smu<j<ihn"r from one to another of 
 them. Previous to the late revolutionary war in that country, the 
 taxes were of very different rates in the different provinces. . . . The 
 consequence was that the standing army of patrols against smuggling 
 had swollen to the number of twenty-three thousand ; the annual 
 arrests of men, women, and children engaged in smuggling, to five 
 thousand five hundred and fifty, . . . more than three hundred of 
 whom were consigned to the terrible punishment of the galleys." 
 
 The colonies, then, did not go to war to deprive tlicmselves 
 of the right to regtdate their own trade according to their own 
 notions of what is advantageous to tlie whole community; and 
 Professor Perry's labored introduction tends to produce an im- 
 pression the i^everse of what is true. 
 
 But this is a trifle to what follows, when he says tliat " no 
 ill effects followed this general liberty to buy and sell with 
 foreigners," &c. 
 
 The real facts are tliat upon the opening of the ports, after 
 the war, an immense quantity of foreign manufactui-es was in- 
 troduced ; and the people were tempted by the sudden cliea])- 
 ness of imported goods to purcliase beyond (heir capacity fur
 
 4 REVIEW OF PROFESSOR PERRY S 
 
 payment. The bonds of men whose competency to pay their 
 debts was unquestionable could not be negotiated but at a dis- 
 count of thirty, forty, and fifty per cent ; real property was 
 scarcely vendible, and sales of any article for ready money 
 could only be made at a ruinous loss. Property, when brought 
 to sale under execution, sold at so low a price as frequently 
 to ruin the debtor without paying the creditor. A disposition 
 to resist the laws became common. Laws were passed by 
 which property of every kind was made a legal tender in the 
 payment of debts, though payable according to contract in gold 
 and silver. Other laws delayed payments, so that of sums 
 already due only a third, and afterwards only a fifth, was 
 annually recoverable in the courts of law. Silver and gold 
 departed to pay for the necessary and unnecessary commodities 
 imported. 
 
 In this condition of financial matters, the public securities fell 
 to fifteen, twelve, and even ten cents in the dollar, ruining 
 a large portion of the warmest friends of the Revolution, who 
 had risked their lives and embarked their entire property in its 
 support. 
 
 In every part of the States the scarcity of money had- become 
 a common subject of complaint, and the difficulty of paying 
 debts had become so common, that riots and combinations 
 were formed in many places, and the operations of civil gov- 
 ernment were suspended. 
 
 The authorities for the above are, Dr. Hugh Williamson, 
 Minot's " History of the Insurrection in Massachusetts," pp. 
 2, 13 ; Marshall's " Life of Washington," pp. 75, 88, 121 ; 
 Ramsay's " South Carolina," vol. ii. p. 428 ; Belknap's " His- 
 tory of New Hampshire," vol. ii. pp. 352, 356, 429 ; Matthew 
 Carey's works, and the "Questions of the Day," by Dr. Elder. 
 
 But Professor Perry says that " no ill effects followed this 
 general liberty to buy and sell with foreigners," &c. 
 
 Let the reader pause a moment over this extraordinary mis- 
 representation. Had it been made by one who was impelled 
 by avarice or revenge, there would be nothing marvellous 
 about it ; but here is a very difierent case. A professor in a 
 respectable college, the author of a treatise on political economy
 
 " FARMERS AND THE TARIFF." 6 
 
 said to be used in many universities, a gentleman whose offi- 
 cial position makes him a trustee of the truth for the rising 
 generation, should not be accused of wilful untruthfulness. 
 No ! it is more courteous, more agreeable, and doubtless more 
 just, to trace the misstatement to an unfortunate habit of 
 hastily concluding that events did actually happen in this or 
 that manner, because, if his theories be correct, they must so 
 have happened. He feels perfectly sure of his doctrine ; and, 
 such being the doctrine, the events must have been as stated ; 
 but, unfortunately for the deduced history, the doctrine itself 
 cannot be maintained. Imports are not exchanged for ex- 
 ports. Imports are sold for money, and the money is there- 
 after either carried abroad or invested in exports, according 
 to circumstances ; or it may be invested in Government or 
 other securities, and so run the country in debt., But pajang 
 in money or in securities has a limit which is speedily 
 reached ; and afterwards, imports must be limited by the 
 foreign demand for exports, even if this pays for only a fifth or 
 a tenth of what the country could produce and enjoy through 
 its own labor. But before the free-trade disease reaches this 
 chronic stage it must pass through the acute stage. There 
 are the export of treasure ; the contraction of all values as 
 measured by treasure ; the aggravation of all debts, public and 
 private; forced liquidations; widespread bankruptcy, and a 
 general diminution of employment to industry. 
 
 The theory which teaches that the only way in which a 
 country can be flooded with the cheap goods of foreigners is 
 for the natives to flood the foreigners with cheap goods in ex- 
 change is an incorrect theory ; and the history deduced from it 
 is consequently the opposite of the actual course of events, — all 
 which proves only what common sense would have seen at 
 once, namely, that history should not be inferred from theories, 
 but ascertained by reference to the written and printed records 
 of the times. 
 
 Another misstatement as to facts may be found in the alle 
 gation that in 1789 men had not yet invented the theory that 
 protection would benefit farmers by enlarging the homo 
 market.
 
 6 REVIEW OF PEOFESSOR PERRY S 
 
 111 Adam Smith's lectures, afterwards published (in 1776) 
 under the title of " Inquiry into the Nature and Causes of the 
 Wealth of Nations," the idea of the great advantage of the home 
 market crops out frequently, and may be found more particu- 
 larly in bk. iv. chap, ix., last paragraph but four, where he 
 says : — 
 
 " Whatever, then, tends to diminish in any country the number of 
 artificers and manufacturers tends to diminish the home market, — the 
 most important of all markets for the rude produce of the land." 
 
 The same idea appears frequently in Alexander Hamilton's 
 "writings. He says : — 
 
 " There appear strong reasons to regard the foreign demand for 
 that (agricultural) surplus as too uncertain a reliance, and to desire a 
 substitute for it in an extensive domestic market. 
 
 " To secui-e such a market there is no other expedient than to pro- 
 mote manufacturing establishments. Manufacturers, who constitute 
 the most numerous class after the cultivators of the land, are for that 
 reason the principal consumers of the surplus of their labor. 
 
 "The idea of an extensive domestic market for the surplus prod- 
 uct of the soil is of the first consequence. It is, of all things, that 
 which most effectually conduces to a flourishing state of agriculture." 
 
 Benjamin Franklin, writing home from London in 1771, 
 says : — 
 
 " Every manufjicturer encouraged in a country makes part of a home 
 market for provisions among ourselves, and saves so much money to 
 the country as must otherwise be exported to pay for the manufac- 
 tures he supplies. Here in England it is well known that wdierever a 
 manufacture is established which employs a number of hands, it raises 
 the value of land in the country all around it. It seems, therefore, the 
 interest of our farmers and owners of land to encourage our young 
 manufactures in preference to foreign ones." 
 
 Professor Perry says tliat this doctrine, which he calls a 
 fallacy, liad not been invented in 1789 ! The reader will see 
 that he is here again in error as to matters of fact. The doc- 
 trine was well established long before the date named, and has
 
 " FARMERS AND THE TARIFF." 7 
 
 never been shaken. It was reaffirmed bj General Jackson in 
 his celebrated letter to Dr. Coleman in 1824, and by Jolin 
 Stuart Mill, in his Political Economy, thirty years later. In- 
 deed, it is nearly self-evident ; but Professor Perry denounces it 
 as a fallacy which a few words will explode, and he gives us 
 the few words, which are : — 
 
 " Unless it can be shown that protection — that is to say, restriction — 
 increases the number of births or diminishes the number of deaths, it is 
 in vain to claim that there are any more mouths to be fed by the 
 farmers than there would be under freedom." 
 
 This is a question about which a farmer is as good a judge 
 as any professor. In twenty-five years the population of the 
 United States will be doubled, — it will be 100,000,000, — capa- 
 ble, if all employed in agriculture, of producing food and raw 
 materials for 250,000,000 to 300,000,000 of people. Nowhere 
 on this planet are to be found the requisite number of purcha- 
 sers. In England and Scotland and Wales the peo[)le (less than 
 30,000,000) have been rash enough to make themselves largely 
 dependent upon foreign food ; but even their demand is lial)le 
 to very great variations. Other countries pursue the more 
 sensible policy of raising in ordinary seasons enough for them- 
 selves. 
 
 To repeat: in twenty-five years the population of the whole 
 country will be doubled ; that of the now less settled portions 
 will be increased three, four, or five fold. Let the farmer in 
 such portions consider whether he would prefer the increase of 
 population to be mostly farmers or mostly people who buy and 
 do not produce farm products. It will not take him long to 
 make up his mind, and his judgment will be wortli as much as 
 that of all the political economists in Europe and America. 
 His judgment will agree with the mature and dcliljcrate oi)inion 
 of such men as Franklin, Hamilton, Jefferson, Andrew Jackson, 
 Henry Clay, Daniel Webster, and the majority of the great 
 statesmen who have been the pride of our country. 
 
 The article now under review contains two argunuMitations 
 which it may be well to examine, coming as they do from a 
 noted political economist.
 
 8 REVIEW OF PROFESSOR PERRY'S 
 
 The first is in favor of free trade. It runs thus : — 
 
 " Free trade does not compel anybody to trade ; it does not even 
 recommend anybody to trade ; it merely allows those persons to trade 
 who find it for their profit to do so. Unless it be profitable for them 
 to trade they will not trade. They have no motive to trade." 
 
 The original free-trade argument (by Adam Smith) went 
 farther, and maintained not only that each individual knew his 
 own interest (both immediate and permanent) better than any 
 statesman or law-giver could, but also that what the individual 
 elected to do must necessarily be that which best promoted the 
 national wealth. These extravagant propositions were re- 
 peatedly shown to be untenable, were abandoned by Mr. John 
 Stuart Mill, and are abandoned by Professor Perry, inasmuch 
 as in the very article" now under review he maintains that 
 the manufacturers do not understand their own interests, that 
 the farmers do not understand theirs, and that a majority 
 of the American people have for a hundred years been pursuing 
 a pernicious and pauperizing policy. 
 
 But in place of these abandoned positions Professor Perry 
 gives us the following : — 
 
 " If it be profitable for any two persons to trade, and a law steps in 
 to prevent it, tlien that law destroys property, interferes with rights, 
 and makes the persons subject to it so far forth slaves." 
 
 But as the identity of individual and national interests has 
 been abundantly disproved, this proposition is exclusively one 
 regarding the rights of property. It is a proposition in law or 
 in social science. It cannot be maintained either in law or in 
 social science ; but if it could, it would still be out of place in 
 a discussion as to whether free trade or protection will best 
 promote the wealth of a particular nation. Both law and 
 social science demand tliat the individual interest shall give 
 way to the national interest; with compensation, it is true, in 
 same cases, but not in those cases where the betterment out- 
 weighs the damage. To suppose that property confers the 
 right to nullify the social and economical regime under which
 
 " FARMERS AND THE TARIFF." 9 
 
 it ^vas acquired would, I think, have astonished Socrates or 
 any subsequent moralist ; and to expect that a discussion of 
 the rights of property will reveal the secrets of the nature and 
 causes of the wealth of nations would equally surprise all 
 political economists save Bastiat and his imitators. 
 
 The second and last argument which it will be necessary to 
 look at is the following : — 
 
 "Your protectionist thinks it is a very good thing for the farmers and 
 for the people generally to pay protective prices, but he never likes to 
 pay them himself. He has no scruple in evading them, if he can do 
 so by any possibility. He denies by his own actions, which speak 
 louder than words, what he is constantly affirming in words, namely, 
 that protection is a good thing." 
 
 Let us test this method of reasoning. A just, efficient, and 
 economical government gives us good roads, good water, safe 
 buildings, defence against public and private violence, and a 
 thousand other desirable things ; but it costs money, and many 
 individuals, after enjoying its benefits, are unwilling to pay 
 their proportion of the expense. They thus deny by their 
 actions, which speak louder than words, what they are con- 
 stantly affirming in words, namely, that a just, efficient, and 
 economical government is a good thing. 
 
 Again, laws against cheating and robbing are generally 
 thought to be good ; but many men, while they themselves 
 enjoy protection against cheating and robbing on the part of 
 others, will not hesitate, whenever they can, to cheat and rob ; 
 thus denying by actions, which speak louder than words, what 
 they are constantly affirming in words, that cheating and rob- 
 bing ought to be suppressed. 
 
 Again, if the protectionist doctrine be correct, the American 
 system vastly increases the gross annual product of the country, 
 which pays all rents, profits, fees, salaries, and wages, which 
 has endowed our institutions of learning, and brought our pros- 
 perity and civilization to its present height. Nevertheless, the 
 wealthier classes generally keep themselves in a fever because 
 under this system their champagnes, gloves, ribbons, silks, 
 satius, and fine broadcloths, brought from abroad, cost much
 
 10 REVIEW OP PCOFESSOR PERRY'S ' 
 
 higher than they would were there no duties. They do not 
 like to pay the cost of the prosperity they enjoy. But this 
 does not prove that prosperity is a bad thing. The farmer 
 sees that without protection he would have to go without three 
 fourths of the comforts he now possesses ; the rich do not see 
 that under free trade reduced incomes would compel them to 
 forego a large portion of their present luxuries. They deny 
 the allegation with emphasis ; but neither the denial nor the 
 emphasis proves anything. The proof must be sought from 
 combined observation and reasoning. Patient and truthful 
 search after facts, patient and truthful reasoning from them, 
 patient and truthful examination and re-examination of both 
 facts and reasoning, when they appear to disagree, may at some 
 future time build up a solid and enduring science of political 
 economy. Violence, denunciation, rhetoric, fierce onslaughts 
 upon individuals or classes, vehement appeals to the short- 
 sighted pocket, will in no way assist in its construction. 
 
 Having examined Professor Perry's historical and logical 
 methods, we are in a position to form a correct judgment as to 
 the rest of his article. 
 
 He asserts that the manufacturers are so foolish as to sup- 
 port measures which do not benefit them at all as a whole 
 class. Some of the shrewdest and most unscrupulous are bene- 
 fited; and these wicked, selfish, mendicant swindlers have 
 cajoled the farmers into consenting to pay for their supplies 
 prices artificially enhanced by law, and selling their produce 
 AT prices artificially DEPRESSED BY LAW. This they have done 
 by lobbying and log-rolling, — that is, by either deceiving or 
 corrupting a majority of the Representatives and Senators in 
 Congress. A majority of the American people for a hundred 
 years have been either fools or knaves, or both ; and the farm- 
 ers especially are " the ass that bears most of the burden and 
 eats least of the hay of protection." The only pure, patriotic, 
 and intelligent people in the country are the free-traders. No 
 evil has ever been experienced from free trade ; no good has 
 ever come from protection. 
 
 The actual history from beginning to end has been precisely 
 opposite to that which Professor Perry has laid before us.
 
 "FARMERS AND THE TARIFF." 11 
 
 In 1789 it was well known to thinking men that the steady 
 and permanent interests of farmers could be secured only by 
 increasing the proportion of the community which consumed 
 and did not produce farm products. 
 
 In the years immediately preceding 1789 free trade had 
 brought intolerable evils upon the country ; and it was for this 
 reason, as well as with the design of benefiting the farming in- 
 terest by adding to the number of their customers, that duties 
 were imposed upon imported manufactures. The Napoleonic 
 wars followed with a great demand for our exports, and then 
 came the period of the embargo and the war with England of 
 1812-15. During the period of non-intercourse and the war 
 our manufactures increased greatly ; but after peace was de- 
 clared there came a period of excessive importations similar to 
 that which followed the War of the Eevolution. Although 
 free-traders assert that " the only way a country can be flooded 
 with the cheap goods of foreigners is for the natives to flood 
 the foreigners with cheap goods in exchange," the facts were 
 the reverse of those deduced from their theories. In point of 
 fact our country was flooded with cheap foreign goods ; in 
 point of fact we did buy enormously beyond the amount which 
 the foreigner would take pay for in goods ; in point of fact our 
 treasure teas exported, and this (contrary again to free-trade 
 theories) did plunge the country into immeasurable distress, 
 destroying a vast number of our manufacturing establishments, 
 and affecting in a disastrous manner the farming interests as 
 well. 
 
 Jt was then perceived that the protection which the existing 
 tariff gave to manufactures was entirely insufficient in times 
 when English speculation or distress threw immense masses 
 of goods upon our shores ; and it was perceived that the ruin 
 brought down upon every interest by a short period of great 
 cheapness cost the country a hundred times what it gained by 
 the momentary and illusive advantage of a low-moneyed price. 
 It was in 1824 that General Jackson asked, " Where has the 
 American farmer a market for his surplus products ? " and rec- 
 ommended as a remedy to draw from agriculture the super- 
 abundant labor, and employ it in machinery and manufactures.
 
 12 REVIEW OF PROFESSOR PERRY's 
 
 It was to benefit the farmer that he proposed such higher duties 
 as would make the other industries safe in times of foreign 
 panics or periods of speculation. There would have been a 
 diverting scene had any one assured the clear-headed old war- 
 rior and statesman that commodities are always paid for with 
 commodities, and that no harm can come to a country from an 
 inundation of foreign goods. 
 
 In 1833, in consequence of the threatening attitude of several 
 of the Southern States which, under the slavery regime^ were 
 unable or unwilling to establish manufactures, the tariff was 
 reduced ; and in the ensuing panic of 1837 the lessons of 1786 
 and 1820 were repeated, and it again became apparent that the 
 farmer absolutely required the custom of the manufacturing and 
 mechanical classes, and that these could only be rendered safe 
 by duties sufficiently high to prevent foreign competition not 
 merely in ordinary times, but also and chiefly during periods of 
 financial disturbance in England. Any other policy would 
 be as wise as it would be for Holland to build her dikes only 
 high enough to exclude the ocean in ordinary weather, pre- 
 ferring occasional submergence to a somewhat more expensive 
 security. Nay, it would not bo as wise, for the higher duty 
 does not entail higher prices. These, as regards such goods 
 as concern the great mass of the people, are determined by in- 
 ternal competition. They will be as low as they can be under 
 the circumstances of the country, whether the duty be forty 
 per cent or sixty per cent; indeed, the higher duty would be 
 more likely to lower the price by giving a greater sense of 
 security, and thereby attracting more capital to the industry. 
 I am not aware that any respectable economist, from Adam 
 Smith's days to ours, has written anything which contra- 
 dicts this proposition. The goods produced at home are in 
 a few years much cheaper than the foreign goods with duty 
 added, and they gradually grow cheaper and cheaper as skill 
 and the increasing use of machinery more and more counter- 
 balance, and in many cases overcome, the effect of a higher 
 rate of wages and a higher rate of interest. The heavier 
 cotton goods were long ago cheaper even in money than 
 they could be imported, duty free; and free-trade writers
 
 "farmers and the tariff." 13 
 
 allege that heavy woollens have reached nearly an equality 
 in cost with foreign goods. To be sure, after making this 
 allegation they state that the duty is 135 per cent, and in- 
 vite the " hod-carrier and the poor sewing-girl " to believe 
 that they pay, and the manufacturer pockets, the 135 per cent ; 
 but everybody knows that any reasonable prospect of making 
 ten per cent a year would cause a hundred millions to be in- 
 vested in new woollen mills ; and the inference is unavoidable 
 that the poor get their clothing at what it costs, and a pro tit 
 averaging about the same as is made in other industries. 
 
 In every industry the demand occasionally outruns the 
 power of production, and then there are large profits ; and 
 occasionally the power of production outruns the demand, 
 and then there are severe losses. The steel rails of Professor 
 Perry's article are in point. The productive capacity of Eng- 
 land in 1880 was about one million tons, and that of the United 
 States the same, with the prospect of reaching a million and a 
 half in 1882. Before steel rails were made in this country the 
 price was not less than ^150 a ton, and the demand has so 
 suddenly outrun the means of supply, that the same price 
 would very probal)ly have Leen reached again had we depended 
 upon England. The present price in England is what answers 
 to a demand for one million of tons, and Professor Perry bases 
 his calculations upon the assumption that the price in Great 
 Britain would have been the same in the face of a demand for 
 two millions of tons, and in face of a knowledge that the Amer- 
 icans could not make a ton for themselves ! As it is, the 
 manufacturers of steel rails are making money, — perhaps a 
 great deal of money, — and the country is made to ring with 
 denunciations of the wicked and deplorable fact. By and by 
 they will be losing money, and then the free-trader will tiy^o 
 gain influence with them by urging that they are being-a-uincd 
 by the duties upon iron. But the country can console itself by 
 the reflection that whatsoever they make, be it much or little, 
 finds its way, every dollar of it (save and except what is spent 
 upon foreign goods) into the hands of the American workiug- 
 man. 
 
 The observations of Fisher Ames, which Professor Perry
 
 14 REVIEW OF PROFESSOR PERRY'S 
 
 contrives to misunderstand, arc simple enough. They assert 
 merely that where every man can be a farmer if he pleases, 
 and enjoy the competence and independence of that position, it 
 is in vain to endeavor to form other classes unless the condition 
 of those other classes be made sufficiently profitable to compen- 
 sate them for leaving their farms or for abstaining from taking 
 farms. On these conditions we can have all that the whole 
 community can produce ; on any other terms we can have only 
 the food and raw products we ourselves need, and such amount 
 of manufactured articles as will pay for what raw products 
 foreigners desire to take from us. If we desire a far greater 
 value of their products than they desire of ours, the advantage 
 we possess in producing raw products will inure entirely to 
 them ; and, moreover, we shall obtain only a portion — in our 
 case only a small portion — of what we desire, and shall either 
 have large quantities of food to be given to animals or burned, 
 or else be discouraged from producing more than a fraction of 
 what we might produce under wiser arrangements. We should 
 then enjoy in some sense a competency, for we should not 
 starve ; but we could not enjoy our present comparative opu- 
 lence. If any one doubts this let him study Mr. J. S. Mill's 
 chapter on international trade. 
 
 Professor Perry is an admirer of Bastiat, a writer who en- 
 deavored to bolster a weak cause by importing into economical 
 questions the virulence of personal and class abuse, and the 
 inexhaustible resources of rhetorical inveracity ; a writer, how- 
 ever, of whose works one serves as a text-book at Harvard, 
 while another — the worst of the whole — is recommended to 
 youth by the authority of Yale. According to Bastiat, protec- 
 tionists are cheats, thieves, robbers, swindlers, &c., and the 
 denunciations of Professor Perry in the article under review 
 are of a similar quality. If these were merited it would be 
 high time that Harvard and Yale and our other universities 
 looked into their records to see how large a proportion of their 
 foundations had been derived from protectionists ; to what ex- 
 tent, in short, they have been receivers of stolen goods ; and 
 they should lose no time in coming to a solemn resolution to 
 accept nothing in future from so infamous and polluted a
 
 " FARMERS AND THE TARIFF." 15 
 
 source ! MeaiiTvhile, it would gratify a natural curiosity if 
 some one would tell us who were the wielded and selfish men 
 who have for a hundred years cajoled the majority of the 
 American people. The men who introduced the cotton manu- 
 facture certainly did not answer to the description ; they were 
 men with large heads and large hearts, many of them the sons 
 of farmers, but quite able to comprehend and act upon the 
 broadest views of statesmanship. They were not wicked, nor 
 selfish, nor robbers, nor swindlers, nor men who would cajole 
 anybody. They engaged in an enterprise in which immense 
 capital was embarked, and so some of them became rich ; but 
 no one can truthfully allege that they used their wealth in a 
 mean or selfish manner. As to this point Harvard College 
 can bo called as a witness. Certainly no more weighty witness 
 could be summoned ; but this grand old witness now testifies 
 emphatically to the truth of the free-trade doctrines. How is 
 this ? Is it not almost conclusive ? By no means ! It is a 
 transient humor. Her belief was very different in 1776 when 
 men were in earnest ; it was very different during the greater 
 portion of the intervening years, and it will be different 
 again as soon as it shall be generally seen that Great Britain, 
 through her commercial, manufacturing, and educated classes, 
 organized in the Cobden Club, is assailing our prosperity as 
 perniciously as she could with shot and shell and ironclads 
 and all the barbarity and devastation of war. The persistent 
 pressure of transatlantic condescension will then cease to 
 sway our literary classes ; and we shall have not only free 
 farmers and free working-men, but a whole population wliich 
 will be free to reason for themselves, and which will bestow 
 upon the faithful journalist, author, and teacher tlic all-suth- 
 pient reward of the sincere and enduring approbation of his 
 own fellow-citizens. 
 
 To return to Professor Perry's article. We have seen — 
 1st, That with regard to the Revolutionary War, it so states 
 the truth as to lead the reader inevitably to a false conclusion. 
 It does the same also witli regard to the opinions of Mr. 
 Madison, quoting words he used, but failing to quote tlic ex- 
 ceptions he insisted on.
 
 IQ " FARMERS AND THE TARIFF." 
 
 2d, That with regard to the effects of free trade before 
 1789, and in regard to the time when the theory of the home 
 market sprang up, it makes statements which are absolutely 
 contradicted by historical records. 
 
 3d, That its only argumentative portions will not bear to be 
 confronted with any known system of reasoning. 
 
 4th, That it speaks with indecorous and unwarrantable con- 
 tempt of the majority of the people and statesmen of the 
 United States, representing that the manufacturers are too 
 stupid to know their own interests, and yet are clever enough 
 to deceive or corrupt the statesmen and to cajole the farmers, 
 whom it calls " the ass that bears most of the burden and eats 
 least of the hay of protection." 
 
 6th, That its incautious author appears to have fallen into 
 these incongruities in consequence of reasoning which involved 
 a doctrine in political economy long since obsolete, — the doc- 
 trine, namely, that the immediate interests of the individual 
 are always necessarily identical with the immediate and per- 
 manent interests of the community to which he belongs. 
 This doctrine may linger in the seclusion of this or that uni- 
 versity ; but as each class emerges, annually, into the broad 
 daylight of actual life, its members will quickly discover that 
 those who would be leaders among men must possess them- 
 selyes of some philosophy which does not flatly contradict all 
 that their eyes and ears reveal to them in the world of firm, 
 concrete, positive, indisputable fact, 
 
 George Basil Dixwell.
 
 TARIFF COMMISSION.
 
 TARIFF COMMISSION. 
 
 PHILADELPHIA, PA., OCT. 14, 1882. 
 
 Prof. "W. G. Sumner, of New Haven, Conn., addressed the 
 Commission as follows : — 
 
 " I have noticed that in the discussions which have taken place before 
 this Commission there has been a constant reiteration of some false doc- 
 trines of theoretical political economy about wages. If there is to be any- 
 theoretical political economy admitted, it is worth while to have it correct. 
 I have therefore thought that it might be proper for me, as a professional stu- 
 dent of political economy, to appear here and read a paper setting forth the 
 true relations between protective taxes and wages." 
 
 Mr. Sumner assumes that, being a professor of political econ- 
 omy in a great institution of learning, he is competent to correct 
 what he alleges to be a gross error in the public mind in regard 
 to the relation between protection and wages. His reasons shall 
 be carefully examined; but we must first ascertain how much 
 deference we ought to pay to his opinions on the ground of his 
 being a professor. What guarantee does that fact give of the 
 accuracy of his doctrines ? Let us see how it has been with oth- 
 ers over whom Mr. Sumner could hardly claim superiority. 
 
 First let us take Prof Adam Smith, the very distinguished 
 author of the " Enquiry into the Nature and Causes of the "Wealth 
 of Nations." He was as certain as Mr. Sumner of the correctness 
 of his opinions ; indeed, he was not the least bashful about inti- 
 mating that the " notions " of all statesmen and lawgiver were 
 childish in comparison with his. 
 
 But Prof J. Pi. McCulloch (equally positive) declared that Adam 
 Smith was in error upon more than eighty points, many of them 
 of great importance.
 
 4 TARIFF COMMISSION. 
 
 Mr. John Stuart Mill, also, who was so distinguished a thinker 
 and reasoner as to be ranked perhaps almost upon an equality 
 with the professors of political economy, declared that the work 
 of Adam Smith was " in many parts obsolete and in all parts 
 imperfect " ! and Mr. Mill could not agree with Malthus, Chalmers, 
 or Carey. 
 
 But Professor Cairnes dissents in very important points from 
 Mr. Mill, although declaring himself to be a humble follower; 
 while Professor McLeod, in a work which has had an ftnmense 
 success upon the Continent of Europe, maintains that Mr. Mill 
 and all his school are in error as to the very method of studying 
 political economy, — they declaring that it should only be studied 
 by the deductive, he that it can yield correct results only when 
 investigated by the inductive, method. 
 
 Professor McLeod also, in his Dictionary, falls foul of other 
 professors upon various points, especially upon their doctrine that 
 absenteeism is no injury to a country ; and he presses his own 
 views with such vigor and warmth as might lead a hasty reader to 
 infer that his opponents were little better than blockheads. But 
 it would be a very precipitate reader who would draw such a con- 
 clusion. Each of these great thinkers made inestimable contri- 
 butions to political economy, notwithstanding that each contradicts 
 others and himself as well. To examine these contradictions and 
 ascertain wherein and to what degree each was right, is a work to 
 which plodding conscientious mediocrity is quite competent. The 
 critic needs not the genius and inspiration of the author, but only 
 the dihgence which brings the author to the bar of his own 
 methods of reasoning. Mr. Mill's great works upon Logic and 
 Political Economy will furnish the tools by which to detect the 
 few errors into which even Mr. Mill himself may have fallen ; 
 but they wiU never be discovered by one who, like Professor 
 Sumner, draws his inspiration from Bastiat, Mr. D. A. Wells, and 
 the Cobden Club Essays, and who from inability to understand 
 Mr. Mill's methods is quite incompetent to distinguish between 
 the propositions which are and those which are not consistent 
 with those methods. Professor McCuUoch's paradox regarding 
 absenteeism passed for science for thirty years without, however, 
 making any impression upon the popular mind ; but at last the
 
 TARIFF COMMISSION. 5 
 
 error in his reasoning was recognized, and his position abandoned 
 by several even of the free-trade writers. 
 
 We see, then, that we cannot safely indulge our laziness in al- 
 lowing a professor to think for us. He has no sources of infor- 
 mation which are not equally open to statesmen and educated 
 business men, all of whom have been pupils of the professors and 
 afterwards pupils in the great school of practical life, wliere they 
 often learn tirst to doubt and then to discard much which had 
 been learned at college. 
 
 The professor, in fact, stands at some disadvantage. He is 
 obliged to teach the same old propositions year after year, until 
 they root themselves in his mind too deeply to be torn up ; in 
 short, he is very liable to fall into that condition which is 
 described by Carlyle as being " possessed by Fixed Idea." 
 In ordinary life he has nobody to challenge his opinions, and 
 he must tlierefore be more likely than others to become dog- 
 matic, and to be prone to wrath whenever he does encounter 
 opposition. 
 
 Like Professor McCulloch in the matter of absenteeism, Mr. 
 Sumner comes forward to sustain a paradox, and to prove by 
 dialectics that wages are not higher by reason of protection ; 
 that is, he has set himself the task of proving that an opinion 
 generally entertained upon both sides of the Atlantic during all 
 past time is entirely erroneous. It was necessary in the interest 
 of the free-trade party and of the Cobden Club that somebody 
 should make the attempt, and it was perhaps judicious that he 
 should be one who would carry before him the shield of a great 
 institution of learning ; but we have said enough to show that 
 this, after all, amounts to very little, and that the reasons of a 
 professor must be brought to the test as rigidly as those of any 
 other individual. Let us now examine them. 
 
 "I learn, from the reports of tlie proeeediiigs Lefore this Commission, that 
 some people believe that protective taxes make wages higli, and at the same 
 time that high wages make protective taxes necessary. If the Commission 
 should act on these two doctrines, it would first raise taxes in order to raise 
 wages in obedience to a delegation of workmen, and then raise taxes again 
 in order to offset the previous increase, in the interest of a delegation of 
 employers, and so on forever. These two notions, therefore, contradict each 
 other and produce an absurdity. They are both false. Protective taxes
 
 6 TAKIFF COMMISSION. 
 
 lower wages, and high wages are a reason for free trade, not for protection. 
 These two propositions confirm and sustain each other, and so ratify the truth 
 of each." 
 
 The logical deception in this paragraph consists in the substi- 
 tution of a universal for a limited proposition. Men who inves- 
 tigate cases in political economy, whether by the deductive or 
 inductive methods, embody their conclusions in a set of words 
 which, taken with the circumstances of the case known to all the 
 world, are limited with sufficient exactness to prevent anybody of 
 ordinary caution from falling into error. 
 
 Thus Adam Smith, Fisher Ames, Mr. John Stuart Mill, and 
 many others have noticed that where cheap land is to be had men 
 will flock to it, unless drawn to other pursuits by wages high 
 enough to overcome the attraction of the land. Adam Smith, 
 speaking of the Colonies, says : " From artificer a man becomes a 
 planter, and neither large wages nor the easy subsistence which 
 that country affords can bribe him rather to work for other people 
 than for himself. He feels that an artificer is the servant of his 
 customers, from whom he derives his subsistence; but that a planter, 
 who cultivates his own land and derives his necessary subsistence 
 from the labor of his own family, is really a master, and inde- 
 pendent of all the world." 
 
 Here the inclinations of the individual are opposed to the in- 
 terests of his class and to those of the whole community, which 
 tends to become disproportionately agricultural, to depend more 
 and more upon distant nations for everything except food, and to 
 become poorer and poorer as it increases in numbers. The de- 
 mand of the outer world for the food and raw materials of the 
 United States cannot increase as fast as the home population ; 
 for the outer world can take payment for the conversion of raw 
 into finished products only in a few articles of comparatively easy 
 transportation, while the home artificer and manufacturer take 
 payment in every sort of product and every sort of service. Let 
 the producers of food and raw materials allow to the other classes 
 such emoluments as are sufficient to induce a portion of the com- 
 munity to abstain from becoming farmers, and the nation will 
 grow symmetrically. The daily increasing numbers and skill of 
 the other classes will give the market which will enable agricul-
 
 TARIFF COMMISSION. 7 
 
 ture to avail itself of better tools, machines, draiuage, and other 
 improvements. The emoluments of the other classes, mean- 
 while, can never exceed the limit named, — to wit, that which 
 balances the disposition of an individual to become an inde- 
 jDendent landowner. If it goes beyond this for a while, more 
 persons will abstain from farming, and the balance will be re- 
 stored. But before the introduction of manufactures there is 
 not only the difficulty of high wages but also that of want 
 of skill. Without a protective duty adequate to shut out the 
 foreign article nothing can be done. The duty being laid on 
 raises the price, but not to the extent of the duty, for the for- 
 eign price declines under the reduced demand. If, however, the 
 duty be sufficient, the manufacture is introduced at a certain 
 price which covers the higher wages and also the want of skill. 
 This rise in price is for the moment a disadvantage to the por- 
 tion of the community who before obtained a sufficiency of fin- 
 ished products; but the articles come at once within the reach of 
 a wider circle, who before could not obtain them at all, or not in 
 sufficient quantity, on account of the low price or unsalableness of 
 their crops. The duty removes those who were causing an agri- 
 cultural glut, and whose labor therefore produced less than nothing, 
 and puts them upon the construction of finished products which are 
 pure gain to the community. The gross annual product is increased 
 by their whole value. There is more to divide, and demand and 
 supply ultimately distribute the increase throughout the commu- 
 nity. The farmer and planter are the first to feel it. Their occu- 
 pation becomes more remunerative ; and from this movement 
 there folloivs Si rise of wages in the non-agricultural portion of the 
 community. The working of the economic forces is progressive, 
 not simultaneous or instantaneous. The protective law first re- 
 lieves the agricultural glut and apathy, and this in turn causes 
 an increased demand for finished products. Wages in all de- 
 partments will gradually advance, out they can augment no farther 
 nor faster than the gross annual product. The protective tax, 
 as Professor Sumner likes to call it, simply removes an obsta- 
 cle which prevents the best and the natural distribution of the 
 population. As skill increases, the price falls under home com- 
 petition until it covers only the difference in the cost of labor ;
 
 8 TiRIFP COMMISSION. 
 
 and the skill may increase so as to cover this also, and give the 
 community the article as cheaply as it could be imported with- 
 out any duty. Such is the case with regard to tools, locomo- 
 tives, agricultural machinery, and many other goods, including the 
 greater part of the cottons consumed in the country. Such ap- 
 pears to be nearly the case with regard to the woollens used by 
 the bulk of the people. The fine cottons and woollens which are 
 objects of ostentation are still mostly imported. The duty on 
 them gives a large revenue to the Government, and in reality 
 comes out of nobody, as their higher price only fits them the bet- 
 ter to enable A to appear as rich as B. It is these duties, however, 
 — the duties upon objects of luxury and ostentation, — which 
 irritate some of the salaried classes who do not understand po- 
 litical economy, and even some professors of the subject. They 
 think themselves oppressed, they hate the manufacturers who 
 live more showily than they can, and they make every effort to 
 persuade the bulk of the people that they also are the victims of 
 oppression. 
 
 If they understood the subject they profess, they would know 
 that if its present objects were cheapened to ostentation, it would 
 reject them and fly to others ; and they would also know that 
 whatever social necessity there may exist for such indulgences 
 must surely in the long run be considered in the salaries paid 
 them. But this necessity does not go a great way. The high 
 respect which they and their families command on account of 
 their much honored office relieves them from such necessity. 
 The wise, temperate, truthful, benevolent, right-hearted professor 
 is as welcome in homespun as is Crcesus in broadcloth ; and if any 
 individual fail to command respect, it can only be because he is 
 an exception to the rule, and wanting in the high intellectual 
 and moral qualities usually exhibited by professors. But to re- 
 turn to the price of manufactured goods. It must be sufiicient 
 to pay the wages of labor and the profit on capital usual in the 
 community. Higher than this it cannot be for any long time, 
 and it cannot be long lower. Monopoly has had no place in 
 political economy since the discussion upon that point between 
 Say and Eicardo. 
 
 It will be seen, then, that the propositions of the protection-
 
 TAEIFP COMMISSION. 9 
 
 ists, — 1. That a duty raises wages gradually as the annual prod- 
 uct increases ; 2. That high wages (so far as wages affect the 
 cost, and are not overmastered by greater efficiency) make pro- 
 tection necessary, — are limited. Within the limits naturally 
 and necessarily attaching to them they are not contradictory, and 
 they do not produce an absurdity. 
 
 But for these limited propositions Mr. Sumner substitutes two 
 universal propositions, — 
 
 1. That a duty always raises wages, and raises them in propor- 
 tion to its magnitude. 
 
 2. That high wages always make protection necessary, and 
 necessary in proportion to their height. 
 
 These universal propositions he endeavors to impute to the 
 protectionists, depicting the Commission first raising the duty in 
 order to raise wages, and then raising it again to compensate the 
 manufacturer for the higher wages, and so on. It is an ingenious 
 sophism, well calculated to impose upon those whom a technical 
 education has deprived of their natural intuitive judgment, while 
 only half teaching them how to reason by propositions ; but it 
 would never impose upon any thoroughly educated person nor 
 upon any practical man. The latter would put it aside at once 
 as nonsense, and I fear would even think me a fool for spending 
 time in showing it to be so. 
 
 What would the Commission have answered to a deputa- 
 tion of either workmen or employers asking for an advance of 
 the duty for such purposes ? Why, that if the industry already 
 existed, and upon an average of years was paying the rate of 
 profit usual in the community, then the duty had done all tliat 
 it could do, — it had excluded the foreign product, and left the 
 price and the wages to be arranged, as they must be, by tlie 
 internal demand and supply. Higher duties, the Commissioners 
 would have said, cannot raise your w^ages any more, nor raise 
 your profits. An additional amount would positively have no 
 effect. 
 
 To this the committees might say. Why not, then, raise the 
 duties ? And the only answer that could be given them would be, 
 Because, if we raised the duties, it would be a handle for dema- 
 gogues to use with those uninformed about such matters. It
 
 10 TARIFF COMMISSION. 
 
 would be represented that the additional ten or twenty per cent 
 was added to the price. 
 
 The " Boston Transcript," " Globe," " Herald," and even such 
 high-toned papers as the " Advertiser," and the " New York 
 Times " admit articles based upon this economic absurdity. The 
 " Herald " even published an article which declared that the 
 manufacturers of woollens could make the common goods suitable 
 for the general consumption as cheaply as they could be made 
 abroad, and yet took one hundred and thirty-five per cent profit 
 to the detriment of the hod-carrier and poor sewing-girl ! All 
 business men who were in vain trying to find investments to pay 
 six per cent were amused, but uninformed people were misled. 
 
 The next two paragraphs read as follows : — 
 
 " The interests of the man who pays wages and those of the man who re- 
 ceives wages are antagonistic. The one wants wages low and. the other wants 
 wages high. The protectionist legislator pretends to step in between them 
 and satisfy both at once. He pretends to make both parties happy at once. 
 ' I am going to make your wages high,' says he to the wage receiver. ' What, 
 then, will become of me ? ' says the wage payer. ' I will make wages low 
 for you,' he replies. ' How is that 1 ' cry the laborers and all their friends ; 
 'you are going to make wages low ?' 'No,' replies the legislator, 'I mean 
 that I will make the price of the products high, which will have the same 
 effect for the employer.' ' But how is that V cry the consumers ; 'you mean 
 to make prices high by law ? ' ' No,' replies the legislator, ' I do not really 
 make prices high ; it only looks so. My measures really make prices low.' 
 We have here, then, the greatest miracle that has ever been accomplished. 
 We have heard of making something out of nothing, but here we have crea- 
 tion and destruction in one and the same act. Certainly the problem of uni- 
 versal happiness is solved if we have found out how those who buy need 
 pay little, and those who sell may at the same time receive much ; how prices 
 may be raised for the producer and lowered for the consumer both at the 
 same time. As we are all producers and all consumers, we may all sell at 
 the high prices and'all buy at the low ones, and all get rich together. This 
 is why it is that the protected manufacturers are found bulling what they 
 are short of (that is, labor) and bearing what they are long of (that is, 
 products). They have discovered this wonderful system by which all are 
 to bull everything and bear everything at the same time, and win a big 
 difference out of nothing. No wonder the protectionists are enraged at the 
 economists who are still stupidly teaching that we can produce nothing ex- 
 cept by applying labor and capital to land. 
 
 " Who is the beneficent genie, now, who works all the magic of the protec- 
 tionist system 1 It is tax. If taxes are only rightly adjusted, says the pro-
 
 TARIFF COMMISSION. 11 
 
 tectionist, they make wages high and low and prices high and low both at 
 the same time. When one hears this kind of nonsense, one is forced to be- 
 lieve that the sum of superstition in the world is a constant quantity. Su- 
 perstition is a defective sense of causation. The savage who wears a bone 
 tied to his arm as a fetich to ward off misfortune believes that there is a 
 connection of cause and effect where there is none. The astrologer thought 
 that the relations of the planets to each other affected the fate of persons 
 born at a certain time. He saw a connection of cause and eflect where there 
 is none. The protectionist legislator lays a tax and goes home secure in the 
 faith that wages will be high, prices 'low, and prosperity stable, as if there 
 were a fixed, direct, and inevitable law of nature connecting taxes with social 
 welfare and nothing else. This superstition is more wild than fetichism or 
 astrology." 
 
 As Mr. Sumner says, " When one hears this kind of nonsense,^ 
 one is forced to believe that the sum of superstition in the world 
 is a constant quantity ; " hut if superstition be a defective sense of 
 causation, then Mr. Sumner certainly is the most superstitious 
 man on earth, for he shows an unparalleled inability to appreciate 
 the action and reaction of economic causes. 
 
 General Jackson, writing in 1824, said : " The American farmer 
 has neither a foreign nor a home market, except for cotton. Does 
 not this clearly prove that there is too much labor employed in 
 agriculture, and that the channels of labor should be multiplied ? 
 Common sense points out at once the remedy. Draw from agri- 
 culture the superabundant labor, and employ it in mechanism 
 and manufactures, thereby creating a home market for your bread- 
 stuffs, and distributing labor to a most profitable account, and 
 benefits to the country will result. Take from agriculture in the 
 United States six hundred thousand men, women, and children, 
 and you at once give a home market for more breadsfeuffs than all 
 England now furnishes." 
 
 Benjamin Franklin, writing in 1771, said: " Every manufac- 
 turer encouraged in a country makes a part of a market for pro- 
 visions within ourselves, and saves so much money to tlie country 
 as must otherwise be exported to pay for the manufactures he 
 supplies. Here in England it is well known and understood 
 that, wherever a manufacture is established, it raises the value 
 
 1 The, nonsense is Sunuicrian nonsense exclusively, and is founded on a niis- 
 stateinent. No protectionist ever pretended to " make wages high and low and 
 prices high and low both at the same time,"
 
 12 TARIFF COMMISSION. 
 
 ■of the land in the neighboring country all around it. It seems, 
 therefore, the interest of our farmers and owners of land to encour- 
 age our young manufactures rather than foreign ones." 
 
 The condition of affairs described by General Jackson was a 
 verification of the deductions made from Adam Smith's remarks 
 about the attractiveness of plentiful land. Eeasouing led us to 
 the conclusion that the tendency was to become unduly and un- 
 profitably agricultural. Our country tried the experiment, and 
 found it was so. Mr. John Stuart Mill also recognized this ten- 
 dency, and he recognized it as a difficulty out of which the efforts 
 of individuals to benefit themselves cannot extricate a commu- 
 nity : that laissez /aire is entirely impotent, and government 
 assistance — that is to say, the combined action of the whole 
 community — imperatively necessary .^ Mr. Sumner lingers be- 
 hind Mr. Mill about a hundred years, and knows, or appears to 
 know, no more upon the subject than Adam Smith knew in 
 1755, when he gave his lectures, which were afterwards pub- 
 lished under the title of an " Enquiry into the Nature and Causes 
 of the Wealth of Nations." How long will Harvard and Yale 
 insist upon being the Sleepy Hollows of Political Economy, from 
 which pupils emerge with ideas that have been obsolete for a 
 century ? 
 
 What Jackson recommended was done by the tariff of 1824. 
 The people, removed or retained from the land where they could 
 only add to a surplus already unsalable, produced finished pro- 
 ducts, and the whole value of their labor was just so much 
 added to the gross annual product of the country, which, being 
 distributed by demand and supply, could produce no other possi- 
 ble effect than to increase all incomes, — rent, profits, and wages. 
 The price at which the new products sold may have been at first 
 thirty, forty — if you please, even fifty — per cent higher than 
 they could be imported for; but we got the commodities, and 
 did not have to export money or commodities to pay for them. 
 The totality of consumers may have had to pay one hundred and 
 fifty millions for what before cost one hundred millions, and so 
 lost fifty millions ; but they had the commodities, and in their 
 cajmcity of producers, or livers upon the rent or profits of pro- 
 1 See Book Y. Chap. XI. § 12 of his " Political Economy."
 
 TAPvIFF COMMISSION. 13 
 
 ductive instruments, or upon salaries drawn from the general 
 prosperity of the country, they gained the one hundred millions 
 which would otherwise be sent abroad ; and as increasing skill 
 produced the articles with less and less labor, the legislator's 
 " little tax " became less and less. 
 
 Paragraphs 5 and 6 are as follows : — 
 
 " In discussing the effects of taxation, ambiguity is often introduced by not 
 distinguishing carefully the alternatives which may be imagined. If we 
 could imagine a state of society in which vice, passion, and other destructive 
 forces no longer existed, government could be dispensed with, or it would 
 sink into some low form of co-operation for common purposes. Taxes could 
 then be dispensed with. If we compare our present condition with any 
 such ideal state of things, all taxes are minus quantities, reducing by so 
 much the available wealth and attainable comfort of the community. But 
 such an ideal is a mere poetic dream. If we had no government we should 
 have vice and passion running triumphantly through society, wasting and 
 destroying on every side. Comparing our present condition with that state 
 of things, the taxes which we pay for security, peace, and order as products 
 of civil government are a small loss incurred to prevent a great one. Such 
 is the only sensible and correct view of taxes. They are never anything but 
 loss and diminution of wealth, and it is as impossible to convert them into 
 productive forces as it would be to make destruction create, or waste save. 
 Every tax is on the defensive, so to speak. It is necessary to justify every 
 cent which is drawn from the community by taxes, and to show that all the 
 capital thus consumed is necessary, under the existing order of things, to se- 
 cure the protection of society, on the cheapest terms, against the forces which 
 would disturb security, peace, and order. If the taxes were large enough, 
 they might, as in Egypt or Turkey, almost take the place of the evils against 
 which governments pretend to guard society. Every unnecessary cent of 
 taxation is, therefore, a pure evil. Government in Egypt and Turkey, and 
 in much of Asia, is not an organization to defend society against evils. It is 
 only an organization by which some plunder all the rest, and taxes are the 
 means by which they do it. Wherever any taxes are laid for any other pur- 
 pose than to provide civil order, peace, and security, government approaches 
 by just so much towards the Turkish pattern. Such is the case whenever 
 protective taxes are laid. 
 
 " Taxes which ward off greater evils at the lowest practicaljle cost are eco- 
 nomical. They do not lessen the average comfort of the people. Taxes which 
 do not conform to this description do lower the average comfort of all classes 
 of the people. The wages class has no separate interest in the matter which 
 either can be or ought to be considered by itself. It is pure demagogism to 
 say that it is the business of the government to make wages high. If I dis- 
 cuss the effect of taxes on wages, it is only by way of meeting the ([uestion 
 in. the form in which it is raised. Protective taxes do not aim to produce
 
 14 TARIFF COMMISSION. 
 
 good government, or to accomplish any civil purpose at all. Their aim is 
 industrial. They are planned to help some people to get a living. They 
 interfere, on behalf of certain persons, with the conditions of production and 
 the relations of competition. A man who engages in a protected industry has 
 some other reliance in his business than his own capital, energy, enterprise, 
 prudence, &c. The man who is in an unprotected industry has somethmg 
 more to guard against and contend with than the problems of his industiy 
 and the ditficulties of the market. One of these parties has a special advan- 
 tage created by law at the expense of the other party, who is therefore under 
 a special disadvantage. These protective taxes, therefore, cannot be defended 
 or justified under a sound view of the function and justifiability of taxation. 
 They waste labor and capital, and keep the wealth of the country less than 
 it might be for the labor and capital which have been expended. Let us 
 examine in particular their effect on wages." 
 
 In these Mr. Sumner lays down several propositions which are 
 incorrect in fact, and several which have been repudiated by Mc- 
 CuUoch, Mr. John Stuart ]\Iill, and the other great authorities in 
 political economy. He implies that the only permissible functions 
 of government are the providing of security, peace, and order. 
 This contradicts all the great economists who affirm that govern- 
 ment has many other duties. He then draws attention to the 
 fact that taxes which are levied in Egypt, Turkey, and Asia are 
 squandered without giving the security, peace, and order under 
 pretence of giving which they are collected ; that they are an 
 organization bj which some plunder the rest. Then he says that 
 •wherever there are protective taxes the case is similar. 
 
 PKOTECTIVE TAXES. 
 
 This was the title of an article, by Mr. Sumner, in the March 
 number of the "Princeton Review" of 1881. As it was calcu- 
 lated to mislead the public, backed as it was by the weight of a 
 great institution of learning, I replied to it in those terms of stud- 
 ied respect which were due to the office of teacher. In my reply 
 I said : " A protectionist cannot even pass by the title without 
 objection. A tax is not necessarily a burden. If the money be 
 well and economically expended, and gives us good roads, good 
 water-works, good police, and good government for what they 
 ought to cost, then a tax is a great blessing and saving ; but, un- 
 fortunately, the money is often expended recklessly and foolishly, 
 and so, through abuses, the very name of tax becomes offensive.
 
 TARIFF COMMISSION. 15 
 
 The free-trader, who writes about " protective taxes," avails him- 
 self of this existing prejudice, with the effect of disgusting the 
 reader with protection in advance of all argument in respect to 
 it. The word tax also gives two false impressions : first, that 
 all protected articles cost the consumer more than they would 
 if not protected ; and seeond, that when they cost more, the 
 consumer gets no counterbalancing or greater overbalancing 
 advantage." 
 
 The effect of the taxes which are paid for government services 
 press with double weight when doubled, with treble weight when 
 trebled. A duty laid on for protection has, and can have, no 
 such effect. If thirty per cent would shut out the foreign article, 
 all is done which can be done by the tariff. Forty or fifty or 
 sixty per cent can do no more. I also pointed out that, even if 
 our cottons, woollens, and iron cost the consumers one thousand 
 millions, while they could be imported for seven hundred mil- 
 lions, still we have our cottons, woollens, and iron, and we keep 
 seven hundred millions annually at home, which would other- 
 wise have gone abroad, and could not have been balanced by any 
 alternative occupation upon the land, since the land even now 
 cannot sell to advantage all that it can produce. 
 
 Mr. Sumner, however, continues to avail himself of the catch- 
 word of " protective taxes ; " and the whole of his address to the 
 Tariff Commission assumes and presupposes that the pressure of 
 a tariff upon the consumer is in proportion and equal to the rate 
 of duties imposed, and that these duties inure to tlie benefit — 
 in fact, go into the pockets — of the protected manufacturers who, 
 according to him, hold a monopoly. 
 
 In pursuing this line of argument, after full notice of its inap- 
 plicability, Mr. Sumner proves one of two things. He is either 
 ignorant of the political economy of the latter half of the nine- 
 teenth century, and incapable of comprehending tlie reasoning of 
 Say, Iticardo, ]\IcCulloch, and Mr. John Stuart Mill, or else he 
 shuts his eyes to the truth under the influence of personal or 
 party passion. He is welcome to either horn of the dilemma. 
 It is no satisfaction to me, or to any fair-minded American, to 
 see him in such a position ; but, on the contrary, it.is a source 
 of mortification and humiliation. To us professor connotes all
 
 16 TARIFF COMMISSION. 
 
 that is honorable, dignified, temperate, benignant, and wise. 
 When he condescends to enter the arena of politics, the passions 
 of the crowd stand overawed by the calm and majestic presence. 
 The bandying of libellous crimination and recrimination, the 
 unjust imputation of base motives, the giving and taking of the 
 lie, — all are hushed. So would Harvard's Kirkland, or Everett, 
 or Walker, or Sparks, or Peirce, or many others in such a posi- 
 tion, calm and sway and elevate the people. We have come to 
 expect this ; and the opposite action of Mr. Sumner affects ns 
 like some horrible discord in music, or some frightful want of 
 harmony in colors. 
 
 In short, there are proprieties attaching to every position in 
 life, and we could not tolerate an actor who, in the garb of Soc- 
 rates, should, upon the appearance of a fierce mastiff, descend 
 Upon all fours and endeavor to outbark and outbite the ferocious 
 animal. 
 
 When a professor appears we feel that he should be able to 
 show propositions to be unsound, if they really be so ; and when 
 he denounces them as " lies " we can only distrust his ability to 
 make good his assertions. In paragraph 7 he says : — 
 
 " Anything whicli lessens the number of persons competing for wages, or 
 which increases the amount of capital which may be divided in wages, in- 
 creases wages. In a new country in which there is an immense amount of 
 unoccupied land, and in which the amount of capital required for tilling the 
 soil is small, any man who has a pair of stout hands, although he has no skill 
 and very little capital, may become a landowner and agriculturist. He is then, 
 withdrawn from the wages class ; he lessens the supjdy of labor in the labor 
 market ; and, as an independent producer, he contributes all the time to the 
 capital of the country. Every man of the unskilled labor class, therefore, has 
 an alternative offered to him. He is never driven by starvation into a desper- 
 ate competition with others in the same predicament to work for low wages. 
 He is on the right side of the market. Supply and demand are in his favor. 
 He owns a thing for which there is a high demand in the market. The com- 
 fort he could win on the land iixes a minimum below which wages cannot fall. 
 If they do temporarily fall below that minimum, the laborers take to the land, 
 as they did in the hard times a few years ago. Since the comfort obtainable 
 from an abundance of cheap and fertile land is high, the minimum of wages 
 is high. This makes the average wages of the country high. High wages, 
 therefore, simply mean that the soil of this continent is rich, the climate is 
 excellent and well varied, the rivers are large and convenient, the mountains 
 are full of metal and coal, the people are industrious and energetic and are
 
 TARIFF COMMISSION. 17 
 
 eager to accumulate, the public order is fairly secure, and the general intel- 
 ligence is good. The conditions of production are, therefore, good, and we 
 produce a great deal. We accumulate capital far more rapidly than any other 
 people in the world." 
 
 I beg the reader to look again at this paragraph. He will see 
 that Mr. Sumner admits that what a farmer can make from his 
 land is equal to the minimum of wages. When skilled artisans 
 and manufacturers from any cause fail for a length of time to ob- 
 tain this minimum, they take to the land. He does not seem, 
 however, to perceive what was so plain to Adam Smith, to wit, 
 that the normal condition of agriculture, where there was plenty 
 of land, was less profitable than the non-agricultural industries, 
 Iccause the farmer's position is more independent, and one in 
 which the mere possession of food is certain. Those greater ad- 
 vantages are counterbalanced by a smaller profit, just as the high 
 dignity of a professor causes his salary to be less than that of 
 just the same sort of man employed as a treasurer to a mill. 
 Adam Smith has an interesting chapter upon this point, which 
 has been accepted by all subsequent economists, and which I rec- 
 ommend to Mr. Sumner's attention. 
 
 The word minimvAii presupposes and admits a normal some- 
 thing greater than the minimum. It concedes the point that in a 
 community like ours the non -agricultural industries are more pro- 
 ductive than the agricultural ; that \inder the action and reaction 
 of demand and supply among ourselves, the man who works at a 
 trade or carries on a manufacture adds more to the gross annual 
 product than the farmer does. The latter takes out the difference 
 in feelings of independence and perfect security. But here ]\Ir. 
 Sumner would object that he has nothing to do with the play of 
 industrial forces among ourselves ; that he refuses to consider 
 them ; that political economy regards the whole world ; that there 
 is a country called Great Britain which will take our agricultural 
 products and give us in exchange finished products at a much 
 better bargain than our artisans or manufacturers can or will give. 
 And this position he immediately demonstrates in the following 
 manner. He picks out some article such as iron or fine woollens, 
 and shows that at the present prices for cotton or for wheat here, 
 and the present prices for iron and woollens there, the imported
 
 18 TARIFF COMMISSION. 
 
 article without duty would be a good deal cheaper than the do- 
 mestic product. But this argument assumes that if we had occa- 
 sion to sell more largely abroad we should obtain as high a price 
 as now, and that if we had occasion to buy more largely abroad 
 we should buy as cheaply as now. If Mr. Sumner will propound 
 the propositions embodying these assumptions to any merchant 
 he will be set right, or he can be set right without going out of 
 Yale, by turning to Mr. John Stuart Mill's chapters upon Inter- 
 national Trade. 
 
 Our non-agricultural industries add at least three thousand 
 millions to the value of the materials they deal with. We now 
 find a market abroad for some seven hundred millions of raw 
 products ; but we find it with difficulty, and only when the food 
 crops of all Europe are short. 
 
 The idea of selling three thousand millions more at any price, 
 or one thousand millions more without a reduction of forty to 
 fifty per cent in our prices, is an idea which no well-informed 
 merchant and no well-informed economist would entertain for a 
 moment. 
 
 His premises do not lead to his conclusion that " high wages 
 simply mean that the soil of the continent is rich, the climate is 
 excellent and varied," &c. These things do not, by his own show- 
 ing, account for the high wages that exist, but only for a high 
 minimum of wages, high as a minimum, but a good deal less 
 than what we enjoy. His observation that " we accumulate capi- 
 tal far more rapidly than any other people in the world " is prima 
 facie evidence that our present organization of industries, as 
 brought about by a protective policy, is better than that of any 
 other nation ; but it is totally irrelevant with regard to an entirely 
 different arrangement such as Mr. Sumner would prefer. 
 
 It is tedious to be obliged to refute such sophistries. Para- 
 graph 8 says : — 
 
 " It is one of the humors of the tariff that the politician appears at this stage 
 and says, ' Oh, no I you are quite wrong in attributing the prosperity of the 
 country to those causes. It was I who did it, with my little taxes. The 
 country has prospered because I taxed it vigorously. If I had not put on my 
 taxes the country would have been ruined.' He argues that an industrious 
 people on a fertile soil could not have got food and clothing out of it if they 
 had not had the right taxes. A further touch of the ridiculous, however, is
 
 TARIFF COMMISSION. 19 
 
 added by those politicians who declaim about the dignity of the American 
 laljorer. To listen to the speeches and read the editorials, one would think 
 politicians formed a standard of comfort which they thought suitable for the 
 American laborer, and then just passed the right laws to get it for him. It 
 is said that our laborers ought not to be on the standard of comfort of Euro- 
 pean paupers. It must be, then, that the American sovereign can formulate 
 his demands on nature. He makes up his mind what is suitable to his own 
 majesty, and serves notice on nature to provide it. His attorney, the politi- 
 cian, justly indignant that nature does not respond, passes a law to secure the 
 becoming thing for his noble client, the American laborer. In this view of 
 the matter certain persons are ' nature's noblemen ' in a sense not heretofore 
 used. A little examination shows us, however, that we are only dealing with 
 an old fraud under a new face. The old-fashioned nobleman drew his drafts, 
 not on nature but on his fellow-citizens, and, as his friends were in control of 
 the government, they got payment for him. The American sovereign can 
 get nothing from nature which he does not earn. If the politician meddles 
 in the matter, he can only rob one sovereign to favor another. That is all 
 that he ever has done. That process has never made us any richer, but only 
 poorer." 
 
 The protectionists do not argue that an industrious people on 
 a fertile soil could not get food and some clothing out of it, &c. 
 They argue that fifty millions of people, situated like those of the 
 United States, could not have got food, and anything like their 
 actual present quantity of clothing, and all other conveniences, 
 had the foreign products been left free to come in. 
 
 Tlie American sovereign, it is true, can get nothing from nature 
 which he does not earn ; but he will earn twice or three times as 
 much under a rational distribution of industries as he can if 
 confined to the production of raw products, for which there is no 
 adequate foreign demand, and for which the growth of a domestic 
 demand is prevented by the constant presence of foreign products 
 ready to be sold for money. Mr. Sumner is in error in alleging 
 that if the politician — say rather statesman — meddles in the 
 matter he can only rob one sovereign to favor another. The 
 statesman who promotes measures which bring about a suitable 
 diversity of employments can cause, and in the United States 
 has caused, the total annual product per head to be doubled and 
 trebled, thereby doubling and trebling the aggregate of all wages, 
 all profits, and all rents. He can cause and has caused a pros- 
 perity which shall endow great institutions of learning and fill 
 them with instructors whose salaries are vastly higher than they
 
 20 TARIFF COMMISSION. 
 
 could have been under a free-trade policy. Mr. Sumner's argu- 
 ment could be buried out of sight by evidence drawn from all 
 recognized authorities, whether those on the protectionist or free- 
 trade side of the question. But Mr. John Stuart Mill will suffice. 
 Although breathing every day an atmosphere surcharged with free 
 trade and consequently prejudiced in that direction, liis " Political 
 Economy " is full of passages the reasonings of which followed 
 out to their full consequences prove all that any protectionist 
 maintains. As to Mr. Sumner's dogma that any change wrought 
 in society by the united action of the whole must be injuri- 
 ous, let the reader consult Book I. Chap. VIII. §§ 2, 3, and also 
 Book V. Chap. XI. § 12, of Mr. John Stuart Mill's " Political 
 Economy." Paragraph 9 says : — 
 
 "Under the conditions of the United States, a tax on immigrants would prob- 
 ably lower wages, not raise them. The country is underpopuhited. So long 
 as there is an immense amount of unoccupied hind, the immigrants do not go 
 to swell the wages class ; they go upon the land ; they open it up, win wealth 
 from it, and contribute to the capital of the country. Each new-comer who 
 is industrious counts more as a pair of new hands to produce than as another 
 mouth to consume ; and he may well add to the average Avealth per head. 
 Taxation has not even, therefore, in this country the field which it might 
 have in some countries, if it were used to keep competitors out of the labor 
 market." 
 
 I agree that under the present condition of the United States 
 a tax upon immigrants would not raise wages, but not for the 
 reason given by Mr. Sumner. The immigrants from European 
 countries quickly assimilate themselves to us. They distribute 
 themselves throughout the industries, and speedily produce and 
 consume as much as others. The country simply grows symmet- 
 rically like a crystal or a tree, and so it will be until in the far 
 distant future there comes to be a scarcity of land, mines, &c., in 
 comparison with the population. Paragraph 10 reads : — 
 
 " If a tax on laborers could not raise wages, certainly no tax on commodities 
 can do so. Protective taxes aim to keep certain foreign commodities out of 
 the country. An army of custom-house officers must therefore be supported, 
 not to collect revenue, but to prevent revenue from being collected. This 
 device is kept up in order to secure the home market to the home producer. 
 The home producer carries on his business at a loss. He says that he would 
 lose capital if it were not for the tariff. His industry, he says, would not ex- 
 ist if it were not for the tariff. It is therefore conducted at a loss all the time,
 
 TARIFF COMMISSION. 21 
 
 only that the loss is not borne by the persons carryiilg on the business, but by 
 the consumers of the goods. The protective system, therefore, involves tlie 
 following expenditiu-es : The pay of all the custom-house expenditures to keep 
 up the system ; wages and profits to all those who are carrying on the pro- 
 ductive industries ; the losses incurred by the protected industries. All these 
 outgoes must be borne by the non-protected in order that there may be less 
 goods of all kinds in the country than there might be imder free trade. How 
 then can protection increase wages, or the average amount of these goods 
 which can be obtained by each laborer in the country ? There could not be 
 a more flagrant error. If there is anything cheap anywhere, the protectionists 
 spring into activity to keep the American people from getting it. If there is 
 an abundance of food, clothing, furniture, and other supplies Avhich is offered 
 to the American people on easy terms, the protectionists call it an ' inunda- 
 tion,' and run to set a barrier against it. A few weeks ago I saw a hundred 
 women waiting for hours on the sidewalk for the opening of a store at which 
 some fire-damaged goods were to be sold cheap. A protectionist must hold 
 that those women were insane, or that they were selfishly ruining the country. 
 It is impossible to raise wages by opposing cheapness and abundance. The 
 protective system lessens wealth ; and until somebodj' invents an arithmetic 
 according to which 10 will go in 70 more times than it will in 100, it is cer- 
 tain that a smaller dividend will give a smaller share to each person. The 
 protective system, therefofe, lowers wages." 
 
 This whole paragraph is based, as already pointed out in my 
 former reply to Mr. Sumner, upon the fallacy of division. Under 
 our present industrial organization we have our own food and 
 raw materials, and export, at present prices, say seven hundred 
 millions of raw products. Our farmers sell these seven hundred 
 millions abroad, and they sell twelve hundred millions at home. 
 Mr. Sumner's microscopic vision sees only the present. He as- 
 sumes that if our farmers had to sell nineteen hundred millions 
 abroad instead of seven hundred, they would get the same price. 
 With the seven hundred millions of raw products, we now buy 
 abroad say three hundred and fifty millions, M'hich we could not 
 produce, of tropical products, and a like quantity of the finer 
 manufactures which we cannot yet produce under existing duties. 
 If we did not produce finished products for ourselves, we should 
 have to buy not only what ^ve now buy, but many times that 
 quantity. Mr. Sunnier assumes that under such circumstances 
 the price of imports would be the same as now! Or, leaving out 
 the reference to price, he assumes that whereas now we exchange 
 three hundred and fifty million dollars worth of raw products
 
 22 TARIFF COMMISSION. 
 
 for the like amount of finished commodities, we could exchange at 
 the same advantage, if we were under the necessity of selling 
 and buying abroad, four times as much ! Neither Mr. John 
 Stuart Mill, nor any other economist of capacity to take in the 
 whole problem, would maintain such a proposition. Under the 
 supposed change we not only should obtain our finished products 
 at a much less advantageous exchange for raw products than we do 
 now, but, over and beyond this, we should not be able to obtain 
 more than probably a third part as many. Oar total gross annual 
 product would not be 100 to 70, as Mr. Sumner deduces, but as 
 70 to 100 rather; and until somebody invents an arithmetic by 
 which 10 will go into 70 more times than into 100 it is certain 
 that a smaller dividend under free trade will give a smaller 
 share to each person. Free trade, therefore, would lower wages. 
 Paragraph 11 says : — 
 
 "Let us next look at the effect of protective taxes on the alternative which is 
 open to the American laborer to go upon the land. The protective taxes en- 
 hance the cost of all articles of clothing, furniture, crockery, utensils, tools, 
 and machinery. They also increase the cost of fuel and transportation. 
 They therefore reduce the amount of all the commodities mentioned which a 
 farmer can get for a certain amount of farm products. They therefore lessen 
 the profits of agriculture in all its forms, and lessen the attractiveness of the 
 land. Whatever lessens the attractiveness of the land lowers the niinimuni 
 gain of all manual laborers, increases the number of competitors in the labor 
 market, and reduces the amount which the employer needs to bid in order to 
 counteract the advantages of the land. Protective taxes, therefore, take 
 away from the laborer the advantage which he has by nature in this country ; 
 that is to say, they take away from him part of his advantage in the labor 
 market. Consequently they lower wages." 
 
 Underneath the whole of this paragraph lies the above fallacy, 
 which assumes that present prices of exports could be obtained 
 if we had need to sell four times as much, and that imports could 
 be obtained as cheaply if we had occasion to buy four times as 
 much. Theory, as laid down by the greatest economists, nega- 
 tives this assumption, as can be seen by reference to the passages 
 in Mr. Mill's work already indicated. Experience contradicts this, 
 as shown by the quotation already made from Andrew Jackson. 
 The truth is as follows : Protection prevents a vast number of 
 people from flying to the land, and makes them consumers in-
 
 TARIFF COMMISSION. 23 
 
 stead of producers of raw products. It diininislies the aggregate 
 of the farmer's products, and increases the demand. They there- 
 fore increase the profits of agriculture in all its forms, and in- 
 crease the attractiveness of the land. Whatever increases this 
 increases the minimum gain of all manual laborers, and increases 
 the number of competitors for labor, and increases the amount 
 which the employer needs to bid in order to counteract the 
 advantages of the land. Protection therefore secures to the 
 laborer the advantage which he has by nature in this country, 
 and increases it by diversifying employments. Consequently it 
 raises wages above what they could be under foreign competition. 
 At the same time it hastens the moment when increasing skill 
 may compensate for the higher moneyed cost of labor ; for high 
 wages lead to greater efforts and intelligence on the part of oper- 
 atives, and to greater care in selecting the most skilful on the 
 part of employers, and to a more extensive use of the very best 
 machinery. 
 
 For the theory of this I appeal to Mr. Mill. For the verification 
 of the theory I appeal to the experience of the United States, where 
 the growing efficiency of labor has already in some cases overcome 
 the effect of its greater cost per man, as is shown by the very many 
 manufactured goods which we export, and by the approximation to 
 a similar cheapness in nearly all which are used by the great bulk 
 of the people. Champagne, fine broadcloth, silks, satins, gloves, 
 feathers, &c., the objects of ostentation and luxury, are much 
 dearer. Is it desirable to change our legislation in order to 
 cheapen these ? I beg the reader to carefully compare this reply 
 with the paragraph to which it is an answer. Paragraphs 12 
 and 13 read : — 
 
 " It has been affirmed by protectionists that their system increases capital. 
 Two ways have been alleged in which it does this, — (1) by improving the 
 organization of labor, (2) by bringing capital into nse which would otherwise 
 be idle. 
 
 " 1. The people of this country are all the time exercising their utmost in- 
 genuity to organize their industry to the highest advantage. Partly they do 
 this by instinct. Plenty of people never heard of the ' organization of indus- 
 try,' but tliey are ctmstantly arranging their busiiiess to save lalior, and so 
 gain tinwj and prevent waste. They are also constantly laboring intelligently 
 to secure a better organization of industry. But, after they have exhausted
 
 24 TARIFF COMMISSION. 
 
 their ingenuity, the protective system assumes that some other persons, viz. 
 politicians and legislators, can see some better organization than the persons 
 engaged in industry have themselves been able to devise. If one part of 
 the American people have not invented the best organization of labor, we 
 have no one else to call upon than some other portion of the American peo- 
 ple, and we must appeal from the men of business to the politicians. The 
 politicians, then, as an incident to their own occupations, rectify the errors 
 and shortcomings of the business men. The mode they employ is taxes. 
 It is the same old magic. But the business men have to bring intelligence 
 to bear on the organization of labor, while the protectionist legislator never 
 has brought any intelligence at all to bear on the problem, and he never 
 can. Protective taxes have never been laid in view of any true knowledge 
 of the industrial circumstances, and they never can be. A thousand com- 
 missions, sitting for ten years, and actually engaging in a real study of the in- 
 dustries of this country, could not win a knowledge of our industrial system ; 
 and if they could acquire such knowledge of the industrial system as it 
 exists on a given day, their knowledge would not be good for anything the 
 day after, on account of the new inventions, discoveries, processes, lines of 
 transportation, financial arrangements, and so on." 
 
 Here we have the antique doctrine that a man must know his 
 own business better than any statesman can know it, and that 
 the interests of the man are identical with the interests of the 
 state. This was entirely refuted by John Eae (see pp. 1-32) some 
 fifty years ago ; moreover, as pointed out by Mr. Mill, there are 
 cases in which the interests of the whole nation and that of the 
 individual coincide only when all can be made to act in a certain 
 way. 
 
 The case of bankers is in point. Every intelligent banker sees 
 that it is for the public interest and for his own that all bankers 
 should keep a sufficient reserve ; but if some do and some do not, 
 the reckless in fair weather take away the business of the others, 
 and when a storm comes their failure throws a portion of the 
 consequent loss upon those who have been prudent. 
 
 Protection is still more in point. Fifty millions of people 
 may believe, and believe truly, that it is better for them to buy of 
 one another, — that by such means a greater annual product can 
 be reached, and hence a great benefit to all classes ; that there will 
 be more produced, and hence more to divide. But the recipients 
 of rents, profits, and fixed salaries see that after they have got 
 their incomes, — after, in short, they have got the profit arising out 
 of protection, — it would be an excellent thing if they could get
 
 TARIFF COMMISSION. 25 
 
 their commodities abroad. A and B and C wish to he paid very- 
 high profits or salaries by the rest of the alphabet, but not to give 
 any employment in return. They do not see that under such an 
 arrangement the rest of the alphabet would be quite unable to 
 pay their profits and salaries. If a protective law binds the 
 whole to the profitable course, it will be followed ; otherwise, not. 
 Each will say to himself, " The action of one individual can have 
 no appreciable effect upon fifty millions ; and whether it has or 
 not, I want my fine broadcloth to be cheap : those bloated manu- 
 facturers are robbing, cheating, swindling, pillaging me," &c. 
 
 There are cases in which the intelligence of the statesman can 
 promote the public good in a way that is unattainable in any 
 other manner. This is admitted by Adam Smith in passages 
 where he is not arguing for free trade, and is distinctly laid down 
 by Mr. Mill. The argument, then, of Mr. Sumner is too obsolete 
 to be repeated in the year 1882. Paragraphs 14 and 15 say : — 
 
 " We have here now fifty milUons of people spread over a continent with 
 great varieties of climate and soil, and we constitute the most energetic, rest- 
 less, and indefatigable nation which has ever existed. To try to plan a sys- 
 tem of artificial relations of industry for such a nation is the most ridiculous 
 undertaking that could be proposed. Any one who talks of reaching a per- 
 manent adjustment of the tariff to fit the needs of all interests and do injus- 
 tice to none is talking the wildest nonsense. Nothing less than the impei'sonal 
 forces of nature can adjust interests under such conditions, and there is oidy 
 one thing which can be predicated of any steps taken by the statesman, that 
 is, that he will make mischief. A man who is running a railroad easily sees 
 what crude nonsense people talk about railroading when they know nothing 
 of the business. A banker makes the same observation. So does every 
 other man in his own line. What chance is there, then, that politicians can 
 deal wisely with the thousands of industries and interests in this country in 
 all their manifold and complex relations to each other 1 We might as well 
 try to establish, by legislation, a system of health which would prevent the 
 people of the United States from ever being .sick any more. 
 
 " Furthermore, the politicians never try to deal with the whole combina- 
 tion of industrial interests. They listen only to the most clamorous. They 
 heed only those who win influence and so secure the position of favorites. 
 They never bring any intelligence to bear on the question. How much as- 
 sistance is needed ? There never is any adjustment of means to ends. No 
 tests are ever applied ; no guarantees are ever given ; no subsecpient reports 
 are ever made by the recipients of favor to show results for the expentliture. 
 Each interest comes forward and asks for favor, and gets it for n(j reason save 
 because it asked for it. The x^etitioner thinks that about so nuich per cent
 
 26 TARIFF COMMISSION. 
 
 will do, and does not himself know or ever try to calculate wbat will be the 
 effect of that much protection to him when offset by all the taxes to which he 
 must submit in behalf of others in order that the system may be completed. 
 Mr. Peter Cooper says that the tariif ought to just about offset the difference 
 between American and European wages. If that could be done and were 
 done, it would just take away from the American laborer those superior ad- 
 vantages which made him or his ancestors come across the ocean. Now, from 
 this tangle of absurdities and contradictions and ignorances and guesses, it 
 is expected that guidance will come which shall lead the American pro- 
 ducer to a better organization of industry than he could arrive at if left alone, 
 «o that greater accommodation of capital and larger wages would follow. 
 From such causes no result, save waste and loss, can ensue with reduction of 
 capital and lowering of wages." 
 
 According to Mr. Sumner, the politician — say rather statesman 
 — has never brought any intelligence to bear upon the question of 
 how to deal with the whole combination of industrial interests ! 
 "Well, now, let us order out an immense pair of scales. Into 
 one we will put Franklin, Washington, Jefferson, Madison, 
 Monroe, Jackson, Webster, after he had studied the subject, — 
 in short, we will put a large majority of the statesmen of the 
 United States for a hundred years ; and into the other we will 
 put Mr. Sumner, backed by theories which all the great econo- 
 mists repudiate. Is it easier to believe that all these great in- 
 telligences were ignorant and corrupt, or to believe that Mr. 
 Sumner's dialectics have led him, and tend to lead others, into 
 fatal error? Let any one who desires the truth peruse their 
 speeches, messages, and letters ; or let him read Mr. Hamilton's 
 report on manufactures, and compare its prophetic wisdom with 
 Mr. Sumner's production now under review. Let him note the 
 objects for which Hamilton recommended the protection, and 
 then let him look at the United States and see whether those 
 objects have or have not been attained ; let him compare Massa- 
 chusetts with the more fertile Canada, — Canada, too, which has 
 been aided by our protective policy, which has prevented the 
 foreign markets from being overwhelmed by the immense mass 
 of our raw products which are similar to hers. Paragraphs 16 
 and 17 read : — 
 
 " 2. It is alleged, in the second place, that protection brings capital into 
 use which would otherwise be idle. Every one of us who has any capital is 
 anxious to put it to productive use without delay. It is impossible, in the
 
 TARIFF COMMISSION. 27 
 
 nature of things, to keep all capital all the time employed. Improvements 
 (such as a better credit system) which make this more fully realizable are 
 eagerly adopted. The argument I have cpioted means that in spite of this 
 eagerness, and in spite of the chances for employing capital on a new con- 
 tinent, some portion of the capital now in protected industries would not be 
 in use if it were not for protection. Such a notion is beneath discussion. 
 
 " There is, then, no way in which protective taxes can prodiice capital. 
 Every analysis shows that they waste it. Not a cent can come to A by the 
 action of the tariff which does not come from B. The consequence of uni- 
 versal borro^ving, or stealing, or gift-making, however, is not to increase capi- 
 tal but to waste it. Hence protective taxes lower wages. The laborers have 
 been exhorted to vote for protection, lest their wages should be reduced to 
 European rates. I have shown that the rate of wages obtained here is due 
 to the economic forces at work in this country. There is only one thing 
 which could reduce American wages to European standards, and that is pro- 
 tective taxes applied long enough and with sufficient weight." 
 
 In Mr. Sumner's article in the " Princeton Eeview," already al- 
 luded to, he said : " The rest is all phrases intended to oceupy atten- 
 tion while the thimhlcrig is going on. If this is not so, let some 
 protectionist analyze the operation of his system, and show by 
 reference to undisputed economical principles where and how it 
 exerts any effect upon production to increase it." 
 
 He himself threw down the glove ; I picked it up, and, shut- 
 ting my eyes to the imputation of dishonesty, I replied in an 
 article which was, at all events, courteous. Mr. Sumner says 
 that it is beneath discussion. I am content to reaffirm my ar- 
 guments, and to leave it to competent judges to decide whether 
 or not they are beneath discussion. Possibly they are not so 
 much beneath discussion as above refutation. In the article in 
 question, which can be found in all the great libraries of the 
 United States in a volume entitled " Free Trade and Protection," 
 I pointed out the precise manner in whicli, in a country already 
 possessed of a great variety of industries, the floating capital, 
 converted to a fixed form, was almost instantaneously repro- 
 duced, so that the nation became owners of the fi.xed capital, 
 either merely by calling out more labor or by turning to tlie 
 production of capital what otherwise would have gone into new 
 carriages, furniture, houses of luxury, &c., and that the result 
 came about generally by the former rather tlian by the latter 
 means ; the fixed capital resulting from a fuller employment
 
 28 TARIFF COMMISSION. 
 
 of the people, and not by a mere diversion from one work to 
 another, 
 
 Mr. Sumner thought he had me alone to deal with, but he 
 has another infinitely more formidable antagonist in Mr. John 
 Stuart Mill. Let any one turn to Book IV. Chap. V. of Mr. 
 Mill's " Political Economy." Mr. Mill had in mind, to be sure, 
 the effect of an abstraction of capital by government for purely 
 unproductive purposes ; but the reader will see at once that the 
 argument is much stronger with regard to measures leading to 
 the construction of fixed capital, which would forever after be 
 productive of commodities. A does not get his capital from B, 
 for A can, upon the average of years, obtain only the profits 
 current in the community. A gets his capital out* of his own 
 abstinence. If the manufactured article at first costs more, it 
 must, with increasing skill, cost less and less, and by necessity, 
 enforced by competition, be sold for less and less. If B, whose 
 wages or salary is in money, pays more, C, D, and the rest of 
 the alphabet, practically pay less, for tliey can pay with commod- 
 ities they produce, and for which the new industry occasions an 
 additional demand and a better price. Even B is compensated, 
 and more than compensated, by an augmentation in his salary 
 or his profits, growing out of the general increased prosperity of 
 the country. 
 
 It is easy to call this " thimblerigging," or a " bungle of absurd- 
 ities, contradictions, ignorances, or guesses ; " but calling names 
 is not economical reasoning. If there be anything wrong in the 
 deductions, some one can show with precision and courtesy the 
 exact point in which they are wrong. It is not the protectionists 
 who shrink from bringing doctrines to the test of the methods 
 of economic reasoning laid down by the greatest recognized 
 authorities. 
 
 Mr. Sumner says he has shown that the rate of wages now ob- 
 tained here is due solely to economic forces at work in this coun- 
 try. In this he is in error. He has only shown that the mininmm 
 of wages cannot be less than food and such small modicum of 
 6lothing and other conveniences as a nation producing raw pro- 
 ducts could obtain from foreign markets eternally glutted with 
 such products. He has not shown, nor can he (without admitting
 
 TARIFF COMMISSION. 29 
 
 the effects of protection) show, how the mucli higher existing rate 
 of wages has come about. The intimation that higher or long- 
 continued protection could reduce wages involves tlie economic 
 absurdity which supposes that, in a population of fifty millions, 
 under free competition, the profits upon protected industries can, 
 upon an average of years, be higher than upon others. Upon this 
 point I appeal from Mr. Sumner to Adam Smith, Eicardo, Mr. 
 John Stuart Mill, to tlie universally accepted conclusions of 
 economic reasoning, and to common sense. They are all upon 
 one side, and all against Mr. Sumner. Paragraphs 18, 19, and 20 
 read thus : — 
 
 " There is, however, another argument which must be considered in this con- 
 nection. It is said that under free trade all our population would go into 
 agriculture, and that wages and all other remuneration for labor would be re- 
 duced until we should all be in poverty together. Hence the agricultmists, 
 and the mechanical laborers, too, are exhorted to support a wide protective 
 system in order to diversify industry and prevent ruinous comjjetition. 
 
 " We have seen above that the direct cost of keeping wp the protective sys- 
 tem consists of three items : (1) payment of custom-house officers to keep 
 goods out ; (2) support of Laborers, and jirofit on capital in protected indus- 
 tries ; (3) the losses of the protected industries. These costs must be paid to 
 buy off competition. 
 
 " In the first place, it can pay no one to buy off competition unless he has 
 a monopoly. Protected industries have done it. sometimes. American farmers 
 share the world's market with a number of strong competitors. If they buy 
 off the competition of American manufacturers they must bear all the cost of 
 it ; and they must share the gain, if any, with all the agriculturists in the 
 world. That means that if they try it they will put themselves at a great 
 disadvantage with their own competitors in the world's market." 
 
 The expense of custom-liouse officers is too trivial to be consid- 
 ered. The support of laborers and profit on capital in protected 
 industries is paid out of the exchangeable value of their products : 
 the losses of the protected industries consist of the higher cost of 
 their products, calculated upon present prices liere and abroad. 
 It amounts even now to very little. The gain to tlic nation is 
 the whole value of what must have been sent abroad to purcliase 
 those products. The gain to the agriculturists is a certain home 
 market, already twice as great, and destined in twenty years to 
 be four times as great, as the market of the woild affords him. 
 They now sell abroad say seven hundred milUons, and twelve
 
 30 TARIFF COMMISSION. 
 
 hundred millions at home, or nineteen hundred millions. This 
 
 is the market required by half tlie population. The whole popula- 
 
 tion employed on the soil would require a market for forty-eight 
 hundred millions. Nowhere on this planet is there a market for 
 one half the amount ; and in twenty years the case would he 
 twice as bad. But it is not necessary to take an extreme case, 
 ' although Mr. Sumner challenges it. We need only inquire into 
 the effect of offering abroad twice as much as we do now, to 
 be convinced that the purchasing power of raw products would 
 be vastly less than it is now. The farmer does not lose, but 
 gains, and gains immensely, by that better distribution of the 
 community which the necessities of his argument compel Mr. 
 Sumner to describe as " buying off the competition of the manu- 
 facturers." By favoring such a distribution the,y have not put 
 themselves at a disadvantage, as compared with their competitors 
 in the foreign market. On the contrary, the resulting wealth of 
 the whole nation has overflowed upon them, and given them 
 much more and better clothing, tools, and machines tlian they 
 could possibly have obtained under a regime of free trade. Tlie 
 arrangement has helped other agricultural countries, doubtless ; 
 but that need not distress us. It has helped ourselves vastly 
 more. Paragraph 21 says : — 
 
 " In the second place, all the protected industries of this country are now 
 parasites on the naturally strong industries. Agriculture now supports itself 
 and all the rest and all their losses. Therefore, even if it were true that all 
 the population would, under free trade, take to agriculture, it is mathemati- 
 cally certain that agriculture could support them all better directly than under 
 the present arrangement." 
 
 To this I must add a sentence already quoted in paragraph 3. 
 It is this : — 
 
 " No wonder the protectionists are enraged at the economists who are still 
 stupidly teaching that we can produce nothing except by applying labor and 
 capital to land." 
 
 There is nothing in this to enrage, but there is much to as- 
 tonish and amuse. The doctrine is that of the Physiocrats of 
 France, and has been supposed to have been disposed of by Adam 
 Smith in his lectures one hundred and thirty years ago.^ All the 
 1 See Wealth of Nations, Book IV. Chap. IX. § 28, &c.
 
 TARIFF COMMISSION. 31 
 
 ■world thought it had been decently buried, but Mr. Sumner with 
 sacrilegious hand has disinterred it. 
 
 Let us add a word to what Adam Smith says. As already 
 pointed out, the United States produce annually seven thousand 
 millions worth of finished products. Agriculture and mining fur- 
 nish the raw materials, worth three thousand millions ; manul'ac- 
 tures and the mechanical arts bring these into a shape suitable for" 
 consumption, and trade and transportation place them where 
 they can be consumed. Each class is indispensable to the 
 production of the vast aggregate. It is in vain to argue that the 
 other industries could do nothing without raw materials ; for 
 it is equally true that agriculture and mining, such as they are 
 to-day, could not exist without the machines, the admirable tools, 
 the clothing, the barns and stores and dwellings, and the trans- 
 portation afforded by the other industries. Nor will it do to 
 affirm that these fifty millions engaged in agriculture could pro- 
 cure those things cheaper and better from abroad. 
 
 No such conclusion can be arrived at eitlier by the theoretical 
 deductive reasoning of any recognized political economy of to-day 
 or from the inductive reasoning of practical men. Mr. John 
 Stuart Mill, were he alive, would feel for it as little respecfr as is 
 felt by statesmen and business men. It not only is not practical 
 wisdom or a guide to practical wisdom, but it is not political 
 economy of any school, save one which has been forgotten for more 
 than a hundred years. 
 
 Agriculture, then, does not support itself and all other industries, 
 and therefore it is not mathematically certain that it would sup- 
 port us all better directly tlian under the present arrangement. 
 It is, on the contrary, as certain as anything can be made by 
 means of economical reasoning or by reasoning from observation, 
 that a reversion to agriculture and trade alone would rmIucc by 
 one half the amount of necessaries, conveniences, and luxuries 
 now enjoyed by the people of the United States. Paragraphs 22- 
 28 read : — 
 
 " Tlic furmers would indeed gain a great deal if the protected people ^vould 
 keep still and not do anything, for then they w^ould at least waste nothing. 
 The earnings of farmers and the wages of laborers would then not l)e reduced 
 80 much as they are now. The protectionist theory, however, is that it in-
 
 32 TARIFF COMMISSION. 
 
 creases wages to keep on an occupation which wastes capital and lessens all 
 the time the goods within reach of the population. It is interesting to apply 
 this theory to some other cases. 
 
 " On the protectionist theory it would be a means of raising wages to keep 
 up a big standing army. All the soldiers would be withdrawn from competi- 
 tion in the labor market, and would consume while producing notliiiig. In 
 time of peace they would not be destroying anything ; but in time of war they 
 would be just like a protected industry, — they would be wasting capital aU 
 the time. In that case, then, they would raise wages all the more. 
 
 " On the protectionist theory a leisure class of idle, rich people make wages 
 higher than they would be if the same people should go to work. By the 
 same reasoning women who now consume without producing would lower 
 wages if they should go to work, and while consuming, as they now do, should 
 compete in the labor market. Indeed, this view of the matter is very often 
 taken, and perhaps the popular view is that the rich make wages high, if they 
 not only keep out of the labor market, but also consume luxuriously, and do 
 not save anything. 
 
 " On the protectionist argument paupers living in an almshouse raise wages 
 as compared with what wages would be if the same persons should no longer 
 consume unproductively, but should come out and compete in the labor mar- 
 ket while consuming as before. On the same argument paupers who produce 
 something, though less than they consume, lower wages compared witli what 
 would be the case if the paupers did nothing ; still more as compared with the 
 case in which the paupers should destroy. 
 
 " On the protectionist argument, convicts in the state prison raise wages by 
 consuming the product of taxation in idleness, and lower wages if they go to 
 work, and, while consuming as before, produce something, because in the latter 
 case they compete in the labor mai'ket. In fact, criminals out of state prison 
 would satisfy the protectionist reasoning still better. They always destroy 
 far more than they produce, and they do not compete with laborers. They 
 would, therefore, raise wages by their operations. It would be a limitation 
 of their beneficent action to put them in prison as consumers in idleness, still 
 more so to set them to work at a useful industry. 
 
 " On the protectionist view of the matter the trade-unionists are right when 
 they adopt wasteful processes, practise shiftlessness and neglect, study not to 
 be skilful or effective, and try to make work, as they call it, believing that 
 they thus raise wages. The protectionist and the trades-unionist both mistake 
 toil for wages. They think that when they increase the difficulties which 
 intervene between us men and goods they increase wages, and that to make 
 goods abundant is to lower wages. 
 
 " On the protectionist theory those men in the riot at Pittsburgh, who ex- 
 ulted in the destruction of the city because they thought that it would make 
 work, which they confused with making wages, were right from their point 
 of view. No man wauts work ; that is, toil, or irksome exertion. Least of 
 all does the man who has no capital want toil. He supplies toil. He cannot
 
 TARIFF COMMISSION. 33 
 
 supply and demand the same thing. He demands capital on which to live. 
 When capital is destroyed and toil is necessary to reproduce it, the ratio in 
 which toil must be given for capital is rendered more unfavorable to the la- 
 borer ; that is, wages fall. If they do not fall on the spot where the destruc- 
 tion took place they must fsill elsewhere whence the capital is drawn to replace 
 the capital destroyed. If Pittsljurgh had to be rebuilt other cities couid be 
 built up just so much less. If Pittsburgh had not been burned up the capital 
 which went to replace it would have been used to employ laborers in adding 
 so much more to the comfort and possessions of the country. The country is 
 poorer for all time by the capital there destroyed, with all its accumulations. 
 Just so every year that this nation, on account of the protective system, attains 
 to the possession of a less amount of goods than it could have obtained under 
 freedom, the effect is the same as if we had produced a city and had seen it 
 burn up ; and anybody who believes that the protective taxes raise ■\\'ages 
 must believe that to burn up cities raises wages. AU these notions are mis- 
 erable fallacies, which sin against the first elements of common sense. He who 
 believes that the way to raise wages is to hinder people from getting at things 
 easily and cheaply, or to refrain from the most profitable modes of obtaining 
 goods, must believe that workmen raise wages when they stop working and 
 go out on strikes, and lower wages when they go to work again. Trades-union- 
 ism and protectionism are falsehoods. The way of prosperity for human so- 
 ciety is by industry, economy, thrift, skill, energy, painstaking, excellence, 
 liberty, abundance, and not by some crafty and artificial devices to produce 
 scarcity and bad work. The protectionist system requires a new set of prov- 
 erbs which have never yet found their way into any popular philosophy, such 
 as these : Want makes wealth ; destroy and prosper ; taxes are wages ; to have 
 much produce little ; blessed are the bad workman and the foolish capitalist, 
 for they shall get abundance." 
 
 I have already shown that according to the protectionist theory 
 the whole amount which would be sent out of the country to buy 
 the goods now made in it by protected industries, — this whole 
 amount less the amount by which home-made goods exceed in 
 cost the foreign, is a gain to the country, even taking prices at 
 their present point ; for the labor now employed would, if 
 transferred to the laud, reduce the exchangeable value of the 
 totality of raw products, — it would be a minus quantity. Pro- 
 tection therefore increases capital, and increases all the time the 
 goods within reach of the population. The theory of protection, 
 then, is absolutely the reverse of wliat Mr. Sumner alleges it to 
 be, and it is a theory in perfect accord with methods of reasoning 
 always adopted by the great economists excepting when they are 
 arguing for a preconceived opinion. It is a theory also whicli is
 
 34 TARIFF COMMISSION. 
 
 in harmony with facts. It explains the past and the present, it 
 explains with precision and in an intelligible manner the poverty 
 of Ireland and Portugal and Turkey and India, and why all purely 
 or disproportionably agricultural nations and states are poor, &c. 
 It is not necessary, then, to follow Mr. Sumner into the side issues 
 of paragraphs 22-28. They all fail to be analogies in every 
 point but one, and it w^ould require many pages to examine them 
 in detail. I will notice only one sentence. Mr. Sumner says 
 tliat " the way of prosperity for human society is by industry, 
 economy, thrift, skill, energy, painstaking, excellence, liberty, 
 abundance." But abundance in political economy is prosperity. 
 The way of prosperity then, according to Mr. Sumner, is by pros- 
 perity. This is an identical proposition. But, abstaining from 
 taking advantage of this, let us strike out the word abundance. 
 The other means he enumerates would certainly not lead to 
 abundance or prosperity if we insisted upon producing only or 
 even more largely the raw products with which the world is al- 
 ready oversupplied, and abstained from producing the finished 
 products we ourselves require, and wdiich can be had in abun- 
 dance only through our own labor. The new set of proverbs 
 which Mr. Sumner offers to protection are borrowed from Bastiat's 
 " Sophisms of Protection," a book which a great lawyer once said 
 to me was in his opinion the most sophistical work he had ever 
 read. The new proverbs are totally inapplicable, and protection 
 declines to accept them. 
 
 The precise point in which Mr. Sumner's reasoning is faulty is 
 the assumption that prices of finished products abroad would re- 
 main the same under a vastly increased demand, and that the 
 prices of raw products abroad would remain the same under a 
 vastly increased supply. None of the great economists would 
 indorse such an assumption ; on tlie contrary, the metliods of rea- 
 soning adopted by them all justify the protectionist conclusions, 
 and warrant them in affirming that the exchangeable value of the 
 annual product of the United States is vastly increased by pro- 
 tection. But we have the authority of Adam Smith and Say 
 and Mr. Mill for the conclusion that the exchangeable value of 
 the annual product is precisely equivalent to the totality of the 
 individual incomes. Protection then raises all incomes, and wages
 
 TAr.IFF COMMISSION. 35 
 
 among the others. .There does not appear to be a particle of 
 doubt that, according to the accepted economical reasoning, we 
 ought in the United States to have high wages in consequence of 
 protection ; and experience shows that we have high wages which 
 bring to us annually three fourtlis of a million of people from 
 almost every country of the earth. Paragraph 29 runs : — 
 
 " Let us now look at the other dogma : High wages make protective taxes 
 necessary. It is the very opposite of the truth. If wages are high, that is the 
 reason why no protective taxes are needed, even if they might be in some 
 other case. In Germany the protectionists generally allege that lower wages 
 in Germany than in England are a proof that Germany is industrially in- 
 ferior, and needs protection against England. The protectionist argument 
 never flags on account of any little variation in the facts." 
 
 This argument is, I believe, borrowed from Mr. David A. Wells, 
 and is thus answered by a free-trade writer, Professor Cairnes : 
 " Mr. Wells shows that lal^or in England, though much higher 
 than in most European countries, and in particular than in Russia, 
 is still so much more efficient here than there, that the hiii-h En"- 
 lish rates are practically cheaper for the English capitalist than the 
 lower continental rates for the capitalist of the Continent. What 
 is the bearing of this upon the American demand for protection 
 against England ? Will Mr. Wells maintain that, as the efficiency 
 of English labor is to that of Piussia, so is the efficiency of Amer- 
 ican labor to that of English ? If not, how does his objection to 
 the protectionist criterion of costs, founded upon the different 
 degrees of industrial efficiency, affect the argument ? " 
 
 In short, Mr. Wells's argument was this : If in the case of Eng- 
 land a high rate of wages is the result of greater skill or other 
 greater advantages in the iron and textile industries, then a still 
 higher rate of wages in America is a pi'oof of still greater skill or 
 other advantages in the iron and textile industries, or generally 
 in tlie conversion of raw into finished products ! It is this ab- 
 surdity which his words suggest and insinuate, although when 
 confronted with it he would say, " Oli, no ! I only mean that if 
 high wages are paid it must be because the products of the coun- 
 try find a market at home and abroad which makes it possible to 
 pay such wages. If the liberal wages now paid in the United 
 States to the iron and the textile industries could not be paid
 
 36 TARIFF COMMISSION. 
 
 under free trade, this only proves that those industries are car- 
 ried on at a loss, which loss must fall upon the unprotected in- 
 dustries." The answer to this is, that the industries in question 
 produce about seven hundred and fifty millions, or one tenth of the 
 annual product, and so support directly and indirectly one tenth 
 part of the population. Were it not for these industries our pro- 
 duction of raw materials must be increased by one tenth, that is 
 to say, by an amount equal at present prices to three hundred 
 millions, and the demand for iron and textiles in the outer world 
 would be increased by seven hundred and fifty millions. There 
 would be, then, an advance in finished products and a sharp de- 
 cline in raw products, and the exchangeable value of what we 
 had to offer would be diminished enormously. Agriculture not 
 only would not gain, but it would lo§e immensely. Paragraph 30 
 reads : — 
 
 " 111 the arguments under this head of the subject, it is constantly assumed 
 that wages are the controlling condition in production, or that there is some 
 direct connection between the wages paid and the value of the product or 
 the profits of the capitalist employer. These assumptions are false. Sup- 
 pose that an individual comes forward and claims that he cannot compete 
 because he pays higher wages than a foreign producer. When has any 
 examination ever been made to find out whether such person has an adequate 
 capital, or has a competent knowdedge of the business, or diligently attends 
 to his business, or has located his establishment wisely, or has organized his 
 business economically, or has bought bis raw material judiciously, or has kept 
 up with improvements in machinery, or has not speculated with his product 
 unsuccessfully, or has not violated some one of the other conditions of suc- 
 cess ? The wages paid are but one, and often one of the least important 
 conditions of production. If it is alleged, as it constantly is in this contro- 
 versy, in a sweeping way, that American industries need protection because 
 American wages are higher than foreign wages, it is a case of joining a very 
 wide inference to very inadequate premises. What are the comparative con- 
 ditions of industry in America and elsewhere as regards convenience and 
 cost of raw materials, quality and cost of machinery, rent of land used, 
 character of the climate as affecting the requirements of various industries, 
 national character as respects industry, diligence, sobriety, intelligence, &c., of 
 laborers, distance from the market or convenience and cost of transportation, 
 convenience and cost of natural agents (coal or water), taxes and tax system, 
 the security afforded by the excellence or otherwise of the government, &c. '? 
 Surely it is plain that these things are the conditions of production ; and the 
 comparative money rates of wages, taken apart from the purchasing power of 
 money, or the efficiency of labor, to say nothing of all the other conditions
 
 TARIFF COMMISSION. 37 
 
 enumerated, are by no means a criterion for a decision whether an industry 
 can be carried on successfully or not. The lists of comparative wages which 
 have been made, and which are relied upon by protectionists, and are often 
 accepted by free-traders as pertinent to the issue, and perhaps as decisive of it, 
 have no value at all for the purpose. The employer alleges that he can make 
 no profits because he pays high wages. He assumes, apparently, that wages 
 and profits displace each other.. It is, certain that they do nothing of the 
 kind. There is no ascertainable relation between wages and profits. Wages 
 are paid out of the capital during the period of production. The employer 
 tries to keep wages down, just as he tries to keep down cost and waste of raw 
 material or wear of machinery, because he wants to economize on his outlay. 
 He, of course, tries to minimize every outlay, because that is the road to suc- 
 cess in the competition of the market, and to maximum profits. The price 
 of his product, when he gets it done, will be determined by supply and de- 
 mand on the market. He must replace his capital, and then he will find out 
 what profit he has. No law whatever can be established between this profit 
 and the wages which were paid to the men while they were making the 
 article. Profits and wages may both be high or both low at the same time, 
 or one may be high and the other low. The fact is, that instead of one bemg 
 displaced by the other, they most always go together, both high or both low 
 at the same time." 
 
 In* this paragraph Mr. Sumner succeeds very well in confusing 
 the reader by enumerating a great many other things which affect 
 the cost of commodities, perplexing the subject by using the very 
 reverse of the method employed, when we seriously desire to as- 
 certain the plus or minus effect of a certain cause. 
 
 The true method is to isolate the cause, and see how it must 
 act when taken alone, or with other things equal. Well, then, 
 a commodity being produced is offered in the market and sold 
 at a certain price. From this price F, the foreigner, has to de- 
 duct the cost of materials and x wages, and what remains is 
 profit. From this price A, the American, has to deduct tlie cost 
 of materials and say x plus y for wages. The additional y in- 
 capacitates A from contending with F. Higher wages, then, are 
 indisputably a reason for protection, especially when we recollect 
 that they enter into the cost of forming fixed capital and into the 
 cost of repairing fixed capital, as well as into the sums paid di- 
 rectly for the work performed in shaping the commodities. It is 
 of course necessary to success " that a man should have adequate 
 capital, a competent knowledge of his business, must diligently 
 attend to his business, must organize his business judiciously,
 
 38 TARIFF COMMISSION. 
 
 must have kept up with improvements in machinery, have ab- 
 stained from speculating with his product unsuccessfully, and 
 have not violated some one of the other conditions of success ;" in 
 short, he must be well enough to get out of bed and sane enough 
 to keep out of the lunatic hospital. But all these things are as 
 necessary to F as to A. They have nothing to do with the ques- 
 tion of the effect of a higher price of labor, into the discussion of 
 which they are brought. 
 
 If Mr. Sumner means that we cannot contend with England 
 in manufactures because we do not attend to our business, it may 
 be noted that we are the same race of men as beat the pauper 
 farm-laborers of Europe in their own market. It is fair to sup- 
 pose that we should use as much diligence in the one occupation 
 as the other. If he says no, because protection makes the pro- 
 tected manufacturer careless, the answer again is that all, or very 
 nearly all, protected articles are very much cheaper, upon an 
 average of years, than the foreign article with duty added ; and 
 in not a few the domestic article is cheaper than the foreign arti- 
 cle without any duty. If the duty made the protected indus- 
 tries thriftless, in spite of internal competition, we should have 
 prices remaining continually only very slightly below the point 
 at which they can be imported and pay duty. If, on the con- 
 trary, he means that we are more careful, more skilful, or rap- 
 idly becoming more skilful, than the foreigner ; that our general 
 high rate of wages causes a careful selection of the most skilful, 
 and great attention to have the best macliinery, &c. ; and that 
 this being so, we ought to be able to manufacture as cheaply as 
 the foreigner in spite of the difference of wages, — the answer is, 
 that the fact of prices being already much less than the foreign 
 commodity with duty added, is sufficient proof that the duty is not 
 preventing our advance, in the desired direction ; that we have 
 already reached the goal in common cottons, locomotives, agri- 
 cultural machinery, tools, &c., and nearly reached the goal in 
 such woollens as are used by the great mass of the people. The 
 duty troubles nobody much except the users of the finer cottons 
 and woollens and other luxuries. The men who get their one, 
 two, or three dollars a day feel the tariff only through its benefi- 
 cent effects upon their wages ; it is the men who get their ten
 
 TARIFF COMMISSION. 39 
 
 and twenty and thirty dollars a day who are very erroneously 
 •thinking themselves oppressed. If they really were oppressed, it 
 might be reason even for class legislation ; but they and their 
 families would spend just as much in ostentation were there no 
 custom-house in the country. Paragraph 31 says : — 
 
 " It is much more to the point to notice that profits are higher in this coun- 
 try than in Europe. We ought not to take too low views of hiunan nature ; 
 but when an employer pretends to bull wages, we shall not believe him with- 
 out examination. When we notice that profits are high in this country, we 
 can understand the applicants for tariff favors, without assuming any dis- 
 interestedness. No capitalist wall go into a business which gives less profit 
 than some other which is open to him. The American producer does not 
 want to put up with the rates of profit which his European competitor is 
 satisfied with. He wants the rate which he could get if he went into one of 
 the industries which are favored by nature in this country. Instead of going 
 where he could get it on a natural basis, he wants the law to tax his fellow-citi- 
 zens to give it to him. The talk about wages is all for effect. It is only so 
 much smoke and noise imported into the contest to obscure the issue. It has 
 had no little effect, because no one has taken the trouble to expose it in de- 
 tail. The competitor whom we fear most is England, in which country 
 wages are higher than anywhere else in Europe. How does England pay 
 high wages and beat all the others, if high wages are the controlling con- 
 sideration ? And if she pays higher wages than the continental countries and 
 beats them all, because other considerations come in, why may we not pay 
 higher wages than she and beat her, at least in our home market, because 
 other considerations come in ? The nearest approach to pauper laborers in 
 Europe are agricultural laborers. Our farmers send their products, raised by 
 men remunerated at American rates, and pay transportation, and beat the 
 pauper laborers in their own home market. How can this be done if the cri- 
 terion of possible competition is the comparative rate of wages ? " 
 
 Mr. Sumner here intimates that the manufacturer who tells 
 the workingman that the tariff sustains and tends to increase 
 wages is deluding the latter with a statement he does not be- 
 lieve, because his own interest is to have wages low. Yes ; but 
 it is also his own interest to sustain a policy which makes his 
 industry possible in spite of the high wages. But the manufac- 
 turers are not the only men whom ]\Ir. Sumner accuses of dis- 
 honesty in this matter. The highest statesmen of the land he 
 believes to be simply telling lies when they speak in the manner 
 he disapproves. He cannot believe that there are any men who, 
 looking forward to the time M'hen population must begin to press
 
 40 TARIFF COMMISSION. 
 
 upon subsistence, feel it to be of the greatest possible importance 
 that high wages should continue from now till then, and that the 
 change should find a people so long used to good living as to re- 
 fuse to descend into beggary. I am sorry he thinks such senti- 
 ments to be hypocrisy. He differs from Mr. Mill in this as much 
 as he does in political economy. 
 
 Mr. Sumner asks, If England can pay higher wages than the 
 Continent and beat the Continent, why cannot we pay higher 
 wages than England and beat England ? Answer : Because 
 England's superiority in skill more than counterbalances the 
 lower wages of the Continent, while we have not a similar supe- 
 riority over her. He also asks how our farmers compete with 
 European, if the criterion of possible competition is the compar- 
 ative rate of wages. The answer is, that nobody ever said that 
 wages were the criterion, but only one of the elements. Tlie 
 English farmer has to pay three times as much in rent as the 
 American farmer pays for wages, and he has to use vastly more 
 labor per acre, and he has to use fertilizers. When manufactures 
 and the mechanical arts have a similar advantage, they certainly 
 will need no protection. Paragraph 32 reads : — 
 
 " If it is said that we cannot compete, what is meant ? These phrases are 
 allowed to pass without due examination. I cannot compete with my infe- 
 riors or with my superiors. I cannot compete with an Irish laborer at digging a 
 ditch, and I could not compete with the late Mr. Scott in running a railroad. 
 Could any taxes enable me to run a railroad as Mr. Scott did, and to earn such 
 remuneration as he earned 1 Certainly not. No taxes can possibly enable a 
 man to compete with a superior. Could any taxes enable me to compete 
 with an Irish laborer at digging a ditch ? Indeed they could. They might 
 interfere between me and the laborer, and prevent me from getting his ser- 
 vices, and I might be forced to dig my own ditch, turning away from other 
 and better paid occupations to give my time to an inferior occupation. That 
 would impoverish me. Such is the only way in which protective taxes can 
 make competitidVi possible. They drive us down to compete with those 
 who are far worse oflf than we instead of allowing us the full use of our nat- 
 ural advantages." 
 
 If the condition of things were such that, without a protective 
 law, so many persons would crowd into professorships as to de- 
 press the exchangeable value of their services below those of ditch- 
 diggers, then a law which should cause some of those would-be
 
 TARIFF COMMISSION. 41 
 
 professors to dig ditches would increase the annual product, and 
 raise the rate of wages. Paragraph 33 says : — 
 
 '• If we have high wages, then they are a proof of industrial superiority. 
 They prove that there are some lines of industry open to us, as a nation, in 
 which great returns for both labor and capital may be obtained. To argue 
 from high wages that we need protection is like arguing that a man needs 
 charity because he is rich, or needs help because he is strong." 
 
 If we have high wages, they are a proof that we have a wisely 
 distributed variety of industries ; that we have not, by overdoing 
 the production of raw products, thrown away our natural advan- 
 tages, so as to go half clad in the midst of fertile fields. To 
 argue from high wages that we do not need protection is like 
 arguing that a man's methods of business must have been bad 
 because he has become rich, or that the organization of a victo- 
 rious army had been pernicious, and that greater success would 
 have come if each man had waged the war by himself. ParaOTaph 
 34 says : — 
 
 "A true analysis of the facts therefore shows us that protective taxes 
 lower wages, and that high wages are not a reason why protective taxes are 
 necessary. We get the remuneration of labor by using our natural advan- 
 tages. The remuneration of labor is high because the advantages are great. 
 It will be highest if the laborer is let alone to use the advantages without 
 any restraint or interference. If we get a high remimeration by the use of 
 our advantages, our strength in competition will come from the very advan- 
 tages of nature which gave the high rewards of industry. Thus every aspect 
 of the matter is consistent and straightforward, clear and natural. The more 
 we study the case in all its aspects, the more thoroughly is the free- trade 
 solution of it confirmed ; for, instead of entangling ourselves in ridiculous 
 absurdities, we find that all the relations are simple and consistent." 
 
 He who studies Hamilton's report upon manufactures will see 
 that he expected general prosperity — that is, liigh wages — to flow 
 from protection, and why he expected it. He who studies the 
 United States to-day will see that the event has justified liLs theory, 
 and he will see that his theory accords with the wisest thought of 
 the great writers upon political economy. We get a great remu- 
 neration to our labor by using and not throwiiig away our natural 
 advantages. The remuneration of labor is high because we do 
 not press those advantages beyond the ability of the world to 
 absorb their products. We should entirely throw away those
 
 42 TARIFF COMMISSION. 
 
 advantages if the laborers, instead of acting in concert for the 
 greatest good of all, had each acted independently. If we get a 
 high remuneration under protection, that is evidence that pro- 
 tection was needed, and will be needed until we gain a skill so 
 much greater than others as to overbalance the greater cost per 
 man of our labor. 
 
 Thus every aspect of the matter is consistent, straightforward, 
 clear, and natural. We are not, like the free-traders, confounded 
 by the presence of prosperity in the United States in spite of and 
 in contradiction of all our theories, nor by the presence of the 
 direst poverty in Ireland, Portugal, Turkey, and India. Para- 
 graph 35 reads : — 
 
 " The application of these ideas to the matter in hand is simple and direct. 
 I have spoken wholly as a political economist whose business it is to study 
 theoretical questions. If it is proper to do anything about wages, the right 
 thing to do is to abolish all protective taxes, and that will let them rise 
 where they ought to be." 
 
 The author of this review of Professor Sumner's paper has 
 written wholly as a political economist whose business it has 
 been for many years to study theoretical questions. It is of the 
 utmost consequence to sustain wages, and this will be done by 
 continuing the protective policy. Otherwise the growth of our 
 non-agricultural industries will be checked, and the country will 
 become disproportionately addicted to farming, with a constant 
 diminution of the profits of that occupation and of wages and 
 profits in all occupations. 
 
 We have now finished Mr. Sumner's paper. He had after- 
 wards a long conversation with the Commissioners, in which he 
 repeated that protection lowered wages, declared that New Eng- 
 land would have been greatly richer had there never been any 
 tariff, and that the South was about to greatly harm herself by in- 
 troducing manufactures ; and he scoffed at the theory of Franklin, 
 Adam Smith, and Mr. Mill which teaches the great advantages of 
 frequent industrial centres to the farming population. This he 
 dismissed by calling it the famous Truck Farm argument. It is 
 not necessary to go through those conversations, as they evolved no 
 new point, and as the positions above referred to are not warranted 
 by any reasoning in accordance with the political economy of the
 
 TARIFF COMMISSION. 43 
 
 latter half of the nineteenth century as set forth by Mr. Mill and 
 by many authors on the protectionist side. 1 believe there is 
 not a particle of doubt that protection sustains and gradually 
 raises wages ; that New England and the whole country is greatly 
 richer by reason of it ; that the South is doing very wisely in in- 
 troducing manufactures; and that the "Truck Farm argument" 
 is sufficiently justified by the authorities I have named, by all 
 sound economic reasoning, and by common sense.
 
 (C 
 
 PROGRESS AND POVERTY." 
 
 I. 
 
 In " Progress and Poverty " Mr. Henry George has given to 
 the world a brilliant work, admirably written, full of eloquence, 
 radiant with the noble aspiration of diminishing human suffer- 
 ing, and absolutely devoid of that too common cowardice which 
 stops at each sentence to consider whether the words about to 
 be written will be in harmony with opinions avowed upon the 
 other side of the Atlantic. 
 
 But the ability and earnestness of the author and the tre- 
 mendous importance of his subject make it all the more neces- 
 sary to examine with care every doubtful premise and every 
 questionable deduction, and to collect what evidence we can as 
 to the exactness or carelessness of his methods of reasoning. Of 
 these we have some specimens in an article published by Mr. 
 George in the Pojmlar Science Monthly for March, 1880, en- 
 titled " The Study of Political Economy." In this he says : — 
 
 " The effect of a tariff is to increase the cost of bringing goods from 
 abroad. Now if this benefits a country, then all difficulties, dangers, 
 and impediments which increase the cost of bringing goods from 
 abroad are likewise beneficial. If this theory be correct, then the 
 city which is the hardest to get at has the most advantageous sit- 
 uation ; pirates and shipwrecks contribute to national prosperity by 
 raising the price of freight and insurance ; and improvements in navi- 
 gation, in railroads and steamships, are injurious. Manifestly, this 
 is absurd." 
 
 It is certainly absurd, but the absurdity must be looked for in 
 Mr. George's reasoning. The true statement should be this : 
 One of the effects of a tariff is to increase the cost of bringing 
 certain hinds of goods from abroad. Nevertheless a tariff is said
 
 4 "PROGRESS AND POVERTY." 
 
 to be beneficial. If so, tlien everytliing which increases the cost 
 of bringing from abroad not only those certain goods, but all 
 goods, must likewise be beneficial. The obstacles he mentions 
 not only raise the price of a particular kind or kinds of goods, 
 but of all goods, and that of passage also, and they diminish the 
 value of all exports. The railroad and the steamship facilitate 
 every sort of exchange, but this does not prove that every sort 
 of exchange is beneficial. Eum, opium, small-pox, and leprosy 
 do not become desirable because distributed by rail and steamer ! 
 A tariff does not stop all exchanges, but only some. That would 
 be a droll syllogism which ran : " If to stop some exchanges 
 be beneficial, then to stop all exchanges would be beneficial." 
 Mr. George continues thus : — 
 
 " And then I looked farther. Tiie speaker had dwelt on the folly 
 of a great country like the United States exporting raw material and 
 importing manufactured goods which might as well be made at home, 
 and I asked myself. What is the motive which causes a people to ex- 
 port raw materials and import manufactured goods 1 I found that it 
 could be attributed to nothing else than the fact that they could in 
 this way get the goods cheaper, — that is, with less labor. I looked 
 to transactions between individuals for parallels to this trade between 
 nations, and found them in plenty : the farmer selling his wheat and 
 buying flour ; the grazier sending his wool to a market and bringing 
 back cloth and blankets ; the tanner buying back leather in shoes, 
 instead of making them himself. I saw, when I came to analyze them, 
 that these exchanges between nations were precisely the same thing 
 as exchanges between individuals ; that they were in fact nothing but 
 exchanges between individuals of different nations ; that they were 
 aU prompted by the desire and led to the result of getting the greatest 
 return for the least expenditure of labor ; that the social condition in 
 which such exchanges did not take place was the naked barbarism of 
 the Terra del Fuegians ; that just in proportion to the division of 
 labor and the increase of trade were the increase of wealth and the 
 progress of civilization. And so, following up, turning, analyzing, and 
 testing all the protectionist arguments, I came to conclusions which I 
 have ever since retained." 
 
 The reader who is familiar with the Free-Trade and Protec- 
 tionist controversy \vill need no one to point out the weakness 
 of the above paragraph.
 
 "PROGRESS AND POVERTY." 5 
 
 To get goods cheaper is not the equivalent of getting them for 
 less labor. 
 
 To get the greatest return for the least expenditure of a small 
 portion of its labor is not the proper aim of a nation, but to get 
 the greatest Gross Annual Product obtainable by the whole of 
 its available labor. This is a very different matter. 
 
 That exchanges and division pf employments find place in all 
 but savage societies, does not prove that there must be division 
 of employments between nations. It is not necessary that Eng- 
 land should make up all our raw materials while we confine 
 ourselves to agricultural pursuits. We are numerous enough 
 to derive from the division of employments every possible 
 advantage among ourselves. No man can be certain that the 
 increase of wealth and the progress of civilization are "just in 
 proportion " to the division of labor and the increase of trade, 
 because these tw^o last are not the only nor even the chief ele- 
 ments in civilization ; but even if they were, we are not promot- 
 ing the division of labor nor the increase of trade in the United 
 States by confining ourselves to raising raw material. 
 
 THE OBJECT OF INTERNATIONAL TRADE. 
 
 The object aimed at in trading with a foreign nation is to 
 get what is wanted cheaper in the sense of for less labor, cer- 
 tainly; but this object is attained only when the reciprocal 
 desires balance. When they do not balance, the party whose 
 needs are the greatest in amount must give up more and more 
 of any advantages arising from the exchange, and may have to 
 give up the whole, — yes, and a good deal more than the whole ; 
 for if he does not possess the skill and the fixed capital he cannot 
 begin to manufacture (which is his only defence) until the other 
 party has extorted from him twenty or tliirty or more per cent 
 over the rate at which he might manufacture for himself if he 
 had the skill and fixed capital. And this is not the worst : B 
 needs more of A's goods 'than A will take of his. He must pay 
 in treasure while tliis lasts. He may produce, if you please, a 
 hundred millions of treasure a year ; but if he pay out two hun- 
 dred, he will soon find the basis of his machinery of exchange 
 gone, only to bo recovered after years of loss and misery, and
 
 6 "PKOGEESS AND POVERTY, 
 
 he will find that he must go ivitlwut a large part of what he 
 might have enjoyed through his own industry. He can per- 
 manently obtain from abroad only so many goods as will pay for 
 that quantity of his commodities which is needed in the outer 
 world at the lowest price at which he can afford them. These 
 are the conditions which the World offers to fifty millions of 
 people, soon to be a hundred millions. If it were bargaining with 
 five millions of people it might have to offer better terms. This 
 is not merely protectionist doctrine, but is a necessary deduction 
 from the propositions regarding international trade laid down by 
 Mr. John Stuart Mill. But Mr. George reasons as if the matter 
 of proportional demands or requirements had no place in political 
 economy. 
 
 The reader may at first think that all this has nothing to do 
 with " Progress and Poverty ; " but it has much to do with Mr. 
 George's habits of thought, and these have shaped his book. If 
 we find him making about free-trade deductions which involve 
 a syllogism with four terms, — or a universal conclusion drawn 
 from a particular premise, or the like, — we shall be prepared 
 and on the watch for similar inaccuracies in the book we are 
 about to examine ; and before going to the main subject it 
 is well to quote from page 270 of "Progress and Poverty" 
 the following : — 
 
 " To these must be added, in the United States, the robbery in- 
 volved in the protective tariff, which for ^very twenty-five cents it 
 puts in the treasury takes a dollar- and it may be four or five out of 
 the pocket of the consumer." 
 
 Now the duties collected have some years been over two hun- 
 dred millions ; there must then, according to Mr. George, have 
 been at least eight hundred millions, and perhaps four thousand 
 millions, taken by the tariff from the pockets of the consumers. 
 These Munchausen figures would have set any honest man like 
 Mr. George upon a re-examination of the statements which the 
 aUies of the Cobden Qlubs have the audacity to repeat year after 
 year in the face of repeated refutations ; but he did not stop to 
 see where his allegations would carry him, — and this is a lamen- 
 table fact, as it throws his evident uprightness and earnestness
 
 "PKOGRESS AND POVERTY." 7 
 
 into the scales which are heavily weighted with falsehood and 
 frivolity. The fact is noted in no hostile spirit. The internal 
 evidence which " Progress and Poverty " contains of the pure, 
 sino-le-hearted, and noble motives of its author are overwhelmin"-; 
 and his object, " the alleviation of human misery," is one with 
 which every true man must sympathize; but the higlier the 
 object the more important it becomes not to fall into error as to 
 the cause of the evil or as to the remedies which may be advan- 
 tageously applied to it. 
 
 THE AMEEICAN PROBLEM. 
 
 Mr. George describes eloquently this century's increase in 
 wealth-producing power, and thinks that if a Franklin or a 
 Priestley had seen it in a vision he would have expected the 
 very poorest to be lifted above the possibility of want, — he 
 would have expected to see 
 
 "Youth no longer stunted and starved; age no longer harried by 
 avarice; the child at play with the tiger; the man with the muck- 
 rake drinking in the glory of the stars ! Foul things fled ; fierce 
 things tamed ; discord turned to harmony ! For how could there be 
 greed when all had enough? How could the vice, the crime, the 
 ignorance, the brutahty, that spring from poverty and the fear of 
 poverty, exist when poverty had vanished 1 Who should crouch 
 where all were freemen; who oppress where all Avere peers'?" 
 
 But Franklin and Priestley were far from rhapsodists ; they 
 were cool and wary thinkers and observers. They saw about 
 them much vice, crime, ignorance, and brutality that were the 
 cause of poverty, instead of being caused by poverty, as Mr. 
 George assumes. They saw much poverty which need not then 
 exist, had the sufferers been as free from vice, crime, ignorance, 
 and brutality as they might have been under the then condi- 
 tions of society ; they saw, indeed, much vice, crime, ignorance, 
 and brutality which even then had not the apology of poverty; 
 moreover, they would have foreseen a vast increase in cities, 
 where temptations are more numerous and restraints less power- 
 ful ; where there is much wealth to be preyed upon, and compara- 
 tively great opportunity of escaping detection; where Charity
 
 8 "PROGRESS AXD POVERTY." 
 
 rushes about eager to relieve the deserving, and often carelessly 
 giving to the undeserving the funds which should have been 
 better bestowed ; where men may live for months or years with- 
 out knowing who lives in the next house ; where there are a 
 thousandfold more opportunities for self-indulgence than in the 
 village in which every one knows every one, and each man and 
 woman is a wholesome restraint upon the rest. Franklin and 
 Priestley, then, would hardly have expected as much as our 
 author believes they would have expected : possibly they would 
 not have expected even as much as has been accomplished. If 
 they could have foreseen the condition of society to-day, and 
 compared it, class for class, with what existed in their times, 
 they probably would have gone down to their graves with 
 bright hopes of the future. They would have seen great cities 
 become as healthy as the village was in their days, and they 
 would have seen a great and a general advance in the real 
 wases of all classes of those who are able and willing to work. 
 The change in this respect is most striking, and is within the 
 scope of the personal observation of all who can look back thirty 
 or forty years with a clear and distinct memory. To such no 
 statistical proof is needed ; but such proof is at hand, for we 
 have careful estimates of the gross annual product of the United 
 States each ten years, and by these we find that there was 
 earned enough to give each individual $61 in 1840, 869 in 1850, 
 S83 in 1860, at least 8110 in 1870, and at least 8140 in 1880. 
 Let us add 15 per cent to 1840 on account of possibly shorter 
 enumerations then than now. Still we have only 870 in 1840 
 against $140 now. But for 1880 we have not only estimates 
 of the gross annual product: we have also those of the total 
 value of the nation's accumulations, and made by the same hand 
 (Mulhall). These make the property of the United States to have 
 been forty thousand millions ; and this valuation was made at a 
 time when Government could borrow at 4 per cent, and when few 
 investments could be made to safely yield 5 per cent, and when 
 farmers in the far west could borrow at 6 per cent. If, then, we 
 take into consideration the fact that much property in real estate 
 gave no return, but was merely held for a market, it will be seen 
 that to assume the whole forty thousand millions of property to
 
 "PROGRESS AND POVERTY. 9 
 
 have paid its owners 6 per cent will be to err so miicli on the 
 side of too high a rate as to cover any possible error which may- 
 have crept in from undervaluation of the property at forty thou- 
 sand millions. But 6 per cent upon forty thousand millions 
 gives twenty-four hundred millions (out of the seven thousand 
 millions of gross annual product) as the amount going in the 
 first place to rent and profit. 
 
 But what becomes of rent and profit ? On the average of 
 years the annual product is used up, leaving at the end of each 
 year the same percentage of stocks of commodities. Eent and 
 profit are completely passed over to the renderers of services 
 which do and services which do not issue in commodities. They 
 are totally spent either for services, or for commodities, or for 
 property which is expected to bring in an income, and which is 
 formed by labor. Nearly all of the seven thousand millions 
 gets into the hands of those who render services, of those who 
 produce commodities, and of those who form those instruments 
 of production and of convenience which are exjoected to yield a 
 power of appropriating a portion of the enhanced annual products 
 of future years. The recipients of rent and of profits enjoy the 
 comfort, the consideration, and the luxury which the services of 
 a large mass of the population can afford, and in return they 
 pass over to this portion of the population nearly the whole of 
 their share of the gross annual product. They retain nothing to 
 the exclusion of the rest of the community except the raw mate- 
 rials which enter *into the commodities they and their immediate 
 families consume. Even the gross total of their receipts is regu- 
 lated by demand and supply, and can only be a portion of that 
 which the community derive from the use of the capital (the 
 fixed and floating instruments of production and instruments of 
 convenience) which has been formed out of their savings. With- 
 out the aid of these instruments even Mr. George (see p. 72) 
 concedes that the total annual product could be only a small 
 fraction of what it is now ; in other words, that it is of supreme 
 importance that these instruments should be kept in repair, and 
 that new ones should be formed to meet the demand of the 
 rapidly increasing population. They are kept in repair by those 
 who live within their incomes. New ones are formed by those 
 who save.
 
 10 "PROGRESS AND POVERTY." 
 
 Without the instruments of production now in use Mr. George 
 declares that the product could not be a tithe, or a tenth part, of 
 what it is now ; that is, the capital produces nine tenths, and, 
 if our calculations be correct, the whole people get two thirds of 
 this advantage, and the owners of the capital get one third ; but 
 this one third they spend in such a shape as to cause the exist- 
 ence of various classes who are not employed in producing neces- 
 saries, and whose demand for necessaries enables those who do 
 produce them to procure by exchange a vast amount of conven- 
 iences and luxuries, and to be thus stimulated to make the earth 
 yield a greater amount of necessaries. 
 
 PROPERTY AS AN INCENTIVE TO PRODUCTION. 
 
 Gut of the institution of property, then, has grown both the 
 present great productive power and also the distribution of the 
 population into various grades of wealth, each of which stimu- 
 lates the next poorer to strive to better its condition ; and this 
 beneficent effect should be seen most fully in the United States, 
 where the almost universal sentiment of the people demands the 
 equal or nearly equal division of properties among the children 
 at the death of the possessor. Enormous estates are said to have 
 destroyed Italy and the provinces of the Koman Empire ; but it 
 does not follow that there should be no estates and no landlords, 
 and it is to be feared that Mr. George is giving fatal advice to 
 the already sufficiently miserable Irish. Native landlords living 
 on their estates and using Irish products would speedily change 
 the wliole aspect of that island. The abolition of landlords will 
 indefinitely postpone her resurrection. 
 
 For the purposes of this discussion an improved farm is as 
 much an instrument of production as a power-loom, and so is a 
 store in Broadway. The position of this last may be such that 
 the land, apart from the building, possesses great exchangeable 
 value ; but the totality of such ground rents form but a small 
 part of the value of the annual product, — nine tenths of which 
 product Mr. George calculates to be due to the efficiency lent to 
 labor by capital. Such ground rents are what Mr. Wm. Lucas 
 Sargant calls ascending rents. They spring from the imiirove- 
 ment of the productive forces of the community, and in this are
 
 "PROGRESS AND POVERTY." 11 
 
 totally unlike the descending rents, which may come into exist- 
 ence where population presses upon the means of subsistence. 
 The former are the accompaniment of national growth and pros- 
 perity ; the latter are an indication of national decay. 
 
 Out of the twenty-four hundred millions which is assumed 
 as having, in 1880, gone in the first place to rent and profits, 
 probably one half went for services not issuing in commodities, 
 — such as those of actors, artists, barbers, clergymen, clerks, 
 copyists, hotel-keepers, dentists, designers, draughtsmen, domes- 
 tic servants, civil engineers, gardeners, government officials (in 
 taxes), hostlers, intelligence-office keepers, journalists, laundresses, 
 librarians, lawyers, managers, musicians, nurses, physicians, pro- 
 fessors, restaurant-keepers, teachers, surgeons, and so on. 
 
 The otlier half must have gone to the butchers, bakers, con- 
 fectioners, carriage-makers, furniture-makers, blacksmiths, car- 
 penters, tailors, etc., etc., who furnished commodities ; and a little 
 reflection will show that less than half of the value of these 
 would upon the average consist of raw materials. We have then, 
 at most, only six hundred millions consumed by the owners of 
 property to the exclusion of tlie rest of the community ; six hun- 
 dred out of seven thousand, which last is, according to Mr. George, 
 ten times more than could be produced without capital. This 
 includes the cases of all recipients of profits and of all recipients 
 of rent, and tlie latter includes the rent of improvements as well 
 as ground rent. The reader will then see that ground rent, from 
 the abolition of which Mr. George expects the return of the golden 
 age, is altogether too minute to produce any perceptible harm; 
 while the commission of so stupendous a breach of public faith 
 would be likely to lessen the general confidence in the stability 
 of individual fortunes, and in this way to diminish the effective 
 desire for accumulatio'n which lies at the very foundation of 
 national prosperity. 
 
 WAGES INCREASE WITH .PRODUCTION, 
 
 We appear, then, to have arrived at the conclusion that more 
 than nine tenths of the gross annual product goes directly or in- 
 directly to those who labor with the hands or with the head ; 
 and this is so near the whole, that, for purposes of comparison.
 
 12 "PROGRESS AND POVERTY." 
 
 we may say that the great wage fund of the entire community 
 is the gross annual product, or, at all events, that in com- 
 paring different periods the wages fund is in proportion to the 
 annual products. Now the most we could make out for 1840 
 was an average of $70 per head for the whole population ; the 
 least which seems probable for 1880 is $140 per head. Gold 
 may have depreciated since 1840, but not enough to account for 
 a quarter part of this difference ; and we are forced to the con- 
 clusion that real wages must have risen immensely ; and this 
 is what the personal observation of each individual and what 
 statistics in detail bear witness to. The question then — 
 
 "Why, in spite of increase in productive power, do wages 
 tend to a minimum which will give but a bare living ? " which 
 Mr. George propounds as " the riddle which the Sphinx of Fate 
 puts to our civilization, and which not to answer is to be de- 
 stroyed," — this question appears to have no existence out of his 
 imagination. Wages, fees, salaries, emoluments of every kind, 
 have risen every ten years. They were higher in 1850 than in 
 1840, again higher in 1860, and very much higher in 1880. 
 At each period there was more to divide, and every portion of 
 the community obtained a larger dividend, — every portion, that 
 is, in which no exceptional or temporary causes overcame the 
 general swing of financial events. 
 
 The problem, then, for the solution of which Mr. George wrote 
 his eloquent book seems not to exist. It appears that wages do 
 not tend to a minimum, but that, on the contrary, they are con- 
 stantly and steadily increasing if we examine them at consider- 
 able intervals and under similar circumstances : it would appear 
 that " where population is the densest, wealth greatest, and the 
 machinery of production and exchange most highly developed," 
 we do not " find the deepest poverty, the sharpest struggle for 
 existence, and the most enforced idleness." His proposition is 
 universal, and is demolished the moment we compare Ireland 
 with England, or Portugal with France, or the farmer of fifty 
 years ago with the farmer now, or the domestic servant and 
 'longshoreman of those days with the same classes to-day.
 
 "PROGRESS AND POVERTY." 13 
 
 n. 
 
 But although it appears quite certain that all classes who are 
 able and willing to work have shared in the great increase of 
 opulence which has during the last century resulted from the 
 greater security of property and the introduction of machinery 
 and the division of employments, still it is equally certain that 
 the progress has not been continuous. It has been in waves. 
 Each wave has run higher than the last ; but, during the reflux^ 
 there has been distress enough to wring the heart of any one 
 who observed it at its focus in the poorer quarters of a great 
 city. It is in vain to answer that this is a trivial matter com- 
 pared to the famines and consequent pestilences that used to 
 attend short crops, and that still attend them in nations which 
 modern trade prevents from attaining a diversity of occupations. 
 It is in vain to point to Ireland and Orissa and Behar and the 
 Punjab with their many millians of victims ; for, although we 
 have passed from the scene of such horrors, the evil which re- 
 mains is great enough to demand that we use every effort to 
 discover and remove its causes. 
 
 THE REAL PROBLEM 
 
 would seem to be to ascertain why, during the advance of modern 
 society from one plane of opulence to another, there should occur 
 periods of depression in which a considerable portion of the 
 population suffers want of employment and all consequent evils 
 for periods of several consecutive years. 
 
 At the bottom of the whole trouble lie the imperfect informa- 
 tion and consequent imperfect judgment of individuals. 
 
 A market, whicli has been for some time closed, is opened. 
 A manufacturing and commercial nation hastens to send goods
 
 14 "PKOGRESS AND POVERTY." 
 
 to it. They pay a profit. Then all prudence is cast to the winds; 
 immense supplies are poured upon the market and forced upon it 
 by long credits and all the devices of trade. The thing is over- 
 done. The comparatively agricultural nation has taken vastly 
 more than it can pay for in goods. It has to pay in treasure, 
 and this sort of trade at last comes to an end ; but not until the 
 buying nation has suffered a disarrangement of its machinery of 
 exchange which keeps it in a state of paralysis for years. 
 
 We suffered this after the war of the Revolution and after the 
 war of 1812-15. 
 
 But there is another field in which the inaccurate judgment 
 of men would bring about excitement and subsequent depression, 
 even if there were no such thing as trade. 
 
 The efficiency of modern labor springs, in a great measure, 
 from the aid given by fixed and floating capital ; and the dis- 
 position to save — or to form capital — is stimulated by" the 
 manifold instruments of convenience and luxury which increas- 
 ing opulence bestows. 
 
 AMERICAN CAPITAL AND POPULATION. 
 
 But, in a country like the United States, the desire to save finds 
 wide scope. The population, and its effective demand for capital, 
 increase at the rate of three per cent annually. If, then, we take 
 the value of all capital and of all. improvements on land to have 
 been $30,000,000,000 in 1880, the average demand for new capi- 
 tal and improvements would be to the amount of $900,000,000 ; 
 that is, commodities would every year be exchanged, not for other 
 commodities, but for labor employed in forming new property, 
 to this enormous extent. 
 
 At the commencement of a period of excitement more than 
 this would be invested, and with profit ; then more, while the 
 prudent shook their heads. But perhaps, nevertheless, a profit 
 M'ould ensue ; and so on until the formation of instruments of 
 production and convenience is carried beyond the point where 
 society can and will pay for their use enough to satisfy the desire 
 for profit current in the community. Up to this point there has 
 been a greater and greater demand for commodities, and con- 
 sequently for labor to form commodities. Now, suddenly, the
 
 y "PROGRESS AND POVERTY." 15 
 
 movement to form more improved farms, more mills, forges, 
 machinery, etc., is diminished, and the labor which was forming 
 them is set adrift and is unable to consume as largely as be- 
 fore ; and so less commodities are required, and less labor to form 
 commodities. Here we have a glut, a panic, and a period of 
 depression. 
 
 Rent has had nothing to do with the movement except as one 
 of the closing effects. As the keener-sighted see that too much 
 fixed capital is being formed, they may rush upon real estate as 
 a means of securing some income ; and this speculation may run 
 very wild, because when A buys B's real estate his doing so 
 does not diminish a particle the aggregate of funds seeking in- 
 vestment. He simply transfers them to B. But such a specula- 
 tion is an effect, not a cause, of the movement which is about to 
 culminate in a collapse. This would come to pass just the same 
 if real estate were never either bought or sold. 
 
 THE MOTIVE OF GEORGE'S BOOK. 
 
 A collapse of this kind, aggravated by over-importations and 
 by a simultaneous contraction of the currency, occurred in 1873, 
 and continued in greater or less intensity until 1879 ; and it was 
 during these years that Mr. George saw the misery which caused 
 him to write his eloquent book. Unhappily, he seems to have 
 entirely missed the nature and causes of the disease, and to have 
 equally erred in the remedy he prescribed. 
 
 During this period of depression he saw " gaunt Famine side 
 by side with the gilded palace," etc. ; but the construction of 
 the gilded palace in no way 'hastened or contributed to the 
 collapse. On the, contrary, it tended to postpone and moderate 
 the collapse ; and tlie construction of a thousand such at the 
 proper moment, accompanied by similar expenditure in other 
 directions, might have totally averted the miseries, losses, and 
 wreck which filled the period from 1873 to 1879. Tliey could 
 not have been averted nor have been postponed for a moment 
 by the confiscation of landed property or any other property. 
 
 Let us pass now to what Mr. George lias to say aliout cai)ital. 
 
 Mr. George is particularly unfortunate in his use of the rcdudio 
 ad absurdum.
 
 16 "PROGRESS AXD POVERTY." 
 
 In examining his free-trade notions we have seen him brush 
 aside the opinions of Washington, Franklin, Hamilton, Jefferson, 
 Jackson — in short, of the majority of the statesmen and people of 
 the United States — by a few phrases which to him appeared to be 
 a reduetio ad absurdum, but which a brief examination showed to 
 be only a false syllogism. In writing of "Capital" he dismisses all 
 previous political economists, both free-trade and protectionist, in 
 a similar manner. He finds their propositions absurd — in hold- 
 ing labor to be supported by capital — " because they involve 
 the idea that labor cannot be exerted until the products of labor 
 are saved, — thus putting the product before the producer," and 
 this he repeats several times in different words. Let us put this 
 into a syllogism. 
 
 The producer of capital cannot be dependent for support upon 
 the subsequent product. 
 
 Labor is the producer of capital, tlierefore labor cannot be 
 dependent for support upon capital; but labor in the minor 
 premise is undistributed, while in the conclusion it is distrib- 
 uted. It is a false syllogism. 
 
 The labor which precedes and produces certain capital is not 
 the labor which is supported by that same capital, but quite 
 another labor. There is nothing absurd in supposing that the 
 crops raised by certain labor in 1882 may support and be ab- 
 solutely necessary to the support of that other labor which raises 
 the crops of 1883. The confusion of thought lies with Mr. 
 George, and not with those whom he criticises. 
 
 Through many pages upon " Capital " he labors to show that 
 " v/ages are not drawn from capital at all, but come directly from the 
 produce of the labor for which they are paid." But the real wages 
 of the laborers are the food, raiment, shelter, etc., for which they 
 spend their wages. These are produced hefo7'e they are used. 
 They are advanced by the capitalist, who is reimbursed only 
 when the articles or the property formed by labor are finished 
 and put upon the market and sold. 
 
 That industry cannot exceed the amount which previously ex- 
 isting means can support, is plain enough ; but in point of fact 
 there always exists in an industrial society sufficient commodities 
 to carry the community to the next harvest and somewhat beyond.
 
 "PROGRESS AND POVERTY." 17 
 
 Industry, then, is not limited by capital, but both it and capital 
 are limited by the field of em'ployment. 
 
 Underneath this, and limiting it, lie the desires for the grati- 
 fication of which the community, as a whole, will work and save. 
 If it desire only bananas and bamboo huts, or mere necessaries, 
 it will remain without progress and without wealth. If it desire 
 the manifold conveniences, luxuries, and amusements now en- 
 joyed in the United States, it will continually work towards the 
 attainment of them as increasing skill, dexterity, judgment, and 
 capital bring nature more and more under dominion. But at no 
 point of time, between the two conditions, has it been true that 
 there existed an unlimited demand for any one or for all the 
 commodities known to the community. At any given moment 
 the demand is limited to such quantity of commodities as can 
 be obtained by a given amount of effort ; and it is still further 
 limited by the desire to provide for the future, — the desire to 
 save. 
 
 Without this desire there can be none of that progress which 
 grows from the greater efficiency given to labor by fixed and 
 floating capital ; that is, by those instruments of production and 
 of convenience which, according to Mr. George himself, enable 
 the community to produce a product ten times greater than it 
 could unaided. But, at any moment, capital is of limited effi- 
 ciency, and demand and supply will award it only a portion of 
 that which it adds to the annual product. With a given popu- 
 lation and a given efficiency of capital the latter cannot be in- 
 creased indefinitely. Beyond a certain point a larger amount 
 must either rest unemployed, or divide with that before existing 
 the same portion of the annual product, — thus diminishing tlie 
 profits of the whole. There is, then, in every industrial com- 
 munity, at each point in its development, a limit to the field 
 of employment, even if it be in possession of immense unde- 
 veloped resources. The English economists generally (and ]\Ir. 
 George follows their lead) suppose that there is only one limit ; 
 namely, that which is found in a scarcity of land, mines, etc. 
 Whether this limit has ever been reached in any existing indus- 
 trial community seems doubtful ; that it has not been reached 
 in the United States seems quite beyond doubt. 
 
 3
 
 18 "PROGRESS AXD POVERTY." 
 
 It is idle, then, to attribute the fluctuations in amount of 
 employment to a deficiency of laud brought about by specu- 
 lation. 
 
 The normal limit to the field of employment is passed when 
 the desire to save forms capital faster than the population and 
 its effective demand incred^s. The excess of employment in 
 this direction causes an excess of production of commodities, 
 and a farther excess in the employment of what is called pro- 
 ductive labor. 
 
 During the corresponding depression employment shrinks be- 
 neath its normal limit, and continues less than the average until 
 the population has gained upon capital or has changed its habits 
 of expenditure. Unemployed capital and labor, during a period 
 of depression, are constantly looking for new commodities and 
 new services with which to temjDt the savers (great and small) 
 to increase their expenditure ; the savers, meanwhile, vie with 
 each other for the possession of any property which yields a 
 sure income ; and those in whom the desire to save is least are 
 crowded out and give up trying to accumulate, — until at last it 
 begins to be apparent that more fixed capital is needed. Then 
 commences another expansion, to be followed, after a longer or 
 shorter period, by another collapse. 
 
 The violence of these fluctuations will doubtless diminish 
 in proportion as the community obtains correct views of the 
 relative magnitvde of the industrial forces, — of the amounts of 
 fixed and floating capital, — the average quantity of unemployed 
 capital in the shape of unsold stocks of commodities and of ma- 
 terials awaiting conversion into commodities, etc. ; and, mean- 
 while, some considerable mitigation might be afforded if, during 
 times of excitement, the general and State and city and village 
 governments abstained, as far as possible, from expenditures 
 for improvements, and reserved their means for times of de- 
 pression. 
 
 To lay all taxes upon real estate would give governments 
 enormous revenues during periods of excitement, when to use 
 them would be prejudicial, and leave it without a large portion 
 of its necessary revenue during periods of depression, when ex- 
 penditures would be beneficial. How much could be collected
 
 "PROGRESS AND POVERTY." 19 
 
 from taxes upon land during periods when land is so depressed 
 that mortgaged property sold under foreclosure fails generally 
 to pay its debts ? 
 
 CONFUSIONS OF THOUGHT. 
 
 In his chapter on " Capital " MrRJeorge accuses all past econo- 
 mists of confusion of thought ; but his own errors in this respect 
 seem to outweigh those of all other writers put together. 
 
 He thinks it foolish to suppose that the capital produced in 
 1882 should support the labor of 1883, but finds nothing un- 
 reasonable in saying that the man who is at work upon an 
 unfinished steamship "virtually produces the things in which 
 he expends his wages." 
 
 But the things for which he expends his wages were created 
 "before, he did his work, created by the previous joint efforts of 
 antecedent labor and capital. They belonged to capital, which 
 had furnished the instruments of production and advanced the 
 wages and kept the instruments of production in repair. If 
 what remained was more than the profit usual in the commu- 
 nity, it would indicate that population had outgrown capital, — 
 that more capital was needed. To construct this capital more 
 labor would be called for, and wages would rise. 
 
 That is, labor (of all kinds) and capital and rent divide 
 between them the total gross product. When this increases, 
 wages and profits and rents increase. When this diminishes 
 they all must submit to a diminution. The proportions of the 
 gross product which go to one or the other are determined by 
 demand and supply. If capital be relatively scarce, capital takes 
 a larger percentage ; if relatively abundant, it takes a smaller 
 percentage. And so with respect to different classes of the com- 
 munity. If any be in excess, it receives a smaller share of the 
 annual product ; otherwise, a larger. 
 
 With the increase of the annual product, growing out of more 
 efficient labor and more efficient capital, the totality of wages 
 must necessarily advance. If it advance less in any particular 
 class it can only be because that class is relatively in excess. 
 The amount per head which goes directly to labor of every sort 
 in 1882 is more than the whole product of 1840, and the amount
 
 20 "PROGRESS AND POVERTY." 
 
 that goes directly and indirectly to labor of every sort in 1882 is 
 double that vfhich went to labor of every sort in 1840. 
 
 Ml'. George argues rightly that, at any particular moment, 
 industry is not limited by capital, for there are alwaj's surplus 
 stocks ready to support more labor, and likely to be speedily made 
 good by quickened production ; but, indirectly, and in the long 
 run, industry is very much affected by the increasing efficiency 
 of capital, for on this depends the magnitude of the total annual 
 product, and on this the rewards of industry. To secure this, 
 together with a greater diversity and division of employments, 
 and to secure to our own labor as large a proportion of the best 
 possible field of employment — that, namely, which is found in 
 satisfying by our own efforts as many of our desires as possible, 
 • — was the avowed object of the 
 
 PROTECTIVE POLICY 
 
 as set forth by Alexander Hamilton ; and under this policy, 
 when thoroughly carried out, we have attained that high rate of 
 wages which attracts two thirds of a million of men annually to 
 our shores, and which gives us warrant to hope that, before 
 population can press upon the means of subsistence in these 
 United States, our people will have become accustomed to so 
 high a scale of living as to ensure the exercise of that prudence 
 which will become necessary in the altered conditions of the 
 nation. 
 
 Mr. George can see nothing in the policy but a foolish effort 
 to make certain classes rich ! 
 
 Few things, however, are so settled in political economy as 
 that " no industry can for any length of time obtain a higher 
 rate of profit than that which is common in the community." 
 If it could, it would be doubly desirable to have those industries 
 which might be turned into monopolies within reach, and not 
 upon the other side of the Atlantic ! Let it be ascertained 
 that a monopoly exists among us, — likely to be permanent, not 
 likely to be speedily destroyed by internal competition, — and 
 the remedy would be the easiest conceivable. A reduction of 
 the duty would put the would-be monopolists upon their good 
 behavior. But if, upon a false or mistaken cry of monopoly,
 
 "PROGRESS AND POVERTY." 21 
 
 we destroy some of our own industries, and transfer the scene 
 of monopoly to foreign shores, we shall be thenceforth without 
 remedy. 
 
 The outcry of monopoly as to industries easily inaugurated by 
 moderate amounts of capital is generally passed over as the 
 product of insincerity; but Mr. George is above suspicion in 
 this respect. He writes what he believes. 
 
 We come now to what he has to say about the Malthusian 
 Doctrine.
 
 22 "PEOGRESS A2;D POVERTY." 
 
 m. 
 
 Mr. George quotes as follows from Mr. John Stuart Mill : — 
 
 " A greater number of people cannot, in any given state of civiliza- 
 tion, be collectively as well provided for as a smaller. The niggardli- 
 ness of nature, not the injustice of society, is the cause of the penalty 
 attached to over-population. An unjust distribution of wealth does not 
 aggravate the evil, but, at most, causes it to be somewhat earlier felt. 
 It is in vain to say that all mouths which the increase of mankind call 
 into existence bring with them hands. The new mouths require as 
 much food as the old ones, and the hands do not produce as much. If 
 all instruments of production were held in joint property by the whole 
 people, and the produce divided with perfect equality among them, 
 and if in a society thus constituted industry was as energetic and the 
 produce as ample as at the present time, there would be enough to make 
 all the existing population extremely comfortable ; but when that 
 population had doubled itself, as with existing habits of the people it 
 undoubtedly would in little more than twenty years, what would then 
 be their condition 1 Unless the arts of production were in the same 
 time improved in an almost unexampled degree, the inferior soils which 
 must be resorted to, and tbe more laborious and scantUy remunerative 
 cultivation which must be employed on the superior soils to procure 
 food for so much larger a population, would, by an insuperable neces- 
 sity, render every individual in the community poorer than before. If 
 the population continued to increase at the same rate, a time would 
 soon arrive when no one would have more than mere necessaries, and 
 soon after a time when no one would have a sufficiency of those, and 
 the further increase of the population would be arrested by death." 
 
 To this Mr. George replies : — 
 
 " All this I deny. I assert that the very reverse of these propositions 
 is true. I assert that in any given state of civilization a greater
 
 "PROGRESS AND POVERTY." 23 
 
 number of people can collectively be better provided for than a smaller. 
 I assert that the injustice of society, not the niggardliness of nature, is 
 the cause of the want and misery which the current theory attributes 
 to over-population. I assert that the new mouths which an increasing 
 population call into existence require no more food than the old 
 ones, while the hands they bring with them can, in the natural 
 order of things, produce more. I assert that, other things being 
 equal, the greater the population the greater the comfort which an 
 equitable distribution of wealth would give to each individual. I 
 assert that, in a state of equality, the natural increase of population 
 would constantly tend to make each individual richer instead of 
 poorer. 
 
 ** I thus distinctly join issue and submit the question to the test of 
 facts." 
 
 Now, let us look at his facts. They are these : That, iu our 
 times, communities have increased faster in wealth than in. 
 population ; that it is iu the densest populations we find " costly 
 buildings, fine furniture, luxurious equipages, statues, pictures, 
 pleasure-gardens, and yachts, men of income and of elegant leisure, 
 thieves, policemen, menial servants, lawyers, men of letters, and 
 the like; and that capital overflows for remunerative investment 
 from these densely populated to sparsely populated regions." 
 These things, he says, "conclusively show that vjcalth is the 
 greatest where population is densest ; that the production of 
 wealth to a given amount of labor increases as population in- 
 creases." 
 
 But these things do not prove the contradictory of ]Mr. jSIill's 
 propositions, Mr. Mill would not deny that, in countries so greatly 
 undel-peopled (having regard to the existing skill and knowledge 
 of mankind and the available land) as were our colonies when, 
 as Adam Smith relates, a widow with half a dozen children was 
 looked upon as an heiress, — he would not deny that in such cases 
 a mere increase of population would bring increase of wealth. 
 Mr. Mill was speaking of communities in which to support a 
 widow who had six children would be a good deal more dilUcult 
 than to support a widow without any ; and, with respect to such, 
 he says that a great increase of population would bring great 
 misery, unless, at the same time, the arts of production M'ere
 
 24 "PROGKESS AND POYEE.TY." 
 
 improved in an almost unprecedented degree. This, Mr. George 
 thinks, he disproves by adducing the experience of the last forty- 
 years, in which the arts of production have been improved in an 
 almost unprecedented degree. 
 
 Wealth has increased in consequence of these improvements, 
 — not in consequence of the greater population. The greater 
 wealth and the greater population are joint effects ; or rather the 
 improvements brought greater wealth, and this brought greater 
 density of population. This answers his point as to the general 
 advance in wealth and population in our times. With respect 
 to the comparison he draws between countries now underpeo- 
 pled, — tliose in which that density of population which can be 
 maintained to the best advantage with the skill and the pro^ 
 ductive instruments known in our time has not been reached, — 
 it is quite true that greater wealth would ensue from greater 
 population up to a certain not very well defined point. More 
 capital can be used to advantage as population increases ; the 
 steamship and the railroad become paying instruments where be- 
 fore they could not be used, and capital speedily appears, either 
 from home savings or from other communities, when the condi- 
 tions exist for its safe and paying investment. And with the 
 application of more capital comes the possibility of satisfying new 
 desires, — the desires for " costly buildings, fine furniture, luxuri- 
 ous equipages, statues, pictures, pleasure-gardens, yachts, elegant 
 leisure, protection by means of police, menial servants, instruction 
 in the law, in religion, in literature, and the like on the part of 
 the rich, and for better food, better clothing, better houses, better 
 schooling, and more amusements on the part of the rest of the 
 community." 
 
 It is the existence of those desires and the possibility of grati- 
 fying them that leads to the accumulation of those instruments 
 of production of which Mr. George himself says : — 
 
 " If the farmer must use the spade because he has not capital enough 
 for a plough, the sickle instead of the reaping-machine, the flail instead 
 of the thresher ; if the machinist must rely upon the chisel for cutting 
 iron, the weaver on the hand-loom, and so on, — the productiveness of 
 industry cannot be a tithe of what it is when aided by capital in the 
 shape of the best tools now in use."
 
 "PROGRESS A2sD POVERTY." 25 
 
 Well, then, these instrumeuts of production, which do nine 
 tenths of the work, can be brought into existence and kept in 
 repair only by abstinence. Somebody must save what he other- 
 wise would have squandered in present enjoyment. Instead of 
 orgies with boon companions he prefers to improve his farm, 
 to buy better tools, to build a mill, etc. The instruments of 
 production into which he transforms his savings are part of 
 those which increase tenfold the gross products to be divided. 
 He is clearly entitled to some portion of the incr,ease his savings 
 have effected : what that portion shall be will be decided by per- 
 fectly impartial umpires, — demand and supply. If of any one 
 kind of the instruments of production there are less than the 
 community can use to advantage, the rent for their use will be 
 high, the profits to be derived from constructing more will be 
 great, and many will be constructed; until at last there will 
 come into existence as many as will command such annual rent 
 or equivalent profit as will satisfy the existing effective desire 
 for accumulation. If he cannot get income enough from his 
 instruments of production to make it worth while to save in 
 this shape, he will form instead instruments of convenience : he 
 will improve his dwelling-house or build a new one ; or, aban- 
 doning saving, he will use better food, better clothing, go oftener 
 to the shows or the play ; and if he be rich, he will call together 
 a number of carpenters, masons, and other artificers, and build 
 him a " gilded palace." In building this he will pass over to 
 the artificers a portion of the annual product which came to him 
 as rent for his part of the community's property, and the artificers 
 will eat it and drink it, and put it into clotliing, or obtain some 
 amusement with it, or put a portion in the bank. Every particle 
 of the value of the gilded palace and its luxurious furniture will, 
 when it is finished, have passed into the hands of labor, and the 
 greater part of it will have been consumed by those who were 
 able and willing to work. Thereafter the gilded palace will 
 stand as a striking witness to the fact that in some previous 
 year or years there were funds which could be devoted to un- 
 productive purposes. The totality of such costly edifices, yachts, 
 etc., which existed in San Francisco in 1879 were the accu- 
 mulations since 1849. They struck the eye and excited the 
 
 4
 
 26 "PROGRESS AND POVERTY." 
 
 imagination, and they led Mr. George to very erroneous con- 
 clusions. 
 
 Mr. George says : — 
 
 " There is no necessity for abstract reasoning. The question is one 
 of simple fact. Does the relative power of producing wealth decrease 
 with the increase of population ] " 
 
 But he wishes to establish the universal fact that the produc- 
 tion of wealth increases faster than population. This he en- 
 deavors to prove by inferences from other facts, — that is, by 
 abstract reasoning. He could not do it in any other way, except 
 by appealing to statistical facts, and is therefore not to blame 
 for the method. What he appears to err in is the way in which 
 he applied his method. He looks at a very sparsely peopled 
 community, and sees that in it a canoe is a more suitable instru- 
 ment than a steamer, a common road than a railroad ; that, in 
 short, there is a limit to the application of modern devices in 
 that community. "With a greater population, more capital could 
 be applied ; and, to a certain point, with increase in the annual 
 product as compared with the population. Where he errs is 
 in concluding that what is true to a certain point is true indefi- 
 nitely. He is so sure of this that he instances California. He 
 says: "In 1849, $16 a day were only ordinary wages. Now, 
 men are glad to work a week for that sum, and money is loaned 
 by the year for what would not have hardly been deemed extor- 
 tionate by the month." But, strange as it may seem, Mr. George 
 does not think that wages are lower because labor yields less 
 wealth. He says : — 
 
 " On the contrary ! Instead of the wealth-producing power of labor 
 being less in California in 1879 than in 1849, I am convinced that it 
 is greater ; and it seems to me that no one who considers how enor- 
 mously during these years the efficiency of labor in California has been 
 increased by roads, wharves, flumes, railroads, steamboats, telegraphs, 
 and machinery of all kinds, — by a closer connection with the rest of 
 the world, and by the numberless economies resulting from a larger 
 population, — can doubt that the return which labor receives from nature 
 in California is on the whole much greater now than it was in the days 
 of unexhausted placers and virgin soil ; the increase in the power of
 
 "PROGRESS AND POVERTY." 27 
 
 the human factor having more than compensated for the decline in the 
 power of the natural factor. That this conclusion is the correct one 
 is proved hy many facts that show that the consumption of wealth is 
 now much greater, as compared with the number of the laborers, than 
 it was then. Instead of a population composed almost exclusively of 
 men in the prime of life, a large proportion of women and children are 
 now supported, and other non-producers have increased in a much 
 greater ratio than the population ; luxury has grown far more than 
 wages have fallen ; where the best houses were cloth and paper 
 shanties are now mansions whose magnificence rivals European 
 palaces ; there are liveried carriages on the streets of Sail Francisco, 
 and pleasure yachts on her bay ; the class who can live sumptuously 
 on their incomes has steadily grown ; there are rich men beside whom 
 the richest of the earlier years would seem little more than paupers, — 
 in short, there are on every hand the most striking and conclusive evi- 
 dences that the production and consumption of wealth have increased 
 with even greater rapidity than the increase of population, and that if 
 any class obtains less it is solely because of the greater inequality of 
 the distribution." 
 
 This quotation is an example of the eloquence with which Mr. 
 George states his conclusions, and of the unwariness with which 
 lie adopts them and considers them proved. 
 
 Wages had fallen to one sixth, and the interest upon capital 
 to nearly a twelfth ; yet he thought the annual product must 
 certainly be greater per man than it was in 1849 ! One would 
 think he would have asked, If this be so, what becomes of it ? 
 Eent, profits, and wages must take the whole ; and rent and 
 profit again spend nearly the whole of their shares upon wages. 
 How, tlien, could it be that wages had fallen to one sixth part of 
 what they were ? Having come to this question, it must have 
 occurred to him to look into the census of 1870 and see wliat 
 were the earniugs of labor and capital, — that is, the gross prod- 
 uct out of which the share of rent must come. Looking into 
 this, he would have found that the value of all farm products, 
 including betterments and additions, was $50,000,000, and that 
 the number of hands employed was forty-eight thousand, giv- 
 ing $1,040 a year to each ; or, dividing by three hundred days, 
 $3.50 a day. Turning now to mining, he would have found the
 
 28 "PROGRESS AND POVERTY." 
 
 # 
 
 gross product $-8,300,000, and the hands employed seventy-six 
 hundred, giving to each $1,090 a year, or S3. 60 a day. Turning 
 again to manufactures, he would have found the gross product 
 $68,000,000, the materials being $27,000,000, leaving $31,000,000 
 as the value added to materials by forty-nine thousand persons ; 
 giving $633, or $2.11 a day. 
 
 The agricultural and mining gross products included of course 
 more rent, and the manufacturing less rent ; but they all three 
 contained funds which went to non-productive labor, — that is, 
 to the seventy-six thousand persons who were engaged in pro- 
 fessional and personal services. The thirty-three thousand per- 
 sons engaged in trade and transportation could hardly have much 
 increased the average. We will call their earnings $4 a day, or 
 $1,200 a year, for each person, or $39,000,000 altogether. 
 
 We have, then, 
 
 48,000 persons engaged in agriculture and producing . $50,000,000 
 
 7,600 in mining, producing 8,300,000 
 
 49,000 in manufacturing 31,000,000 
 
 33,000 in trade and transportation 39,000,000 
 
 76,000 in professional and personal services .... 
 
 213,600 $128,300,000 
 
 We have, then, $128,300,000 to be divided among two hun- 
 dred and thirteen thousand six hundred persons, or just about 
 $600, or $2 a day against $16 a day, earned by each man in 
 1849. 
 
 Nobody supposes that the census enumerations are absolutely 
 exact, but on the other baud nobody believes that they err by 
 fifty per cent ; and it will be seen then how wild, beyond belief, 
 were the conclusions which Mr. George considered proved by his 
 method of reasoning. 
 
 He believed that labor, assisted by capital, was earning in 
 California over $16 a day; and liis book would tend to make 
 the laborer feel himself wronged if he did not receive that amount. 
 But all that labor and capital together earned was about $2.11 
 a day, as shown by the statistics of manufactures ; and out of 
 this and the shares of rent in agriculture and mining, the per- 
 sons engaged in professional and personal services had to be 
 supported.
 
 "PROGRESS AND POVERTY." 
 
 29 
 
 "With the total annual product, such as it was, the laborers 
 could not possibly have had more than they obtained ; and it is 
 a pity they and their innumerable well-wishers in other classes 
 should have been disquieted by Mr. George's generous and elo- 
 quent but exceedingly inaccurate reasoning. 
 
 Analyzing Massachusetts in the same way as California, we 
 find: — 
 
 Engaged in agriculture 73,000 witli products worth .... $32,000,000 
 
 Engaged in manufactures 279,000 " " " $554,000,000 
 
 Deduct materials 334,000,000 220,000,000 
 Engaged in mechanical ") 
 
 and mining y 14,000 \ Supposing these to 
 
 occupations ) f earn as much as those 
 
 Engaged in trade and ■) j engaged in nianufac- 
 
 transporta- > 83,000 ) turiug 76,000,000 
 
 *^°" $328,000,000 
 
 Engaged in professional \ 
 
 and personal \ 131,000 
 
 services ) 
 
 580,000 persons, among whom §328,000,000 being 
 divided gives $566 a year, or $1.89 a day. 
 
 But the estimates in Massachusetts were in currency, which 
 was at 15 per cent discount, so that the daily earnings in that 
 State come down to $1.61 against S2 in California. With all 
 her machinery, and all the economies resulting from a denser 
 population, Massachusetts in 1870 could not divide among her 
 workers as much as thinly settled California. 
 
 And here we come to a distinction as to the wealth of States, 
 which seems nowhere present to the mind of Mr. George. 
 
 A State may possess a vast - accumulation of j)ublic and pri- 
 vate edifices, and a vast aggregate of tools, machinery, mills, etc. 
 These strike the eye and impress the imagination forcibly. The 
 beholder infers at once that he is in an enormously rich com- 
 munity, and his next inference is that in such a community tlie 
 wages of labor ought to be very high. It seems as if where there 
 was so much visible wealth every one ought to have a great abun- 
 dance. But the value of these visible portions of wealth has 
 already been consumed once. At the time of their construction, 
 nearly every cent of their cost passed directly or indirectly into
 
 30 "PROGRESS AND POVERTY." 
 
 the hands of some kind of laborer. They have been eaten up 
 once ; they cannot be eaten up again. All that they can hereafter 
 be made to contribute is that which their assistance adds to the 
 annual product. This is every year divided between rent, labor, 
 and capital, in such portions as demand and supply determine ; 
 but the part which goes to rent and capital nearly all, as we 
 have already seen, goes (through the hands of the landlords and 
 capitalists) to labor. 
 
 "What, then, can be annually divided among the members of 
 a community is the annual product of commodities; and that 
 nation is the wealthiest which can give to each of its members 
 the largest amount of the " necessaries, conveniences, and luxu- 
 ries of life." This dividend bears no necessary proportion to the 
 visible accumulated property, which is the result of the savings 
 of many years, and which may have much, or may have very 
 little, influence upon the annual product. 
 
 The repeated references of Mr. George to the magnitude of 
 these accumulations, as showing what ought to be, or could pos- 
 sibly be, the annual reward of labor, — these are at the bottom 
 of much that is misleading in his book. 
 
 Mr. John Stuart Mill, as every one knows, was a person of the 
 highest integrity, a great logician, as much interested in the fu- 
 ture fate of the poorer classes as any man who has lived in our 
 times. His positions, as quoted in the beginning of this chapter, 
 seem not to have been shaken by Mr. George in the slightest 
 degree. 
 
 We have now gone through the first two books of " Progress 
 and Poverty," and have found what appear to be good reasons 
 for dissenting from every one of his distinctive doctrines. 
 
 It appears that wages do not tend to decrease as wealth (in the 
 sense of the gross annual product as compared with population) 
 increases, but that, on the contrary, wages increase pari passu 
 with wealth. It appears that although productive labor, when 
 employed, adds generally, by the assistance of capital, a value 
 which is greater than its wages, still this value is not available 
 until the product is finished and put upon the market and sold, 
 so as to give a general purchasing power. It seems, therefore, 
 that wages are certainly advanced by capital, without which the
 
 "PROGRESS AND rOVERTY." 31 
 
 greater portion of the work of industrial communities could not 
 be carried on. It appears that under favorable circumstances 
 population does increase as rapidly as Malthus and Mr. jVIill 
 declared ; and although, with increasing skill and capital to the 
 very extraordinary extent that has been seen in our days, the 
 annual product in the United States has increased much more 
 rajDidly, and so led to an equal advance in wages, still it is by no 
 means certain that improvements can continue indefinitely at 
 the same rate. 
 
 We see that the same causes have not produced an equal 
 advance in wealth and wages in older communities, and we see 
 that in California there has been a very marked decline. It 
 seems probable, then, that in the course of another century, or 
 half a century, population with us will press upon the means of 
 subsistence. It is the hope of protectionists that the high scale 
 of living which has been established in the meanwhile will pre- 
 vent the descent of any large class of the people to transatlantic 
 poverty. Mr. George sneers at protection as being contrived and 
 intended to favor monopolies ; but this is as untrue, as offensive, 
 and as unjust as it would be to stigmatize him as a selfish com- 
 munist and demagogue, whose only aim was notoriety. This is 
 not true ; neither is that.
 
 32 "PROGEESS AisD POVERTY." 
 
 IV. 
 
 How to deal with the remaining chapters. of "Progress and 
 Poverty " without wearying the reader is " the riddle which the 
 Sphinx of Fate puts" to the reviewer, and which not to answer 
 is — not to be read ! The fallacies are so numerous that to reply 
 to each in full would be to exceed reasonable limits. All that 
 can be done is to take the principal ones scriatwi, and get rid of 
 each as speedily as possible. 
 
 He says that one thousand men working together will do much 
 more than one thousand times the work of one man. 
 
 This is true when they have unlimited subject-matter to work 
 upon. Double the population of the United States, and all might 
 be better off. Would they be better off if multiplied by a thou- 
 sand ? Up to a certain point the mutual helpfulness of men 
 outweighs the relative but not absolute scarcity of materials, 
 such as land, mines, etc. ; but only up to a certain point. He 
 makes the old error of arguing " a dido secundum quid ad dic- 
 tum simpliciter" This is all that there is in his argument, that 
 the joint product of labor and capital continually increases faster 
 than population increases, and that therefore the laborer must be 
 robbed if in a densely peopled country he earns less than the 
 wages usual where lands, mines, forests, etc., are more abundant. 
 
 He repeats that capital does not employ labor, but that labor 
 employs capital, and adduces in proof the fact that capital was 
 originally formed by labor ; but when the first capital was being 
 formed few could exist upon a given space, and society bore no 
 analogy to present communities in which, according to his own 
 dictum, nine tenths of the product is due to the assistance of 
 capital
 
 "PKOGKESS AND POVERTY." 33 
 
 RENT AND CAPITAL. 
 
 He asserts that " rent is the price of monopoly, arising from 
 the reduction to individual ownership of natural elements which 
 human exertion can neither produce nor increase." But human 
 agency has already vastly increased their capacity and can in- 
 crease it still farther ; ten acres with sufficient capital will yield 
 as much as fifty without. Kent, then, is kept in check by capi- 
 tal. Moreover, he would have us believe that rent has actually 
 swallowed up much that belonged to labor in the United States, 
 and that to this cause we must trace the panic of 1873. Now, 
 with respect to Economic Ground Rent, there seems reason to 
 doubt whether it has begun to exist in the United States, as far 
 as the great mass of farms and plantations are concerned ; there 
 seems, indeed, reason to believe that the farms do not yield a 
 full interest upon the mere improvements existing upon them. 
 The formation of this particular kind of instruments of produc- 
 tion has been over-stimulated by our homestead laws, and by the 
 action of that very common desire of men to acquire an absolute 
 right to a portion of land and to be each his own master, with a 
 certainty, as nearly complete as possible, of never being in want 
 of food and seldom in want of a moderate amount of conven- 
 iences and luxuries. 
 
 The competition of seven millions of individual farmers ought 
 surely to be a sufficient guarantee against monopoly ; they M'ill 
 not even obtain a fair return for the labor they have spent in 
 improvements, until increasing population and the action of the 
 protective system build up a sufficient market for their products. 
 Free trade, by forcing them to offer a greatly increased quantity 
 of raw products to the outer world, would infallibly, under exist- 
 ing conditions, reduce very much the exchangeable value of their 
 produce, and impoverish them for several generations. 
 
 It appears evident, then, that the panic of 1873 could not have 
 been brought about by a scarcity of raw products. Many mil- 
 lions of farmers — each with more land than he liabitually used, 
 each eager to raise more when prices warranted — were a suffi- 
 cient guarantee against any such catastrophe. 
 
 5
 
 34 "PKOGJlESS AND POVERTY." 
 
 But it may be said, " There are the rents of houses and stores 
 in the cities ; these become exorbitant and make the production 
 of something or other too expensive, and so something or other 
 is not made, and hence we have a diminution in the aggregate 
 demand." 
 
 But this idea is contradicted by the facts, well known to prac- 
 tical men, that during a period of excitement real estate is one of 
 the last things to rise, and that when a period of depression comes 
 it is one of the last to fall. The facts are empirical, and so may 
 be questioned until we discover a reason for them. This is not 
 far to seek. People do not enlarge their quarters until they have 
 experienced high wages and higli profits for some time, — until, 
 in fact, they have got used to them, and have come to consider 
 them as practically permanent. The individual takes a larger 
 house or more rooms because he feels he can afford it, and he 
 takes more space for the accommodation of his business because 
 he feels that an increasing business demands more, and that, after 
 paying more rent, he will have a larger sum left at the end of 
 the year. High rents in the cities appear to be a consequence of 
 the fuller occupation of the population ; and even if, towards the 
 end of a period of excitement, they become so high as to materi- 
 ally affect the profits and consequent expenditure of a portion of 
 the dealers, they can only transfer to the owners of houses and 
 lands the very same sums that are taken from the dealers, and 
 the recipients must in their turn either spend them or save 
 them ; and in saving they spend only upon different people. It 
 is only when it begins to be seen that saving has been overdone, 
 — that more instruments of production and convenience cannot 
 be formed with a chance of their yielding the rate of profit usual 
 in the community, — it is only then that the industrial move- 
 ment begins to decrease. Tlien laborers are thrown out of 
 employment, and with tliis comes a diminished demand for 
 commodities and a necessity for dismissing still more laborers, 
 and so on in a widening circle. 
 
 RENT NOT RESPONSIBLE FOR PANICS AND POVERTY. 
 
 In a country depending largely upon the export of manu- 
 factured goods, like Great Britain, a panic may be brought
 
 "PROGRESS AND POVERTY." 35 
 
 about by a failure of the crops of some of her principal pur- 
 chasers, and a consequent inability to buy ; but this does not 
 arise from extravagant rents in either country. 
 
 Again, in a country wliich exports largely of raw products, a 
 period of depression might be brought about by large crops and 
 low prices in some other part of the world ; but here again rent 
 has nothing to do with the matter. 
 
 Mr. George appears, then, to have failed in his attempt to fix 
 upon rent the responsibility for panics. That rent is not the 
 cause of general poverty in the United States is apparent enough 
 from the fact that if from the Gross Annual Product of 1880 
 jDer head we subtract the whole of rent and the whole of profits, 
 there remains much more than the whole product per head 
 of 1840. That is, labor alone in 1880 took more than labor, 
 rent, and profits togetluer took in 1840. And besides this, rent 
 and profits again spent three quarters or more of their share 
 upon labor. 
 
 His algebraical formula, then. Produce = Pent + Wages + In- 
 terest, therefore Produce — Rent = Wages + Interest, proves 
 nothing. We should rather say, Produce = Rent + Wages -|- In- 
 terest ; therefore Produce — (Wages and Interest) = Rent. As 
 long as men and capital, taking the whole country together, are 
 scarcer than land, they must be paid first, and rent must take 
 what they leave. When, in the far future, men and capital are 
 the more plenty, and land the less, then, and then only, wiU his 
 interpretation of the formula be true. But when, if ever, we 
 approach such a point, it is fair to expect that a population 
 long accustomed to convenienees and luxuries will exercise suffi- 
 cient self-restraint to prevent the loss of them. 
 
 There are two cases in which the rent of land, and the rent of 
 capital also, become oppressive and tlie source of poverty. One 
 is when the owners are absentees. This case Mr. George recog- 
 nizes. The other is when the owners, instead of buying their 
 conveniences and luxuries of their fellow-citizens, buy them 
 abroad. Tliis case Mr. George entirely ignores. But this is 
 semi-absenteeism. If, for instance, rent and profits together 
 receive in the United States twenty-four hundred millions out 
 of seven thousand millions annual product, in consideration of
 
 36 "TROGRESS AND POVERTY." 
 
 the use by the rest of the community of their land and capital, 
 and if they proceed immediately to redistribute tln-ee fourths or 
 more of the twenty-four hundred millions to other classes of the 
 community, we speedily come to have vast masses of men who 
 are engaged in producing conveniences and luxuries and ser- 
 vices, and who bring conveniences and luxuries to the doors of 
 those who produce necessaries. 
 
 ' But if the owners of land and of capital were allowed to send 
 their twenty-four hundred millions abroad after cheap conven- 
 iences and luxuries, the inevitable effect would be to break 
 down the foreign market for our raw products, to make what we 
 did buy exceedingly dear instead of cheap, and, in the end, to 
 limit us to a small portion of what we now have by our own 
 direct industry. A vastly diminished gross annual product would 
 ensue, and rents, profits, and wages all suffering together, an im- 
 poverished people would no longer be able to support the stately 
 universities that are now in league with the Cobden Club to 
 destroy our industries. 
 
 It is not charged that the colleges are doing this intentionally ; 
 but their good intentions cannot alter the result. 
 
 Mr. George draws a picture of the growth of a village into a 
 city, and tells us what " some hard-headed man of business, who 
 has no theories, but knows how to make money," would say if 
 he were assured that the village would in ten years become a 
 city. He would say, " Go and buy lands and you will be rich." 
 But if some one thinking, not knowing, that the village would 
 become a great city, should ask the advice of the same hard- 
 headed business man, he would reply, — 
 
 " Speculation in land is an exceedingly unsatisfactory business in 
 the aggregate. If your village become a great city in ten years, and if 
 your land happen to be in the right path of it, you may become rich 
 without any exertion on your part ; but where one man judges cor- 
 rectly, fifty judge wrong, and find at the end of twenty or thirty years 
 their piece of land worth very much less than what the first price of it 
 would have grown to if placed at interest. Land speculation is a great 
 lottery, and has an inordinate number of blanks. When a man or a 
 family draws a prize, all the world knows of it. "When he draws a 
 blank, be keeps it to himself."
 
 "PROGRESS AND POVERTY." 37 
 
 Mr. George says : — 
 
 " In the city where I write is a man — but the typo of men every- 
 where to be found. — who used to boil his ovvn beaus and fry his own 
 bacon, but who, now that he has got rich, maintains a town house that 
 takes up a whole block and would answer for a first-class hotel, two 
 or three country houses with extensive grounds, a large stud of racers, 
 a breeding farm, private track, etc., etc. It certainly takes at least a 
 thousand times, it may be several thousand times, as much land to 
 maintain this man now as it did when he was poor." 
 
 But the question is not how much land he keeps vacant. That 
 can be of no consequence in a State which has but two or three 
 persons to tlie square mile. Wliat we have occaaion to know is 
 what portion of his income he can or does keep the rest of the 
 community out of. His houses and the improvements of his 
 pleasure-grounds have been paid for years ago to labor. They 
 do not form any portion of his annual expenditure. His stud of 
 racers is the only great expense which does not almost entirely 
 go to labor at once ; and much of this does. So does the greater 
 part of the additional expenditure for more delicate food. The 
 longer you look at it the more improbable does it api)ear that he 
 does or can keep the rest of the community out of a tenth part 
 of his income, even counting in all that he pays for foreign com- 
 modities. 
 
 But more important than all this is the bad logic of calling 
 this man "a type of men found everywhere." 
 
 How many out of the seven millions of land-owners and as 
 many more capitalists in the United States keep studs of horses ? 
 What has such a man as this or a hundred such to do with the 
 general sweep of the nation's life ? 
 
 FREE TRADE NOT THE CAUSE OF PROSPERITY. 
 
 Mr. George says that "free trade has enormously increased 
 the wealth of Great Britain ! " 
 
 Other events, more especially the discovery of Californian and 
 Australian gold, occurred about the time she entered upon the 
 career of free trade, and those events have caused a general ad- 
 vance in wealth among industrial nations ; but as protectionist
 
 38 "PROGRESS AND POVERTY." 
 
 France and the United States have advanced much more rapidly 
 than Great Britain, it is not easy to see what free trade has 
 had to do with it. It is the policy of England to exaggerate her 
 prosperity, and to impute it all to free trade. But if it were 
 even so, the outside barbarians would inquire what free trade 
 had done for India, Japan, Turkey, Ireland, etc. If it has ben- 
 efited Great Britain, if it has not even made the advance of her 
 prosperity less than it would otherwise have been, the other 
 parties to the exchanges made by Irer show no signs of having 
 shared in the profits. 
 
 LABOR PROFITS BY IMPROVEMENTS. 
 
 At page 225 Mr. George gives what he considers a demon- 
 stration that any and all improvements enure to the advantage 
 of rent, and in no way benefit the laborer. 
 
 He supposes that population remains the same, but that im- 
 provements in production take place so as to 
 
 "reduce by one tenth the expenditure of labor and capital neces- 
 sary to produce the same amount of wealth. Now either one tenth of 
 the labor and capital may be freed, and production remain the same as 
 before ; or the same amount of labor and capital may be employed, 
 and production be correspondingly increased. But the industrial or- 
 ganization, as in all civilized countries, is such that labor and capital, 
 and especially labor, must press for employment on any terms. The 
 industrial organization is such that the mere laborers are not in a posi- 
 tion to demand their fair share in the new adjustment, and that any 
 reduction in the application of labor to production will, at first at 
 least, take the form, not of giving each laborer the same amount of 
 produce for less work, but of throwing some of the laborers out of 
 work and giving them none of the produce. Now, owing to the in- 
 creased efficiency of labor secured by the new improvements, as great 
 a return can be secured at the point of natural productiveness repre- 
 sented by eighteen as before at twenty. Thus the unsatisfied desire 
 for wealth, the competition of labor and capital for employment, would 
 insure the extension of the margin of production, we mil say to eigh- 
 teen, and thus rent would be increased by the difference between eigh- 
 teen and twenty, while wages and interest in quantity would be no 
 more than before, and in proportion to the whole produce would be
 
 "PKOGRESS .VXD POVERTY." 39 
 
 I'ess. There would be a greater production of wealth, but the land- 
 owners would get the whole benefit (subject to temporary deductions 
 which will be hereafter stated)." 
 
 Possibly this might happen in a country where, as in Ireland, 
 landlords were in the habit of sending abroad for their con- 
 veniences and luxuries and exporting raw products to pay 
 for them ; but in a country like the United States, where 
 the whole population is accustomed to many conveniences and 
 luxuries, produced for the most part by our own labor and 
 capital, the result would be very different. The moment an}^ 
 additional labor was applied to the land there would be an over- 
 supply of raw products ; and the exchangeable value of these, as 
 compared with highly finished commodities composed largely of 
 labor and capital, and as compared also with services, would 
 decline. There would be an increased demand for services not 
 issuing in commodities, and an increased demand for conven- 
 iences and luxuries on the part of the whole community. Labor 
 and capital would be turned to the production of these, and the 
 end of it all would be a community consuming the same abun- 
 dance of necessaries as before, and a much greater abundance of 
 conveniences and luxuries. 
 
 If, before the change, rent and profits took one third of the 
 product and again distributed three quarters of that third to 
 labor for services and for commodities, then rent and profits 
 would not be likely to retain any greater share of the increased 
 product after the change, for the demand of rent and profits for 
 raw materials was already satisfied before. 
 
 It would seem then that, so far from the whole increase "oinf 
 to rent, eleven twelfths of it would go to labor, and part of the 
 other twelfth would go to capital, and a part of the remainder 
 would be rent of improvements and not at all ground rent. By 
 labor is here meant every kind and description of labor, both 
 that with the head and that with tlic hands. Tlie ainnial prc»d- 
 uct pays tliem all, and those get the largest share who are the 
 least numerous as compared with the demand for their work. 
 
 Wherever, then, the productive efficiency of t]i • population 
 becomes greater per head it would seem that w -i must in-
 
 40 "PROGRESS AND POVERTY." 
 
 crease, whether the greater efficiency spring from augmented 
 skill, or more abundant capital, or from the mutual helpfulness 
 and greater economies which attend a greater density of popula- 
 tion. If these advantages continued to increase indefinitely, as 
 Mr. George imagines, then wages would increase indefinitely 
 but, unfortunately, greater numbers upon a given space and 
 with given skill and capital come at last to press upon the 
 aneans of subsistence ; and then, however disagreeable it may 
 be to face the fact, the only recourse by which the population 
 can avoid increasing poverty is to avoid increase in numbers. 
 
 All the eloquence in the world, all the passionate declarations 
 that such an opinion impeaches the goodness of God, etc., will 
 not change the disagreeable fact. It is just as well to admit 
 it and act accordingly ; and this is exactly what every working- 
 man does who considers before he marries whether he can or 
 cannot support a family and bring up his children so that they 
 will be good and useful and happy members of society. 
 
 Mr. George in effect tells this good citizen to make no such 
 calculations ; that, in all cases, there comes with each additional 
 pair of hands a more than equal means of production : but Mr. 
 George's conclusions, though inspired by a very good heart, are 
 arrived at by a very bad logic, and he gives fatal advice, which 
 can only impoverish and destroy those whom he desires to lift up 
 and enrich. Ui^ to a certain 2ioint each additional pair of hands 
 increases the average production ; heyond a certain point it is 
 diminished. No one who dispassionately reflects upon this 
 matter for an hour can be in any doubt with regard to it. 
 
 The next and last chapter will be devoted to what Mr. George 
 has to say about the wickedness and impolicy of individual 
 property in land, etc.
 
 " PROGRESS A^'D POVERTY." 4l 
 
 V. 
 
 We now come to Mr. George's views as to justice. He says : — 
 
 " If we are all here by the equal permission of the Creator, we are 
 all here with an equal title to the enjoyment of his bounty, — with an 
 equal right to the use of all that nature so impartially offers." 
 
 Afterwards he says : — 
 
 " Though the sovereign people of the State of New York consent to 
 the landed possessions of the Astors, the puniest infant that comes 
 wailing into the world, in the squalidest room of the most miserable 
 tenement-house, becomes at that moment seized of an equal right with 
 the millionnaires. And it is robbed if the right is denied." 
 
 Many intelligent readers, who are not afflicted with a little 
 knowledge of formal logic, but who retain, unimpaired, their 
 natural common-sense, will see at a glance that the above pas- 
 sacres contain a vast amount of rhetoric. It is assumed that the 
 value of land of these United States is the product of nature ; 
 but nearly the whole of it is the product of capital slowly ac- 
 quired by self-denial. Mr. George himself estimates that of the 
 present annual" product nine tenths are due to the efficiency 
 which capital lends to labor. Take away then the capital, — 
 take away the farm improvements, the tools, the mills, the 
 machinery, the forges, the houses, etc., and it would seem that a 
 very large portion of the population must perish. They do not 
 perish, because those who have gone before have labored and 
 saved. But for this antecedent labor and thrift no piece of 
 ground would command any rent. The whole value then would 
 seem to belong of right to those who are here. 
 
 6 .
 
 42 "PROGRESS AND POVERTY." 
 
 "VVe welcome annually to our shores, it is true, nearly a mil- 
 lion of persons, — from every nation that will assimilate with 
 us and adopt our habits, — feeling that there is still room enough 
 for many more. But what would the people of the United 
 States think if each of these immigrants, not satistied^with an 
 equal chance to share in our opportunities to labor to advantage, 
 should, upon landing, claim for every man, woman, and child 
 a pro rata right to the land of the country ? 
 
 The contrast which Mr. George avails himself of, between the 
 puny infant and a wealthy millionnaire, is rhetorical in the high- 
 est degree. It appeals at once to our natural and laudable com- 
 passion for the poor, and to our natural but not laudable envy 
 of the rich. To pillage the latter and pass the plunder over to 
 the former, gratifies at once two strong passions. But how if, in 
 thus gratifying our blind inclinations, we should miss our aim, 
 and prevent that development of society to which alone the 
 puny infant can look for a chance of unfolding its faculties and 
 rising in the world ? How if, in robbing the rich, we rob a 
 thousand times as many deserving persons who cannot afford to 
 be robbed ? 
 
 RENT NOT MONOPOLY. 
 
 Let us look at some illustrations which, if a little rhetorical 
 in the opposite direction, are still many times nearer the true 
 statement than is that of Mr. George. 
 
 Here is a brave-hearted woman, sixty years old, left destitute, 
 with three children, long years ago. With thrift, intelligence, 
 and self-denial, she faced the world. She saved, after many 
 years, a few thousand dollars. She bought a house in a city, 
 paying half the cost, and being able, upon its security, to raise the 
 other half upon mortgage. She has denied herself fine clothing, 
 amusements, — every kind of unthrift. She has brought up her 
 children to be good members of society. She has barely enough 
 to support her without charity until she passes away. Mr. 
 George proposes to take her all in the name of justice. 
 
 Again: There was, forty years ago, a young man, son of a 
 New England farmer, who had many children. The young man 
 loved a young woman, and she loved him, — loved him enough 
 to face every hardship, if it were with him. They two went
 
 "PROGRESS AND POVERTY." 43 
 
 into the wilderness, knowing that a life of privation was before 
 them, but knowing that in course of time the country would 
 become settled, and that their farm would in the meanwhile be 
 their bank, in which many years of labor might, under the laws 
 of their country, be safely deposited. They looked forward to 
 an independent old age, and so-mething with which to give their 
 children a start in life. Even now, in their declining years, 
 their farm has no rent which can be distinguished from the rent 
 for improvements. Then, says Mr. George, let the rent of all be 
 taken. And this in the name of justice ! 
 
 To the mind of Mr. George, rent is monopoly. He imagines 
 one man owning all the land, and infers that under such circum- 
 stances the whole population would be his slaves. But what 
 light does such an imagining throw upon the case of the United 
 States, where there are certainly many millions of land-own- 
 ers ? The land-owners of the country cannot possibly com- 
 bine to make food scarce, nor can the land-owners of the city 
 combine to make commodities dear. There are plenty of other 
 sites for- cities, and there are plenty of competing cities already. 
 The rents which are paid are paid simply because the sites are 
 worth more than is paid for them. They would not be any 
 lower if they were paid to the government instead of to indi- 
 viduals ; and if city governments are tlie sinks of corruption Mr. 
 George believes them to be, the transfer of the funds into their 
 hands would not seem to be in the interest of civilization. It 
 would be infinitely better to leave them in the hands of the 
 present owners, to be by them distributed — as tliey must 
 be — for services and for commodities, and for the formation 
 of new capital, by whicli the annual product may l)e still further 
 augmented. 
 
 Mr. George instances several cases in which land-owners in 
 Great Britain have manifestly abused their power and pushed 
 tlie rights of property beyond their just limits. Such instances 
 are proper for legal restraint. It is not necessary to confiscate 
 all property in land in order to prevent some abuses. To turn 
 Mr. George's favorite illustration upon him : it is not necessary 
 to burn down your house because there is a pig in it. The pig ' 
 can be driven out.
 
 44 "PEOGEESS AND POVERTY. 
 
 RENTS IN A GROWING COUNTRY. 
 
 Our author appears to have knowledge of only one kind of 
 rent — that of Eicardo -■ — which arises from a pi-essure of popu- 
 lation upon subsistence forcing inferior lands to be taken into , 
 cultivation, and is thus an evidence of diminishing comfort. 
 But there does not seem to be any rent of this description in the 
 United States. The rent of farming lands generally is as yet 
 the rent of improvements, and the rent in cities and the vicinity 
 of cities is spontaneous ascending rent arising out of an improve- 
 ment, not out of a diminution, of the productiveness of labor. 
 Capitalists set themselves down beside one another and carry on 
 certain industries at so great an advantage that more capital can 
 be applied to the adjacent farms, and their product be greatly 
 increased. The distant farms produce just as much as before. 
 As the city grows, rents in some portions increase ; and some 
 capitalists, enticed by this chance, build stores and houses rather 
 than engage in manufacturing. For the opportunity to do this 
 they are willing to pay high prices for land, and the capital they 
 would otherwise employ themselves is employed by others, from 
 whom they buy land. 
 
 Some persons or families who have made fortunate or saga- 
 cious investments of this sort have benefited largely ; they have 
 drawn the prizes in the Land Lottery. But others, many others, 
 draw blanks. I have in mind not a few. One where $50,000 
 were loaned upon property, the property foreclosed, and, after 
 twenty years, sold for one third of the sum advanced, not a cent 
 of interest having been ever received. Another, a case of prop- 
 erty held twenty years and not yet salable at first cost, having 
 never yielded any income, and being taxed all the time at its 
 full value. These cases w^ere in a city. The city in the latter 
 case grew the wrong way ! That it is best for society that prop- 
 erty in land should be under individual management is so mani- 
 fest that even Mr. George admits it; but he proposes to take 
 the income of it for the State, because every infant born in the 
 world has an equal right to his individual proportion of the 
 planet ! 
 
 To the writer the proposal appears to be unwise, useless, un-
 
 "progress and poverty." 45 
 
 just, and wicked. That abuses of the rights of property ought 
 to be restrained, and that a limit might be, and perhaps ought to 
 be, fixed to the quantity of land that any one man or family 
 may engross, may be admitted ; but the suggestion that society 
 may repudiate its own titles, without compensation, under the sub- 
 terfuge that the present generation cannot be bound by the past, 
 is one which so evidently upright a person as our author could 
 never have made if he had not been carried out of himself by the 
 imagination that he had discovered the source of all social evil. 
 
 Would that he had ! With fifty years of moderate economy 
 we could buy back our concessions, and, thereafter, there would 
 be no more poverty or wickedness upon earth ! But, alas ! his 
 supposed cause (the rise of real estate before a panic) is not a 
 cause, but a concurrent effect of quite another cause. 
 
 THE LAWS OF WAGES. 
 
 But if our examination of " Progress and Poverty " shows that 
 we must abandon the belief in the discoveiy by our author of a 
 panacea for all social evils, it shows, on the otlier hand, that we 
 may dismiss his fears of wages tending to a minimum, and of 
 rent devouring the whole annual product. 
 
 So long as this annual product increases, wages also must in- 
 crease ; and there appears to be no reason to apprehend that they 
 will not increase for a long period imless the people, misled by 
 fallacious advice, should abandon the protective policy and permit 
 the recipients of rent and of profits, and the non-productive 
 classes, who are supported out of rent and profits, to send abroad 
 for the greater part of their commodities. So long as the men 
 who get their ten or twenty or thirty or more dollars a day from 
 fees, salaries, or profits, are content to buy their commodities 
 from the men who get their dollar and a half, or two dollars, or 
 three dollars a day, so long (until, at all events, population 
 presses on the means of subsistence) will the annual product, 
 and the consequent remuneration to every land of labor, con- 
 tinue to augment. The progress wiU not be continuous, but in 
 waves ; and during the retrocessions tliere will be severe dis- 
 tress among all classes who have not laid by something for the 
 " rainy day."
 
 46 - "PROGRESS AND POVERTY." 
 
 How these periods of depression may be shortened and made 
 less frequent is worthy of the profound study of the intelligent 
 and philanthropic ; and, meanwhile, it is some consolation to see 
 clearly that such periods are by no means mere aggravations of 
 a general course of economic deterioration, as Mr. George sup- 
 poses, but that they are, on the contrary, only temporary pauses 
 in a general course of economic improvement. 
 
 And now, having performed the disagreeable task of picking 
 flaws in " Progress and Poverty," let us gratefully admit, once 
 more, that it is a brilliant book, glowing with a noble philan- 
 thropy, courage, and self-devotion. All that we have read in 
 fable, or history, or the records of science, is brought again to 
 mind in admirable sentences, and there is much of most inter- 
 esting and suggestive thought and speculation. If political 
 economy could all be strained out, there would remain a vol- 
 ume which every critic would applaud, and which the general 
 reader would turn to again and again as a source of improve- 
 ment and pleasure. As it is, the book is well suited to fas- 
 cinate and mislead the inexperienced, the impatient, the many 
 who judge by the heart rather than by the head, and all those 
 who, in seeking an imaginary right, are willing to commit a 
 certain and irretrievable wroncr. 
 
 University Press : John Wilson & Soitj Cambridge.
 
 UNIVERSITY OF CALIFORNIA LIBRARY 
 
 Los Angeles 
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