nioersittj of (California (Elaus JSorcckels 3Tuna AUTHORISED EDITION: SPECIAL RE-ISSUE PRICE SIXPENCE, NET. PROTECTION OR FREE TRADE BY HENRY GEORGE g $3a // OK ? LONDON ENGLISH LEAGUE FOR THE TAXATION OF LAND VALUES, 376 AND 377 STRAND, W.C.. 1903 SOME OF THE PUBLICATIONS ISSUED AND SOLD BY THE English League for the Taxation of Land Values Offices 376 & 377, STRAND, LONDON, W.C. Price, when not otherwise stated, One Penny each; post free,ld.; 8d per dozen, postage extra; 5s. per 100 (carriage forward). Land Values in Parliament. Land Values and Local Taxation. By His Honour JUDGE O'CONNOR,K.C. Land Law Reform. Based on Taxing Land Values and Not Taxing Improvements. By JAMES DUNDAS WHITE, M.A., LL.D. Landlordism : Its Origin and Growth. By JOHN WHEEL WEIGHT. The Land Tax. A Just Basis of Taxation. By FREDERICK VERINDER, Gen. Sec. E.L.T.L.V. The Taxation of Land Valr ~s. By ALFRED BILLSON. The Great Problem of OUT Great Towns. Series of 12 Articles re- printed from the London Echo. The Taxation of Ground Values. By J. FLETCHER MOULTON, K.C.. M.P. The Queer Side of Landlordism. The Story of Sir Ogre de Covetous, told by J. F. SULLIVAN ; with 17 Illustrations by the Author. Taxing Land Values. By HENRY GEORGE. [One Halfpenny ; 2s. 6d. per 100, post free 25. lid.] "Moses"; "Thou shalt not steal"; "The Crime of Poverty"; "Scotland and Scotsmen"; "Thy Kingdom come." Five Lectures by HKNKY ('.K<>K<;K. A Tragedy of English History. L ne Halfpenny ; 2s. 6d. per 100.] Large Cartoons on the Land Question, suitable for clubs, hoardings, etc. By J. W. BKNGOUGH. On stout paper, 35 in. by 22 in. ; Sd. each, post free. PROTECTION OE FREE TRADE LV EXAMINATION OF THE TARIFF QUESTION WITH ESPECIAL REGARD TO THE INTERESTS OF LABOUR BY HENKY GEOKGE Prove all things ; hold fast that which i&good NEW EDITION LONDON KEG AN PAUL. TRENCH, TBtJBNBR ft CO., LT> . DKYDKN HOUSE, 43 OKBBABD STREET, SOHO, W. 1903 BY TEE SAME AUTHOR. PROGRESS AND POVERTY: An Inquiry into the Causes of Industrial Depressions, and of Increase of \Vant with Increase of Wealth. The Remedy. Fifth Library Edition. Post 8vo, 7s. 6d. Cabinet Edition. Crown Svo, 2s. 6dL Also a Cheap Edition. Limp cloth, Is. Gd. Paper covers, Is. SOCIAL PROBLEMS. Fourth Thousand. Crown 8v . 5*. Cheap Edition. Paper covers, 1*. LONDON : KEG AN PAUL, TRENCH, TRUBNEB adventure whether protection or free trade best accords with the interests of those who live by their INTRODUCTORY. O I differ with those who say that with the rate of wages the state has no concern. I hold with those who deem the increase of wages a legitimate purpose of public policy. To raise and maintain wages is the great ob- ject that all who live by wztges ought to seek, and workingmen. are right in supporting any measure that will attain that object. Nor in this are they acting selfishly, for, while the question of wages is the most important of questions to laborers, it is also the most important of questions to society at large. Whatever improves the condition of the lowest and broadest social stratum must promote the true interests of all. Where the wages of common labor are high and remu- nerative employment is easy to obtain, prosperity will be general. Where wages are highest, there will be the largest production and the most equitable distribu- tion of wealth. There will invention be most active and the brain best guide the hand. There will be the greatest comfort, the widest diffusion of knowledge, the purest morals and the truest patriotism. If we would have a healthy, a happy, an enlightened and a virtuous people, if we would have a pure government, firmly based on the popular will and quickly responsive to it, we jnust strive to raise wages and keep them high. I accept as good and praiseworthy the ends avowed by the advocates of protective tariffs. What I propose to inquire is whether protective tariffs are in reality conducive to these ends. To do this thoroughly I wish to go over all the ground upon which pro- tective tariffs are advocated or defended, to consider what effect the opposite policy of free trade would have, and to stop not until conclusions are reached of which we may feel absolutely sure. 6 PROTECTION OR FREE TRADE. To some it may seem too much to think that this cao be done. For a century no question of public policy has been so widely and persistently debated as that of Protection vs. Free Trade. Yet it seems to-day as far as ever from settlement so far, indeed, that many have come to deem it a question as to which no certain con- clusions can be reached, and many more to regard it as too complex and abstruse to be understood by those who have not equipped themselves by long study. This is, indeed, a hopeless view. We may safely leave many branches of knowledge to such as can de- vote themselves to special pursuits. We may safely accept what chemists tell us of chemistry, or astron- omers of astronomy, or philologists of the development of language, or anatomists of our internal structure, for not only are there in such investigations no pecuni- ary temptations to warp the judgment, but the ordinary duties of men and of citizens do not call for such special knowledge, and the great body of a people may entertain the crudest notions as to such things and yet lead happy and useful lives. Far different, however, is it with matters which relate to the production and dis- tribution of wealth, and which thus directly affect the comfort and livelihood of men. The intelligence which can alone safely guide in these matters must be the in- telligence of the masses, for as to such things it is the common opinion, and not the opinion of the learned few, that finds expression in legislation. If the knowledge required for the proper ordering of public affairs be like the knowledge required for the prediction of an eclipse, the making of a chemical an- alysis, or the decipherment of a cuneiform inscription, or even like the knowledge required in any branch of art or INTRODUCTORY. / handicraft, then the shortness of human life and the necessities of human existence must forever condemn the masses of men to ignorance of matters which direct- ly affect their means of subsistence. If this be so, then popular government is hopeless, and, confronted on one side by the fact, to which all experience testifies, that a people can never safely trust to any portion of their number the making of regulations which affect their earnings, and on the other by the fact that the masses can never see for themselves the effect of such regula tions, the only prospect before mankind is that the many must always be ruled and robbed by the few. But this is not so. Political economy is only the economy of human aggregates, and its laws are laws which we may individually recognize. What is re- quired for their elucidation is not long arrays of statis- tics nor the collocation of laboriously ascertained facts, but that sort of clear thinking which, keeping in mind the distinction between the part and the whole, seeks the relations of familiar things, and which is as possible for the unlearned as for the learned. Whether protection does or does not increase na- tional wealth, whether it does or does not benefit the laborer, are questions that from their nature must admit of decisive answers. That the controversy be- tween protection and free trade, widely and ener- getically as it has been carried on, has as yet led to no accepted conclusion cannot therefore be due to diffi- culties inherent in the subject. It may in part be ac- counted for by the fact that powerful pecuniary interests are concerned in the issue, for it is true, as Macau lay said, that if large pecuniary interests were concerned in the attraction of gravitation, that most obvious 8 PROTECTION OR FREE TRADE. of physical facts would have disputers. But that so many fair-minded men who have no special interests to serve are still at variance on this subject can only,4t seems to me, be fully explained on the assumption that the discussion has not been carried far enough to bring out that full truth which harmonizes all partial truths. The present condition of the controversy, indeed, shows this to be the fact. In the literature of the sub- ject, I know of no work in which the inquiry has yet been carried to its proper end. As to the effect of protection upon the production of wealth, all has prob- ably been said that can be said; but that part of the question which relates to wages and which is primarily concerned with the distribution of wealth has not been adequately treated. Yet this is the very heart of the controversy, the ground from which, until it is thor- oughly explored, fallacies and confusions must con- stantly arise, to envelop in obscurity even that which has of itself been sufficiently explained. The reason of this failure is not far to seek. Politi- cal economy is the simplest of the sciences. It is but the intellectual recognition, as related to social life, of laws which in their moral aspect men instinctively rec- ogni/o, and which are embodied in the simple teachings of him whom the common people heard gladly. But, like Christianity, political economy has been warped l>y institutions which, denying the equality and brother- hood of man, have enlisted authority, silenced objec- tion, and ingrained themselves in custom and habit of thought. Its professors and teachers have almost in- variably belonged to or been dominated l>y that class which folcniics no questioning of social adjustments that ^ivc to those who do not Jabor the fruits <>/ INTRODUCTORY. labor's toil. They have been like physicians employed to make a diagnosis on condition that they shall dis- cover no unpleasant truth. Given social conditions such as those that throughout the civilized world to- day shock the moral sense, and political economy, fear- lessly pursued, must lead to conclusions that will be as a lion in the way to those who have any tenderness for "vested interests." But in the colleges and universities of our time, as in the Sanhedrim of old, it is idle to ex~ pect any enunciation of truths unwelcome to the powers that be. Adam Smith demonstrated clearly enough that pro- tective tariffs hamper the production of wealth. Bat Aclarn Smith the university professor, the tutor and pensioner of the Duke of Buccleuch, the prospective holder of a government place either did not deem it prudent to go further, or, as is more probable, was pre- vented from seeing the necessity of doing so by the at- mosphere of his time and place. He at any rate failed to carry his great inquiry into the causes which from " that original state of things in which the production of labor constitutes the natural recompense or wages of labor " had developed a state of things in which nat- ural wages seemed to be only such part of the produce of labor as would enable the laborer to exist. And, following Smith, came Malthus, to formulate a doctrine which throws upon the Creator the responsibility for the want and vice that flow from man's injustice a doctrine which has barred from the inquiry which Smith did not pursue even such high and generous minds as that of John Stuart Mill. Some of the pub- lications of the Anti-Corn-Law League contain indi- cations that if the struggle over the English corn laws 10 PROTECTION OR FREE TRADE. had been longer continued, the discussion might have been pushed further than the question of revenue tariff or protective tariff ; but, ending as it did, the capitalists of the Manchester school were satisfied, and in such discussion as has since ensued English free traders, with few exceptions, have made no further advance, while American advocates of free trade have merely followed the English free traders. On the other hand, the advocates of protection have evinced a- like indisposition to venture on burning ground. They extol the virtues of protection as fur- nish ing employment, without asking how it comes that any one should need to be furnished with employment ; they assert that protection maintains the rate of wages, without explaining what determines the rate of wages. The ablest of them, under the lead of Carey, have re- jected the Malthusian doctrine, but only to set up an ((jiially untenable optimistic theory which serves the same purpose of barring inquiry into the wrongs of labor, and which has been borrowed by Continental free traders as a weapon with which to fight the agi- tation for social reform. That, so far as it has yet gone, the controversy be- tween protection and free trade has not been carried to its logical conclusions is evident from the positions which both sides occupy. Protectionists and fret. traders alike seem to lack the courage of their convic- tions. If protection have the yirtues cLiinicd for it, why should it be confined to the, restriction of imports from foreign countries? If it roallv "provides employ- ment" and ruiscs \v;i^cs, tlu-n a condition of tilings in which hundreds of thousands vainly seek employment, and wages touch the point of bare subsistence, demands INTRODUCTORY. 11 a far more vigorous application of this beneficent prin- ciple than any protectionist has }^et proposed. On the other hand, if the principle of free trade be true, the substitution of a revenue tariff for a protective tariff is a ridiculously inefficient application of it. Like the two knights of allegory, who, halting one on each side of the shield, continued to dispute about it when the advance of either must have revealed a truth that would have ended their controversy, pro- tectionists and free traders stand to-day. Let it be ours to carry the inquiry wherever it may lead. The fact is, that fully to understand the tariff question we must go beyond the tariff question as ordinarily debated. And here, it may be, we shall find ground on which honest divergences of opinion may be reconciled, and facts which seem conflicting may fall into harmonious relations. 3/TY CHAPTER II. CLEARING OROUND. , THE protective theory lias certainly the weight of most general acceptance. Forty years ago all civilized countries based their policy upon it ; and though Great Britain has since discarded it, she remains the only considerable nation that has done so, while not only have her own colonies, as soon as they have obtained the power, shown a disposition to revert to it, but such a disposition has of late years been growing in Great Britain herself. It should be remembered, however, that the pre- sumption in favor of any belief generally entertained has existed in favor of many beliefs now known to be entirely erroneous, and is especially weak in the case of a theory which, like that of protection, enlists the sup- port of powerful special interests. The history of man- kind everywhere shows the power that special inter- ests, capable of organization and action, may exert in securing the acceptance of the most monstrous doc- trines. We have, indeed, only to look around us to see how easily a small special interest may exert greater influence in forming opinion and making laws than a large general interest. As what is everybody's busi- ness is nobody's business, so what is everybody's in- terest is nobody's inlcivst. Two or three citi/ens of a town see that the building of a custom-house or 1* CHARING GROUND. 13 the dredging of a creek will put money in their pock- ets ; a few silver miners conclude that it will be a good thing for them to have the government stow away some millions of silver every month. ; a navy contractor wants the profit of repairing useless iron-clads or building needless cruisers, and again and again such petty inter- ests have their way against the larger interests of the whole people. What can be clearer than that a note directly issued by the government is at least as good as a note based on a government bond? Yet special interests have sufficed with us to institute and maintain a hybrid currency for which no other valid reason can be assigned than private profit. Those who are specially interested in protective tariffs find it easy to believe that protection is of gen- eral benefit. The directness of their interest makes them active in spreading their views, and having con- trol of large means for the protected industries are those in which large capitals are engaged and being ready on occasion, as a matter of business, to spend money in propagating their doctrines, they exert great influence upon the organs of public opinion. Free trade, on the contrary, offers no special advantage to any particular interest, and in the present state of social morality benefits or injuries which men share in common with their fellows are not felt so intensely as those which affect them specially. I do not mean to say that the pecuniary interests which protection enlists suffice to explain the wide- spread acceptance of its theories and the tenacity with which they are held. But it is plain that these in- terests do constitute a power of the kind most potent in forming opinion and influencing legislation, and 14 PROTECTION OR FREE TRADE. that this fact weakens the presumption the wide accept- ance of protection might otherwise afford, and is a rea- son why those who believe in protection merely because they have constantly heard it praised should examine the question for themselves. Protection, moreover, has always found an effective ally in those national prejudices and hatreds which are in part the cause and in part the result of the wars that have made the annals of mankind a record of blood- shed and devastation prejudices and hatreds which have everywhere bSen the means by which the masses have been induced to use their own power for their own enslavement. For the first half century of our national existence American protectionists pointed to the protective tariff of Great Britain as an example to be followed; but since that country, in 1846, discarded protection, its American advocates have endeavored to utilize national prejudice by constantly speaking of protection as an American system and of free trade as a British inven- tion. Just now they are endeavoring to utilize in the same way the enmity against everything British which long oppressions and insults have engendered in the Irish heart, and, in the words of a recent political plat- Conn, Irish- Americans are called upon "to resist the introdiietion into America of the English theory of free trade, \vliirli has been so successfully used as a means 1<> destroy the industries and oppress the people of Ireland."' Kven if free trade had originated in Great Britain we should be as foolish in rejretinir it on that account as iioiild be in refusing t<> speak our mother tongue Ixvanse it is of Hriiish origin, or in going back to hand CLEARING GROUND. 15 and water power because steam engines were first intro- duced in Great Britain. But, in truth, free trade no more originated in Great Britain than did the habit of Valking on the feet. Free trade is the natural trade the trade that goes on in the absence of artificial re- strictions. It is protection that had to be invented. But instead of being invented in the United States, it was in full force in Great Britain long before the Uni- ted States were thought of. It would be nearer the truth to say that protection originated in Great Britain, for, if the system did not originate there, it was fully developed there, and it is from that country that it has been derived by us. Nor yet did the reaction against it originate in Great Britain, but in France, among a school of eminent men headed by Quesnay, who were Adam Smith's predecessors and in many things his teachers. These French economists were what neither omith nor any subsequent British economist or states- man has been true free traders. They wished to sweep away not merely protective duties, but all taxes, direct and indirect, save a single tax upon land values. This logical conclusion of free-trade principles the so- called British free traders have shirked, and it meets to- day as bitter opposition from the Cobden Club as from American protectionist's. The only sense in which we can properly speak of " British free trade " is the same sense in which we speak of a certain imitation metal as " German silver." " British free trade " is spurious free trade. Great Britain does not really enjoy free trade. To say nothing of internal taxes, inconsistent with true free trade, she still maintains a cordon of custom-house officers, coast guards and baggage searchers, and still collects over a hundred million dollars of her revenue 16 PROTECTION OR FREE TRADE. from import duties. To be sure, her tariff is u for rev- enue only/' but a tariff for revenue only is not free trade. The ruling classes of Great Britain have ado pe- ed only so much free trade as suits their class inter- ests, and the battle for free trade in that country Las yet to be fought. On the other hand, it is absurd to talk of protection as an American system. It had been fully developed in Europe before the American colonies were planted, and during our colonial period England maintained a more thorough system of protection than now anywhere exists a system which aimed at building up English industries not merely by protective duties, but by the repression of like industries in Ireland and the colonies, and wherever else throughout the world English power could be exerted. What we got of protection was the wrong side of it, in regulations intended to prevent American industries from competing with those of the mother country and to give to her a monopoly of the American trade. The irritation produced in the growing colonies by these restrictions was the main cause of the revolution which made of them an independent nation. Protec- tionist ideas were doubtless at that time latent among one people, for they permeated the mental atmosphere of the civilized world; but so little disposition was there to embody those ideas in a national policy, that the American representatives in negotiating the treaty of peace endeavored to secure complete freedom of trade between the United States and Great Britain. This was refused by England, then- and for a long time afterward completely dominated by protective ideas. But during the poriod following the revolution CLEARING GROUND. 17 in which the American Union existed during the Articles of Confederation, no tariff hampered impor- tations into the American States. The adoption of the Constitution made a Federal tariff possible, and to give the Federal Government an independent revenue a tariff was soon imposed ; but although protection had then begun to find advocates in the United States, this first American tariff was almost nominal as compared with what the British tariff was then or our tariff is now. And in the Federal Constitution state tariffs were prohibited a step which has resulted in giving to the principle of free trade the greatest extension it has had in modern times. Nothing could more clearly show how far the American people then were from accepting the theories of protection since popularized among them, for the national idea had not then acquired the force it has since gained, and if protection had then been looked upon as necessary the different states would not without a struggle have given up the power of imposing tariffs of their own. Nor could protection have reached its present height in the United States but for the civil war. While at- tention was concentrated on the struggle and mothers were sending their sons to the battle-field, the interests that sought protection took advantage of the patriotism that was ready for any sacrifice to secure protective' taxes such as had never before been dreamed of taxes which they have ever since managed to keep in force, and even in many cases to increase. The truth is that protection is no more American than is the distinction made in our regular army and navy between commissioned officers and enlisted men a dis- 18 PROTECTION OR PEEK TRADE. tinction not of degree but of kind, so that there is be- tween the highest non-commissioned officer and the lowest commissioned officer a deep gulf fixed, a gulf which can only be likened to that which exists between white and black where the color line is drawn sharpest. This distinction is historically a survival of that made in the armies of aristocratic Europe, when they were officered by nobles and recruited from peasants, and has been copied by us in the same spirit of imitation that has led us to copy other undemocratic customs and in- stitutions. Though we preserve this aristocratic dis- tinction after it has been abandoned in some European countries, it is in no sense American. It neither origin- ated with us nor does it consort with, our distinctive ideas and institutions. So it is with protection. Whatever be its economic merits there can be no doubt that it conflicts with those ideas of natural right and personal freedom which received national expression in the es- tablishment of the American Republic, and which wo have been accustomed to regard as distinctively Ameri- can. What more incongruous than the administering of custom-house oaths and the searching o.: trunks and hand-bags under the shadow of " Liberty Enlightening tl.<- World?" As for the assertion that " the English theory of free trade" has been used "to destroy the industries and oppress the people of Ireland," the truth is that it was "the Kii.irlish theory of protection" that was soused. The restrictions which British protection imposed upon the American colonies were trivial as compared with those imposed upon Ireland. The successful resistance of the colonies roused in Ireland the same spirit, and led to tlie great movement of "Irish Volunteers," who, with CLEARING GROUND. 19 cannon bearing the inscription " Free Trade or - ! '' forced the repeal of those restrictions and won for a time Irish legislative independence. Whether Irish industries that were unquestionably hampered and throttled by British protection could now be benefited by Irish protection, like the question whether protection benefits the United States, is only to be settled by a determination of the effects of pro- tection upon the country that imposes it But without going into that, it is evident that the free trade be- tween Great Britain and Ireland which has existed since the union in 1801, has not been the cause of the backwardness of Irish industry. There is one part of Ireland which has enjoyed comparative prosperity and in which important industries have grown up some of them, such as the building of iron ships, for which natural advantages cannot be claimed. How can this be explained on the theory that Irish industries cannot be re-established without protection? If the very men who are now trying to persuade Irish- American voters that Ireland has been impover- ished by "British free trade" were privately asked the cause of the greater prosperity of Ulster over other parts of Ireland, they would probably give the answer made familiar by religious bigotry that Ulster is en- terprising and prosperous because it is Protestant, while the rest of Ireland is sluggish and poor because it is Catholic. But the true reason is plain. It is, that the land tenure in Ulster has been such that a larger por- tion of the wealth produced has been left there than in other parts of Ireland, and that the mass of the peo- ple have not been so remorsely hunted and oppressed. In Presbyterian Skye the same general poverty, the 20 PROTECTION OR FREE TRADE. same primitive conditions of industry exist as in Catho- lic Connemara, and its cause is to be seen in the same rapacious system of landlordism which has carried off the fruits of industry and prevented the accumulation of capital. To attribute the backwardness of industry among a people who are steadily stripped of all they can produce above a bare living, to the want of a pro- tective tariff or to religious opinions is like attributing the sinking of a scuttled ship to the loss of her figure- head or the color of her paint. What, however, in the United States at least, has tended more than any appeals to national feeling to dis- pose the masses in favor of protection, has been the difference of attitude toward the working classes as- sumed by the contending policies. In its beginnings in this country protection was strongest in those sec- tions where labor had the largest opportunities and was held in the highest esteem, while the strength of free trudo has been the greatest in the section in which up to tin; civil war slavery prevailed. The political party which successfullv challenged the aggressions of the slave power also declared for a protective tariff, while the men who tried to rend the Union in order to es- tablish a nation hased upon the right of capital to own lalior, prohibited protection in the constitution they formed. The explanation of these facts is, that in one section of the country there were many industries that could l>e protected, while in the other section there were few. While American cotton culture was in its earlier stages, Southern cotton planters were willing enough to avail themselves of a heavy duty on India cottons, and Louisiana sugar growers have always been persist fur protection, lint when cotton ruis<>,| CLEARING GROUND. 21 for export became the great staple of the South, pro- tection, in the absence of manufactures, was not only clearly opposed to dominant Southern interests, but assumed the character of a sectional imposition by which the South was taxed for the benefit of the North. This sectional division on the tariff question had no reference whatever to the conditions of labor, but in many minds its effect has been to associate protection with respect for labor and free trade with its enslave- ment. Irrespective of this there has been much in the pre- sentation of the two theories to dispose the working- classes toward protection and against free trade. World ngmen generally feel that they do not get a fair reward for their labor. They know that what prevents them from successfully demanding higher wages is the competition of others anxious for work, and they are naturally disposed to favor the doctrine or party that proposes to shield them from competition. This, its advocates urge, is the aim of protection. And what- ever protection accomplishes, protectionists at least pro- fess regard for the working classes, and proclaim their desire to use the powers of government to raise and maintain wages. Protection, they declare, means the protection of labor. So constantly is this reiterated that many suppose that this is the real derivation of the term, and that " protection " is short for " protection of labor." On the other hand, the opponents of protection have, for^the most part, not only professed no special interest in the well-being of the working classes and no desire to raise wages, but have denied the justice of attempt- ing to use the powers of government for this purpose. 22 PROTECTION OR FREE TRADE. The doctrines of free trade have been intertwined with teachings tha,t throw upon the laws of nature respon- sibility for the poverty of the laboring class, and foster a callous indifference to their sufferings. On the same grounds on which they have condemned leg- islative interference with commerce, free-trade econ- omists have condemned interference with hours of labor, with the rate of wages, and even with the employ- ment of women and children, and have united protec- tionism and trades unionism in the same denuncia- tion, proclaiming supply and demand to be the only true and rightful regulator of the price of labor as of the price of pig iron. While protesting against re- strictions upon the production of wealth they have ignored the monstrous injustice of its distribution, and have treated as fair and normal that competition in which human beings, deprived of their natural oppor- tunities of employing themselves, are compelled by bit- ing want, to bid against one another. All this is true. But it is also true that the needs of labor require more than kind words, and are not to be satisfied by such soft phrases as we address to a horse when we want to catch him that we may put a bit in his mouth and a saddle on his back. Let me ask those \/ho are disposed to regard protection as favorable to the aspirations of labor, to consider whether it can be tnie that what labor needs is to be protected? To admit that labor needs protection is to acknowl- c;|;jv its inferiority : it is to acquiesce in ;in assumption that degrades the workman to the position of a depend- ent, and leads logically to the claim that the employe 5* bound to vote in the interest of the employer who him with work. There is sujnetliinjj' in the CLEAKfN(! GHOUNT). 23 very word " protection " tliat ought to make work- ingmen cautious of accepting anything presented to them under it. The protection of the masses has in all times been the pretense of tyranny -the plea of monarchy, of aristocracy, of special privilege of every kind. The slave owners justified slavery as protect- ing the slaves. British misrule in Ireland is upheld on the ground that it is for the protection of the Irish. But, whether under a monarchy or under a re- public, is there an instance in the history of the world in which the " protection " of the laboring masses has not meant their oppression ? The protection that those who have got the law-making power into their hands have given to labor, has at best always been the pro- tection that man gives to cattle he protects them that he may use and eat them. There runs through protectionist professions of con- cern for labor a tone of condescending patronage more insulting to men who feel the true dignity of labor than frankly expressed contempt could be an assumption that pauperism is the natural condition of labor, to which it must everywhere fall unless benevolently pro- jected. It is never intimated that the land-owner or the capitalist needs protection. They, it is always as- sumed, can take care of themselves. It is only the #oor workingman who must be protected. What is labor that it should so need protection? Is not labor the creator of capital, the producer of all wealth? Is it not the men who labor that feed and clothe all others ? Is it not true, as has been said, that the three great orders of society are " workingmen, beggarmen and thieves?" How, then, does it come that ^Yorkingmen alone need protection? When the 24 PROTECTION OR FREE TRADE. iirst man came upon the earth who was there to pro- tect him or to provide him with employment? Yet whenever or however he came, he must have managed to get a living and raise a family! When we consider that labor is the producer of all Wealth, is it not evident that the impoverishment and dependence of labor are abnormal conditions re- sulting from restrictions and usurpations, and that instead of accepting protection, what labor should de- mand is freedom ? That those who advocate any ex- tension of freedom choose to go no further than suits their own special purpose is no reason why freedom it- self should be distrusted. For years it was held that the assertion of our Declaration of Independence that all men are created equal and endowed by their Creator with unalienable rights, applied only to white men. But this in nowise vitiated the principle. Nor does it vitiate the principle that it is still held to apply only to political rights. And so, that freedom of trade has been advocated by those who have no sympathy with labor should not pK'judice us against it. Can the road to the industrial emancipation of the masses be any other than that of freedom ? CHAPTER III. OF METHOD. ON the deck of a ship men are pulling on a rope and on her mast a yard is rising. A man aloft is clinging to the tackle that raises the yard. Is his weight assist- ing its rise or retarding it? That, of course, depends on what part of the tackle his weight is thrown upon, and can only be told by noticing whether its tendency is with or against the efforts of those who pull on deck. If in things so simple we may easily err in assuming cause from effect, how much more liable to error are such assumptions in regard to the complicated phenom- ena of social life. Much that is urged in current discussions of the tariff question is of no validity whatever, and however it may serve the purpose of controversy, cannot aid in the discovery of truth. That a thing exists with or follows another thing is no proof that it is because of that other thing. This assumption is the fallacy post Itoc, ergo propter hoc, which leads, if admitted, to the most preposterous conclusions. Wages in the United States are higher than in England, and we differ from England in having a protective tariff. But the assumption that the one fact is because of the other, is no more valid than would be the assumption that these higher wages are due to our decimal coinage or to our republican form of government. That Eng- 25 26 PROTECTION OR FREE TRADE. land has grown in wealth since the abolition of pro- tection proves no more for free trade than the growth of the United States under a protective tariff does for protection. It does not follow that an institu- tion is good because a country has prospered under it, nor bad because a country in which it exists is not prosperous. It does not even follow that institutions to be found in all prosperous countries and not to be found in backward countries are therefore beneficial. For this, at various times, might have been confidently asserted of slavery, of polygamy, of aristocracy, of es- tablished churches, and it may still be asserted of pub- lic debts/of private property in land, of pauperism, or of the existence of distinctively vicious or criminal classes. Nor even when it can be shown that certain changes in the prosperity of a country, of an industry, or of a class, have followed certain other changes in laws or institutions can it be inferred that the two are related to each other as effect and cause, unless it can also be shown that the assigned cause tends to produce the assigned effect, or unless, what is clearly impossible in most cases, it can be shown that there is no other cause to which the effect can be attributed. The almost endless multiplicity of causes constantly operating in human societies, and the almost endless interference of effect with effect, make that popular mode of reasoning which logicians call the method of simple enumeration worse than uselessMn social investigations. As for reliance upon statistics, that involves the ad- ditional difficulty of knowing whether we have the right statistics. Though " figures cannot lie," there is in their collection and v T011 l^ n .- S11< '' 1 liability to over- sight and such temptation to biy.s taat they are to be OF Mjrrnoi). 27 distrusted in matters of controversy until they have been subjected to rigid examination. The value of most arguments turning upon statistics is well illus- trated in the story of the government clerk who, being told to get up the statistics of a certain question, wished first to know which side it was desired that they should support. Under their imposing appearance of exact- ness may lurk the gravest errors and wildest assump- tions. To ascertain the effect of protective tariffs, we must inquire what they are and how they operate. When we thus discover their nature and tendencies, we shall be able to weigh what is said for or against them, and have a clew by which we may trace their results amid the complications of social phenomena. For the largest communities are but expansions of the smallest com- munities, and the rules of arithmetic by which we cal- culate gain or loss on transactions of dollars apply as well to transactions of hundreds of millions. Thus the facts we must use and the principles we must apply are common facts that are known to all and principles that are recognized in every-day life. Starting from premises as to which there can be no dispute, we have only to be careful as to our steps in order to reach conclusions of which we may feel sure. We cannot experiment with communities as the chem- ist can with material substances, or as the physiologist can with animals. Nor can we find nations so alike in all other respects that we can safely attribute any difference in their conditions to the presence or ab- sence of a single cause without first assuring our- selves of the tendency of that cause. But the imag- ination puts at our command a method of investi- 28 PROTECTION OR FREE TRADE. gating economic problems which is within certain limits hardly less useful than actual experiment. We may test the working of known principles by mentally separating, combining or eliminating con- ditions. Let me explain what I mean by an illus- tration I have once before used.* When I was a boy I went down to the wharf with another boy to see the first iron steamship that had ever crossed the ocean to Philadelphia. Now, hearing of an iron steamship seemed to us then a good deal like hearing of a leaden kite or a wooden cooking-stove. But we had not been long aboard of her, before my comrade said in a tone of contemptuous disgust : " Pooh ! I see how it is. She's all lined with wood ; that's the reason she floats." I could not controvert him for the moment, but I was not satisfied, and sitting down on the wharf when he left me, I set to work trying mental experiments. If it was the wood inside of her that made her float, then the more wood the higher she would float ; and, mentally, I loaded her up with wood. But, as I was familiar with the process of making boats out of blocks of wood, I at once saw that, instead of floating higher, she would sink deeper. Then, I mentally took all the wood out of her, as wo dug out our wooden boats, and saw that thus lightened she would float higher still. Then, in imagination, I jjiu nned a hole in her, and saw that the water would run in and she would sink, as did our wooden boats when ballasted with leaden keels. And, thus I saw, as clearly as though I could have actually made these experiments with the steamer, that it was not the * Lecture before the students of the University of California on tliu " study of Politic -jil Economy," April, 1877. OF METHOD. 29 wooden lining that made her float, but her hollowriess, or, as I would now phrase it, her displacement of water. In such ways as this, with which we are all familiar, we can isolate, analyze or combine economic principles, and, by extending or diminishing the scale of propo- sitions, either subject them to inspection through a men- tal magnifying glass or bring a larger field into view. And this each one can do for himself. In the inquiry upon which we are about to enter, all I ask of the reader is that he shall in nothing trust to me. CHAPTER IV. PROTECTION AS A UNIVERSAL NEED. To understand a thing it is often well to begin by looking at it, as it were, from the outside and observing its relations, before examining it in detail. Let us do this with the protective theory. Protection, as the term has come to signify a certain national policy, means the levying of duties upon im- ported commodities for the purpose of protecting from competition the home producers of such commodities. Protectionists contend that to secure the highest pros- perity of each nation it should produce for itself every- thing it is capable of producing, and that to this end its home industries should be protected against the com- petition of foreign industries. They also contend (in the United States at least) that to enable workmen to obtain as high wages as possible they should be pro- tected by tariff duties against the competition of goods produced in countries where wages are lower. With- out disputing the correctness of this theory, let us con- sider its larger relations. The protective theory, it is to be observed, asserts a general law, as true in one country as in another. However protectionists in the United States may talk of " American protection " and " British free trade," protection is, and of necessity, must be, advocated as of universal application. American protectionists use the PROTECTION AS A UNIVERSAL NEED. 31 arguments of foreign protectionists, and even whera they complain that the protective policy of other coun- tries is injurious to us, commend it as an example which we should follow. They contend that (at least up to a certain point in national development) protec- tion is everywhere beneficial to a nation, and free trade everywhere injurious; that the prosperous nations have built up their prosperity by protection, and that all nations that would be prosperous must adopt that policy. And their arguments must be universal te have any plausibility, for it would be absurd to assert that a theory of national growth and prosperity applies to some countries and not to others. Let me ask the reader who has hitherto accepted the protective theory to consider what its necessarily uni- versal character involves. It was the realization of this that first led me to question that theory. I was for a number of years after I had come of age a protec- tionist, or rather, I supposed I was, for, without real examination, I had accepted the belief, as in the first place we all accept our beliefs, on the authority of others. So far, however, as I thought at all on the subject, 1 was logical, and I well remember how when the Florida and Alabama were sinking American ships at sea, I thought their depredations, after all, a good thing for the state in which I lived California since the increased risk and cost of ocean carriage in Ameri- can ships (then the only way of bringing goods from the Eastern States to California) would give to her in- fant industries something of that needed protection against the lower wages and better established indus- tries of the Eastern States which the Federal Constitu- tion prevented her from securing by a state tariff. The 32 PROTECTION OR FREE TRADE. full bearing of such notions never occurred to me till I happened to hear the protective theory elaborately ex- pounded by an able man. As he urged that American industries must be protected from the competition of foreign countries, that we ought to work up our own raw materials and allow nothing to be imported that \ve Tsould produce for ourselves, I began to realize that those propositions, if true, must be universally true, and that not only should every nation shut itself out from every other nation ; not only should the various sections of every large country institute tariffs of their own to shelter their industries from the competition of other sections, but that the reason given why no people should obtain from abroad anything they might make at home, must apply as well to the family. It was this that led me to weigh arguments I had before accepted without real examination. It seems to me impossible to consider the necessarily universal character of the protective theory without feeling it to be repugnant to moral perceptions and in- consistent with the simplicity and harmony which we e\ erywhere discover in natural law. What should we 1 hi nk of human laws framed for the government of a country which should compel each family to keep con- stantly on their guard against every other family, to expend a large part of their time and labor in prevent- ing exchanges with their neighbors, and to seek their own prosperity by opposing the natural efforts of other families to become prosperous? Yet the protective theory implies that laws such as these have been im- P'.sed by the Creator upon the i';miilies of men who tenant this earth. It implies that by virtue of social laws, OS immutable as the physical laws, eaeli nation PROTECTION AS A UNIVERSAL NEED, 33 must stand jealously on guard against every other na- tion and erect artificial obstacles to national inter- course. It implies that a federation of mankind, such as that which prevents the establishment of tariffs be- tween the states of the American Union, would be a disaster to the race, and that in an ideal world each nation would be protected from every other nation by a cordon of tax collectors, with their attendant spies and informers. Such a theory might consort with that form of poly- theism which assigned to each nation a separate and hostile God ; but it is hard to reconcile it with the idea of the unity -of the Creative Mind and the universality of law. Imagine a Christian missionarj^ expounding to a newly discovered people the sublime truths of the gospel of peace and love the fatherhood of God ; the brotherhood of man ; the duty of regarding the interests of our neighbors equally with our own, and of doing to others as we would have them do to us. Could he, in the same breath, go on to declare that, by virtue of the laws of this same God, each nation, to prosper, must defend itself against all other nations by a pro- tective tariff ? Keligion and experience alike teach us that the highest good of each is to be sought in the good of others ; that the true interests of men are harmonious, not antagonistic ; that prosperity is the daughter of good will and peace ; and that want and destruction follow enmity and strife. The protective theory, on the other hand, implies the opposition of national interests ; that the gain of one people is the loss of others ; that each must seek its own good by constant efforts to get ad- vantage over others and to prevent others from 3i PROTECTION" uk KKEK TRADE. advantage over it. It makes of nations rivals instead of co-operators ; it inculcates a warfare of restrictions and prohibitions and searchings and seizures, which differs in weapons, but not in spirit, from that warfare which sinks ships and burns cities. Can we imagine the nations beating their swords into plowshares and their spears into priming-hooks and yet maintaining hostile tariffs ? No matter whether he call himself Christian or Deist, or Agnostic or Atheist, who can look about him with- out seeing that want and suffering flow inevitably from selfishness, and that in any community the golden rule which teaches us to regard the interests of others as carefully as our own would bring not only peace but plenty ? Can it be that what is true of individuals ceases to be true of nations that in one sphere the law of prosperity is the law of love ; in the other that of strife? On the contrary, universal history testifies that poverty, degradation, and enslavement are the in- evitable results of that spirit which leads nations to regard each other as rivals and enemies. Every political truth must be a moral truth. Yet who can accept the protective theory as a moral truth ? A few months ago I found myself one night, with four other passengers, in the smoking car of a Pennsyl- vania limited express train traveling west. The con- versation, beginning with fast trains, turned to fast steamers, and then to custom-house experiences. One lold how, coming from Europe with a trunk filled with presents for his wife, he had significantly said to the custom-house inspector detailed to examine his trunks that he was in a hurry. " How much of a hurry? " said the officer. "Ten dollars' worth of a hurry," was PROTECTION AS A UNIVERSAL NEED. o5 the reply. The officer took a quick look through the trunk and remarked, i: That's not much of a hurry for all this." " I gave him ten more," said the story-teller, 44 and he chalked the trunk." Then another told how under similar circumstances he had placed a magnificent meerschaum pipe so that it would be the first thing seen on lifting the trunk lid, and, when the officer admired it, had replied that it was his. The third said he simply put a greenback con- spicuously in the first article of luggage ; and the fourth told how his plan was to crumple up a note, and put it with his keys in the officer's hands. Here were four reputable business men, as I after- ward found them to be one an iron worker, one a coal producer, and the other two manufacturers men of at least average morality and patriotism, who not only thought it no harm to evade the tariff, but who made no scruple of the false oath necessary, and regarded the bribery of customs officers as a good joke. I had the curiosity to edge the conversation from this to the sub- ject of free trade, when I found that all four \\vro staunch protectionists, and by edging it a little further I found that all four were thorough believers in the right of an employer to discharge an -f workman who voted for a free-trads candidate, holding, as they put it, that no one ought to eat the bread of an employer whose interests he opposed. * recall this conversation because it is typical. Who- ever has traveled on trans- Atlantic steamers has listened to such conversations, and is aware that the great ma- jority of the American protectionists who visit Europe return with purchases which they smuggle through, even at the expense of a " custom -house oath " and a, 36 PROTECTION OR FREE TRADE. greenback to the examining officer. Many of our larg- est under- valuation smugglers have been men of the highest social and religious standing, who gave freely of their spoils to churches arifl. benevolent societies. Not long ago a highly respected banker, an extremely religious man, who had probably neglected the pre- cautions of my smoking-car friends, was detected in the endeavor to smuggle through in his luggage (which he had of course taken a " custom-house oath " did not contain anything dutiable) a lot of very valuable pres- ents to a church ! Conscientious men will (until they get used to them) shrink from false oaths, from bribery, or from other means necessary to evade a tariff, but even of be- lievers m protection are there any who really think such evasions wrong in themselves ? What theoreti- cal protectionist is there, who, if no one was watch- ing him, would scruple to carry a box of cigars or a dress pattern, or anything else that could be carried, across a steamer wharf or across Niagara bridge? And why should he scruple to carry such things across a wharf, a river, or an imaginary line, since once inside the custom-house frontier no one would object to his carrying them thousands of miles? Tli;it unscrupulous men, for their own private ad- vantage, break laws intended for the general good proves noil ling; but that no one really feels smug- gling f> !>< wrong proves a good deal. Whether we hold tin 1 has is of moral ideas to be intuitive or utili- tarian, is not the fact that protection thus lacks the support of the moral sentiment inconsistent with the idea tlia!. tariffs arc necessary to the well-being and progress <>f mankind 7 If, as is held by some, moral PROTECTION AS A UNIVERSAL NEED. 37 perceptions are implanted in our nature as a means whereby our conduct may be instinctively guided in ?uch way as to conduce to the general well being, how is it, if the Creator has ordained that man should prosper by protective tariffs, that the moral sense takes no cognizance of such a law ? If, as others hold, what we call moral perceptions be the result of general experience of what conduces to the common good, how is it that the beneficial effects of protection have not developed moral recognition? To make that a crime by statute which is no crime in morals, is inevitably to destroy respect for law ; to resort to oaths to prevent men from doing what they feel injures no one, is to weaken the sanctity of oaths. Corruption, evasion and false swearing are inseparable from tariffs. Can that be good of which these are the fruits? A system which requires such spying and searching, such invoking of the Almighty to witness the contents of every box, bundle and package a sys- tem which always has provoked, and in the nature of man always must provoke, corruption and fraud can it be necessary to the prosperity and progress of mankind ? Consider, moreover, how sharply this theory of pro- tection conflicts with common experience and habits of thought. Who would think of recommending a site for a proposed city or a new colony because it was very difficult to get at ? Yet, if the protective theory be true, this would really be an advantage. Who would regard piracy as promotive of civilization ? Yet a discriminating pirate, who would confine his seizures to goods which might be produced in the country to which they were being carried, would be & beneficial to that country as a tariff, 88 PROTECTION OR FREE TRADE. Whether protectionists or free traders, we all "hear with interest and pleasure of improvements in trans- portation by water or land ; we are all disposed to re- gard the opening of canals, the building of rail- ways, the deepening of harbors, the improvement of steamships, as beneficial. But if such things are beneficial, how can tariffs be beneficial ? The effect of such things is to lessen the cost of transporting commodities ; the effect of tariffs is to increase it. If the protective theory be true, every improvement that cheapens the carriage of goods between country and country is an injury to mankind unless tariffs be com- mensurately increased. The directness, the swiftness and the ease with which birds cleave the air, naturally excite man's desire. His fancy has always given angels wings, and he has ever dreamed of a time when the power of traversing those unobstructed fields might also be his. That this tri- umph is within the power of human ingenuity who in lli is age of marvels can doubt? And who would not hail with delight the news that invention had at last brought to realization the dream of ages, and made navigation of the atmosphere as practicable as naviga- tion of the ocean? Yet if the protective theory be true this mastery of anot her element would be a mis- fortune to man. For it would make protection impos- sible, Kvery inland town and village, every rood of ground on the whole earth's surface, would at once lnvnmr a port of an all-embracing ocean, and the only way in which any people could continue to enjoy the blessings of protection would be to roof their coun- try in. It is not only improvements in transportation that J];OTK\ \s \ INIYKRSAL NKKD. ,'i'J are antagonistic to protection ; but all labor-saving invention and discovery. The utilization of natural gas bids fair to lessen the demand for native coal far more than could the free importation of foreign coal. Borings in Central New York have recently revealed vast beds of pure salt, the working of which will de- stroy the industry of salt making, to encourage which we impose a duty on foreign salt. We maintain a tariff for the avowed purpose of keeping out the pro- ducts of cheap foreign labor ; yet machines are daily invented that produce goods cheaper than the cheapest foreign labor. Clearly the only consistent protection- ism is that of China, which would not only prohibit foreign commerce, but forbid the introduction of labor- saving machinery. The aim of protection, in short, is to prevent the bringing into a country of things in themselves useful and valuable, in order to compel the making of such tilings. But what all mankind in the individual affairs of cvery-day life, regard as to be desired is not the making of things, but the possession of things. CHAPTER Y. THE PEOTECTIVE UNIT. THE more one considers the theory that every nation ought to "protect " itself against every other nation, the more inconsistent does it seem. Is there not, in the first place, an obvious absurdity in taking the nation or country as the protective unit and saying that each should have a protective tariff ? * What is meant by nation or country in the protec- tionist theory is an independent political division. Thus Great Britain and Ireland are considered one nation, France another, Germany another, Switzerland another, the United States, Canada, Mexico, and each * That protectionist writers are themselves conscious of this ab- surdity is to be seen in their constant effort to suggest the idea, too preposterous to be broadly stated, that nations instead of being purely arbitrary political divisions of mankind, are natural, or divinely appointed, divisions. Thus, not to multiply instances, Professor Robert Ellis Thompson (Political Economy, p. 34) defines a nation as "a people speaking one language, living under one gov- ernment, and occupying ;i continuous area. This area is a (list rid whose natural boundaries designate it as intended for the site of an independent people." This definition is given in large type, while underneath is appended in small type : ''No one point of this defi- nition is essential save the second." Yet in spite of this admission that the " nation " is a purely arbitrary political division, Professor Thompson endeavors throughout liis book to suggest a different impression to the mind of the reader, by talking <>f "the e\i tenee of nations as parts of the world's providential order," the " prow- boundaries of nations." ei.c. THE PROTECTIVE UNIT. 41 of the Central and South American republics are others. But these divisions are arbitrary. They do not co- incide with any differences in soil, climate, race or in- dustry they have no maximum or minimum of area or population. They are, moreover, continually chang- ing. The maps of Europe and America used by school children to-day are very different from the maps their fathers used. The difference a hundred years ago was greater yet ; and as we go further back still greater differences appear. According to this theory, when the three British kingdoms had separate governments it was necessary for the well-being of all that they should be protected from each other, and should Ire- land achieve independence that necessity would re- cur; but while the three countries are united under one government, it does not exist. The petty states of which a few years ago Germany and Italy consisted ought upon this theory to have had, as they once had, tariffs between them. Yet, now, upon the same theory, they no longer need these tariffs. Alsace and Lorraine when provinces of France needed to be protected against Germany. Now that they are German prov- inces they need protection against France. Texas, when part of Mexico, required a protective tariff against the United States. Now, being a part of the United States, it requires a protective tariff against Mexico. We of the United States require a protective tariff against Canada, and the Canadians a tariff against us, but if Canada were to come into the Union the necessity for both of these tariffs would disappear. Do not these incongruities show that the protective theory is destitute of scientific basis ; that instead of originating in any deduction from principles or indue- 42 PROTECTION OR FRKK TKAM3. tion from facts, it has been invented merely to serve the purposes of its inventors ? Political changes in nowise alter soil, climate, or industrial needs. If the three British kingdoms do not now need tariffs against one another, they could not have needed them before the union. If it is not injurious to the various states of Italy or Germany to trade freely with each other now, it could not have been injurious before they were united. If Alsace and Lorraine are benefited by free trade with Germany now, they would have been bene- fited by it when French provinces. If the people of the opposite shores of the Great Lakes and St. Lawrence River would not be injured by the free exchange of their products should Canada enter the American Union, they could not be injured by freedom to ex- change their products now. Consider how inconsistent with the protective theory is the free trade that prevails between the states of the American Union. Our Union includes an area almost as large as Europe, yet the protectionists who hold that each European country ought to protect itself against all the rest make no objections to the free trade that ex- ists between the American states, though some of these states are larger than European kingdoms, and the dif- ferences between them, as to natural resources and in- dustrial development, are at least as great. If it is for tin- Ix-iK'tit of (rerniuny and France that they should be se|,;ir;ited !v protestive tariffs, docs not New Jersey ne.-d the protection of a t;irifV from N'ew York and Pennsylvania? and do not, New York ;md Pennsyl- vania alho ii' c-d to lr protected from New Jersey? And if New England needs protection against the Province of Quebec, and Ohio, Illinois and Michigan THE PROTECTIVE UNIT. 43 against the Province of Ontario, is it not clear that these states also need protection from the states which adjoin them on the south? What difference does it make that one set of states belong to the American Union and the other to the Canadian Confederation ? Industry and commerce, when left to themselves, pay no more attention to political lines than do birds or fishes. Clearly, if there is any truth in the protective theory it must apply not only to the grand political divisions but to all their parts. If a country ought not to import from other countries anything which its own people can produce, the same principle must apply to every subdivision; and each state, each county and each town- ship, must need its own protective tariff. And further than this, the proper application of the protective theory requires the separation of mankind into the smallest possible political divisions, each defend- ed against the rest by its own tariff. For the larger the area of the protective unit, the more difficult does it become to apply the protective theory. With every extension of such countries as the United States the possibility of protection, if it can be applied only to the major political divisions, becomes less, and were the poet's dream realized, and mankind united in a " Fed- eration of the World," the possibility of protection would vanish. On the other hand, the smaller the pro- tective unit the better can the theory of protection be applied. Protectionists do not go so far as to aver that all trade is injurious. They hold that each country may safely import what it cannot produce, but should restrict the importation of what it can produce. Thus dis- crimination is required, which becomes more possible the smaller the protective unit. 44 PROTECTION OR FREE TRADE. Upon protective principles the same tariff will no bet- ter suit all the states of our Union than the same sized shoes will fit all our sixty million people. Massachu- setts, for instance, does not produce coal, iron or sugar. These, then, on protective principles, ought to come into Massachusetts free, while Pennsylvania enjoyed protection on iron and coal, and Louisiana on sugar. Oranges may be grown in Florida, but not in Minne- sota ; therefore, while Florida needs a protective duty on oranges, Minnesota does not. And so on through the whole list of states. To "protect" them all with the same tariff is to ignore as to each that part of the protective theory which permits the free importation of commodities that cannot be produced at home ; and, by compelling them to pay higher prices for what they cannot produce, to neutralize the benefits arising from the protection of such commodities as they do produce. Furthermore, while Massachusetts, on the protective theory, does not need protection on coal, iron and sugar, which she cannot produce, she does need pro- tection against the beef, hogs and breadstuffs with which she is "deluged" from the West to the injury of her agricultural industries, and of which protection would enable her to raise enough for her home con- sumption. On the other hand, the West needs pro- tection against the boots and shoes and woolens of Massachusetts, so that Western leather and wool could be worked up at home, instead of being carried long distances in raw form, to be brought back in finished form. In the same way the iron workers of Ohio need protection a.'j-ainst Pennsylvania more than they do against Knirlainl, while it is only mockery to protect liocky Mountain coal miners a^-iinst the coal of Nova THE PROTECTIVE UNIT. 46 Scotia, British Columbia and Australia, which cannot come into competition with them, while not protecting them against the coal of Iowa ; or to protect the infant cotton mills of the South against Old England while giving them no protection against New England. Upon the protective theory protection is most needed against like industries. All protectionists agree that the United States has greater need of protection against Great Britain than against Brazil ; and Canada against the United States than against India all agree that if we must have free trade it should be with the countries most widely differing as to their productions from our own. Now there is far less difference between the pro- ductions and productive capacities of New Hampshire and Vermont, of Indiana and Illinois, or of Kansas and Nebraska, than- there is between the United States as a whole and any foreign country. Therefore, on the pro- tective theory, tariffs between these states are more needed than between the United States and foreign countries. And since adjoining townships differ less in industrial capacities than adjoining states, they re- quire protective tariffs all the more. The thirteen American colonies came together as thir- teen independent sovereignties, each retaining the full power of taxation, including that of levying duty on im- ports, which was not given up by them until 1787, eleven years after the Declaration of Independence, when the Federal Constitution was adopted. If the protective theory, then dominant in Great Britain, had at that time had the hold upon the American people which it afterward obtained, it is certain that the power of protecting themselves would never have been given ii) b the states. And had the Union continued as 4C) PROTECTION OR FREE TRADE. nt first formed, or had the framers of the Constitution lacked the foresight to prohibit state tariffs, there is no doubt that when we came to imitate the British system of protection we should have had as strong a demand in the various states for protection against other states as we have had for protection against foreign coun- tries, and the arguments now used against free trade with foreign countries would to-day be urged against free trade between the states. Nor can there be any doubt that if our political or- ganization made our townships independent of one another, we should have, in our townships and villages, the same clamor for protection against the industries of other townships and villages that we have now for the protection of the nation against other nations. I am writing on Long Island, near the town of Jamaica. I think I could make as good an argument to the people of that little town as is made by the pro- tectionists to the people of the United States. I could s:iy to the shopkeepers of Jamaica, " Your townsmen now go to New York when they want to purchase a suit of clothes or a bill of dry goods, leaving to you only the fag ends of their custom, while the farmers' wagons that pass in a long line over the turnpike every night, carrying produce to New York and Brooklyn, bring back supplies the next day. A protective tariff will compel these purchases to be made here. Thus profits t.luit now go to New York and Brooklyn will be retained in Jamaica : yon will want larger stores and heller nouses, can pay your clerks and journeymen liio-lier waives, will need more banking accommodations, will advertise more freely in Jamaican news] tapers, and thus will the town .irn>w and prosper." PROTECTIVE UNIT. " Moreover/' I might say, " what a useless waste of labor there is in carrying milk and butter, chickens, eggs and vegetables to New York and Brooklyn and bringing back other things. How much better for our farmers if they had a home market. This we can secure for them by a tariff that will protect Jamaican industries against those of New York and Brooklyn. Clothing, cigars, boots and shoes, agricultural imple- ments and furniture may be manufactured here as well as in those cities. Why should we not have a cotton factory, a woolen mill, a foundry, and, in short, all the establishments necessary to supply the wants of our people ? To get them we need only a protective tar- iff. Capital, when assured of protection, will be gladly forthcoming for such enterprises, and we shall soon be exporting what we now import, while our farmers will find a demand at their doors for all their produce. Even if at first they do have to pay somewhat higher prices for what they buy they will be much more than compensated by the higher prices they will get for what they sell, and will save an eight or ten mile haul to Brooklyn or New York. Thus, instead of Jamaica remaining a little village, the industries which a pro- tective tariff will build up here will make it a large town, while the increased demand for labor will make wages higher and employment steadier." I submit that all this is at least as valid as the pro- tective arguments that are addressed to the people of the whole United States, and no one who has listened to the talk of village shopkeepers or noticed the comments of local newspapers can doubt that were our townships independent, village protectionists could get as ready a hearing as national protectionists do now. 48 PROTECTION uii FREE TRADE. But to follow the protective theory to its logical con- clusions we cannot stop with protection between state and state, township and township, village and village. If protection be needful between nations, it must be need- ful not only between political subdivisions, but between family and family. If nations should never buy of other nations what they might produce at home, the same principle must forbid each family to buy anything it might produce? Social laws, like physical laws, must apply to the molecule as well as to the aggregate. But a social condition in which the principle of protec- tion was thus fully carried out would be a condition of utter barbarism. CHAPTER VI. TRADE. PROTECTION implies prevention. To protect is to preserve or defend. What is it that protection by tariff prevents ? It is trade. To speak more exactly, it is that part of trade which consists in bringing in from other countries com- modities that might be produced at home. But trade, from which "protection" essays to pre- serve and defend us, is not, like flood, earthquake, or tornado, something that comes without human agency. Trade implies human action. There can be no need of preserving from or defending against trade, unless there are men who want to trade and try to trade. Who, then, are the men against whose efforts to trade " pro- tection " preserves and defends us ? If I had been asked this question before I had come to think over the matter for myself, I should have said that the men against whom " protection " defends us are foreign producers who wish to sell their goods in our home markets. This is the assumption that runs through all protectionist, arguments the assumption that foreigners are constantly trying to force their pro- ducts upon us, and that a protective tariff is a means for defending ourselves against what they want to do. Yet a moment's thought will show that no effort of foreigners to sell us their products could of itself make 49 50 piiomrrroN OK VIIKK TRADE. a tariff necessary. For the desire of one party, how- ever strong it may be, cannot of itself bring about trade. To every trade there must be two parties who mutually desire to trade, and whose actions are recipro- cal. ]STo one can buy unless he can find some one will- ing to sell ; and no one can sell unless there is some other one willing to buy. If Americans did not want to buy foreign goods, foreign goods could not be sold here -even if there were no tariff. The efficient cause of the trade which our tariff aims to prevent h the de- sire of Americans to buy foreign goods, not the desire of foreign producers to sell them. Thus protection really prevents what the " protected " themselves want to do. It is not from foreigners that protection pre- serves and defends us ; it is from ourselves. Trade is not invasion. It docs not involve aggression on one side and resistance on the other, but mutual con- sent and gratification. There cannot be a trade unless the parties to it agree, any more than there can be a quarrel unless the parties to it differ. England, we say, forced trade with the outside world upon China, and the United States upon Japan. But, in both cases, what was done was not to force the people to trade, but to force their governments to let them. If the people had not wanted to trade, the opening of the ports would have been useless. Civilized nations, however, do not use their armies and fleets to open one another's ports to trade. What they use their armies ;mnc another's ports. And their effort then is to prevent the carrying in of things even more than the bringing out of things importing rather than ex- porting. For u people can be more quickly injured by TRADE. 51 preventing them from getting things than by prevent- ing them from sending things away. Trade does not require force. Free trade consists simply in letting people buy and sell as they want to buy and sell. It is protection that requires force, for it consists in prevent- ing people from doing what they want to do. Protect- ive tariffs are as much applications of force as are blockading squadrons, and their object is the same to prevent trade. The difference between the two is that blockading squadrons are a means whereby nations seek to prevent their enemies from trading ; protective tariffs are a means whereby nations attempt to prevent their own people from trading. What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war. Can there be any greater misuse of language tha'n to apply to commerce terms suggesting strife, and to talk of one nation invading, deluging, overwhelming or in- undating another with goods ? Goods ! what are they but good things things we are all glad to get ? Is it not preposterous to talk of one nation forcing its good things upon another nation ? Who individually would wish to be preserved from such invasion ? Who would object to being inundated with all the dress goods his wife and daughters could want ; deluged with a horse and buggy ; overwhelmed with clothing, with groceries, with good cigars, fine pictures, or anything else that has value ? And who would take it kindly if any one should assume to protect him by driving off those who wanted to bring him such things ? In point of fact, however, not only is it impossible for one nation to sell to another, unless that other wants to buy, but international trade does not consist in send- 52 PROTECTION OR FREE TRADE. ing out goods to be sold. The great masts of the im- ports of every civilized country consists of goods that nave been ordered by the people of that country and are imported at their risk. This is true even in our own case, although one of the effects of our tariff is that many goods that otherwise would be imported by Americans are sent here by European manufacturers, because undervaluation is thus made easier. But it is not the importer who is the cause of impor- tation. Whether goods are brought here by American importers or sent here by foreign exporters, the cause of their coming here is that they are asked for by the American people. It is the demand of purchasers at retail that causes goods to be imported. Thus a pro- tective tariff is a prevention by a people not of what others want to do to them, but of what they them- selves want to do. When in the common use of the word we speak of individuals or communities protecting themselves, there is always implied the existence of some external enemy or danger, such as cold, heat or accident, savage beasts or noxious vermin, fire or disease, robbers or invaders ; something disposed to do what the protected object to. Tin? only cases in which the common "meaning of the word does not imply some external enemy or danger are those in which it implies some protector of superior intelligence, as when we speak of imbeciles, lunatics, drunkards or young children being protected against their own irrational nets. But the systems of restriction which their advo- cates have named "protective" lack both the one and the other of these essential qualities of real protection. \Vluit they defend ;i people ;ii':iinst is not external TRADE. . 53 * enemies or dangers, but what that people themselves want to do. Yet this a protection "is not the protec- tion of a superior intelligence, for human wit has not yet been able to devise any scheme by which any intelligence can be secured in a Parliament or Con- gress superior to that of the people it represents. That where protective tariffs are imposed it is in accordance with the national will I do not deny. What I wish to point out is that even the people who thus impose protective tariffs upon themselves still want to do what by protective tariffs they strive to prevent themselves from doing. This is seen in the tendency of importation to continue in spite of tar- iffs, in the disposition of citizens to evade their tariff whenever they can, and in the fact that the very same individuals who demand the imposition of tariffs to prevent the importation of foreign commodities are among the individuals whose demand for those com- modities is the cause of their importation. Given a people of which every man, woman and child is a pro- tectionist, and a tariff unanimously agreed upon, and still that tariff will be a restriction upon what these people want to do and will still try to do. Protection- ists are only protectionists in theory and in politics. When it comes to buying what they want, all protec- tionists are free traders. I say this to point out not the inconsistency of protectionists, but something more significant. " I write." " I breathe." Both propositions assert action on the part of the same individual, but action of different kinds. I write by conscious volition ; I breathe instinctively. I am conscious that I breathe only when I think of it, Yet my breathing goes on 54 PROTECTION OR FREE TRADE. whether I think of it or not when my consciousness is absorbed in thought, or is dormant in sleep. Though with all my will I try to stop breathing, I yet, in spite of myself, try. to breathe, and will continue that en- deavor while life lasts. Other vital functions are even further beyond consciousness and will. We live by the continuous carrying on of multifarious and delicate processes apparent only in their results and utterly irresponsive to mental direction. Between the man and the community there is in these respects an analogy which becomes closer as civilization progresses and social relations grow more complex. That power of the whole which is lodged in governments is limited in its field of consciousness and action much as the conscious will of the indi- vidual is limited, and even that consensus of personal beliefs and wishes termed public opinion is but little wider in its range. There is, beyond national direction and below national consciousness, a life and relation of parts and a performance of functions which are to the social body what the vital processes are to the phvsical body. What would happen to the individual if all the functions of the body were placed under the control of the consciousness, and a man could forget to breathe, or miscalculate the amount of gastric juice needed by his stomach, or blunder as to what his kidneys should take from the blood, is what would happen to a nation in which all individual activities were directed by government. And though a people collectively may institute a tariff to prevent trade, their individual wants and de- sires will still force them to try to trade, just MS TKADfc. 55 when a man ties a ligature round his arm, his blood will still try to circulate. For the effort of each to sat- isfy his desires with the least exertion, which is the motive of trade, is as instinctive and persistent as are the instigations which the vital organs of the body obey. It is not the importer and the exporter who are the cause of trade, but the daily and hourly de- mands of those who never think of importing or ex- porting, and to whom trade carries that which they demand, just as the blood carries to each fibre of the body that for which it calls. It is as natural for men to trade as it is for blood to circulate. Man is by nature a trading animal, impelled to trade by persistent desires, placed in a world where everything shows that he was intended to trade, and finding in trade the possibility of social advance. Without trade man would be a savage. Where each family raises its own food, builds its own house, makes its own clothes and manufactures its own tools, no one can have more than the barest necessaries of life, and every local failure of crops must bring famine. A people living in this way will be independent, but their independence will resemble that of the beasts. They will be poor, ignorant, and all but powerless against the forces of nature and the vicissi- tudes of the seasons. This social condition, to which the protective theory would logically lead, is the lowest in which man is over found the condition from which he has toiled upward, He has progressed only as he has learned to satisfy his wants by exchanging with his fellows and has freed and extended trade. The difference between naked savages possessed only of the rudiments of the 56 PROTECTION OR FREE TRADE. arts, cowering in ignorance and weakness before the forces of nature, and the wealth, the knowledge and the power of our highest civilization, is due to the exchange of the independence which is the aim of the protective system, for that interdependence which comes with trade. Men cannot apply themselves to the pro- duction of but one of the many things human wants demand unless they can exchange their products for the products of others. And thus it is only as the growth of trade permits the division of labor that, beyond the merest rudiments, skill can be developed, knowledge acquired and invention made; and that productive power can so gain upon the requirements for maintaining life that leisure becomes possible and capital can be accumulated. If to prevent trade were to stimulate industry and promote prosperity, then the localities where he was most isolated would show the first advances of man. The natural protection to home industry afforded by rugged mountain chains, by burning deserts, or by seas too wide and tempestuous for the frail bark of the early mariner, would have given us the first glimmerings of civilization and shown its most rapid growth. Hut, in fact, it is where trade could best be carried on that we find wealth first accumulating and civilization beginning. It is on accessible har- bors, by i invisible rivers and much traveled high- ways that we find cities arising and the arts and sciences developing. And as trade becomes free and extensive as roads are made and navigation improved; as pirates and robbers are extirpated and treaties of peace put an end to chronic warfare so does wealth augment, ,-iml civilization grow. All <>ur TRADE. 57 great labor saving inventions, from that of money to that of the steam engine, spring from trade and pro- mote its extension. Trade has ever been the extin- guisher of war, the eradicator of prejudice, the diffuser of knowledge. It is by trade that useful seeds and animals, useful arts and inventions, have been carried over the world, and that men in one place have been enabled not only to obtain the products, but to profit by the observations, discoveries and inventions of men in other places. In a world created on protective principles, all habit- able parts would have the same soil and climate, and be fitted for the same productions, so that the inhabit- ants of each locality would be able to produce at home all they required. Its seas and rivers would not lend themselves to navigation, and every little section in- tended for the habitation of a separate community would be guarded by a protective mountain chain. If we found ourselves in such a world, we might infer it to be the intent of nature that each people should de- velop its own industries independently of all others. But the world in which we do find ourselves is not merely adapted to intercommunication, but what it yields to man is so distributed as to compel the people of different localities to trade with each other to fully satisfy their desires. The diversities of soil and climate, the distribution of water, wood and mineral deposits, the currents of sea and air, produce infinite differences in the adaptation of different parts to different produc- tions. It is not merely that one zone yields sugar and coffee, the banana and the pineapple, and another wheat and barley, the apple and the potato ; that one supplies and another cotton; that here are hillsides adapted 58 PKOTKCTION' OR FREE 'JKADE. to pasture and there valleys fitted for the plow ; here granite and there clay ; in one place iron and coal and in another copper and lead ; but that there are differences so delicate that, though experience tells us they exist, we cannot say to what they are due. Wine of a cer- tain quality is produced in one place which cuttings from the same vines will not yield in another place, though soil and climate seem alike. Some localities, without assignable reason, become renowned for pro- ductions of one kind and some for productions of an- other kind ; and experience often shows that plants thrive differently in different parts of the same field. These endless diversities, in the adaptation of different parts of the earth's surface to the production of the different things required by man, show that nature has not intended man to depend for the supply of his wants upon his own production, but to exchange with his fellows, just as the placing of the meat before one guest at table, the vegetables before another, and the bread before another, shows the intent of the host that they should help one another. Other natural facts have similar bearing. It has long been known that to obtain the best crops the farmer should not sow with seed grown in his own fields, but with seed brought from afar. The strain of domestic animals seems always improved by imported stock, even poultry-breeders finding it best to sell the male birds they raise and supply their plaees with cocks lirought from a distance. Whether <>r not the same law holds true with regard to the physical part of man. it is certain that the admixture of peoples produces stimulating mental effects. Prejudices are worn down, wits are sharpened, language enriched, habits and cus- TRADE. 59 toms brought to the test of comparison and new ideas enkindled. The most progressive peoples, if not always of mixed blood, have always been the peoples who came most in contact with and learned most from others. "Home keeping youths have ever homely wits" is true of nations. And, further than this, it is characteristic of all the inventions and discoveries that are so rapidly increas- ing our power over nature that they require the greater division of labor, and extend trade. Thus every step in advance destroys the independence and increases the interdependence of men. The appointed condition of human progress is evidently that men shall come into closer relations and become more and more dependent upon each other. Thus the restrictions which protectionism urges us to impose upon ourselves are about as well calculated to promote national prosperity as ligatures, that would impede the circulation of the blood, would be to pro- mote bodily health and comfort ? Protection calls upon us to pay officials, to encourage spies and in- formers, and to provoke fraud and perjury, for what ? Why, to preserve ourselves from and protect ourselves against something which offends no moral law ; some- thing to which we are instinctively impelled ; some- thing without which we could never have emerged from barbarism, and something which physical nature and social laws alike prove to ^>e in conformity with the creative intent. It is true that protectionists do not condemn all trade, and though some of them have wished for an ocean of fire to bar out foreign products, others, more reasonable if less logical, would permit a country to import things 60 PROTECTION OR FREE TRADE. it cannot produce. The international trade which they concede to be harmless amounts not to a tenth and per- haps not to a twentieth of the international trade of the world, and, so far as our own country is concerned, the things we could not obtain at home amount to little more than a few productions of the torrid zone, and even these, if properly protected, might be grown at home by artificial heat, to the incidental encouragement of the glass and coal industries. But, so far as the COP rectness of the theory goes, it does not matter whether the trade which "protection" would permit, as com- pared with that it would prevent, be more or less. What "protection" calls on us to preserve ourselves from, and guard ourselves agai nst, is trade. And whether trade be between citizens of the same nation or citizens of dif- ferent nations, and whether we get by it things that we could produce for ourselves or things that we could not produce for ourselves, the object of trade is always the same. If I trade with a Canadian, a Mexican, or an Eng- lishman it is for the same reason that I trade with an American that I would rather have the thing he gives me than the thing I give him. Why should I refuse to trade with a foreigner any more than with a fellow-citizen when my object in trading is my advantage, not his ? And is it not in the one case, quite as much as in the other, an injury to me that my trade should be prevented/* What difference does it make whether it would be pos- sible or impossible for me to make for myself the thing 1 for which I trade. If I did not want the thing I am to get more tlinn the thing I am to give, I would not wish t<\ i nuke the trade. Here is a farmer who proposes to ex- change with his neighbor a horse he does not want for a couple of cows he doas want Would it benefit these TRA7)E. (11 farmers to prevent this trade on the ground that one might breed his own horses and the other raise his own cows ? Yet .if one farmer lived on the American and the other lived on the Canadian side of the line this is just what both the American and Canadian governments would do. And this is called "protection." It is only one of the many benefits of trade that it enables people to obtain what the natural conditions of their own localities would not enable them to produce. This is, however, so obvious a benefit that protectionists cannot altogether ignore it, and a favorite doctrine with American protectionists is that trade ought to follow meridians of longitude instead of parallels of latitude, because the great differences of climate and conse- quently of natural productions are between north and south.* The most desirable reconstruction of the world on this theory would be its division into " countries " consisting of narrow strips running from the equator to the poles, with high tariffs on either side and at the equatorial end, for the polar ice would serve the pur- pose at the other. But in the meantime, despite this notion that trade ought to be between north and south rather than between east and west, the fact is that the great commerce of the world is and always has been between east and west. And the reason is clear. It is that peoples most alike in habits and needs will call most largely for each other's productions, and that the * "This, then, is our position respecting commerce * * * that it should interchange the productions of diverse zones and climates, following in its trans-oceanic voyages lines of longitude oftene^ than lines of latitude." HORACE GREELEY, Political Economy, p. 39. " Legitimate and natural commerce moves rather along the meridians than along the parallels of latitude." PROF. ROBERT ELLIS THOMPSON, Political Economy^ p. 217. PROTECTION OH FREE course of migration and of assimilating influences has been rather between east and west than between north and south. Difference in latitude is but one element of difference in climate, and difference in climate is but one element of the endless diversity in natural productions and ca- pacities. In no one place will nature yield to labor all that man finds useful. Adaptation to one class of pro- ducts involves non-adaptation to others. Trade, by permitting us to obtain each of the things we need from the locality best fitted for its production, enables us to utilize the highest powers of nature in the produc- tion of them all, and thus to increase enormously the sum of various things which a given quantity of labor expended in any locality can secure. But, what is even more important, trade also enables us to utilize the highest powers of the human factor in production. All men cannot do all things equally well. There are differences in physical and mental powers which give different degrees of aptitude for dif- ferent parts of the work of supplying human needs. And far more important still are the differences that arise from the development of special skill. By de- voting himself to one branch of production a man can acquire- skill which enables him, with the same labor, to produce enormously more than one who has not made that branch his specialty. Twenty boys may have equal aptitude for any one of twenty trades, but if every boy tries to learn the twenty trades, none of them can become good workmen in any; whereas, if each devotes himself to one trade, all may become good workmen. There will not only be a saving of the time and effort required for learning, but each, more- TRADE. <>'"> over, can in a single vocation work to much better ad- vantage, and may acquire and use tools which it would be impossible to obtain and employ did each attempt the whole twenty. And as there are differences between individuals which fit them for different branches of production, so, bat to a much greater degree, are there such differences between communities. Not to speak again of the dif- ferences due to situation and natural facilities, some things can be produced with greater relative advantage where population is sparse, others where it is dense, and differences in industrial development, in habits, customs and related occupations, produce differences in relative adaptation. Such gains, moreover, as attend the division of labor between individuals, attend also the division of labor between communities, and lead to that localization of industry which causes different places to become noted for different industries. Wher- ever the production of some special thing becomes the leading industry, skill is more easily acquired, and is carried to a higher pitch, supplies are most readily procured, auxiliary and correlative occupations grow up, and a larger scale of production leads to the employment of more efficient methods. Thus in the natural devel- opment of society trade brings about differentiations of industry between communities as between individuals, and with similar benefits. Men of different nations trade with each other for the same reason that men of the same nation do because they find it profitable ; because they thus obtain what they want with less labor than they otherwise could. Goods will not be imported into any country unless they can be obtained more easily by producing some- 64 PROTECTION OR FREE TRADE. thing else and exchanging it for them, than by produc- ing them directly. And hence, to restrict importations must be to lessen productive power and reduce the fund from which all revenues are drawn: Any one can see what would be the result of for- bidding each individual to obtain from another any commodity or service which he himself was naturally fitted to produce or perform. Such a regulation, were any government mad enough to adopt it and powerful enough to maintain it, would paralyze the forces that make civilization possible and soon convert the most populous and wealthy country into a howling wilder- ness. The restrictions which protection would impose upon foreign trade differ only in degree, not in kind, from such restrictions as these. They would not re- duce a nation to barbarism, because they do not affect all trade, and rather hamper than prohibit the trade they do affect ; but they must prevent the people that adopt them from obtaining the abundance they might otherwise enjoy. If the end of labor be, not the ex- penditure of effort, but the securing of results, then whether any particular thing ought to be obtained in a country by home production, or by importation, de- pends solely upon which mode of obtaining it will give the largest result to the least labor. This is a question involving such complex considerations that what any country ought to obtain in this way or in that cannot be nettled by any Congress or Parliament. It can Mtfcly be left only to those sure instincts which are to society what the: vital instincts are to the body, and which always impel men to take the easiest way open to 1 h MI i 1o reach their ends. not, caused \>y artilicia,] obstacles, any tendency TRADE. 65 in trade to take a certain course is proof that it ought to take that course, and restrictions are harmful because they restrict, and in proportion as they restrict. To assert that the way for men to become healthy and strong is for them to force into their stomachs what nature tries to reject, to regulate the play of their lungs by bandages, or to control the circulation of their blood by ligatures, would be not a whit more absurd than to assert that the way for nations to become rich is for them to restrict the natural tendency to trade. CHAPTEE VII. PRODUCTION AND PRODUCERS. REMOTE from neighbors, in a part of the country where population is only beginning to come, stands the Hide house of a new settler. As the stars corne out, a ruddy light gleams from the little window. The house- wife is preparing a meal. The wood that burns so cheerily was cut by the settler, the flour now turning into bread is from wheat of his raising ; the fish hiss- ing in the pan were caught by one of the boys, and the water bubbling in the kettle, in readiness to be poured on the tea, was brought from the spring by the eldest girl before the sun had set. The settler cut the wood. But it took more than that to produce the wood. Had it been merely cut, it would still be lying where it fell. The labor of haul- ing it was as much a part of its production as the labor of cutting it. So the journey to and from the mill was as necessary to the production of the flour as the planting and reaping of the wheat. To produce the fish the boy had to walk to the lake and trudge back again. And the production of the water in the kettle required not merely the exertion of the girl who brought it from the spring, but also the sinking of the barrel in which it collected, and the making of the bucket in which it was carried. As for the tea, it was grown in China, was carried on PRODUCTION AND PRODUCERS. 67 a bamboo pole upon the shoulders of a man to some river village, and sold to a Chinese merchant, who shipped it by boat to a treaty port. There, having been packed for ocean transportation, it was sold to the agency of some American house, and sent by steamer to San Francisco. Thence it passed by railroad, with another transfer of ownership, into the hands of a Chi- cago jobber. The jobber, in turn, in pursuance of another sale, shipped it to the village store-keeper, who held it so that the settler might get it when and in such quantities as he pleased, just as the water from the spring is held in the sunken barrel so that it may be had when needed. The native dealer who first purchased this tea of the grower, the merchant who shipped it across the Pacific, the Chicago jobber who held it as in a reservoir until the store-keeper ordered it, the store-keeper who, bring- ing it from Chicago to the village, held it as in a smaller reservoir until the settler came for it, as well as those concerned in its transportation, from the coolie who carried it to the bank of the Chinese river to the brake- men of the train that brought it from Chicago were they not all parties to the production of that tea to this family as truly as were the peasants who cultivated the plant and gathered its leaves ? The settler got the tea by exchanging for it money obtained in exchange for things produced from nature by the labor of himself and his boys. Has not this tea, then, been produced to this family by their labor as truly as the wood, the flour or the water ? Is it not true that the labor of this family devoted to producing things which were exchanged for tea has really pro- duced tea, even in the sense of causing it to be grown, 68 PROTECTION OR, FREE TRADE. cured raid transported ? It is not the growing of the tea in China that causes it to be brought to the United States. It is the demand for tea in the United States that is to say, the readiness to give other products of labor for it that causes tea to be grown in China for shipment to the United States. To produce is to bring forth, or to bring to. There is no other word in our language which includes at once all the operations, such as catching, gathering, extracting, growing, breeding or making, by which human labor brings forth from nature, or brings to conditions adapted to human uses, the material things desired by men and which constitute wealth. When, therefore, we wish to speak collectively of the oper- dtion,s by which things are secured, or fitted for human use, as distinguished from operations which consist in moving them from place to place or passing them from hand to hand after they have been so secured or fitted, we are obliged to use the word production in distinc- tion to transportation or exchange. But we should always remember that this is but a narrow and special use of the word. While in conformity with the usages of our language we may properly speak of production as distinguished from transportation and exchange, just as we may prop- erly speak of men as distinguished from women and children, yet in its full meaning, production includes transportation and exchange, just as men includes women and children. In the narrow meaning of the word we speak of coal as having been produced when it has been moved from its place in the vein to the sur- f;ici>of the PRODUCTION AND PRODUCERS. fi9 use it is as necessary a part of coal production, in the full sense, as is the bringing of it to the surface. And while we may produce coal in the United States by digging it out of the ground, we may also just as truly produce it by exchanging other products of labor for it. Whether we get coal by digging it or by bringing it from Nova Scotia or Australia or England in exchange for other products of our labor, it is, in the one case as truly as in the other, produced here by our labor. Through all protectionist arguments runs the notion that transporters and traders are non-producers, whose support lessens the amount of wealth which other classes can enjoy.* This is a short-sighted view. In the full sense of the term transporters and traders are as truly producers as are miners, farmers or manufact- urers, since the transporting of things and the exchang- ing of things are as necessary to the enjoyment of things as is extracting, growing or making. There are some, operations conducted under the forms of trade that are in reality gambling or blackmailing, but this does not alter the fact that real trade, which consists in exchang- ing and transporting commodities, is a part of produc- tion a part so necessary and so important that without it the other operations of production could only be car- * "In my conception, the chief end of a true political economy is the conversion of idlers and useless exchangers and traffickers into habitual, effective producers of wealth." HORACE GREELEY, Politi- cal Economy., p. 29. The trader "adds nothing to the real wealth of society. He neither directs and manages a vital change in the form of matter as does the farmer, nor a chemical and mechanical change in form as does the manufacturer. He merely transfers things from the place of their production to the place of demand." PROF. R. E. THOMP- SON, Political Economy, p. 198. 70 PROTECTION OR FREE TRADE. ried on in the most primitive manner and with the most niggard results. . And not least important of the functions of the trader is that of holding things in stock, so that those who wish to use them may be able to get them at such times and places, and in such quantities, as are most convenient. This is a service analogous to that per- formed by the sunken barrel which holds the water of a spring so that it can be had by the bucketful when needed, or by the reservoirs and pipes which enable the inhabitant of a city to obtain water by the turning of a faucet. The profits of traders and " middlemen " may sometimes be excessive (and anything which hampers trade and increases the capital necessary to carry it on tends to make them excessive) but they are in reality based upon the performance of services in holding and distributing things as well as in transporting things. " When Charles Fourier was young," says Professor Thompson (Political Economy, p. 199), "ho was on a visit to Paris, and priced at a street stall some apples of a sort that grew abundantly in his native province. He was amazed to find that they sold for many times the sum they would bring at home, having passed through the hands of a host of middlemen on their way from the owner of the orchard to the eater of the fruit. The impression received at that instant never left him ; it gave the first impulse to his thinking out his socialistic scheme for the reconstruction of society, in which among other sweeping changes the whole class of traders and their profits are to be abolished. " This story, quoted approvingly to convey an idea that the trader is a mere toll gatherer, simply shows what a superficial thinker Fourier was. If he had undertaken to bring -with him to Paris a supply of apples and to carry them around with him so that he could have one when he felt like it he would have formed a much PRODUCTION AND PRODUCERS. 71 truer idea of what lie was really paying for in the in- creased price. That price included not merely the cost of the apple at its place of growth, plus the cost of transporting it to Paris, the octroi at the Paris gates,* the loss of damaged apples, and remuneration for the service and capital of the wholesaler, who held the apples in stock until the vender chose to take them, but also payment to the vender, for standing all day in the streets of Paris, in order to supply a few apples to those who wanted an apple then and there. So when I go to a druggist's and buy a small quan- tity of medicine or chemicals, I pay many times the original cost of those articles, but what I thus pay is in much larger degree wages than profit. Out of such small sales the druggist must get not only the cost of what he sells me, with other costs incidental to the busi- ness, but also payment for his services. These services consist not only in the actual exertion of giving me what I want, but in waiting there in readiness to serve me when I choose to come. In the price of what he sells me he makes a charge for what printers call " waiting time." And he must manifestly not merely charge " waiting time " for himself, but also for the stock of many different things only occasionally called for, which he must keep on hand. He has been wait- ing there, with his stock, in anticipation of the fact that * The octroi, or municipal tariff on produce brought into a town, is still levied in France, though abolished for a time by the Revo- lution. It is a survival of the local tariffs once common in Europe, which separated province from province and town from country. Colbert, the first Napoleon, and the German Zollverein did much in reducing and abolishing these restrictions to trade, producing i:| this way good results which are sometimes attributed by protection ists to external tariffs. 72 PROTECTION OR FREE TRADE. such persons as myself, in sudden need of some small quantities of drugs or chemicals, would find it cheaper to pay him many times their wholesale cost than to go further and buy larger quantities. What I pay him, even when it is not payment for the skilled labor of compounding, is largely a payment of the same nature as, were he not there, I might have had to make to a messenger. If each consumer had to go to the producer for the small quantities individually demanded, the producer would have to charge a higher price on account of the greater labor and expense of attending to such small transactions. A hundred cases of shoes may be -sold at wholesale in less time than would be consumed in suiting a customer with a single pair. On the other hand, the going to the producer direct would involve an enormous increase of cost and trouble to the con- sumer, even when such a method of obtaining things would not be utterly impossible. What " middlemen " do is to save to both parties this trouble and expense, and the profits which compe- tition permits them to charge in return are infinitesimal as compared with the enormous savings effected are like the charge made to each consumer for the cost of the aqueducts, mains afnd pumping engines of a great system of wilier supply as compared with the cost of providing a separate, system for eaeh house. And furtliiT tii;m this, these middlemen between producer and con.-um'T eli'cct .-m enm-iimus eeonomv in the amount of commodities that it is necessary to keep in stock to provide for n given consumption, and con- sequently vastly lessen the loss from deterioration and decay, Let any one consider what amount of stores PRODUCTION AND PRODUCERS. 78 would be needed to keep in their accustomed supply even for a month a family used to easy access to those handy magazines of commodities which retail dealers maintain. He will see at once that there are a number of things such as fresh meat, fish, fruits, etc., which it is impossible to keep on hand, so as to be sure of having them when needed. And of the things that would keep longer, such as flour, sugar, oil, etc., he will see that but for the retail dealer it would be necessary that much greater quantities should be kept in each house, with a much greater liability to loss from decay or accident. But it is when he comes to things not constantly needed, but which, when needed, though it may not be once a year or once a lifetime, may be needed very badly that he will realize fully how the much-abused "middleman " economizes the capital of society and in- creases the opportunities of its members. A retail dealer is called by the English a " shop- keeper " and by the Americans a " store-keeper." The American usage best expresses his real function. He is in reality a keeper of stores which, otherwise his cus- tomers would have to keep on hand for themselves, ot go without. The English speak of the shops of co- operative supply associations as " stores," since it is in them that the various things required from time to time by the members of those associations are stored until called for. But this is precisely what, without any formal association, the retail dealer does for those who buy of him. And though co-operative purchasing associations have to a certain extent succeeded in England (they have generally failed in the United States) there can be no question that the functions of keeping things in store and distributing them .to consumers as needed are 74: PROTECTION OB FREE TRADE. on the whole performed more satisfactorily and more economically by self-appointed store or stock-keepers than they could be as yet by formal associations of con- sumers. And the tendencies of the time to economies in the distribution as well as in the production of com- modities, are bringing about through the play of com- petition just such a saving of expense to the consumer as is aimed at by co-operative supply associations. That in civilized society to-day there seem to be too many store-keepers and other distributors is quite true. But so there seem to be too many professional men, too many mechanics, too many farmers, and too many la- borers. What may be the cause of this most curious state of things it may hereafter lie in our way to in- quire, but at present I am only concerned in pointing out that the trader is not a mere " useless exchanger," who "adds nothing to the real wealth of society," but that the transporting, storing, and exchanging of things are as necessary a part of the work of supplying hu- man needs as is growing, extracting, or making. Nor should it be forgotten that the investigator, the philosopher, the teacher, the artist, the poet, the priest, though not engaged in the production of wealth, are not only engaged in the production of utilities and sat- isfactions to which the production of wealth is only a means, but by acquiring and diffusing knowledge, stimulating mental powers and elevating the moral sense, may greatly increase the ability to produce wealth. For man does not live by bread alone. He is not an engine, in which so much fuel gives so much power. On a capstan bar or a topsail halyard a good song tells like muscle, and a " Marseillaise " or a " Battle Hyrnn of the Kepublic " counts for bayonets. PRODUCTION AND PRODUCERS. 75 A hearty laugh, a noble thought, a perception of har- mony, may add to the power of dealing even with material things. He who by any exertion of mind or body adds to the aggregate of enjoyable wealth, increases the sum of human knowledge or gives to human life higher ele- vation or greater fullness he is in the large meaning of the words, a " producer," a " working man," a "la- borer," and is honestly earning honest wages. But he who without doing ought to make mankind richer, wiser, better, happier, lives on the toil of others he, no matter by what name of honor he may be called, or how lustily the priests of Mammon may swing their censers before him, is in the last analysis but a beggarman or a- thief. CHAPTER VIII. TAK1FFS FOK KE VENUE. TARIFFS may embrace duties on exports as well as on imports; but duties on exports are prohibited by the Constitution of the United States and are now levied only by a few countries, such as Brazil, and by them only on a few articles. The tariff, as we have to consider it, is a schedule of taxes upon imports. The word " tariff" is said to be derived from the Spanish town of Tariff a, near Gibraltar, where the Moors in the days of their power collected duties, prob- ably much after the manner of those Chinese local cus- tom houses called "squeeze stations." But the thing is older than the mime. Augustus Caesar levied duties on imports into Italy, and there were tariffs long before the Caesars. The purpose in which tariffs originate is that of rais- ing revenue. The idea of using them for protection is an afterthought. And be-fore considering the protect- ive function of tariffs it will be well to consider them as a means for collecting revenue. It is usually assumed, even by the opponents of pro- tection, that tar ill's should be maintained for revenue. Most of those who are commonly called free traders might mon- properly be called revenue tarii! men. They object, n<-1 to ihe turill', but, only to its protective features, iind propose, not to abolish it, but only to re- TARIFFS Foil .HKVENl.'K. 77 strict it to revenue purposes. Nearly all the opposi- tion to the protective system in the United States is of this kind, and in current discussion a tariff for revenue only is usually assumed to be the sole alternative to a tariff for protection. But since there are other ways of raising revenue than by tariffs this manifestly is not so. And if not useful for protection, the only justification for any tariff is that it is a good means of raising rev- enue. Let us inquire as to this. Duties on imports are indirect taxes. Therefore the question whether a tariff is a good means of raising- revenue involves the question whether indirect taxa- tion is a good means of raising revenue. As to ease and cheapness of collection indirect taxa- tion is certainly not a good means of raising revenue. While there are direct taxes, such as taxes on real estate and taxes on legacies and successions, from which great revenues can easily and cheaply be col- lected, the only indirect taxes from which any consid- erable revenue can be obtained require large and expensive staffs of officials and the enforcement of vexatious and injurious regulations. To collect the in- direct tax on tobacco and cigars, France and some other countries make the trade and manufacture a strict government monopoly, while Great Britain prohibits the culture of tobacco under penalty of fine and im- prisonment a prohibition particularly injurious to Ireland, where the soil and climate are in some parts admirably adapted to the growth of certain kinds of to- bacco. In the United States we maintain a costly in- quisitorial system which assumes to trace every pound of tobacco raised or imported, through all its stages of manufacture, and requires the most elaborate returns of 78 PROTECTION OR FREE TRADE. private business to be made to government officials. To more easily collect an indirect tax upon salt the government of British India cruelly prevents the mak- ing of salt in many places where the natives suffer from the want of it. While indirect taxes upon spir- ituous liquors, wherever resorted to, require the most elaborate system of prohibition, inspection and espion- age. So with the collection of indirect taxes upon imports. Land frontiers must be guarded and sea-coasts watched ; imports must be forbidden except at certain places and under regulati JLS which are always vexatious and fre- quently entail wasteful delays and expenses ; consuls must be maintained all over the world, and no end of oaths required ; vessels must be watched from the time they enter harbor until the time they leave, and every- thing landed from them examined, down to the trunks and* satchels and sometimes the persons of passengers, while spies, informers and " bloodhounds " must be en- couraged. But in spite of prohibitions, restrictions, searchings, watchings, and swearings, indirect taxes on commodi- ties are largely evaded, sometimes by the bribery of officials and sometimes by the adoption pf methods for eluding their vigilance, which though costly in them- selves, cost less than the taxes. All these costs, how- ever, whether borne by the government or by the first p;ivers (or evaders) of the taxes, together with the increased charges due to increased prices, finally fall on consumers, and thus this method of taxation is extremely wasteful, taking from the people much more than the government obtains. A still more important objection to indirect taxation TARIFFS FOR REVENUE. 79 is that when imposed on articles of general use (and it is only from such articles that large revenues can be had) it bears with far greater weight on the poor than on the rich. Since such taxation falls on people not according to what they have, but according to what they consume, it is heaviest on those whose consump- tion is largest in proportion to their means. As much sugar is needed to sweeten a cup of tea for a working- girl as for the richest lady in the land, but the propor- tion of their means which a tax on sugar compels each to contribute to the government is in the case of the one much greater than in the case of the other. So it is with all taxes that increase the cost of articles of general consumption. They bear far more heavily on married men than on bachelors ; on those who have children than on those who have none : on those barely able to support their families than on those whose incomes leave them a large surplus. If the million- aire chooses to live closely he need pay no more of these indirect taxes than the mechanic. I have known at least two millionaires possessed not of one, but of from six to ten millions each who paid little more of such taxes than ordinary day laborers. Even if cheaper articles were taxed at no higher rates than the more costly, such taxation would be grossly unjust ; but in indirect taxation there is always a tendency to impose heavier taxes on the cheaper articles used by all than on the more costly articles used only by the rich. This arises from the necessities of the case. Not only do the larger amounts of articles of common consumption afford a wider basis for large revenues than the smaller amounts of more costly articles, but taxes imposed on them cannot be so easily 80 PROTECTION OR FREE TRADE. evaded. For instance, while articles in use by the poor as well as the rich are under our tariff taxed fifty and a hundred, and even a hundred and fifty per cent, the tax on diamonds is only ten per cent., and this comparative light tax is most difficult to enforce, owing to the high value of diamonds as compared with their bulk. Even where discrimination of this kind is not made in the imposition of indirect taxation, it arises in its collection. Specific taxes fall more heavily upon the cheaper than the costlier grades of goods, while even in the case of ad valorem taxes, under-valuation and evasion are easier in regard to the more valuable grades. That indirect taxes thus bear far more heavily on the poor than on the rich is undoubtedly one of the reasons why they have so readily been adopted. The rich are ever the powerful, and under all forms of government have most influence in forming public opinion and framing laws, while the poor are ever the voiceless. And while indirect taxation causes no loss to those who first pay it, it is collected in such insidious ways from those who finally pay it that they do not realize it. It thus affords the best means of getting the largest revenues from the body of the people with the least remonstrance against the amount collected or the uses to which it is put. This is the main reason that has induced governments to resort so largely to indirect taxation. A direct tax, where its justice and necessity are not clear, provokes outcry and oppo- sition which may at times rise to successful resistance ; but not only do those indirectly taxed seldom realize it, but it is extremely difficult for them to refuse pay- ment. They are not called on at set times to pay TARIFFS FOR REVENUE. 81 definite sums to government agents, but the tax becomes indistinguisliably blended with the cost of the goods they buy. When it reaches those who must finally pay it, together with all costs and profits of collection, it is not a tax yet to be paid, but a tax which has already been paid, some time ago, and many removes back, and which cannot be separated from other elements which go to make up the cost of goods. There is no choice save to pay the tax or go without the goods. If a tax-gatherer stood at the door of every store, and levied a tax of twenty-five per cent, on every article bought, there would quickly be outcry; but the very people who would fight rather than pay a tax like this, will uncomplainingly pay higher taxes when they are collected by store-keepers in increased prices. And even if an indirect tax is consciously realized, it cannot easily be opposed. At the beginning of our Revolution the indirect tax on tea levied by the British government, without the consent of the American colo- nies, was successfully resisted by preventing the land- ing of the tea; but if the tea had once got into the hands of the dealers, with the taxes on it paid, the English government could have laughed at the oppo- sition of the patriots. When in Ireland, during the height of the Land League agitation, I was much struck with the ease and certainty with which an unpopular government can collect indirect taxes. At the begin- ning of the century the Irish people, without any assistance from America, proved in the famous Tithe war that the whole power of the English government could not collect direct taxes they had resolved not to pay ; and the strike against rent, which so long as per- 82 PROTECTION OR FREE TRADE. sisted in proved so effective, could readily have been made a strike against direct taxation. Had the gov- ernment which was enforcing the claim of the landlords depended on direct taxation, its resources could thus have been seriously diminished by the same blow which crippled the landlords ; but during all the time of this strike the force used to put down the popular movement was being supported by indirect taxation on the people who were in passive rebellion. The people who struck against rent could not strike against taxes paid in buying the commodities they used. Even had rebellion been active and general, the British govern- ment could have collected the bulk of its revenues from indirect taxation, so long as it retained command of the principal towns. It is no wonder that princes and ministers anxious to make their revenues as large as possible should prefer a method that enables them to " pluck the goose with- out making it cry," nor is it wonderful that this prefer- ence should be shared by those who get control of popular governments; but the reason which renders indirect taxes so agreeable to those who levy taxes is a sufficient reason why a people jealous of their liberties should insist that taxes levied for revenue only should be direct, not indirect. It is not merely the ease with which indirect taxes can be collected that urges to their adoption. Indirect taxes always enlist active private interests in their favor. The first rude device for making the collection of taxes easier to the governing power is to let them out to farm. Under this system, which existed in France up to the Revolution, and still exists in such countries as Turkey, persons called farmers of the TARIFFS FOR REVENUE. 83 revenue buy the privilege of collecting certain taxes and make their profits, frequently very large, out of the greater amount which their vigilance and extortion enable them to collect. The system of indirect tax- ation is essentially of the same nature. The tendency of the restrictions and regulations necessary for the collection of indirect taxes is to con- centrate business and give large capital an advantage. For instance, with a board, a knife, a kettle of paste and a few dollars' worth of tobacco, a competent cigar maker could set up in business for himself, were it not for the revenue regulations. As it is, in the United States, the stock of tobacco which he must procure is not only increased in value some two or three times by a tax upon it ; but before the cigar maker can go to work he must buy a manufacturer's license and find bonds in the sum of five hundred dollars. Before he can sell the cigars he has made, he must furthermore pay a tax on them, and even then if he would sell cigars in less quantities than by the box he must buy a second license. The effect of all this is to give capital a great advantage, and to concentrate in the hands of large manufacturers a business in which, if free, workmen could easily set up for themselves. But even in the absence of such regulations indirect taxation tends to concentration. Indirect taxes add to the price of goods not only the tax itself but also the profit upon the tax. If on goods costing a dollar a manufacturer or merchant has paid fifty cents in tax- ation, he will now expect profit on a dollar and fifty cents instead of upon a dollar. As, in the course of trade, these taxed goods pass from hand to hand, the amount which each successive purchaser pays on account 84 PROTECTION OH FREE TRADE. of the tax is constantly augmenting. It is not merely inevitable that consumers have to pay considerably more than a dollar for every dollar the government receives, but larger capital is required by dealers. The need of larger capital for dealing in goods that have been enhanced in cost by taxation, the restrictions imposed on trade to secure the collection of the tax, and the better opportunities which those who do busi- ness on a large scale have of managing the payment or evading the tax, tend to concentrate business, and, by checking competition, to permit large profits, which must ultimately be paid by consumers. Thus the first pay- ers of indirect taxes are generally not merely indifferent to the tax, but regard it with favor. That indirect taxation is of the nature of farming the revenue to private parties is shown by the fact that those who pay such taxes to the government seldom or never ask for their reduction or repeal, but on the con- trary generally oppose such propositions. The manu- facturers and dealers in tobacco and cigars have never striven to secure any reduction in the heavy taxes on those articles, and the importers who pay directly the immense sums collected by our custom houses have never grumbled at the duties, however they may grumble at the manner of their collection. When, at the time of the war, the national taxation was enormously in- creased there was no opposition to the imposition of indirect taxation from those who would thus be called upon to pay large sums to the government. On the contrary, the imposition of these taxes, by enhancing the value of stock in hand, made many fortunes. And since the war the main dill'iculty in reducing taxation has been the opposition of the very men who pay these TARIFFS FOU MKVKM'K. ^5 taxes to the government. The reduction of the war tax on whisky was strongly opposed by the whisky ring, composed of great distillers. The match manufacturers fought bitterly the abolition of the tax on matches. Whenever it has been proposed to reduce or repeal any indirect tax Congress has been beset by a persistent lobby urging that, whatever other taxes might be dis- pensed with, that particular tax might be left in full force. In order to provide an excuse for keeping up indirect taxes all sorts of extravagant expenditures of the national money have been made, and hundreds of millions have been voted away to get them out of the Treasury.* Despite all this extravagance, we have a surplus ; yet we go on collecting taxes we do not need because of the opposition of interested parties to their reduction. This opposition is of the same kind and springs from the same motives as that which the farmers of the revenue under the old French system would have made to the abolition of a tax which enabled them to extort two millions of francs from the French people for one million which they paid to the govern- ment. Now, over and above the great loss to the people which indirect taxation thus imposes, the manner in which it gives individuals and corporations a direct and selfish interest in public affairs tends powerfully to the corruption of government. These moneyed inter- ests enter into our politics as a potent demoralizing force. What to the ordinary citizen is a question of public policy, affecting him only as one of some sixty * Just now (1S86) the interests concerned in keeping up indirect taxation are urging a worse than useless scheme for spending enoi> suuib on iron- clad ccuoi, dv Luces. 86 PROTECTION OR FREE TRADE. millions of people, is to them a question of special pecuniary interest. To this is largely due the state of things in which politics has become the trade of pro- fessional politicians ; in which it is seldom that one who has not money to spend can, with any prospect of suc- cess, present himself for the suffrages of his fellow-citi- zens ; in which Congress is surrounded by lobbyists, clamorous for special interests, and questions of the utmost general importance are lost sight of in the struggle which goes on for the spoils of taxation. That under such a system of taxation our government is not far more corrupt than it is, is the strongest proof of the essential goodness of republican institutions. That indirect taxes may sometimes serve purposes other than the raising of revenue I do not deny. The license taxes exacted from the sellers of liquor may be defended on the ground that they diminish the number of saloons and lessen a traffic injurious to public morals. And so taxes on tobacco and spirits may be defended on the ground that the smoking of tobacco and the drinking of spirits are injurious vices, which may be lessened by making tobacco and spirits more expensive, so that (except the rich) those who smoke may be com- pelled to smoke poorer tobacco, and those who drink to drink viler liquor. But merely as a means of raising revenue, it is clear that indirect taxes are to be con- demned, since they cost far more than they yield, bear with the greatest weight upon those least able to pay, add to corruptive influences, and lessen the control of the people over their government. ^ All the objections which apply to indirect taxes in general apply to import duties. Those protectionists arc right who declare that protection is the only justi- TARIFFS FOR REVENUE. 87 fication for a tariff,* and the advocates of "a tariff for revenue only " have no case. If we do not need a tariff for protection we need no tariff at all, and for the purpose of raising revenue should resort to some system which will not tax the mechanic as heavily as the millionaire, and will not call on the man who rears a family to pay on that account more than the man who shirks his natural obligation, and leaves some woman whom in the scheme of nature it was intended that he should support, to take care of herself as best she can. * (i Tariffs for revenue should have no existence. Interferences with trade are to be tolerated only as measures of self -protection." H. C. CAREY, Past, Present and Future, p. 472. " Taxes for the sake of revenue should be imposed directly, be- cause such is the only mode in which the contribution of each in- dividual can be adjusted in proportion to his means." PROF. E. P. SMITH, Political Economy, pp. 265-8. " Duties for revenue * * * are highly unjust. They inflict all the hardship of indirect and unequal taxation without even the purpose of benefiting the consumer. " PROF. R. E. THOMPSON, Political Economy, p. 232. CHAPTER IX. TARIFFS FOR PROTECTION. PROTECTIVE tariffs differ from revenue tariffs in their object, which is not so much that of obtaining revenue as that of protecting home producers from the compe- tition of imported commodities. The two objects, revenue and protection, are not merely distinct, but antagonistic. The same duty may raise some revenue and give some protection, but, past a certain point at least, in proportion as one object is secured the other is sacrificed, since revenue depends on the bringing in of commodities ; protection on keep- ing them out. So the same tariff may embrace both protective and revenue duties, but while the protect- ive duties lessen its power of collecting revenue, the revenue duties by adding to the cost of home production lessen its power of encouraging home producers. The duties of a purely revenue tariff should fall only "on commodities not produced in the country; or, if levied on commodities partly produced at home should be balanced by equivalent internal taxes to prevent inci- dental protection. In a purely protective tariff, on the other lumd, commodities not produced in the country should be free and duties should be levied on com- modities that are or may be produced in the country. And, just in proportion as it accomplishes its object. TARIFFS FOR PROTECTION. 89' the less revenue will it yield. The tariff of Great Britain is an example of a purely revenue tariff, in cidental protection being prevented by excise duties. There is no example of a purely protective tariff, the purpose of obtaining revenue seeming always to be the original stock upon which protective features are grafted. The tariff of the United States, like all actual protective tariffs, is partly revenue and partly protect- ive, its original purpose of yielding revenue having been subordinated to that of giving protection, until it may now be best described as a protective tariff yield- ing incidental revenue. As we have already considered the revenue functions of tariffs, let us now consider their protective functions. Protection, as the word has come to be used to denote a scheme of national policy, signifies the levying of duties on the importation of commodities (as a means) in order (as an end) to encourage domestic industry. Now, when the means proposed in any such scheme is the only means by which the proposed end can be reached, it is only needful to inquire as to the desir- ability of the end ; but when the proposed means is only one of various means we must satisfy ourselves that it is the best. If it is not, the scheme is con- demned irrespective of the goodness of its end. Thus the advisability of protection does not, as is generally assumed, follow the admission of the advisability of encouraging domestic industry. That granted, the advisability of protection is still an open question, since it is clear that there are other ways of encourag- ing home industry than by import duties. Instead of levying import duties, we might, for in . stance, destroy a certain proportion of imported com- 90 PROTECTION OR FREE TRADE. modities, or require the ships bringing them to sail so many times round the world before landing at our ports. In either of these ways precisely the same pro- tective effect could be secured as by import duties, and in cases where duties secure full protection by prevent- ing importation, such methods would involve no more waste. Or, instead of indirectly encouraging domestic producers by levying duties on foreign goods, we might directly encourage them by paying them bounties. As a means of encouraging domestic industry the bounty has over the protective system all *the advan- tages that the system of paying public officers fixed salaries has over the system prevailing in some countries, and in some instances in our own, of letting them make what they can. As by paying fixed salaries we can get officials at such places and to perform sucli functions as we wish, while under the make-what-you- can system they can only be got at places and in ca- pacities that will enable them to pay themselves, so do bounties permit the encouragement of any industry, while protection permits only the encouragement of the comparatively few industries with which imported commodities compete. As salaries enable us to know what we are paying, to proportion the rewards of different offices to their respective dignity, responsibility and arduousness, while make-what-you-can may give to one official much more than is necessary, and to others not enough, so do bounties enable us to see and to fix the encouragement to each industry, while the protect- ive system leaves the public in the dark and makes the encouragement to each industry almost a matter of chance. And as salaries impose on the people much lighter and more fairly apportioned burdens than does TARIFFS FOR PROTECTION. 91 the make-what-you-can system, so is the difference be- tween bounties and protection. To illustrate the working of the two systems, let it be assumed desirable to encourage aerial navigation at public expense. Under the bounty system we should offer premiums for the building and successful operation of air ships. Under the protective system we should impose deterrent taxes on all existing methods of trans- portation. In the one case we should have nothing to pay till we got what we wanted, and would then pay a definite sum which would fall on individuals and locali- ties in general taxes. But in the other case we should have to suffer all the inconveniences of obstructed transportation before we got air ships, and whether we got them or not ; and while these obstructions would, in some cases, more seriously affect individuals, busi- nesses and localities than in others, we should never be able to tell how much they distorted industry and cost the people, or how much they stimulated the invention and building of air ships. In the one case, moreover, after aerial navigation had proved successful, and the stipulated bounties had been paid, the air-ship men would hardly have the audacity to ask for more bounties, and would not be likely to get them if they did. In the other case, the public would have grown accustomed to the taxes on surface transportation, while the air-ship proprietors, if they had not convinced themselves that these taxes were necessary to the con- tinued prosperity of aerial navigation, could readily pretend so, and would have, in opposing their repeal, the advantage of that inertia which tends to the con- tinuance of anything that is. The superiority of the bounty system over the pro- 92 PROTECTION OR FREE TRADE. tective system for the encouragement of any single in- dustry is very great ; but it becomes greater as the number of industries to be encouraged is increased. When we encourage an industry by a bounty we do not discourage any other industry, except as the neces- sary increase in general taxation may have a discour- aging effect. But when to encourage one industry we raise the price of its products by a protective duty, we at the same time produce a directly injurious effect upon other industries that use those products. So complicated has production become, so intimate are the relations between industries, and in so many forms do the products of one industry enter into the materials or processes of others, that what will be the effect of a single protective duty it is hard for an expert to say. But when it comes to encouraging not one nor a dozen, but a thousand different industries, it is impossible for human intelligence to trace the multifarious effects of raising the prices of so many products. The people cannot tell what such a system costs them, nor in most cases can even those who are supposed to be its bene- iiciaries really tell how their gains under it compare with their losses from it. The " drawback " system is an attempt to prevent, so far as exports are concerned, the discouragement to which the protection of one industry subjects others. Draw- backs are bounties paid on exports of domestic goods to an amount which it is calculated will compensate for tho addition a duty on material has made to their cost. But drawbacks not only leave home prices undimin- i- lied, but while fruitful of fraud, o;m only in small ]) i rt prevent the discouragement of ex polls, since it is only on goods into wliidi dutiable commodities have TARIFFS FOR PROTECTION. 93 entered in large proportion and obvious ways that drawbacks are allowed, or that it is worth the while of the exporter to attempt to collect them. In 1884, for instance, the United States paid out a larger sum in drawbacks on copper than was received in duties on copper, yet it is certain that very many exports into which copper entered, and which were therefore en- hanced in cost by the duty, got no drawback what- ever. And so of drawbacks on refined sugar, for which we are paying a sum greatly in excess of the duties collected on the raw sugar, though many of our ex- ports, such as those of condensed milk, syrups and pre- served fruits, are much curtailed by these duties. The substitution of bounties for protection in en- couraging industry would do away with the necessity for such inefficient, fraud-provoking, and back-action devices. Under the bounty system prices would not be raised, except as affected by general taxation. Each encouraged producer would know in dollars and cents how much encouragement he got, and the people at large would know how much they paid. In short, all and even more than protection can do to encourage home industries can be done more cheaply and more certainly by bounties. It is sometimes asserted, as one of the advantages of tariff duties, that they fall on the producers of im- ported goods, and are thus paid by foreigners. This assertion contains a scintilla of truth. An import duty on a commodity of which the production is a closely controlled foreign monopoly may in some cases fall in part or in whole upon the foreign producer. For instance, let us say that a foreign house or combi- nation has a monopoly in the production of a certain 94 PROTECTION OR FREE TRADE. - article. Within the limits of cost on the one hand and the highest rate at which any can be sold on the other, the price of such article can be fixed by the producers, who will naturally fix it at the point they conclude will give the largest aggregate profits. If we impose an import duty on such an article they may prefer to reduce their profit on what they sell to this country rather than have the sale diminished by the addition of the duty to the price. In such case the duty will fall upon them. Or, again, let us suppose a Canadian farmer so situ- ated that the only market in which he can conveni- ently sell his wheat is on the American side. Wheat being a commodity of which our home production not merely supplies home demands, but leaves a surplus for export, the duty on wheat does not add to price, and the Canadian farmer so exceptionally situated that he must send wheat to this side although there is no general demand for Canadian wheat, cannot get back in enhanced price the duty he must pay. The two classes represented by these instances sug- gest all the cases in which import duties fall on for- eign producers.* Such cases, too unimportant to be * In certain cases where an import duty, levied in one country on the produce of another, has the effect of reducing price in the exporting country at the expense of rent, it may, in some part, fall upon foreign land-owners. John Stuart Mill (Chap. III., Book V., Political Economy), further maintains that taxes on imports fall in part, not on the foreign producer of whom we buy, but on the foreign consumer to whom we sell since they increase the cost oi products we export. But this is only to say that the injury which we do ourselves by protection must in some part fall upon those with whom we trade. And even if import duties do, in such ways, somewhat increase the cost to foreigners of what they get from us, TARIFFS FOR PROTECTION. 95 considered in any estimates of national revenue, are only the rare exceptions to the general rule that the ability to tax ends with the territorial limits of the taxing power. And it is well for mankind that this is so. If it were possible for the government of one country, by any system of taxation, to compel the peo- ple of other countries to pay its expenses, the world would soon be taxed into barbarism. But the possibility of exceptional cases in which im- port duties may in part or in whole fall on foreign producers, instead of domestic consumers, has in it, even for those who would gladly tax "foreigners," no shadow of a recommendation for protection. For it will be noticed that the cases in which an import duty falls on foreign producers, are cases in which it can afford no encouragement to home producers. An import duty can only fall on foreign producers when its payment does not add to price ; while the only and thus, in some degree, compel them to share our loss, yet they also handicap us when we come into competition with them. Thus, assuming that our tariff upon imports may at times, to some slight extent, have increased the price which English consumers have had to pay for our cotton, wheat or oil, the increased cost of production in the United States has certainly operated far more strongly to give English producers an advantage over American pro- ducers in markets in which they compete, and to enable England to take the lion's share of the ocean-borne commerce of the world. The minute tracing of the actions and reactions of taxation upon international trade is, however, more a matter of theo- retical nicety than of practical interest, since the general conclu- sion will be that stated in the text, that while we cannot injure ourselves without injuring others, the taxing power of a govern- ment is substantially restricted to its territorial limit. The clearest exception to this is in the case of export duties on articles of which the country levying the export duty has a monopoly, as Brazil has of India-rubber and Cuba of the Havana tobacco. 96 PEOTECTION OR FREE TRADE. possible way in which an import duty can encourage home producers is by adding to price. It is sometimes said that protection does not in- crease prices. It is sufficient answer to ask, how then can it encourage ? To say that a protective duty en- courages the home producer without raising prices, is to say that it encourages him without doing anything for him. Wherever beneath this assertion, as regard- less of fact as it is of theory, there is any glimmering of reason, it is either in the notion that protective duties do not permanently add to prices, because they bring about such a competition between home pro- ducers as finally carries prices down to the previous level ; or else in a confused idea that it would be an advantage to home producers to be secured the whole home market, even if at no higher prices. But as to the first, the only way in which a pro- tective duty can increase home competition in the pro- duction of any commodity is by so increasing prices as to attract producers to the industry by the superior profits to be obtained. This competition, when free to operate, ultimately reduces profits to the general level.* But this is not to say that it reduces prices to what they would be without the duty. The profits of Louisiana sugar growing are now, doubtless, no larger than in other occupations involving equal risks, but the duty on sugar does make the price of sugar very much higher in the United States than it is in England, where there is no duty upon it. And even where there is no reason in natural or social conditions why a commodity should not be produced as cheaply as in any foreign -The <(]';: t <>!' prof i-cl im upon profits in fli> protected industries will be moiv fully cxamini-d in Chapter X\ 1 1. TA1UFFS FOtt PROTECTION'. 97 country, the effect of the net-work of duties, of which the particular duty is but a part, is to increase the cost of production, and thus, though profits may fall, to keep prices above the point of free importation. Did the price of a protected article fall to the point at which the foreign product could not be imported were there no duty, the duty would cease to protect, since the foreign product would not be imported if it were abolished, and the producers for whose protection it was imposed would cease to care for its retention. In what instance has this been the case ? Are any of our protected in- dustries less clamorous for protection now than they were forty years ago ? As to the second notion, it is to be observed that the only way in which a protective duty can give the home market to home producers is by increasing the price at which foreign products can be sold in it. Not merely does this increase in the price of foreign products compel an increase in the price of domestic products into which they enter, but the shutting out of foreign products must increase the price of similar domestic products. For it is only where prices are fixed by the will of the producer that increase or decrease in supply does not result in increase or decrease of price. Thus, while the newspaper business is not a monopoly, the publication of each individual paper is, and its price is fixed by the publisher. A publisher may, and in most cases will, prefer increased circulation to increased prices. And if competition were to be lessened, or even cut off, as, for instance, by imposing a stamp duty on, or pro- hibiting the publication of all the newspapers of New York save one, it would not necessarily follow that the price of that paper would be increased. But the 98 PROTECTION OR FREE TRADE. prices of the great mass of commodities, and especially the great mass of commodities which are exported and imported, are regulated by competition. They are not fixed by the will of producers, but by the relative intensity of supply and demand, which are brought to an equation in price by what Adam Smith called u the higgling of the market," and hence any lessening of supply caused by the shutting out of importations will at once increase prices. In short, the protective system is simply a system of encouraging certain industries by enabling those carry- ing them on to obtain higher prices for the goods they produce. It is a clumsy and extravagant mode of giv- ing encouragement that could be given much better and at much less cost by bounties or subsidies. If it be wise to "encourage" American industries, and this we have yet to examine, the best way of doing so would be to abolish our tariff entirely and to pay bounties from funds obtained by direct taxation. In way the cost could be distributed with some ap- proach to fairness, and the citizen who is worth a million times more than another could have the satis- faction of contributing a million times as much to the encouragement of American industry. I do not forget that, from the bounties given in the Colonial days for the killing of noxious animals to the ! '.bsidies !f!\ui{,i;:l to the Pacific railroads, experience shown that the bounty system inevitably leads to fraud and begets corruption, while but poorly accom- plishing the ends sought by it But these evils are in- separable from any method of "encouragement," and attach to the protective more than to the bounty sys- tem, because its operations are not bo clear. If pro- TARIFFS FOR PROTECTION. tection lias been preferred to bounties it is not that it is a better means of encouragement, but for the s;imo reason that indirect has been preferred to direct taxa- tion because the people do not so readily realize what is being done. Where a grain of a hundred thousand dollars directly from the treasury would raise an out- cry, the imposition of a duty which will enable the appropriation of millions in higher prices excites no comment. Where bounties have been given by our states for the establishment of new industries they have been comparatively small sums, given in a single payment or in a subsidy for a definite term of years. Although the people have in some cases been willing thus to pay bounties to a small extent and for a short time, in no case have they consented to regard them as a settled thing, and to keep on paying them year after year. But protective duties once imposed, the pro- tected industry has always been as clamorous for the continuance of protection as it was in the beginning for the grant of it. And the people not being so con- scious of the payment have permitted it to go on. It is often said by protectionists, that free trade is right in theory but wrong in practice. Whatever may be meant by such phrases they involve a contradiction in terms, since a theory that will not agree with facts must be false. But without inquiring into the validity of the protective theory it is clear that no such tariff as it proposes ever has been or ever can be made. The theory of free trade may be carried into practice to the point of ideal perfection. For to secure free trade we have only to abolish restrictions. But to carry the theory of protection into practice some articles must be taxed arid others left untaxed, and, as to the 100 PROTECTION OR FREE TRADE. articles taxed, different rates of duty must be imposed. And as tlie protection given to any industry may be neutralized by protection that enhances the price of its materials, careful discrimination is required, for there are very few articles that can be deemed finished products in relation to all their uses. The finished products of some industries are the materials or tools of other industries. Thus, while the protection of any industry is useless unless sufficient to produce the desired effect, too much protection is likely, even from a protective standpoint, to do harm. It is not merely that the ideal perfection with which the free trade theory may be reduced to practice is im- possible in the case of protection, but that even a rough approximation to the protective theory is impossible. There never has been a protective tariff that satisfied protectionists, and there never can be. Our present tariff, for instance, is admitted by protectionists to be full of the grossest blunders.* It was only adopted be- * For instance, to cite only one case, the last Tariff Act, which went into effect in July, 1883, raised the duty on the fabric used in the manufacture of niching and ruillings from 35 to 125 per cent., while leaving the duty of the finished article at 85 per cent. Previous to this, say the manufacturers of these goods, in a memorial addressed to the Secretary of the Treasury, they not only supplied the American market, but sold hundreds of thou- sands of dollars' worth every year to Canada, the West Indies and other countries, the labor-saving machinery which they had in use giving them tin advantage which, in spite of the 35 percent, tax on their material, enabled them to successfully compete wit h European factories. Hut. the 125 per cent, duty has not only cut ofV tin's export Indf completely, but. lias led to such an importation of I'.iitish goods that, as the memorial declares, thousands <>!' h.-inds have lost their employment, and tlmr-fourths of the manufacturers in Ihe business li.-ive been utterly ruined. This, of course, TARIFFS FOR PROTECTION". 101 cause, after a long wrangle, it was found impossible to agree upon a better one, and it is only maintained and defended because any attempt to amend it would begin a scramble out of which no one can tell what sort of a tariff would come. This has been the case with every former tariff, and must be the case with every future tariff. To make a protective tariff that would even roughly accord with the protective theory would require in the first place a minute knowledge of all trade and indus- try, and of the manner in which an effect produced on one industry would act and react on others. This no king, congress or parliament ever can have. But, fur- ther than this, absolute disinterestedness is required, for the fixing of protective duties is simply the distribution of pecuniary favors among a crowd of greedy appli- cants. And even were it possible to obtain for the making of a protective tariff a body of men themselves disinterested and incapable of yielding to bribery, to threats, to friendship or to flattery, they would have to be more than human not to be dazed by the clamor and misled by the representations of selfish interests. The making of a tariff, instead of being, as the pro- tective theory requires, a careful consideration of the circumstances and needs of each industry, is in prac- tice simply a great " grab " in which the retained ad- vocates of selfish interests bully and beg, bribe and log- roll, in the endeavor to get the largest possible pro- tection for themselves without regard for other interests or for the general good. The result is, and always was not intended by Congress. The ruffling industry is only one of the many minor industries that were thrown down and trampled upon in the hist tariff scramble. 102 PROTECTION OR FREE TRADE. must be, the enactment of a tariff which resembles the theoretical protectionist's idea of whafc a protective tariff should be about as closely as a bucketful of paint thrown against a wall resembles the fresco of a Kaphael. But this is not all. After a tariff has been enacted, come the interpretations and decisions of treasury offi- cials and courts to unmake and re-make it,* and duties are raised or lowered by a printer's placing of a comma, or by arbitrary constructions, frequently open to grave suspicion, and which no one can foresee, so that, as Horace Greeley naively says (Political Economy, p. 183) : " The longer a tariff continues the more weak spots are found, the more holes are picked in it, until at last, through the influence of successive evasions, constructions, decisions, its very father could not discern its original features in the transformed bantling that has quietly taken its place." Under the bounty system, bad as it is, we can come much nearer to doing what we want to, and to know- ing what we have done. * The Secretary of the Treasury stairs 1 hut there aro now (F< !>- ruary, 18SG) over 2,800 tar ill' cases pcinlin/,' in ihc Southern Dis- trict <>[' New York alone. CHAPTER X. THE ENCOURAGEMENT OF INDUSTRY. WITHOUT questioning the end sought by them we have seen that protective tariffs are to be condemned as a means. Let us now consider their end the en- couragement of home industry. There can be no difference of opinion as to what encouragement means. To encourage an industry in the protective sense is to secure to those carrying it on larger profits than they could of themselves obtain. Only so far and so long as it does this can any protec* tion encourage an industry. But when we ask what the industries are that pro- tection proposes to encourage we i'ind a wide difference. Those whom American protectionists have regarded as their ablest advocates have asked protection for the encouragement of " infant industries " describing the protective system as a means for establishing new in- dustries in countries to which they are adapted.* They - " Whoever will consult Alexander Hamilton's Report on Man- ufactures, the writings of Matthew Carey, Hezekiah Niles and their compeers, with the speeches of Henry Clay, Thomas Newton, James Tod, Walter Forward, RolLin C. Mallary, and other forensic champions of protection, with the messages of our earlier Presidents, of Governors Simon Snyder, George Clinton, Daniel D. Tompkins, De Witt Clinton, etc., cannot fail to note that they champion not the maintenance, but the creation of home manufactures." HORACE GREELEY, Political Economy, p. 34. 10-4 PROTECTION OR FREE TRADE. have scouted the idea of attempting to encourage all industry, and declared the encouragement of industries not adapted to a country, or already established, or for a time longer than necessary for their establishment, to be waste and robbery. As it is now popularly ad- vocated and practically applied in the United States the aim of protection, however, is not the encourage- ment of " infant industries " but the encouragement of " home industry " that is to say, of all home industries. And what has proved true in our case is generally true. Wherever protection is once begun, the imposition of duties never stops until every home industry of any political strength that can be protected by tariff gets some encouragement. It is only in new countries and in the beginnings of the system that the encourage- ment of infant industries can be presented as the sole end of protection. European protectionists can hardly ask protection, on the ground of their infancy, for in- dustries that have been carried on since the time of the Romans. And in the United States to ask now the en- couragement of such giants as our iron, steel and textile industries as a means for their establishment would, after all these years of high tariffs, be manifestly absurd. We have thus two distinct propositions to examine- the proposition that new and desirable industries r - li< mid be encouraged, which still figures in the apolo- getics of protection, and the proposition popularly urged and which our protectionist legislation attempts to carry into effect that home industry should l>o encouraged. As an abstract proposition it is not, I think, to be denied that there may be industries to which temporary THE ENCOURAGEMENT OF INDUSTRY. 105 encouragement miglit profitably be extended. Indus- tries capable, in their development, of much public benefit have often to struggle under great disadvan- tages in their beginnings, and their development might sometimes be beneficially hastened by judicious en- couragement. But there are insuperable difficulties in the way of discovering what industries would repay encouragement. There are, doubtless, in every con- siderable community some men of exceptional powers who, if provided at public expense with an assured living and left free to investigate, to invent, or to think, would make to the public most valuable returns. Bat it is certain that, under any system yet devised, such livings, if instituted, would not be filled by men of this kind ; but by the pushing and influential, by flatterers and dependents of those in power or by respectable nonentities. The very men who would give a good return in such places would, by virtue of their qualities, be the last to get them. So it is with the encouragement of struggling in- dustries. All experience shows that the policy of en- couragement, once begun, leads to a scramble in which it is the strong, not the weak ; the unscrupulous, not the deserving, that succeed. What are really infant industries have no more chance in the struggle for governmental encouragement than infant pigs have with full grown swine about a meal tub. Not merely is the encouragement likely to go to industries that do not need it, but it is likely to go to industries that can only be maintained in this way, and thus to cause absolute loss to the community by diverting labor and capital from remunerative industries. On the whole, the ability of any industry to establish and sustain 106 PROTECTION OR FREE TRADE. itself in a free field is the measure of its public utility, and that " struggle for existence " which drives out un- profitable industries is the best means of determining what industries are needed under existing conditions and what are not. Even promising industries are more apt to be demoralized and stunted than to be aided in healthy growth by encouragement that gives them what they do not earn, just as a young man is more likely to be injured than benefited by being left a fortune. The very difficulties with which new industries must con- tend not merely serve to determine which are really needed, but also serve to adapt them to surrounding conditions and to develop improvements and inventions that under more prosperous circumstances would never be sought for. Thus, while it may be abstmctly true that there are industries that it would be wise to encourage, the only safe course is to* give to all "a fair field and no favor." Where there is a conscious need for the making of some invention or for the establishment of some in- dustry which, though of public utility, would not be commercially profitable, the best way to encourage it is to offer a bounty conditional upon success. Nothing could better show the futility of attempting to make industries self-supporting by tariif than the confessed inability of the industries that we have so long encouraged to stand alone. In the early HOME TRADE. 113 velocity with low pressure, and with which all the continental powers had at once provided themselves. Had the English government refused to buy from foreign producers, English ships, in the event of war, which then seemed imminent, would have been placed at a serious disadvantage. Now, just as the policy of reserving home markets for home producers would in war put a country which should adhere to it at a great disadvantage even to the extent, if fully carried out, of restricting the country that does not produce coal to the use of sailing ships, and compelling the country that yields no iron to fight with bows and arrows so in all the vocations of peace does this policy involve like disadvantages. To strictly reserve our home market for home producers would be to exclude ourselves from participation in the advantages which natural conditions or the peculiar skill of their people give to other countries. If bananas will not grow at home we must not eat bananas. If india rubber is not a home production we must not avail ourselves of its thousand uses. If salt can only be obtained in our country by evaporating sea water we must continue so to obtain our salt, although in other countries nature has performed this work and provided already-crystallized salt in quantities sufficient not only for their people, but for us too. Because we cannot grow the cinchona tree we must shake with ague and die from malarial diseases, or must writhe in agony under the oculist's knife because the beneficent drug that gives local insensibility is not a home pro- duction. And so with all those products in which the peculiar development of industry has enabled the people of various countries to excel. To reserve our 114: PROTECTION OR FREE TRADE. home market to home production is to limit the world from which our wants may be supplied to the bounds of our own country, how little soever that may be. And to, place any restrictions upon importations is, in so far as they operate, to deprive ourselves of oppor- tunities to satisfy our wants. It may be to the interest of a shopkeeper that the people of his neighborhood should be prohibited from buying from any one but him, so that they must take such goods as he chooses to keep, at such prices as he chooses to charge, but who would contend that this was to the general advantage? It might be to the interest of gas companies to restrict the number and size of windows, but hardly to the interest of a com- munity. Broken limbs bring fees to surgeons, but would it profit a municipality to prohibit the re- moval of ice from sidewalks in order to encourage surgery ? Yet it is in such ways that protective tariffs act. Economically, what difference is there between restricting the importation of iron to benefit iron producers and restricting sanitary improvements to benefit undertakers. - To attempt to make a nation prosperous by pre- venting it from buying from other nations is as ab- surd as it would be to attempt to make a man pros- perous by preventing him from buying from other men. How this operates in the case of the individual we can see from that practice which, since its applica- tion in the Irish land agitation, has come to be called " boycotting." Captain Boycott, upon whom has been thrust the unenviable fame of having his name turned into a verb, was in fact "protected." He had a pro- tective tariff of the most efficient kind built around him THE HOME MARKET AND HOME TRADE. 115 by a neighborhood decree more effective than act of Parliament. No one would sell him labor, no one would sell him milk or bread or meat or any service or commodity whatever. But instead of growing pros- perous, this much-protected man had to fly from a place where his own market was thus reserved for his own productions. What protectionists ask us to do to ourselves in reserving our home market for home producers, is in kind what the Land Leaguers did to Captain Boycott. They ask us to boycott ourselves. In order to convince us that this would be for our benefit, no little ingenuity has been expended. It is asserted (1) that restrictions on foreign trade are bene- ficial because home trade is more profitable than foreign trade ; (2) that even if these restrictions do compel people to pay higher prices for the same commodities, the real cost is no greater, and (3) that even if the cost is greater they get it back again. Strangely enough, the first of these propositions is fortified by the authority of Adam Smith. In book ii., chapter v., of The Wealth of Nations, occurs this pas- sage : " The capital which is employed in purchasing in one part of the country in order to sell in another the produce of the industry of that country, generally replaces by every such operation two dis- tinct capitals that had both been employed in the agriculture or manufactures of that country, and thereby enables them to con- tinue that employment. * . * * The capital which sends Scotch manufactures to London, and brings back English corn and man- ufactures to Edinburgh, necessarily replaces by every such opera- tion two British capitals which had both been employed in the agriculture or manufactures of Great Britain. " The capital employed in purchasing foreign goods for home con- sumption, when this purchase is made with the produce of domestic industry, replaces, too, by every such operation, two distinct capi- 116 PROTECTION OR FREE TRADE. tals : but one of them only is employed in supporting dom-.-iir industry. The capital which sends British goods to Portugal, and brings back Portuguese goods to Great Britain, replaces by every such operation only one British capital. The other is a Portuguese one. Though the returns, therefore, of the foreign trade of con- sumption should be as quick as those of the home trade, the capital employed in it will give but one-half tho encouragement to the industry or productive labor of the country." This astonishing proposition, of which Adam Smith never seemed to see the significance,* is one of the in- consistencies into which he was led by his abandon- ment of the solid ground from which labor is regarded as the prime factor in production for that from which capital is so regarded a confusion of thought which has ever since befogged political economy. This pass- age is quoted approvingly by protectionist writers, and made by them the basis of assertions even more absurd, if that be possible. Yet the fallacy ought to be seen at a glance. It is of the same nature as the Irishman 1 ;; division, " Two for you two, and two forme, too," and de- pends upon the introduction of a term "British," which includes in its meaning two of the terms previously used, "English" and "Scotch." If we substitute for * In the next paragraph Adam Smith goes on to carry this propo- sil inn to an unconscious reductio ad absurdum. lie says: "A capital therefore employed in tho home trade will sometimes make twelve operations, or be sent cut ami returned twelve times, lieiore a ca|)i;al employed in the foreign trad'' of consumption has nnde one. If tin- capitals arc equal, therefore, tin 1 cm- will give four-and-twenty limes more cncourag'-mont and support to the in- dustry <>f the eouniry than Ihc. other." This i> ju-{ such a proposition as that an innkeeper who only permits his guests to stay with him one day can, with equal facili- ties, furnish twelve times as much entertainment to man and beast as can the innkeeper who permits each guest to stay with him twelve davs. THE HOME MARKET AND HOME TltADE. 117 the terms used by Adam Smitli other terms of the same relation we may obtain, with equal validity, such prop- ositions as this: If Episcopalians trade with Presby- terians, two profits are made by Protestants ; whereas when Presbyterians trade with Catholics only one profit goes to Protestants. Therefore, trade between Protest- ants is twice as profitable as trade between Protestants and Catholics. In Adam Smith's illustration there are two quantities of British goods, one in Edinburgh and one in London. In the domestic trade which he supposes, these two quantities of British goods are exchanged ; but if the Scotch goods be sent to Portugal instead of to England and Portuguese goods brought back, only one quantity of British goods is exchanged. There will be only one-half the replacement in Great Britain, but there has been only one-half the displacement. The Edinburgh goods which have been sent away have been replaced with Portuguese goods ; but the London goods have not been replaced with anything, because they are still there. In the one case twice the amount of British capital is employed as in the other, and consequently double returns show equal profitableness. The arguments by which it is attempted to prove that it is no hardship to a people to be forced to pay higher prices to home producers for goods they can more cheaply obtain by importation are of no better consistency. The real cost of commodities, it is de- clared, is not to be measured by their price but by the labor needed to produce them, and hence as it is put, though higher wages, interest, taxes, etc., may make it impossible to produce certain things for as low a price in one country as in another, their real cost is no 118 PROTECTION OR FREE TRADE. greater, if no greater amount of labor is needed for their production, and thus a nation loses nothing by shutting out the cheaper foreign products. The fallacy is in the assumption that equal amounts of labor always produce equal results. A first-class portrait painter may be able to do whitewashing with no more labor than a professional whitewasher, but it would nevertheless be a loss to him to take time in which he might earn the wages of a portrait painter in order to do whitewashing that he might get done for the wages of a whitewasher. Nor would his loss be the less real if he chose to average his income so as to credit himself with as much for whitewashing as for portrait painting. In the same way, it is not the amount of labor required to produce a thing here or there which determines whether it can be more profitably obtained by home production or by importation, but the relation between what the same labor could produce in that ju id in other employments. This is shown by price. Though as between different tii no:, mid places the prices of things do not accurately indicate the relative quantity and quality of labor necessary to obtain them, they do in the same time and place. If at any given time, in any Lriven place, a en-tain commodity cannot be pro- duced for as low ji prief as it can be imported for, tins is not necessarily proof that it would take more labor to produce it in the the people as a whole. The argument that the higher price* which the tariff THE HOME MARKET AND HOME TRADE. 119 enables certain home producers to cliarge involves no loss to those who pay them is thus put by Horace (mvK'Y (Political Kcnna-my, p. 150): ' I never made any iron, nor had any other than a public, general interest in making any, while I have bought and used many thou- sands of dollars' worth, in the shape of power presses, engines, boilers, building plates, etc. It is my interest, you say, to have cheap iron. Certainly; but I buy iron, not (ultimately and really) with money, but with the product of my laborthat is, with newspapers; and I can better afford to pay $70 per ton for iron made by men who can and do buy American newspapers than take it for $53 of those who rarely see and never buy one of my products. The money price of the American iron may be higher, but its real cost to me is less than that of the British iron. And my case is that of the great body of American farmers and other producers of exchangeable wealth." The fallacy is in the assumption that the ability of certain persons to buy American newspapers depends upon their making of iron, whereas, it depends upon their making of something. Newspapers are not bought with iron, nor do newspaper publishers buy iron with newspapers. These transactions are effected with money, which represents no single form of wealth, but value in all forms. If, instead of making iron, the men to whom Mr. Greeley refers had made something else which was exchanged for British iron, Mr. Greeley 's purchase of this foreign iron would have been just as truly # exchange of his products for theirs. The $20 per ton additional which the tariff compelled him to pay for iron represented a loss to him w T hich was not a gain to any one else. For on Mr. Greeley 's sup- position that the tariff was necessary to give American iron makers the same remuneration such labor could have obtained in other pursuits, its effect was simply to compel the expenditure of $70 worth of labor to obtain 120 PROTECTION OR FREE TRADE. what otherwise could have been obtained by $50 worth of labor. To do this was necessarily to lessen the wealth of the country as a whole, and to reduce tlio fund available for the purchase of newspapers and other articles. This loss is as certain and is of the same kind as if Mr. Greeley had been compelled to employ portrait painters to do whitewashing. The more popular forms of this argument that pro- tection costs nothing, hardly need analysis. If, as is asserted, consumers lose nothing in the higher prices the tariff compels them to pay, because these prices are paid to our own people, then producers would lose nothing if compelled to sell to their fellow-citizens below cost. If workmen are necessarily compensated for high priced goods by the increased demand for their labor, then manufacturers would be compensated for high priced labor by the increased demand for their goods. In short, on this reasoning it makes no dif- ference to anybody whether the price of anything is high or low. When farmers complain of the high charges of railroads, they are making much ado about nothing; and workmen are taking needless trouble when they demand an increase of wages, while employers are quite as foolish when they try to cut wages down. CHAPTER .XII. EXPOKTS AND IMPORTS. THE aim of protection is to diminish imports, never to diminish exports. On the contrary, the protection- ist habit is to regard exports with favor, and to consider the country which exports most and imports least as doing the most profitable trade. When exports exceed imports there is said to be a favorable balance of trade. When imports exceed exports there is said to be an unfavorable balance of trade. In accordance with his idea all protectionist countries afford every facility for sending things away and fine men for bringing things in. If the things which we thus try to send away and prevent coming in were pests and vermin things of which all men want as little as possible this policy would conform to reason. But the things of which ex- ports and imports consist are not things that nature -forces on us against our will, and that we have to struggle to rid ourselves of; but things that 'nature gives only in return for labor, things for which men make exertions and undergo privations. Him who has or can command much of these things we call rich ; him who has little we call poor; and when we say that a country increases in wealth we mean that the amount of these things which it contains increases 121 122 PROTECTION OR FREE TRADE. faster than its population. What, then, is more repug- nant to reason than the notion that the way to increase the wealth of a country is to promote the sending of such things away and to prevent the bringing of them in? Could there be a queerer inversion of ideas? Should we not think even a dog had lost his senses that snapped and snarled when given a bone, and wagged his tail when a bone was taken from him ? Lawyers may profit by quarrels, doctors by diseases, rat-catchers by the prevalence of vermin, and so it may be to the interest of some of the individuals of a nation to have as much as possible of the good things which we call " goods" sent away, and as little as pos- sible brought in. But protectionists claim that it is for the benefit of a community, as a whole, of a nation considered as one man, to make it easy to send goods away and difficult to bring them in. Let us take a community which we must perforce consider as a whole that country, with a population of one, which the genius of Defoe has made familiar not only to English readers but to the people of all European tongues. Ivobinson Crusoe, we will suppose, is still living alono on his island. Let us suppose an American pro- tectionist is the first to break his solitude with the long yearned-for music of human speech. Crusoe's delight we can well imagine. But now that he has been there so long he does not euro to leave, the l<\--s since his visitor tells him that the island, having now been dis- covered, will often be visited by passing ships. Let us suppose that after having heard Crusoe's story, seen his island, enjoyed such hospitality as he could offer, told him in return of the wonderful changes in the great EXPOPvTS AND IMPORTS. 128 world, and left him books raid papers, oar protectionism; prepares to depart, but before going seeks to oflVr some kindly warning of the clanger Crusoe will be exposed to from the " deluge of cheap goods " that passing ships will seek to exchange for fruit and goats. Imagine him to tell Crusoe just what protectionists tell larger communities, and to warn him that, unless he takes measures to make it difficult to bring these goods ashore, his industry will be entirely ruined. "In fact," we may imagine the protectionist to say, " so cheaply can all the things you require be produced abroad that un- less you make it hard to land them I do not see how you will be ab]e to employ your own industry at all." ' "Will they give me all these things?" Robinson Crusoe would naturally exclaim. " Do you mean that I shall get all these things for nothing and have no work at all to do ? That will suit me completely. I shall rest and read and go fishing for the fun of it. I am not anxious to work if without work I can get the things I want." " No, I don't quite mean that, the protectionist would be forced to explain. "They will not give you such things for nothing. They will, of course, want some- thing in return. But they will bring you so much and will take away so little that your imports will vastly exceed your exports, and it will soon be difficult for you to find employment for your labor." "But I don't want to find employment for my labor," Crusoe would naturally reply. "I did not spend months in digging out my canoe and weeks in tanning and sewing these goat-skins because I wanted employment for my labor, but because I wanted the things. If I 12-1 PROTECTION Oil FREE TRADE. can get what I want with less labor, so much the bet- ter, and the more I get and the less I give in the trade you tell me I am to carry on or, as you phrase it, the more my imports exceed my exports the easier I can live and the richer I shall be. I am not afraid of being overwhelmed with goods. The more they bring the better it will suit me." And so the two might part, for it is certain that no matter how long our protectionist talked the notion that his industry would be ruined by getting things with less labor than before would never frighten Crusoe. Yet, are these arguments for protection a whit more absurd when addressed to one man living on an island than when addressed to sixty millions living on a con- tinent? What would be true in the case of Robinson Crusoe is true in the case of Brother Jonathan. If foreigners will bring us goods cheaper than we can make them ourselves, we shall be the gainers. The more we get in imports as compared with what \ve have to give in exports, the better the trade for us. And since foreigners are not liberal enough to give us their productions, but will only let us have them in return for our own productions, how can they ruin our industry? The only way they could ruin our industry would be by bringing us for nothing all we want, so as to save us the necessity for work. If this were possible, oii'jht it seem very dreadful? Consider this mailer .in another \v;iy: To impose taxes on exports in order that home consumers might get tli* 1 advantage of lower prices would be quite as just as to impose taxes on imports in order that home producers may get the Md vantage of hii'her prices, ;md EXPORTS AND IMPORTS. 125 it would be far more conformable to the principle of "the greatest good of the greatest number," since all ol us are consumers, while only a few of us are producers of the things that can be raised in price by taxes on imports. And since the wealthy country is the country that in proportion to its population contains the largest quantities of the things of which exports and imports consist, it would be a far more plausible method of national enrichment to keep such things from going out than to keep them from coming in. Now, supposing it were seriously proposed, as a means for enriching the United States, to put restrictive duties on the carrying out of wealth instead of the bringing in of wealth. It is certain that this would be opposed by protectionists. But what objection could they make? The objection they would make would be in sub- stance this : "The sending away of things in trade from one country to another does not involve a loss to the country from which they are sent, but a gain, since other things of more value are brought back in return for them. Therefore, to place any restriction upon the sending away of things would be to lessen instead of to increase the wealth of a country." This is true. But to say this, is to say that to restrict exports would be injurious because it would diminish imports? Yet, to diminish imports is the direct aim and effect of nro- tective tariffs. Exports and imports, so far as they are induced by trade, are correlative. Each is the cause and comple- ment of the other, and to impose any restrictions on the one is necessarily to lessen the other. And so far from its being the mark of a profitable commerce that 126 PROTECTION OR FREE TRADE. the value of a nation's exports exceeds her Imports, the reverse of this is' true. In a profitable international trade the value of im- ports will alwa^ys exceed the value of the exports that pay for them, just as in a profitable trading voyage the return cargo must exceed in value the cargo carried out. This is possible to all the nations that are parties to commerce, for in a normal trade commodities are carried from places where they are relatively cheap to places where they are relatively dear, and their value is thus increased by the transportation, so that a cargo arrived at its destination has a higher value than on leaving the port of its exportation. But on the theory that a trade is profitable only when exports exceed im- ports, the only way for all countries to trade profitably with one another would be to carry commodities from places where they are relatively dear to places where they are relatively cheap. An international trade made up of such transactions as the exportation of manufactured ice from the West Indies to New England, and the exportation of hot-house fruits from New England to the "West Indies, would enable all countries to export much larger values than they imported. On the same theory the more ships sunk at sea the better for the commercial world. To have all the ships that left each country sunk before they could reach any other country would, upon protectionist principles, be the quickest means of enriching the whole world, since all countries could then enjoy the maximum of exports with the minimum of imports. It must, however, bo borne in mind that .-ill export- ing and importing are not the exchanging of products. This, however, is a fact which puts in still stronger EXPORTS AND IMPORTS. 127 light, if that be possible, the absurdity of the notion that an excess of exports over imports shows increasing wealth. When Borne was mistress of the world, Sicily, Spain, Africa, Egypt, and Britain exported to Italy far more than they imported from Italy. But so far from this excess of their exports over their imports indicating their enrichment, it indicated their impoverishment. It meant that the wealth produced in the provinces was being drained to Borne in taxes and tribute and rent, for which no return was made. The tribute exacted by Germany from France in 1871 caused a large ex- cess of French exports over imports. So in India the " home charges " of an alien government and the remit- tances of alien officials secure a permanent excess of exports over imports. So the foreign debt which has been fastened upon Egypt requires large amounts of the produce of that country to be sent away for which there is no return in imports. And so for many years the exports from Ireland have largely exceeded the imports into Ireland, owing to the rent drain of ab- sentee landlords. The Irish landlords who live abroad do not directly draw produce for their rent, nor yet do they draw money. Irish cattle, hogs, sheep, butter, linen and other productions are exported as if in the regular course of trade, but their proceeds instead of coming back to Ireland as imports, are, through the medium of bank and mercantile exchanges, placed to the credit of the absent landlords, and used up by them. This drain of commodities in return for which no com- modities are imported, would be greater yet were it not for the fact that thousands of Irishmen cross the channel every summer to help get in the English harvests, and then return home, and that from those who have perma- 128 PROTECTION OR FREE TRADE. iiently emigrated to otlier countries there is a constant stream of remittances to relatives left behind.* The last time I crossed to England I sat at the steamer table by two .young Englishmen, who drank much champagn'e and in other ways showed they had plenty of money. As we became acquainted I learned that they were younger sons of English " county families," graduates of a sort of school which has been established in Iowa for wealthy young English- men who wish to become ''gentlemen farmers'' or " estate owners " in the United States. Each had got him a considerable tract of new land, had cut it up into farms, erected on each farm a board house and barn, and then rented these farms to tenants for half the crops. They liked America, they said; it was a good country to have an estate in. The land laws were very good, and if a tenant did not pay promptly you could get rid of him without long formality. But they preferred to live in England, and were going back to enjoy their incomes there, having put their affairs in the hands of an agent, to whom the tenants were required to give notice when they wished to reap their *In Dublin in 1883 I several times met the secretary of one of the great banking institutions whose branches ramify through Ire- land. Fach lime lie asked my opinion of the crop prospects in the I'niled States, ;is though that were uppermost in his mind when- ever lie met an American. Finally 1 said to him, "I suppose poor crops in tin; United States would be to your advantage, as it would increas;: the value of the agricultural products that Ireland ex- ports.' " Oh, no ; " he replied, " we are greatly interested in hav- ing the American crops good. Good crops mean good times, and good times in the United Slates mean large remittances from the Irish in America to their families at home, and these remittances arc more important to business here than the prices we get. i'..-r our own products." EXPORTS AND IMPORTS. 129 crops, and who saw that the landlord's half was prop- erly rendered. Thus in this case half the crop (less commissions) of certain Iowa farmers must annually be exported without any return in imports. And this tide of exports for which no imports come back is only commencing to flow. Many Englishmen already own American land by the hundred thousand, and even by the million acres, and are only beginning to draw rent and royalties. Punch recently had a ponderous joke, the point of which was that the British House of Lords had much greater landed interests in the United States than in Great Britain. If not true already, it will not under present conditions be many years before the English aristocracy will draw far larger incomes from their American estates than from their home estates incomes to supply which we must export without any return in imports.* * The Chicago Tribune of January 25, 188G, contains a long account of the American estates of an Irish landlord, William Scully. This Scully, who was one of the most notorious of the rack-renting and evicting Irish landlords, owns from 75,000 to 00,000 acres of the richest land in Illinois, besides large tracts in other States. His estates are cut up into farms and rented to ten- ants who are obliged to pay all taxes and make all improvements, and who are not permitted to sell their crops until the rent is paid. A "spy system' 5 is maintained, and tenants are required to doff their hats when they enter the li estate office." The Tribune de- scribes them as reduced to a condition of absolute serfdom. Tho houses in which they live are the poorest shanties, consisting gen- erally of a room and a half, and the whole district is described as blighted. Scully got most of his land at nominal prices, ranging as low as seventy-five cents per acre. He lives in London, and is said to draw from his American estates a net income of $400,000 a year, which means, of course, that American produce to that value is exported every year without any imports coming back. The Tribune closes its long account by saying: "Not content with land himself, Scully has induced a number of his rela- 130 PROTECTION OR FREE TRADE. In the commerce which goes on between the United States and Europe there are thus other elements than the exchange of productions. The sums borrowed of Europe by the sale of railway and other bonds, the sums paid by Europeans for land in the United States or invested in industrial enterprises here, capital brought by emigrants, what is spent by Europeans traveling here, and some small amounts of the nature of gifts, legacies, and successions tend to swell our imports or reduce our exports. On the other hand, not only do we pay in exports to Europe for our imports from Brazil, India, and such countries, but interest on bonds and other obligations, profits on capital invested here, rent for American land owned abroad, remittances from immigrants to relatives at home, property passing by will or inheritance to people abroad, payments for ocean transportation for- merly carried on by our own vessels but now carried on by foreign vessels, the sums spent by American tourists who every year visit Europe, and by the increas- ing number of rich Americans who live in Europe, all contribute to swell our exports and reduce our imports. The annual balance against us on these accounts is already very large and is steadily growing larger. "Were we to prevmt importations absolutely we should still have to export I a rifely in order to p;iy our rents, to meet interest, and t<> provide for the increasing number of rich Americans who travel or reside abroad. But the fact that our exports must now thus exceed our imports instead of being what protectionists take it for, an evidence of increasing prosperity, is simply the evi- iives to Ix-coinc American landlords and their system i< pa1t-nu-! an \i\* own." EXPORTS AND^ IMPORTS. 131 dence of a drain upon national wealth like that which Las so impoverished Ireland. But this drain is not to be stopped by tariffs. It proceeds from a deeper cause than any tariff can touch, and is but part of a general drift. Our internal com- merce also involves the flow from country to city, and from "West to East, of commodities for which there is no return. Our large mine owners, ranch owners, land speculators, and many of our large farmers, live in the great cities. Our small farmers have had in large part to buy their farms on mortgage of men who live in cities to the east of them; the bonds of the national, state, county, and municipal governments are largely so held, as are the stocks and bonds of railway and other com- panies the result being that the country has to send to the cities, the West to the East, more than is re- turned. This flow is increasing, and, no matter what be our tariff legislation, must continue steadily to increase, for it springs from the most fundamental of our social adjustments, that which makes land private property. As the land in Illinois or Iowa, or Oregon, or New Mexico owned by a resident of New York or Boston increases in value, people who live in those States must send more and more of their produce to the New Yorker or Bostonian. They may work hard, but grow relatively poorer ; he may not work at all, but grow relatively richer, so that when they need capital for building railroads or any other purpose, they must borrow and pay interest, while he can lend and get interest. The tendency of the time is thus to the ownership of the whole country by residents of cities, and it makes no difference to the people of the country districts whether those cities are in America or Europe. CHAPTER XIIL CONFUSIONS ARISING- FROM THE USE OF MONEY. THERE is no one who in exchanging his own pro- ductions for the productions of another would think that the more he gave and the less he got the better off he would be. Yet to many men nothing seeniH clearer than that the more of its own productions a nation sends away, and the less of the productions of other nations it receives in return, the more profitable its trade. So widespread is this belief that to-day nearly all civilized nations endeavor to discourage the bring- ing in of the productions of other nations while re- garding with satisfaction the sending away of their own. What is the reason of this? Men are not apt to apply to the transactions of nations principles opposite to those they apply to individual transactions. On the contrary, the natural tendency is to personify nations, mi' I to think and speak of them as actuated by the same motives and governed by the same laws as the human brings <>f whom they are made up. Nor have we to look far to see that tin- preposterous notion that a nation gains by exporting and loses by importing actually arises from the application to the commerce between nations of ideas to which individual transac- tions accustom civili/ed men. What men dispose, of to others we term their sales; what they obtain from others we term thuir purchases. Hence we CONFUSIONS ARISING FROM THE USE OF MONEY. Io3 accustomed to think of exports as sales, and of imports tis purchases. And as in daily life we habitually think that the greater the value of a man's sales and the less the value of his purchases the better his business ; so, if we do not stop to fix the meaning of the words we use, it seems a matter of course that the more a na- tion exports and the less it imports the richer it will become, It is significant of its origin that such a notion is ui] known among savages. Nor could it have arisen among civilized men if they were accustomed to trade as savages do. Not long ago a class of traders called " soap-fat men " used to go from house to house exchang- ing soap for the refuse fat accumulated by housewi ves. In this petty commerce, carried on in this primitive manner, the habit of thinking that in a profitable trade the value of sales must exceed the value of purchases could never have arisen, it being clearly to the interest of each party that the value of what he sold (or ex- ported) should be as little as possible, and the value of what he bought (or imported) as great as possible. But in civilized society this is only the exceptional form of trade. Buying and selling, as our daily life familiarizes us with them, are not the exchange of commodities for commodities, but the exchange of money for commod- ities, or of commodities for money. It is to confusions of thought growing out of this use of money that we may trace the belief that a nation profits by exporting and loses by importing a belief to which countless lives and incalculable wealth have been sacrificed in bloody wars, and which to-day moulds the policy of nearly all civilized nations and interposes artificial barriers to the commerce of the world. 134 PROTECTION OR FREE TRADE. The primary form of trade is barter the exchange of commodities for commodities. But just as when we begin to think and speak of length, weight or bulk, it is necessary to adopt measures or standards by which .these qualities can be expressed, so when trade begins there arises a need for some common standard by which the value of different articles can be apprehended. The difficulties attending barter soon lead, also, to the adop- tion by common consent of some commodity as a med- ium of exchange, by means of which he who wishes to exchange a thing for one or more other things is no longer obliged to find some one with exactly reciprocal desires, but is enabled to divide the complete exchange into stages or steps, which can be made with different persons, to the enormous saving of time and trouble. In primitive society, cattle, skins, shells, and many other things have in a rude way fulfilled these func- tions. But the precious metals are so peculiarly adapt- ed to this use that wherever they have become known mankind has been led to adopt them as money. They are at first used by weight, but a great step in advance- is taken when they are coined into pieces of definite weight and purity, so that no one who receives them needs to take the trouble of weighing and testing llieui. As civilization advances, as society becomes in- >re set t h < 1 and orderly, and exchanges more numerous and regular, gold and silver are gradually superseded as iiM'diums of exchange, by credit in various forms. By means of accounts current, one purchase is made to 1 Mia nee another purchase and one debt to cancel an- oilier debt. Individuals or associations of recognized solvenev issue bills of exchange, letters of credit, notes and drafts, which largely take the place of coin ; banks CONFUSIONS ARISING FROM THE USE OF MONEY. 135 transfer credits between individuals, and clearing-houses transfer credits between banks, so that immense trans- actions are carried on with a very small actual use of money; and finally, credits of convenient denominations, printed upon paper, and adapted to transference from hand to hand without indorsement or formality, being cheaper and more convenient, take in part or in whole the place of gold or silver in the country where they are issued. This is, in brief, the history of that labor-saving in- strument which ranges in its forms from the cowries of the African or the wampum of the red Indian to the bank-note or greenback, and which does so much to facilitate trade that without it civilization would be im- possible. The part which it plays in social life and intercourse is so necessary, its use is so common in thought and speech and actual transaction, that cer- tain confusions with regard to it are apt to grow up. It is not needful to speak of the delusion that interest grows out of the use of money, or that increase of money is increase of wealth, or that paper money can- not properly fulfill its functions unless an equivalent of coin is buried somewhere, but only of such confusions of thought as have a relation to international trade. I was present yesterday when one farmer gave an- other farmer a horse and four pigs for a mare. Both seemed pleased with the transaction, but neither said, " Thank you." Yet when money is given for any- thing else it is usual for the person who receives the money to say, " Thank you," or in some other way to indicate that he is more obliged in receiving the money than the other party is in receiving the thing the money is given for. This custom is one of the 136 PROTECTION OB FREE TRADE. indications of a habit of thought which (although it is clear that a dollar cannot be more valuable than a dollar's worth) attaches the idea of benefit more to the giving of money for commodities than to the giving of commodities for money. The main reason of this I take to be that difficulties of exchange are most felt on the side of reduction to the medium of exchange. To exchange anything for money it is necessary to find some one who wants that par- ticular thing, but, this exchange effected, the exchange of money for other things is generally easier, since all who have anything to exchange are willing to take money for it. This, and the fact that the value of money is more certain and definite than the value of things measured by it, and the further fact that the sale or conversion of commodities into money completes those transactions upon which we usually estimate profit, easily lead us to look upon the getting of money as the object and end of trade, and upon selling as more profitable than buying. Further than this, money, being the medium of ex- change the thing that can be most quickly and easily exchanged for other things is, therefore, the most convenient in contingencies. In ruder times, before I lie organization of credit had reached such devel- opment as now, when the world was cut up into small states constantly warring with each other, when order was less well preserved, property far more insecure and the exhibition of riches often led to extortion; when pirates infested the sea and robbers the land; when (ires were frequent and insurance had not been devised ; when prisoners were held to ransom and captured cities given up to sack, the contingencies in which it is im- CONFUSIONS ARISING FROM THE USE OF MONEY. 137 portant to have wealth in the form in which it can be most conveniently carried, readily concealed, and speed- ily exchanged, were far more numerous than now, and every one strove to keep some part of his wealth in the precious metals. The peasant buried his savings, the merchant kept his money in his strong box, the miser gloated over his golden hoard and the prince sought to lay up a great treasure for time of sudden need. Thus gold and silver were even more striking symbols of wealth than now, and the habit of thinking of them as the only real wealth was formed. This habit of thought gave ready support to the pro- tective policy. When the growth of commerce made it possible to raise large revenues by indirect taxation, kings and their ministers soon discovered how easily the people could thus be made to pay an amount of taxes that they would have resisted if levied directly. Import taxes were first levied to obtain revenue, but not only was it found to be exceedingly convenient to tax goods in the seaport towns from whence they were distributed through the country, but the taxation of im- ported goods met with the warm support of such home producers as were thus protected from competition. An interest was thus created in favor of "protection," which availed itself of national prejudices and popular habits of thought, and a system was by degrees elabo- rated, which for centuries swayed the policy of Euro- pean nations. This system, which Adam Smith attacked under the name of the mercantile system of political economy, regarded nations as merchants competing with each other for the money of the world, and aimed at en- riching a country by bringing into it as much gold and 138 PROTECTION OR FREE TRADE. silver as possible, and permitting as little as possible to flow out. To do this it was sought not only to pro- hibit the carrying of precious metals out of the country, but to encourage the domestic production of goods that could be sold abroad, and to throw every obstacle in the way of similar foreign or colonial industries. Not only were heavy import duties or absolute prohibitions placed on such products of foreign industry as might come into competition with home industry, but the ex- ports of such raw materials as foreign industries might require wore burdened with export duties or entirely prohibited under savage penalties of death or mutila- tion. Skilled workmen were forbidden to leave the country lest they might teach foreigners their art; do- mestic industries were encouraged by bounties, by patents of monopoly and by the creation of artificial markets sometimes by premiums paid on exports, and sometimes by laws which compelled the use of their products. One instance of this was the Act of Parliament which required every corpse to be buried in a woolen shroud, a piece of stupidity only paralleled by the- laws under which the American people are taxed to bury in underground safes $2.000,000 of coined silver every month, and keep a hundred millionsof gold lying idle in tho treasury. But to attempt to increase the supply of gold and silver by such methods is both foolish and useless. Though the value of the precious metals is high their utility is low ; their principal use, next to that of money, being in ostentation. And just as a farmer would become poorer, not richer, by selling his breed- ing stock and seed grain to obtain gold to hoard and silver to put on his table, or as a manufacturer would CONFUSIONS ARISING FROM THE USE OF MONEY. 139 lessen his income by selling a useful machine and keep- ing in his safe the money he got for it, so must a nation lessen its productive power by stimulating its exports or reducing its imports of things that could be pro- ductively used, in order to accumulate gold and silver for which it has no productive use. Such amounts of the precious metals as are needed for use as money will come to every nation that participates in the trade of the world, by virtue of a tendency that sets at naught all endeavors artificially to enhance supply, a tendency as constant as the tendency of water to seek a level. Wherever trade exists all commodities capable of trans- portation tend to flow from wherever their value is relatively low to wherever their value is relatively high. This tendency is checked by the difficulties of transportation, which vary with different things as their bulk, weight, and liability to injury com- pare with their value. The precious metals do not suffer from transportation, and having (especially gold) little weight and bulk as compared with their value, are so portable that a very slight change in their rela- tive value is sufficient to cause their flow. So easily can they be carried and concealed that legal restrictions, backed by coast guards and custom-house officials, have never been able to prevent them from finding their way out of a country where their value was rela- tively low and into a country where their value was relatively high. The attempts of her despotic monarch s to keep in Spain the precious metals she drew from America were like trying to hold water in a sieve. The effect of artificially increasing the supply of precious metals in any country must be to lower their value as compared with that of other commodities. 140 PROTECTION OR FREE TRADE. The moment, therefore, that restrictions by which it is attempted to attract and retain the precious metals, begin so to operate as to increase the supply of those metals, a tendency to their outflowing is set up, in- creasing in force as the efforts to attract and retain them become more strenuous. Thus all efforts arti- ficially to increase the gold and silver of a country have had no result save to hamper industry and to make the country that engaged in them poorer instead of richer. This, experience has taught civilized nations, and few of them now make any direct efforts to attract or retain the precious metals, save by uselessly hoarding them in burglar-proof vaults as we do. But the notion that gold and silver are the only true money, and that as such they have a peculiar value, still underlies protectionist arguments,* and the habit of as- sociating incomes with sales, and expenditure with pur- chases, which is formed in the thought and speech of i -\ cry-day life, still disposes men to accept a policy which aims at restricting imports by protective tariffs. Being accustomed to measure the profits of business men by the excess of their sales over their purchases, the as- sumption that the exports of a nation are equivalent to the sales of a merchant, and its imports to his pur- * For instance, Professor Thompson writing where and when, save for subsidiary tokens, paper money was exclusively used, and so conscious of its ability to perform all the functions of money that he declares it to be as much superior to coin as the railway is to the stage-coach (Political Economy, p. 152), goes on subsequently (p. 223) to contend that protective duties are necessary to prevent the poorer country being drained of its money by the richer country, thus tacitly assuming that gold and silver alone are money since neither he nor any one else would pretend that one country could drain another of its paper money. CONFUSIONS ARISING FROM THE USE OF MONEY. 141. chases, leads easily to the conclusion that the greater the amount of exports and the less the amount of im- ports, the more profit a nation gets by its trade.* Yet it only needs attention to see that this assump- tion involves a confusion of ideas. When we say that a merchant is doing a profitable business because his sales exceed his purchases, what we are really thinking of as sales is not the goods he sends out, but the money that we infer he takes in in exchange for them ; what we are really thinking of as purchases is not the goods he takes in, but the money we infer he pays out. We mean, in short, that he is growing richer because his in- come exceeds his out-go. We become so used in ordi- nary affairs to this transposition of terms by inference, that when we think of a nation's exports as its sales and of its imports as its purchases, habit leads us to at- tach to these words the same inferential meaning, and thus unconsciously to give to a word expressive of out- going, the significance of in-coming ; and to a word expressive of in-coming, the significance of out-going. But, manifestlvi when we compare the trade of a mer- chant carried on in the usual way with the trade of a nation, it is not the goods that a merchant sells, but the money that he pays out, that is analogous to the ex- ports of a country ; not the goods that he buys, but the money he takes in, that is analogous to imports. It is only where the trade of a merchant is carried on by the * A conclusion frequently carried by protectionists to the most ridiculous lengths, as, for instance, in the recent declaration of a Protectionist Senator (Wm. M. Evarts, of New York), that he would be ready for free trade "when protection had so far developed all our industries that the United States could sell in competition with all the world, and at the same time be free from the necessity of buying anything from all the world." 14:2 PROTECTION OR FREE TRADE. exchange of commodities for commodities, that the com- modities he sells are analogous to the exports, and the commodities he buys are analogous to the imports of a nation. And the village dealer who exchanges grocer- ies and dry goods for eggs, poultry, and farm produce, or the Indian trader who exchanges manufactured goods for furs, is manifestly doing the more profitable business the more the value of the commodities he takes in (his imports) exceeds the value of the goods he gives out (his exports). The fact is, that all trade in the last analysis is sim- ply what it is in its primitive form of barter, the ex- change of commodities for commodities. The carrying on of trade by the use of money does not change its es- sential character, but merely permits the various ex- changes of which trade is made up to be divided into parts or steps, and thus more easily effected. When commodities are exchanged for money, but half a full exchange is completed. When a man sells a thing for money it is to use the money in buying some other thing and it is only as money has this power that any- one wants or will take it. Our common use of the word "money" is largely metaphorical. We speak of a wealthy man as a moneyed man, and in talking of his wealth say that he lias so much " money," whereas the fact probably is, that though he may be worth mil- lion.--, he never has at any one time more than a, IV w dol- lars, or at most a few hundred dollars, in his possession. His possessions really consist of houses, lands, tronds. stocks, or of bonds or oilier obligations to pay money. The possession of these tilings we speak of as the pos- session of money because we habitually estimate their value in money. If we habitually estimated value in CONFUSIONS ARISING FROM THE USE OF MONEY. 143 shells, sugar or cattle, we would speak of rich men as having much of these, just as the use of postage stamps as currency at the beginning of our civil war led to speaking of rich men in the slang of the day, as those who had plenty of " stamps." And so, when a mer- chant is doing a profitable business, though we speak of him as making or accumulating money, the fact is, save in very rare cases, that he is putting out money as fast as he gets it in. The shrewd business man does not stow away money. On the contrary, with the money he obtains from his sales he hastens to make other pur- chases. If he does not buy commodities for use in his business, or commodities or services for personal gratifi- cation, he buys lauds, houses, stocks, bonds, mort- gages, or other things from which he expects a profit- able return. The trade between nations, made up as it is of nu- merous individual transactions which separately are but parts or steps in a complete exchange, is in the aggregate, like the primitive form of trade, the ex- change of commodities for commodities. Money plays no part in international trade, and the world has yet to reach that stage of civilization which will give us in- ternational money. The paper currency which in all civilized nations now constitutes the larger part of their money, is never exported to settle balances, and when gold or silver coin is exported or imported it is as a commodity, and its value is estimated at that of th'e bullion contained. What each nation imports is paid for in the commodities which it exports, unless received as loans, or investments, or as interest, rent, or tribute. Before commerce had reached its present refinement of division and subdivision this was in many individual 144 PKOTECTION OE FKEE TKADE. cases clear enough. A vessel sailed from New York, Philadelphia, or Boston carrying, on account of owner oi 1 shipper, a cargo of flour, lumber and staves to the West Indies, where it was sold, and the proceeds in- vested in sugar, rum and molasses, which were brought back, or which, perhaps, were carried to Europe, there sold, and the proceeds invested in European goods, which were brought home. At present the exporter and importer are usually different persons, but the bills of exchange drawn by the one against goods exported are bought by the other, and used to pay for goods im- ported. So far as the country is concerned, the trans- action is the same as though importers and exporters Were the same persons, and that imports exceed exports in value is no more proof of a losing trade than that in the old times a trading ship brought home a cargo worth more than that she carried out was proof of an unprofit- able voyage. CHAPTER XIV. DO HIGH WAGES NECESSITATE PROTECTION? IN the United States, at present, protection derives strong support from the belief that the products of the lower paid labor of other countries could undersell the products of our higher paid labor if free competition were permitted. This belief not only leads working- men to imagine protection necessary to keep up wages a matter of which I shall speak hereafter ; but it also induces the belief that protection is necessary to the interests of the country at large a matter which now falls in our way. And further than concerns the tariff this belief has important bearings. It enables employers to persuade themselves that they are serving general interests in re- ducing wages or resisting their increase, and greatly strengthens the opposition to the efforts of working- men to improve their condition, by setting against them a body of opinion that otherwise would be neutral, if not strongly in their favor. This is clearly seen in the case of the eight-hour system. Much of the opposition to this great reform arises from the be- lief that the increase of wages to which such a reduction of working hours would be equivalent, would place the United States at a great disadvantage in production as compared with other countries. It is evident that even those who most vociferously 145 146 PROTECTION OR FREE TRADE. assert that we need a protective tariff on account of our higher standard of wages do not really believe it them- selves. For if protection be needed against countries of lower wages, it must be most needed against coun- tries of lowest wages and least needed against countries of highest wages. Now, against what country is it that American protectionists most demand protection ? If we could have a protective tariff against only one country in the whole world, what country is it that American protectionists would select to be protected against ? Unquestionably it is Great Britain. But Great Britain, instead of being the country of lowest wages, is, next to the United States and the British colonies, the country of highest wages. " It is a poor rule that will not work both ways/' If we require a protective tariff because of our high wages, then countries of low wages require free trade or, at the very least, have nothing to fear from free trade. How is it, then, that we find the protectionists of France, Germany, and other low wage countries pro- testing that their industries will be ruined by the free competition of the higher wage industries of Great Britain and the* United States just as vehemently as our protectionists protest that our industries would be ruined if exposed to free competition with the products of the "pauper labor" of Europe? As popularly put, the argument that the country of high wages needs a protective tariff runs in this way : "Wages are higher here than elsewhere; therefore, if the produce of cheaper foreign labor were freely ad- mitted it would drive the produce of our dearer domestic labor out of the market." But the conclusion does not follow from the premise. To make it valid two inter- 147 mediate propositions' must be assumed: First that low wages mean low cost of production ; and second, that production is determined solely by cost or, to put it in another way, that trade being free, everything will be produced where it can be produced at least cost. Let us examine these two propositions separately. If the country of low wages can undersell the coun- try of high wages, how is it that though the American farm hand receives double the wages of the ^English agricultural laborer, yet American grain undersells English grain? How is it that while the general level of wages is higher here than any where else in the world we nevertheless do export the products of our high priced labor to countries of lower priced labor? The protectionist answer is that American grain un- dersells English grain, in spite of the difference of wages, because of our natural advantages for the pro- duction of grain ; and that the bulk of our exports con- sists of those crude productions in which wages are not so important an element of cost, since they do not em- body so much labor as the more elaborate productions- called manufactures. But the first part of this answer is an admission that ihe rate of wages is not the determining element in the cost of production, and that the country of low wages does not necessarily produce more cheaply than the country of high wages ; while, as for the distinction drawn between the cruder and the more elaborate pro- ductions, it is evident that this is founded on the com- parison of such things by bulk or weight, whereas the only measure of embodied labor is value. A pound of cloth embodies more labor than a pound of cotton, but this is not true of a dollar's worth. That a small 148 PROTECTION OR FREE TRADE. weight of cloth will exchange for a large weight of cot- ton, or a small bulk of watches for a large bulk of wheat, means simply that equal amounts of labor will produce larger weights or bulks of the one thing than of the other; and in the same way the exportation of a certain value of grain, ore, stone or timber means the exportation of exactly as much of the produce of labor as would the exportation of the same value of lace or fancy goods. Looking further, we see in every direction that it is not the fact that low priced labor gives advantage in production. If this is the fact how was it that the development of industry in the slave States of the American Union was not more rapid than in the free States ? How is it that Mexico, where peon labor can be had for from four to six dollars a month, does not undersell the products of our more highly paid labor ? How is it that China and India and Japan are not " flooding the world " with the products of their cheap labor? How is it. that England, where labor is better 'paid than on the Continent, leads the whole of Europe in commerce and manufactures? The truth is, that a low rate of wages does not mean a low cost of pro- duction, but the reverse. The universal and obvious truth is, that the country where wages are highest can produce with the greatest economy, because workmen have there the most intelligence, the most spirit and the most ability; because invention and discovery are there most quickly made and most readily utilized. The great inventions and discoveries which so enormously increase the power of human labor to produce wealth have all been made in countries where wages are com- paratively high. T)O HIGPI \VAOE8 NECESSITATE PROTECTIOX ? 149 That low wages mean inefficient labor may be seen wherever we look. Half a dozen Bengalese carpenters are needed to do a job that one American carpenter can do in less time. American residents in China get ser- vants for almost nothing, but find that so many are required that servants cost more than in the United States ; yet the Chinese who are largely employed in domestic service in California, and get wages that they would not have dreamed of in China, are efficient workers. Go to High Bridge, and you will see a great engine attended by a few men, exerting the power of thousands of horses in pumping up a small river for the supply of New York city, while on the Kile you may see Egyptian fellahs raising water by buckets and tread wheels. In Mexico, with labor at four or five dollars a month, silver ore has for centuries been carried to the surface on the backs of men who climbed rude ladders, but when silver mining began in Nevada, where labor could not be had for less than five or six dollars a day, steam power was employed. In Russia, where wages are very low, grain is still reaped by the sickle and threshed with the flail or by the hoofs of horses, while in our Western States, where labor is very high as compared with the Russian standard, grain is reaped, threshed and sacked by machinery. If it were true that equal amounts of labor always produced equal results, then cheap labor might mean cheap production. But this is obviously untrue. The power of human muscle is, indeed, much the same everywhere, and if his wages be sufficient to keep him in good bodily health the poorly paid laborer can, per- haps, exert as much physical force as the highly paid laborer. But the power of human muscles, though 150 PROTECTION OR FREE TRADE. necessary to all production, is not the primary and ef- ficient force in production. That force is human intel- ligence, and human muscles are merely the agency by which that intelligence makes connection with and takes hold of external things, so as to utilize natural forces and mould matter to conformity with its desires. A race of intelligent pygmies with muscles no stronger than those of the grasshopper could produce far more wealth than a race of stupid giants with muscles as strong as those of the elephant. Now, intelligence varies with the standard of comfort, and the standard of comfort varies with wages. Wherever men are con- demned to a poor, hard and precarious living their mental qualities sink toward the level of the brute. Wherever easier conditions prevail the qualities that raise man above the brute and give him power to mas- ter and compel external nature develope and expand. And so it is that the efficiency of labor is greatest where laborers get the best living and have the most leisure that is to say, where wages are highest. How then, in the face of these obvious facts, can we account for the prevalence of the belief that the low wage country has an advantage in production over the high wage country ? It cannot be charged to the teach- ing of protection. This is one of the fallacies which protectionism avails itself of, rather than one for which it is responsible. Men do not hold it because they are protectionists, but become protectionists because they hold it. And it seems to be as firmly held, and on occasion as energetically preached by so-called free traders as by protectionists. Witness the predictions of free trade economists that trades unions, if successful in raising wages and shortening hours, would destroy DO HIGH WAGES NECESSITATE PROTECTION? 161 England's ability to sell her goods to other nations, find the similar objections by so-called free traders to similar movements on the part of workingmen in the United States. The truth is that the notion that low wages give a country an advantage in production is a careless infer- ence from the every-day fact that it is an advantage to an individual producer to obtain labor at low wages. It is true that an individual producer gains an ad- vantage when he can force down the wages of his em- ployees below the ordinary level, or can import laborers who will work for him for less, and that he may by this means be enabled to undersell his competitors, while the employer who continues to pay higher wages than other employers about him will, before long, be driven out of business. But it by no means follows that the country where wages are low can undersell the country where wages are high. For the efficiency of labor, though it may somewhat vary with the particular wages paid, is in greater degree determined by the general standard of comfort and intelligence, and the prevailing habits and methods which grow out of them. When a single employer manages to get labor for less than the rate of wages prevailing around him, the effi- ciency of the labor he gets is still largely fixed by that rate. But a country where the general rate of wages is low does not have a similar advantage over other coun- tries, because there the general efficiency of labor must also be low. The contention that industry can be more largely carried on where wages are low than where wages are high, another form of the same fallacy, may readily be seen to spring from a confusion of thought. For in- 152 PROTECTION OR FREE TRADE. stance, in the earlier days of California it was often said that the lowering of wages would be a great benefit to the State, as lower wages would enable capitalists to work deposits of low grade quartz that it would not pay to work at the then existing rate of wages. But it is evident that a mere reduction of wages would not have resulted in the working of poorer mines, since it could not have increased the amount of labor or capital available for the working of mines, and wha]b existed would still have been devoted to the working of the richer in preference to the poorer mines, no matter how much wages were reduced. It might, however, have been said that the effect would be to increase the profits of capital and thus bring in more capital. But, to say nothing of the deterrent effect upon the coming in of labor, a moment's reflection will show that such a re- duction of wages would not add to the profits of capital. It would add to the profits of mine owners, and mines would bring higher prices. Eliminating improvements in methods, or changes in the value of the product, lower wages and the working of poorer mines come, of course, together, but this is not because the lower wages cause the working of poorer mines, but the reverse. As the richer natural opportunities are taken up and pro- duction is forced to devote itself to natural opportuni- ties that will yield less to the same exertion, wages fall. There is, however, no gain to capital; and under such circumstances we do not see interest increase. The gain accrues to those who have possessed themselves of natural opportunities, and what we see is that the value of land increases. The immediate effect of a general reduction of wages in any country would be merely to alter the distribution of wealth. Of the amount produced less would go to the DO man WAGES NECESSITATE PROTECTION? 153 laborers and more to those who share in the results of production without contributing to it. Some changes in exports and imports would probably follow a general reduction of wages, owing to changes in relative de- mand. The working classes, getting less than before, would have to reduce their luxuries, and perhaps live on cheaper food. Other classes, finding their incomes increased, might use more costly food and demand more of the costlier luxuries, and larger numbers of them might go abroad and use up in foreign countries the produce of exports, by which, of course, imports would be diminished. But except as to such changes the foreign commerce of a country would be unaffected. The country as a whole would have no more to sell and could buy no more than before. And in a little while the inevitable effect of the degradation of labor involved in the reduction of wages would begin to tell in the re- duced power of production, and both exports and im- ports would fall off. So if in any country there were a general increase of wages, the immediate effect would only be so to alter the distribution of wealth that more of the aggregate product would go to the laboring classes and less to those who live on the labor of others. The result would be that more of the cheaper luxuries would be called for and less of the more costly luxuries. But pro- ductive power would in nowise be lessened ; there would be no less to export than before and no less ability to pay for imports. On the contrary, some of the idle classes would find their incomes so reduced that they would have to go to work and thus increase production, while as soon as an increase in wages began to tell on the habits of the people and on industrial methods productive power would increase. CHAPTER XV. OF ADVANTAGES AND DISADVANTAGES AS REASONS FOR PROTECTION. WE have seen that low wages do not mean low cost of production, and that a high standard of wages, in- stead of putting a country at a disadvantage in produc- tion, is really an advantage. This disposes of the claim that protection is rendered necessary by high wages, by showing the invalidity of the first assumption upon which it is based. But it is worth while to examine the second assumption in this claim that production is determined by cost, so that a country of less advan- tages cannot produce if the free competition of a coun- try of greater advantages be permitted. For while we are sometimes told that a country needs protection be- cause of great natural advantages that ought to be de- v -loped, we are at other times told that protection is needed because of the sparseness of population, the want of capital or machinery or skill, or because of high taxes or a high rate of interest,* or other conditions which, it may be, involve real disadvantage. * The higher rate of interest in the United States than in Great Britain has until recently been one of the stock reasons of American 1 protectionists for demanding a high tariff. We do not hear so much of this now that the rate in New York is as low as in London, if not lower, but we hear no less of the need for protection. It is hardly necessary in this discussion to treatof the nature and law of interest, a subject which I have gone over in Progress and Poverty. It may, ADVANTAGES AND DISADVANTAGES. 155 But without reference to the reality of the alleged ad- vantage or disadvantage, all these special pleas for pro- tection are met when it is shown, as it can be shown, that whatever be its advantages or disadvantages for production a country can always increase its wealth by foreign trade. Jf we suppose two countries each of which is, for any reason, at a decided disadvantage in some branch of production in which the other has a decided advantage, it is evident that the free exchange of commodities be- tween them will be mutually beneficial, by enabling each to make up for its own disadvantage by availing itself of the advantage of the other, just as the blind man and the lame man did in the familiar story. Trade between them will give to each country a greater amount of all things than it could otherwise obtain with the same quantity of labor. Such a case re- sembles that of two workmen, each having as to some things skill superior to the other, and who, by working together, each devoting himself to that part for which he is the better fitted, can accomplish more than twice as much as if each worked separately. But let us suppose two countries, one of which has advantages superior to the other for all the produc- tions of which both are capable. Trade between them being free, would one country do all the exporting and the other all the importing? That, of course, however, be worth while to say that a high rate of interest where it does not proceed from insecurity, is not to be regarded as a disad- vantage, but rather as evidence of the large returns to the active* factors of production, labor and capital returns which diminish aa rent rises and the land owner gets a larger share of their produce for permitting labor and capital to work. 156 PROTECTION OK FREE TRADE. would be preposterous. Would trade, .then, be im- possible? Certainly not. Unless the people of the country of less advantages transferred themselves bod- ily to the country of greater advantages, trade would go on with mutual benefit The people of the coun- try of greater advantages would import from the coun- try of less advantages those products as to which the difference of advantage between the two countries was least, and would export in return those products as to which the difference was greatest. By this exchange both peoples would gain. The people of the country of poorest advantages would gain by it some part of the advantages of the other country, and the people of the country of greatest advantages would also gain, since, by being saved the necessity of producing the things as to which their advantage was least, they could concentrate their energies upon the production of things in which their advantage was greatest. This case would resemble that of two workmen of different degrees of skill in all parts of their trade, or that of a skilled workman and an unskilled helper. Though the workman might be able to perform all parts of the work in less time than the helper, yet there would bo some parts in which the advantage of his superior skill would be less than in others ; and as by leaving these 1o the helper he could devote more time to those parts in which superior skill would be most effective, there would be, as in tlio former case, a mutual gain in their working together. Thus it is that neither advantages nor disadvantages afford any reason for restraining trade.* Trade is al- * In point of fact there is no country which us to all branches of production can be said to have superior advantages. The con- ADVANTAGES AND DISADVANTAGES. 157 ways to the benefit of both parties. If it were not there would be no disposition to carry it on. And thus we see again the fallacy of the protectionist contention that if it takes no more labor to produce a thing in our country than elsewhere, we shall lose nothing by shutting out the foreign product, even though we have to pay a higher price for the home product. The interchange of the products of labor does not depend upon differences of absolute cost, but of comparative cost. Goods may profitably be sent from places where they cost more labor to places where they cost less labor, provided (and this is the only case in which they ever will be so sent) that a still greater difference in labor-cost exists as to other things which the first coun- try desires to obtain. Thus tea, which Horace Greeley was fond of referring to as a production that might advantageously be naturalized in the United States by a heavy duty, could undoubtedly be produced in the United States at less cost of labor than in China, for in transportation to the seaboard, packing, etc., we could save upon Chinese methods. But there are other things, dit ions which make one part of the habitable globe better fitted for some productions, unfit it for others, and what is disadvantage for some kinds of production, is generally advantage for other kinds. Even the lack of rain which makes some parts of the globe useless to man, may, if invention ever succeeds in directly utilizing the power of the sun's rays, be found to be especially advantageous for certain parts of production. The advantages and disadvantages that come from the varying density of population, the special de- velopment of certain forms of industry, etc. , are also largely rela- tive. The most positive of all advantages in production that which most certainly gives superiority in all branches, is that which arises from that general intelligence which increases with the in- crease of the comfort and leisure of the masses of the people, that is to say, with the increase of wages. 158 PROTECTION OR FREE TRADE. sucli as the mining of silver, the refining of oil, the weaving of cloth, the making of clocks and watches, as to which our advantage over the Chinese is enormously greater than in the growing of tea. Hence, by pro- ducing these things and exchanging them directly or indirectly for Chinese tea, we obtain, in spite of the long carriage, more tea for the same labor than we could get by growing our own tea. Consider how this principle, that the interchange of commodities is governed by the comparative, not the absolute, cost of production, applies to the plea that protective duties are required on account of home tax- ation. It is of course true that a special tax placed upon any branch of production puts it at a disadvan- tage unless a like tax is placed upon the importation of similar productions. But this is not true of such general taxation as falls on all branches of industry alike. As such taxation does not alter the comparative profitableness of industries it does not diminish the relative inducement to carry any of them on, and to protect any particular industry from foreign competi- tion on account of such general taxation is simply to enable those engaged in it to throw off their share of a general burden. A favorite assumption of American protectionists is. or rather has been (for we once heard much more of it Ihan now), that free trade is a good thing for rich coun- tries but a bad thing for poor countries that it enables a country of better developed industries to prevent the development of industry in other countries, and to iii;ikr such countries tributary to itself. But it follows from the principle which, us we have seen, causes and governs international exchanges, that for any country to ADVANTAGES AND DISADVANTAGES. 159 impose restrictions on its foreign commerce on account of its own disadvantages in production is to prevent such amelioration of those disadvantages as foreign trade would bring. Free trade is voluntary trade. It can- not go on unless to the advantage of both parties, and, as between the two, free trade is relatively more advan- tageous to the poor and undeveloped country than to the rich and prosperous country. The opening up of trade between a Robinson Crusoe and the rest of the world would be to the advantage of both parties. But relatively the advantage would be far greater to Robin- son Crusoe than to the rest of the world. There is a certain class of American protectionists who concede that free trade is good in itself, but who say that we cannot safely adopt it until all other nations have adopted it, or until all other nations have come up to our standard of civilization; or, as it is sometimes phrased, until the millennium has come and men have ceased to struggle for their own interests as opposed to the interests of others. And so British protectionists have now assumed the name of "Fair Traders." They have ceased to deny the essential goodness of free trade, but contend that so long as other countries maintain protective tariffs Great Britain, in self-defence, should maintain a protective tariff too, at least against countries that refuse to admit British productions free. The fallacy underlying most of these American ex- cuses for protection is that considered in the previous chapter the fallacy that the country of low wages can undersell the country of high wages ; but there is also mixed with this the notion to which the British fair traders appeal the notion that the abolition of duties by any country is to the advantage, not of the people 160 PROTECTION OR FREE TRADE. of that country, but of the people of the other coun- tries that are thus given free access to its markets. " Is not the fact that British manufacturers desire the abo- lition of our protective tariff a proof that we ought to continue it ? " ask American protectionists. " Is it not a suicidal policy to give foreigners free access to out markets while they refuse us access to theirs ? " cry British fair traders. All these notions are forms of the delusion that to export is more profitable than to import, but so wide- spread and influential are they that it may be well to devote a few words to them. The direct effect of a tariff is to restrain the people of the country that im- poses it. It curtails the freedom of foreigners to trade only through its operation in curtailing the freedom of citizens to trade. So far as foreigners are concerned it only indirectly affects their freedom to trade with that particular country, while to citizens of that country it is a direct curtailment of the freedom to trade with all the world. Since trade involves mutual benefit, it is true that any restriction that prevents one party from trading must operate in some degree to the injury of another party. But the indirect injury which a pro- tt-ctive tariff inflicts upon other countries is diffused iiiid slight, as compared with the injury it inflicts di- rer tlv upon the nation that imposes it. To illustrate: The tariff which we have so long maintained upon iron to prevent our people from ex- chau'jin,^ their products for "British iron has unques- tionably lessoned our trade with (Jreat Britain. But ills- effect upon the l T nited States has been very much more injurious than the effect upon (treat Britain. While it has lessened our trade absolutely, it has ADVANTAGES AND DISADVANTAGES. 1 fil lessened the trade of Great Britain only with us. AY hat Great Britain lias lost in this curtailment of her trade with us she has largely made up in the consequent ex- tension of her trade elsewhere. For the effect of duties on iron and iron ore, and of the system of which they are part, has been so to increase the cost of American productions as to give to Great Britain the greater part of the carrying trade of the world, for which we were her principal competitor, and to hand over to her the trade of South America and of other countries, of which, but for this, we should have had the largest share. And in the same way, for any nation to restrict the freedom of its own citizens to trade, because other nations so restrict the freedom of their citizens, is a policy of the " biting off one's nose to spite one's face " order. Other nations may injure us by the imposition of taxes which tend to impoverish their own citizens, for as denizens of the world it is to our real interest that all other denizens of the world should be prosper- ous. But no other nation can thus injure us so much as we shall injure ourselves if we impose similar taxes upon our own citizens by way of retaliation. Suppose that a farmer who has an improved variety of potatoes learns that a neighbor has wheat of such su- perior kind that it will yield many more bushels to the acre than that he has been sowing. He might naturally go to his neighbor and offer to exchange seed potatoes for seed wheat. But if the neighbor while willing to sell the wheat should refuse to buy the potatoes, would not our farmer be a fool to declare, " Since you will not buy my superior potatoes I will not buy your superior wheat ! " Would it not be very stupid 162 PROTECTION OR FREE TRADE. retaliation for him to go on planting poorer seed and getting poorer crops ? Or, suppose, isolated from the rest of mankind, half a dozen men so situated and so engaged that mutual convenience constantly prompts them to exchange pro- ductions with one another. Suppose five of these six to be under the dominion of some curious superstition which leads them when they receive anything in ex- change to burn one-half of it up before carrying home the other half. This would indirectly be to the injury of the sixth man, because by thus lessening their own wealth his five neighbors would lessen their ability to exchange with him. But, would he better himself if he were to say : " Since these -fools will insist upon burning half of all they get in exchange I must, in self- defense, follow their example land burn half of all I get?" The constitution and scheme of things in this world in which we find ourselves for a few years is such that no one can do either good or evil for himself alone. No one can release himself from the influence of his sur- roundings, and say, "What others do is nothing to me ; " nor yet can any one say, " What I do is nothing to others." Nevertheless it is in the tendency of things tli at he who does good most profits by it, and he who does evil injures, most of all, himself. And those who say that a nation should adopt a policy essentially bad because other nations have embraced it are as unwise as those who say, Lie, because others are fal^e ; Be idle, because others are lazy ; Refuse knowledge, because others are ignorant. CHAPTER XVI. THE DEVELOPMENT OF MANUFACTURES. ENGLISH protectionists, during the present century at least, struggled for the protection of agriculture, and the repeal of the corn laws in 1846 was their Waterloo. On the continent, also, it is largely agriculture that is held to need protection, and special efforts have been made to protect the German hog, even to the extent of shutting out its American competitor. But in the United States the favorite plea for protection has been that it is necessary to the establishment of manufactures ; and the prevalent American idea of protection is that it is a scheme for fostering manufactures. As a matter of fact, American protection has not been confined to manufactures, nor has there been any hesitation in imposing duties which by raising the cost of materials are the very reverse of encouraging to manufactures. In the scramble which the protective system has induced, every interest capable of being protected and powerful enough to compel consideration in congressional log-rolling has secured a greater or less share of protection a share not based upon any standard of needs or merits, but upon the number of votes it could command. Thus wool, the production of which is one of the most primitive of industries, pre- ceding even the tilling of the soil, has been protected by high duties, although certain grades of foreign wool 164 PROTECTION OK FREE TRADE. are necessary to American woolen manufacturers, who have by these duties been put at a disadvantage in competing with foreign manufacturers. Thus iron ore has been protected despite the fact that American steel makers need foreign ore to mix with American ore, and arc obliged to import it even under the high duty. Thus copper ore has been protected, to the disadvan- tage of American smelters, as well as of all the many branches of manufacture into which copper enters. Thus salt has been protected, though it is an article of prime necessity, used in large quantities in such im- portant industries as the curing of meats and fish, and entering into many branches of manufacture. Thus lumber has been protected in spite of its importance in manufacturing as well as of the protests of all who have inquired into the consequences of the rapid clear- ing of our natural woodlands. Thus coal has been protected, though to many branches of manufacturing cheap fuel is of first importance. And so on, through the list. Protection of this kind is direct discouragement of manufactures. Nor yet is it encouragement of any in- dustry, since its effect is, not to make production of any kind more profitable, but to raise the price of lands or mines from which these crude products are obtained. Yet in spite of all this discouragement of manu- factures, of which the instances I have given are but samples, protection is still advocated as necessary to manufactures, and the growth of American manufactures is claimed as its result. So long and so loudly has this claim been made that to-day many of our people believe, what protectionist writers and speakers constantly assume, that but for THE DEVELOPMENT OF MANUFACTURE. protection there would not now be a manufacture of any importance carried on in the United States, and that were protection abolished the sole industry that this great country could carry on would be the raising of agricultural products for exportation to Europe. That so many believe this is a striking instance of our readiness to accept anything that is persistently dinned into our ears. For that manufactures grow up without protection, and that the effect of our protective tariff is to stunt and injure them, can be conclusively shown from general principles and from common facts. But first, let me call attention to a confusion of thought which gives plausibility to the notion that manufactures should be " encouraged." Manufactures grow up as population increases and capital accumu- lates, and, in the natural order of industry, are best de- veloped in countries of dense population and accumu- lated wealth. Seeing this connection, it is easy to mis- take for cause what is really effect, and to imagine that manufacturing brings population and wealth. Here, in substance, is the argument which has been addressed to the people of the United States from the time when we became a nation to the present day : M/u>/acturiny countries are always rich countries. Countries that produce only raw materials are always poor. Therefore, if we would be rich we must have ///'///,///"'- tare*, and in order to get manufactures we must encount'jr them. To many this argument seems plausible, especially as the taxes for the " encouragement " of the protected in- dustries are levied in such a way that their payment is not realized. But I could make as good an argument to the people of the little town of Jamaica, near which JHn PROTECTION OR FREE TRADE. 1 ju ii now living, in support of a subsidy to a theatre. I could say to them : " All large cities have theatres, and the more theatres it has, the larger the city. Look at New York ! New York has more theatres than any other city in Amer- ica, and is consequently the greatest city in America, Philadelphia ranks next to New York in the number and size of its theatres, and therefore comes next to New York in population and wealth. So, throughout the country, wherever you find large, well-appointed theatres, you will find large and prosperous towns, while where there are no theatres the towns are small. Is it any wonder that Jamaica is so small and grows so slowly when it has no theatres at all ? People do not like to settle in a place where they cannot occasionally go to the theatre. If you want Jamaica to thrive you must take steps to build a fine theatre, which will at- tract a large population. Look at Brooklyn ! Brook- lyn was only a small riverside village before its people hud the enterprise to start a theatre, and see now, since they began to build theatres, how large a city Brooklyn has become." Modeling my argument on that addressed to Amer- ican voters by the Presidential candidate of the Repub- lican party in 1884, 1 might then drop into "statistics" and point to the fact that when theatrical represen- tations first began in this country its population did not amount to a million ; that it was totally destitute of railroads and without a single mile of telegraph wire. Such has been our progress since theatres were intro- duced that the census of 1880 showed that we had 50,- 155,783 people, 97,907 miles of railroad and 291,212 ," miles of telegraph wires. Or I might go into greater THE DEVELOPMENT OF MANUFACTURES. Iti detail, as some protectionist " statisticians " are accus- tomed to do. I might take the date of the building of each of the New York theatres, give the population and wealth of the city at that time, and then, by present- ing the statistics of population and wealth a few years later, show that the building of each theatre had been followed by a marked increase in population and wealth. I might point out that San Francisco had not a theatre until the Americans came there, and was consequently but a straggling village; that the new comers imme- diately set up theatres and maintained them more gen- erously than any other similar population in the world, and that the consequence was the marvelous growth of San Francisco. I might show that Chicago and Denver and Kansas City, all remarkably good theatre towns, have also been remarkable for their rapid growth, and, as in the case of New York, prove statis- tically that the building of each theatre these cities contain has been followed by an increase of population and wealth. Then, stretching out after protectionist fashion into the historical argument, I might refer to the fact that Nineveh and. Babylon had no theatres that we know of, and so went to utter ruin ; dilate upon the fondness of the ancient Greeks for theatrical entertainments con- ducted at public expense, and their consequent great- ness in arts and arms ; point out how the Romans went even further than the Greeks in their encouragement of the theatre, and built at public cost the largest theatre in the world, and how Rome became the mistress of the nations. And, to embellish and give point to the argument, I might perhaps drop into poetry, recalling Byron's lines : Ifl-S PROTECTION OH FREK TRADE. " When falls the Coliseum, Homo .shall fall ; And when Koine falls the world ! ? ' Recovering from this, I might cite the fact that in every province they conquered the Romans established theatres, as explaining the remarkable facility with -which they extended their civilization and made the conquered provinces integral parts of their great em- pire ; point out that the decline of these theatres and the decay of Roman power and civilization went on to- gether; and that the extinction of the theatre brought on the night of the Dark Ages. Dwelling then a mo- ment upon the rudeness and ignorance of that time when there were no theatres, I might triumphantly point to the beginning of modern civilization as con- temporaneous with the revival of theatrical entertain- ments in miracle plays and court masques. And show- ing how these plays and masques were always support- ed by monasteries, municipalities or princes, and how places where they began became sites of great cities, I could laud the wisdom of " encouraging infant theat- ricals." Then, in the fact that English actors, until re- cently, styled themselves her Majesty's servants and that the Lord Chamberlain still has authority over the English boards and must license plays before they can bo acted, I could trace to a national system of subsidiz- ing infant theatricals the foundation of England's great- ness. Coming back to our own times, I could call at- i t-iil ion to the fact that Paris, where theatres are still mbsidized and actors still draw their salaries from the public- treasury, is 1lie world's metropolis of fashion and ail, steadily growing in population and wealth, though other parts !' the same country which do not enjoy subsidized theatres are either at a stand- THE DEVELOPMENT OF MANUFACTURES. 169 still or declining. And finally I could point to the astuteness of the Mormon leaders, who early in the settlement of Salt Lake built a spacious theatre, and whose little village in the sage brush, then hardly as large as Jamaica, has since the building of this theatre grown to be a populous and beautiful city, and indig- nantly ask whether the virtuous people of Jamaica should allow themselves to be outdone by wicked polygamists. If such an argument would not induce the Jamai- cans to tax themselves to "encourage" a theatre, would it not at least be as logical as arguments that have induced the American people to tax themselves to encourage manufactures? The truth is that manufactures, like theatres, are the result, not the cause, of the growth of population and wealth. If we take a watch, a book, a steam engine, a piece of dry goods, or the product of any of the industries which we class as manufactures, and trace the steps by which the material of which it is composed has been brought from the condition in which it is afford- ed by nature into finished form, we will see that to the carrying on of any manufacturing industry many other industries are necessary. That an industry of this kind shall be able to avail itself freely of the prod- ucts of other industries is a prime condition of its suc- cessful prosecution. Hardly less important is the ex- istence of related industries, which aid in economizing material and utilizing waste, or make easier the pro- curement of supplies or services, or the sale and dis- tribution of products. This is the reason why the more elaborate industries tend within certain limits to localization, so that we find a particular district, with- 170 PROTECTION OH FREE TRADE. out any assignable reason of soil climate, material pro- ductions, or character of the people, become noted for a particular manufacture, while different places with- in that district become noted for different branches. Thus, in those parts of Massachusetts where the manu- facture of boots and shoes is largely carried on, distinc- tions such as those between pegged and sewed goods, men's and women's wear, coarse and fine, will be found to characterize the industry of different towns. And in any considerable city we may see the disposition of various industries, with their related industries, to cluster together. But with this tendency to localization there is also a tendency which causes industries to arise in their order wherever population increases. This tendency is due not only to the difficulty and cost of transportation, but to differences in taste and to the individuality of demands. For instance, it will be much more convenient and satis- factory to me, if I wish to have a boat built, to have it built where I can talk with the builder and watch its construction ; or to have a coat made where I can try it on ; or to have a book printed where I can readily read the proofs and consult with the printer. Further than this, that relation of industries which makes the exist- ence of certain industries conduce to the economy with which others can be carried on, not merely causes the growth of one industry to prepare the way for others, but to promote their establishment, 'I'll us the development of industry is of the nature of an evolution, which goes on with the increase of popu- lation and the progress of society, the simpler industry coming first and forming a basis for the more elaborate ones. THE DEVELOPMENT OF MANUFACTURES. 171 The reason that newly settled countries do not man ufacture is that they can get manufactured goods cheaper that is to say, with less expenditure of labor than by manufacturing them. Just as the farmer, though he may have ash and hickory growing on his place, finds it cheaper to buy a wagon than to make one, or to take his wagon to the wheelwright's when it wants repairing, rather than attempt the job himself, so in a new and sparsely settled country it may take less labor to obtain goods from long distances than to man- ufacture them, even when every natural condition for their manufacture exists. The conditions for profitably carrying on any manufacturing industry are not merely natural conditions. Even more important than climate, soil, and mineral deposits are the existence of subsidi- ary industries and of a large demand. Manufacturing involves the production of large quantities of the same thing. The development of skill, the use of machinery and of improved processes, only become possible as large quantities of the same product are required. If the small quantities of all the various things needed must be produced for itself by each small community, they can only be produced by rude and wasteful methods. But if trade permits these things to be produced in large quantities the same labor becomes much more effective, and all the various wants can be much better supplied. The rude methods of savages are due less to igno- rance than to isolation. A gun and ammunition will enable a man to kill more game than a bow and arrows, but a man who had to make his own weapons from the materials furnished by nature, could hardly make him- self a gun in a lifetime, even if he understood gun making. Unless there is a large number of men to be 172 PROTECTION OE FREE TRADE. supplied with guns and ammunition, and the materials of which these are made can be produced with the economy that comes with the production of large quan- tities, the most effective weapons, taking into account the labor of producing them, are bows and arrows, not fire-arms. With a steel axe a tree may be felled with much less labor than with a stone axe. But a man who must make his own axe would be able to fell many trees with a stone axe in the time he would spend trying to make a steel axe from the ore. We smile at the savages who for a sheath knife or copper kettle gladly give many rich furs. Such articles are with us of little value, because being made in large quantities the expenditure of labor required for each is very small, but if made in small quantities, as the savage would have to make them, the expenditure of labor would far exceed that needed to obtain the furs. Even if they had the fullest knowledge of the tools and methods of civilized industry, men isolated as savages are isolated, would be forced to resort to the rude tools and methods of savages. The great advantage which civilized men have over savages -in settling among them, is in the possession of tools and weapons made in that state of society in which alone it is possible to manufacture them, and that by keeping up eoinmuni- eal ion with the denser populations they have left behind them, the settlers are able by means of trade to mail themselves of the manufacturing advantages of a more fully developed society. If the first American colonists had been unable to import from Europe the goods they required, and thus to avail themselves of the fuller development of European industry, they must soon have been reduced to savage tools and weapons. And THE DEVELOPMENT OF MANUFACTURES. 173 this would have happened to all new settlements in the westward march of our people had they been cut off from trade with larger populations. In new countries the industries that yield the largest comparative returns are the primary or extractive in- dustries which obtain food and the raw materials of manufacture from nature. The reason of this is that in these primary industries there are not required such costly tools and appliances, nor the co-operation of so many other industries, nor yet is production in large quantities so important. The people of new countries can therefore get the largest return for their labor by applying it to the primary or extractive industries, and exchanging their products for those of the more elabo- rate industries that can best be carried on where popu- lation is denser. As population increases, the conditions under which the secondary or any more elaborate industries can be carried on gradually arise, and such industries will be established those for which natural conditions are pe- culiarly favorable, and those whose products are in most general demand and will least bear transportation, coming first. Thus in a country having fine forests, manufactures of wood will arise before manufactures for which there is no special advantage. The making of bricks will precede the making of china, the manu- facture of plowshares that of cutlery, window glass will be made before telescope lenses, and the coarser grades of cloth before the finer. But while we may describe in a general way the con- ditions which determine the natural order of industry, yet so many are these conditions and so complex are their actions and reactions upon one another that no 174 PROTECTION OR FREE TRADE. one can predict with any exactness what in any given community this natural order of development will be, or say when it becomes more profitable to manufacture a thing than to import it. Legislative interference, therefore, is sure to prove hurtful, and such questions should be left to the unfettered play of individual en- terprise, which is to the community what the uncon- scious vital activities are to the man. If the time has come for the establishment of an industry for which proper natural conditions exist, restrictions upon impor- tation in order to promote its establishment are needless. If the time has not come, such restrictions can only di- vert labor and capital from industries in which the return is greater, to others in which it must be less, and thus reduce the aggregate production of wealth. Just as it is evident that to prevent the people of a new colony from importing from countries of fuller indus- trial development would deprive them of many things they could not possibly make for themselves, so it is evi- dent that to restrict importations must retard the sym- metrical development of domestic industries. It may be that protection applied to one or to a few industries may sometimes hasten their development at the expense of the general industrial growth ; but when protection is indiscriminately given to every industry capable of pro- tection, as it is in the United States, and as is the inevitable tendency wherever protection is begun, the result must be to check not merely the general devel- opment of industry, but even the development of the very industries for whose benefit the system of protec- tion is most ad vocated, by making more costly the prod- uetfl which they must use and repressing the correl- ative industries with which they interlace, THE DEVELOPMENT OF MANUFACTURES. 175 To assume, as protectionists do, that economy must necessarily result from bringing producer and consumer together in point of space,* is to assume that things can be produced as well in one place as in another, and that difficulties in exchange are to be measured solely by distance. The truth is, that commodities can often be produced in one place with so much greater facility than in another that it involves a less expenditure of labor to bring them long distances than to produce them on the spot, while two points a hundred miles apart ma y i)e commercially nearer each other than two points ten miles apart. To bring the producer to the consumer in point of distance, is, if it increases the cost of production, not economy but waste. But this is not to deny that trade as it is carried on to-day does involve much unnecessary transportation, and that producer and consumer are in many cases needlessly separated. Protectionists are right when they point to the wholesale exportation of the elements of fertility of our soil, in the great stream of breadstuffs and meats which pours across the Atlantic, as reckless profligacy, and fair traders are right when they deplore the waste involved in English importations of food while English fields are going out of cultivation. Both are right in saying that one country ought not to be made a " draw farm " for another, and that a true econ- omy of the powers of nature would bring factory and field closer together. But they are wrong in attributing these evils to the freedom of trade, or in supposing * Protectionist arguments frequently involve the additional assumption that the "home producer" and "home consumer" are necessarily close together in point of space, wheraas, as in tne United States, they may be thousands of miles apart. 176 PROTECTION OR FREE TRADE. that the remedy lies in protection. That tariffs are powerless to remedy these evils may be seen in the fact that this exhausting exportation goes on in spite of our high protective tariff, and that internal trade exhibits the same features. Everywhere that modern civiliza- tion extends, and with greatest rapidity where its influ- ences are most strongly felt, population and wealth are concentrating in huge towns and an exhausting com- merce flows from country to city. But this ominous tendency is not natural, and does not arise from too much freedom ; it is unnatural, and arises from restric- tions. It may bo clearly traced to monopolies, of which the monopoly of material opportunities is the first and most important. In a word, the Roman system of laud ownership, which in our modern civilization has dis- placed that of our Celtic and Teutonic ancestors, is pro- ducing the same effect that it did in the Roman world the engorgement of the centres and the impoverish- ment of the extremities. While London and New York grow faster than Rome ever did, English fields arc passing out of cultivation as did the fields of Latin in, and in Iowa and Dakota goes on the exhausting culture that impoverished the provinces of Africa. The same disease which rotted the old civilization is exhibiting its symptoms in the new. That disease cannot be cured by protective tariffs. RSITY F ' CHAPTER XVII. PROTECTION AND PRODUCERS. THE primary purpose of protection is to encourage producers * that is to say, to increase the profits of capital engaged in certain branches of industry. The protective theory is that the increase a protect- ive duty causes in the price at which an imported com- modity can be sold within the country, protects the home producer (i. e., the man on whose account com- modities are produced for sale) from foreign competi- tion, so as to encourage him by larger profits than lie could otherwise get to engage in or increase production. All the beneficial effects claimed for protection depend upon its effect in thus encouraging the employing pro- ducer, just as all the effects produced by the motion of an engine upon the complicated machinery of a factory are dependent upon its effect in turning the main driv- ing wheel The main driving wheel (so to speak) of the protective theory is that protection increases the profits of the protected producer. But when, assuming this, the opponents of protec- tion represent the whole class of protected producers * For want of a better term I have here used the word "pro- ducers " in that limited sense in which it is applied to those who control capital and employ labor engaged in production. Tho industries protected by our tariff are (with perhaps pome nominal exceptions) of the kind carried on in this way. 178 PROTECTION OR FREE TRADE. as growing rich at tlie expense of their fellow-citizens, they are contradicted by obvious facts. Business men well know that in our long-protected industries the margin of profit is as small and the chances of failure as great as in any others if, in fact, those protected industries are not harder to win success in by reason of the more trying fluctuations to which they are subject. The reason why protection in most cases thus fails to encourage is not difficult to see. The cost of any protective duty to the people at "\arge is (1), the tax collected upon imported goods, plus the profits upon the tax, plus the expense and profits of smuggling in all its forms ; plus the expense of sometimes trying smugglers of the coarser sort, and occasionally sending a poor and friendless one to the penitentiary ; plus bribes and moieties received by gov- ernment officers; and (2), the additional prices that must be paid for the products of the protected home industry. It is from this second part alone that the protected industry can get its encouragement. But only a part of this part of what the people at large pay is real en- couragement. In the first place, it is true of protective duties, as it is true of direct subsidies, that they cannot be had for nothing. Just as the Pacific Mail Steam- ship Company and the various land and bond grant railways had to expend large sums to secure representa- tion at Washington, and had to divide handsomely with the Washington lobby, so the cost of securing Congressional "recognition" for an infant industry, or fighting off threatened reductions in its " encourage- ment," and looking after every new tariff bill, is a considerable item. But still more important is the PROTECTION AND PRODUCERS. U9 absolute loss in carrying on industries so unprofitable in themselves that they can be maintained only by sub- sidies. And to this loss must be added the waste that seems inseparable from governmental fosterage, for just in proportion as industries are sheltered from competi- tion are they slow to avail themselves of improvements in machinery and methods.* Out of the encourage- ment which the tariff beneficiaries receive in higher prices, much must thus be consumed, so that the net encouragement is only a small fraction of what con- sumers pay. Taking encouraged producers and taxed consumers together there is an enormous loss. Hence in all cases in which duties are imposed for the benefit of any particular industry the discouragement to indus- try in general must be greater than the encouragement of the particular industry. So long, however, as the one is spread over a large surface and the other over a small surface, the encouragement is more marked than the discouragement, and the disadvantage imposed on all industry does not much affect the few subsidized industries. But to introduce a tariff bill into a congress or par- * This disposition is, of course, largely augmented by the greater cost of machinery under our protective tariff, which not only in- creases the capital required to begin, but makes the constant dis- carding of old machinery and purchase of new, required to keep up with the march of invention, a much more serious matter. Cases have occurred in which British manufacturers, compelled by com- petition to adopt the latest improvements, have actually sold their discarded machinery to be shipped to the United States and used by protected Americans. It was his coming across a case of this kind that led David A. Wells, when he visited Europe as Special Commissioner of Revenue, to begin to question the usefulness of our tariff in promoting American industry. 180 PROTECTION OR FREE TRADE. liament is like throwing a banana into a cage of mon- keys. No sooner is it proposed to protect one industry than all the industries that are capable of protection begin to screech and scramble for it. They are, in fact, forced to do so, for to be left out of the encour- aged ring is necessarily to be discouraged. The result is, as we see in the United States, that they all get protected, some more and some less, according to the money they can spend and the political influence they can exert. Now every tax that raises prices for the encouragement of one industry must operate to discour- age all other industries into which the products of that industry enter. Thus a duty that raises the price of lumber necessarily discourages the industries which make use of lumber, from those connected with the building of houses and ships to those engaged in the making of matches and wooden toothpicks ; a duty that raises the price of iron discourages the innumerable industries into which iron enters ; a duty that raises the price of salt discourages the dairyman and the fisher- man ; a duty that raises the price of sugar discourages the fruit preserver, the maker of sirups and cordials, and so on. Thus it is evident that every additional in- dustry protected lessens the encouragement of those al- ready protected. And since the net encouragement that hi rill' beneficiaries can receive as a whole is very much less than the aggregate addition to prices required 1o H-riire it, it is evident that the point at which prohv- lion will cease to give any advantage to the protect -l must be much short of that at which every one is protected. To illustrate : Say that the total number of industries is one hundred, of which one-half arc capable of protection. Let us say that of what the protection PROTECTION AND PRODUCERS. 181 costs, one-fourth is realized by the protected industries. Then (presuming equality), as soon as twenty-five in- dustries obtain protection, the protection can be of no benefit even to them, while, of course, involving a heavy discouragement to all the rest. I use this illustration merely to show that there is a point at which protection must cease to benefit even the industries it strives to encourage, not that I think it possible to give numerical exactness to such matters. But that there is such a point is certain, and that in the United States it has been reached and passed is also certain. That is to say, not only is our protective tari if a dead weight upon industry generally, but it is a dead weight upon the very industries it is intended to stimu- late. If there are producers who permanently profit by protective duties, it is only because they are in some other way protected from domestic competition, and hence the profit which comes to them by reason of the duties does not come to them as producers but as monopolists. That is to say, the only cases in 7/7//V7/. protection can more than temporarily lenejit any das* of producers are cases in which it cannot stimulate industry. For that neither duties nor subsidies can give any permanent advantage in any business open to home competition results from the tendency of profits to a common level. The risk to which protected industries are exposed from changes in the tariff may at times keep profits in them somewhat above the ordinary rate ; but this represents not advantage, but the neces- sity for increased insurance, and though it may consti- *rate a tax upon consumers does not operate to extend the industry. This element of insurance eliminated, 182 PROTECTION OR FREE TRADE. profits in protected industries can only be kept above those of unprotected industries by some sort of mon- opoly which shields them from home competition as the tariff does from foreign competition. The first effect of a protective duty is to increase profits in the protected industry. But unless that industry be in some way protected from the influx of competitors which such m- creased profits must attract, this influx must soon bring these profits to the general level. A monopoly, more or less complete, which may thus enable certain pro> ducers to retain for themselves the increased profits which it is the first effect of a protective duty to give, may arise from the possession of advantages of different kinds. It may arise, in the first place, from the possession of some peculiar natural advantage. For instance, the only chrome mines yet discovered in the United States, belonging to a single family, that family have been much encouraged by the higher prices which the pro- tective duty on chrome has enabled them to charge home consumers. In the same way, until the discovery of new and rich copper deposits in Arizona and Mon- tana the owners of the Lake Superior copper mines were enabled to make enormous dividends by the pro- tective duty on copper, which, so long as home compe- tition was impossible, shut out the only competition that could reduce their profits, and enabled them to get three or four cents more per pound for the copper they sold in the United States than for the copper they shipped to Europe. Or u similar monopoly inav bo obtained by the pos- session of exclusive privileges given by the patent laws. For instance, the combination based on patents PROTECTION" AND PRODUCERS. 188 for making st :tn acceptance of protective ideas. And, while keen enough as to their individual interests, these producers are as blind to social interests as any other class. They have so long heard and been accustomed to repeat, that free trade would ruin American industry, that it never occurs to them to doubt it; and the effect of duties upon so many other products being to enhance the cost of their own productions, they see, without apprehend- ing the cause, that were it not for the particular duty that protects them they could be undersold by foreign products, and so they cling to the system. Protection is necessary to them in many cases, because of the pro- tection of other industries. But were the whole system ,-iholishexl there can be no doubt tli :'it Ameriean industry would sprint/ 1 forward with new vigor. CHAPTER XVITT. EFFECTS OF PROTECTION OX AMERICAN INDUSTRY. IF there is one country in the world where the as- sumption that protection is necessary to the develop- ment of manufactures and the "diversification of in- dustry " is conclusively disproved by the most obvious facts, that country is the United States. The first set- tlers in America devoted themselves to trade with the Indians and to those extractive industries which a sparse population always finds most profitable, the produce of the forest, of the soil, and of the fisheries, constituting their staples, while even bricks and tiles were at first imported from the mother country. But without any protection and in spite of British regulations intended to prevent the growth of manufactures in the colonies, one industry after another took root, as population in- creased, until at the time of the first Tariff Act, in 1789, all the more important manufactures, including those of iron and textiles, had become firmly established. As up to this time they had grown without any tariff, so must they have continued to grow with the increase of population, even if we had never had a tariff. But the American who contends that protection is necessary to the diversification of industry must not merely ignore the history of his country during th:it Ion;'' period befoivjhe first tariff of any kind was insli- 191 PROTECTION OR FREE TRADfi. tuted, but he must ignore what has been going on ever since, and is still going on under his eyes. We need look no further back than the formation of the Union to see that if it were true that manufacturing could not grow up in new countries without the pro- tection of tariffs the manufacturing industries of the United States would to-day be confined to a narrow belt along the Atlantic sea-board. Philadelphia, New York, and Boston were considerable cities, and manu- factures had taken a firm root along the Atlantic, when Western New York and Western Pennsylvania were covered with forests, when Indiana and Illinois were buffalo ranges, when Detroit and St. Louis were trad- ing posts, Chicago undreamed of, and the continent beyond the Mississippi as little known as the interior of Africa is now. In the United States, the East has Lad over the West all the advantages which protection- ists say make it impossible for a new country to build up its manufacturing industries against the competition of nn older country larger capital, longer experience, and cheaper labor. Yet without any protective taritV between the West and the East, manufacturing has steadily moved westward with the movement, of popu- lation, and is moving westward still. This is a fari. that of itself conclusively disproves the protective theory. The protectionist assumption that manufactures have increased in the United States because of protective larilTs is even more unfounded than the assumption that the growth of New York after the building of each new theatre was because of the building of the theatre. It is as if one should tow a bucket behind ;i boat and insist that il helped the boat aloni?; be. EFFE< PS OF I'KOTECTioN >\ AMKKK.NN IMUSTKY. H. she still moved .forward. Manufacturing lias increased in the United States because of the growth of popula- tion and the development of the country ; not because of tar ill's, but in spite of them. * That protective tariffs have injured instead of helped^ American manufactures is shown by the fact that our manufactures are much less than they ought to be, considering our population and development much less relatively than they were in the beginning of the century. Had we continued the policy of free trade our manufactures would have grown up in natural hardihood and vigor, and we should now not only be exporting manufactured goods to Mexico and the West Indies, South America and Australia, as Ohio is ex- porting manufactured goods to Kansas, Nebraska, Colo- rado and Dakota, but we should be exporting manu- factured goods to Great Britain, just as Ohio is to-day exporting manufactured goods to Pennsylvania and New York, where manufactures began before Ohio was settled. But so heavily are our manufactures weighted by a tariff which increases the cost of all their mate- rials and appliances, that, in spite of our natural ad- vantages and the inventivenesvS of our people, our sales are confined to our protected market, and we can nowhere compete with the manufactures of other coun- tries. In spite of the increase of duties with which we have attempted to keep out foreign importations and build up our own manufacturing industries, the great bulk of our importations to-day are of manufactured goods, while all but a trivial percentage of our exports c nisist of raw materials. Even where we import Ji'."iisc7 police, have stimulated American invention, and we are constantly making improvements upon the tools, meth- ods, and patterns elsewhere in use. These improvements are constantly starting a foreign demand for American manufactures which seems to promise large increase. But before this increase takes place the improvements are adopted in countries where manufacturing is not so heavily burdened by taxes on material, and what should have been peculiarly an American manufacture is transferred to a foreign country. Every American who has visited London has doubt- less noticed, opposite the Parliament House at West- minster, a shop devoted to the sale of " American notions." There are a number of such shops in Lon- don, and they are also to be found in every town of any size in the three kingdoms. These shops must sell in the aggregate quite an amount of American tools and contrivances, which in part accounts for the fact that we still export some manufactures. But the American will be deluded who from the number of these shops and the interest taken by the people who are constantly looking in the windows or examining the goods, im- agines that American manufactures are beginning to gain a foothold in the Old World. These shops are in fact curiosity shops, just as are the Chinese and Japan- ese shops that we find in the larger American cities, and people go to them to see the ingenious tilings the Americans are getting up. But no sooner do these shops so far popularize an " American notion" that a considerable demand for it arises, than some English manufacturer at once begins to make it, or the Ameri- can inventor, if he holds an English patent, finds more profit in manufacturing it abroad, Not having the di > I' 1 - PKo'mTIOJV OK KHKK TK,\nK. s of American protection to contend with, In* <-;ui make it in Great Britain cheaper than in the Knifed States, and the consequence of the introduction of an American " notion " is that, instead of its importa- tion from America increasing, it comes to an end. This illustrates the history of American manufactures abroad. One article after another which has been in- vented or improved in the United States has seemed to get a foothold in foreign markets only to lose it when fairly introduced. We have sent locomotives to Russia, arms to Turkey and Germany, agricultural implements to England, river steamers to China, sewing machines to all parts of the world, but have never been able to hold the trade our inventiveness should have secured. But it is on the high seas and in an industry in which we once led the world that the effect of our protective policy can be most clearly seen. Thirty years ago ship-building had reached such a pitch of excellence in this country that we built not only for ourselves but for other nations. American ships were the fastest sailers, the largest carriers, in id everywhere got the quickest dispatch and the highest freights. The registered tonnage of the United States almost equaled that of Great Britain, and a few years promised to give us the unquestionable supremacy of the ocean. The Abolition of the more important British pro- tective duties in 1846 was followed in 1854 by the re- peal of the navigation laws, and from thenceforth not only were British subjects free to buy or build ships wherever they pleased, but the coasting trade of the British Isles was thrown open to foreigners. Dire were the predictions of British protectionists as 1o (lie EFFECTS OF PROTECTION ON AMERTOAN INDUSTRY. 199 utter ruin that was thus prepared for Britisli com- merce. The Yankees were to sweep the ocean, and 'half-starved Swedes and Norwegians" were to drive the " ruddy, beef-eating English tar " from his own seas and channels. While one great commercial nation thus abandoned protection, the other redoubled it. The breaking out of our civil war was the golden opportunity of protec- tion, and the unselfish ardor of a people ready to imike any sacrifice to prevent the dismemberment of their country was taken advantage of to pile protective taxes upon tli em. The ravages of Confederate cruisers and the consequent high rate of insurance on American ships would under any circumstances have diminished our deep-sea commerce; vet this effect was only tem- porary, and but for our protective policy we should at the end of the war have quickly resumed our place in the carrying trade of the world and moved forward to the lead with more vigor than ever. But crushed by a policy which prevents Americans from building, and forbids them to buy ships, our com^ nierce, ever since the war, has steadily shrunk, until American ships which, when \ve were a nation of twenty-five millions, ploughed every sea of the globe, arc now, when we number nearty sixty millions, seldom seen on blue water. In Liverpool docks, where once it seemed as if every other vessel was American, you must search the forests of masts to find one. In San Fran- cisco Bay you may count English ship, and English ship, and English ship, before you come to an Ameri- can, while five-sixths of the foreign commerce of New York is carried on in foreign bottoms. Once no Amer- ican dreamed of crossing the Atlantic save on an 2TF,R the advantages of all the world, has handicapped the American producer and restricted him to the market of his own country. The ores of Spain and Africa which, for some purposes, it is necessary to mix with our own ores, have been burdened with a heavy duty ; a heavy duty has enabled a great steel combination to keep steel at a monopoly price; a heavy duty on copper has enabled another combination to get a high price for American copper at home, while exporting it to Great Britain for a low price; and to encourage a single bunting factory the very ensign of an American ship has been subjected to a duty of 150 per cent. From keelson to truck, from the wire in her stays to the brass in her taffrail log, everything that goes to the building, the fitting, or the storing of a ship is burdened with heavy taxes. Even should she be repaired abroad she must pay taxes for it on her return home. Thus has protection strangled an industry in which with free trade we might still have led the world. And the in- jury we have done ourselves has been, in some degree at least, an injury to mankind. Who can doubt that ocean steamers would to-day have been swifter and better had American builders been free to compete with English builders? Though our Navigation Laws, which forbid the carrying of a pound of freight or a single passenger from American port to American port on any other than an American -built vessel, obscure the effects of protection in our coasting trade, they are just as truly felt as in our ocean trade. The increased cost of build- ing and running vessels has, especially as to steamers operated t<> stunt the growth of our coasting trnde, :md to check l.v hiyher freights the development of other EFFECTS <>* PKOTECTTON ON AMERICAN INDUSTRY. 207 industries. And how restriction strengthens monopoly is seen in the manner in which the effect of protection upon our coastwise trade has been to make easier the extortions of railway syndicates. For instance, the Pacific Railway pool has for years paid the Pacific Mail Steamship Company $85,000 a month to Iceep up its rates of fare and freight between New York and San Francisco. It would have been impossible for the railway ring thus to prevent competition had the trade between the Atlantic and Pacific been open to foreign vessels. CHAPTER XLX. PROTECTION AND WAGES. WE have sufficiently seen the effect of protection on the production of wealth. Let us now inquire as to its effect on wages. This is a question of the distribution of wealth. Discussions of the tariff question seldom go further than the point we have now reached, for though much is said, in the United States at least, of the effect of protection on wages, it is as a deduction from what is asserted of its effect on the production of wealth. Its advocates claim that protection raises wages ; but in so far as they attempt to prove this it is only by argu- ments, such as we have examined, that protection in- creases the prosperity of a country as a whole, from which it is assumed that it must increase wages. Or when the claim that protection raises wages is put in the negative form (a favorite method with Ameri- can protectionists; and it is asserted that protection prevents wages from falling to the lower level of other countries, this assertion is always based on the assump- tion that protection is necessary to enable production to be carried on at the higher level of wages, and that if it were withdrawn production would so decline, by reason of the underselling of home producers by for- eign producers, that wages must also decline/-' *Here, for instance, taken from the New York Tribune daring the last Presidential campaign (1884), is a sample of the arguments THOTKri'ION AND AVACiKS. 2<> ( ,l l>ut althougL its whole basis lias aim-id y been over- thrown, let us (since this is the most important part of the question) examine directly and independently the claim that protection raises (or maintains) wages. Though the question of wages is primarily a question of the distribution of wealth, no protectionist writer that I know of ventures to treat it as such, and free- traders generally stop where protectionists stop, arguing that protection must diminish the production of wealth, and (so far as they treat the matter of wages) from this inferring that protection must reduce wages. For pur- poses of controversy this is logically sufficient, sinee, free trade being natural trade, the onus of proof must lie upon those who would restrict it. But as my pur- pose is more than that of controversy, I cannot be con- tented with showing merely the unsoundness of the arguments for protection. A true proposition may be supported by a bad argument, and to satisfy ourselves thoroughly as to the effect of protection we must trace its influence on the distribution, as well as on the pro- duction of wealth. Error often arises from the assump- tion that what benefits or injures the whole must in for protection which are manufactured about election times for the consumption of ''the intelligent and highly paid American work- ing-man:" " All workers know that labor in other countries is not paid as well as it is here. But this difference could not exist if the products of 50- cent labor in England or Germany or Canada could be sold freely in our market, instead of the production of $1 labor here. Hence, this country compels the employers of the 50- cent labor abroad to pay a "duty for the privilege of selling their goods in this market. That duty is called a tariff. If it is made high enough to fit the difference in rate of wages, so that labor in this country cannot be degraded toward the level of similar labor in other countries, it is called a protective tariff. Such a tariff is a defense of American industry against direct competition with the underpaid labor of other countries." 210 I'HOTKCTIOX 01! FliKK TKADK. like manner affect all its parts. Causes which increase or decrease aggregate wealth often produce the reverse effect on classes or individuals. The resort to salt in- stead of kelp for obtaining soda increased the produc- tion of wealth in Great Britain, but lessened the income of many Highland landlords. The introduction of railways, greatly as they have added to aggregate wealth, ruined the business of many small villages. Out of wars, destructive to national wealth though they be, great fortunes arise. Fires, floods, and famines, while disastrous to the community, may prove profit- able to individuals, and he who has a contract to fill, or who has speculated in stocks for a fall, may be en- riched by hard times. As, however, those who live by their labor constitute in all countries the large majority of the people, there is a strong presumption that no matter who else is benefited, anything that reduces the aggregate income of the community must be injurious to working-men. But that we may leave nothing to presumption, how- ever strong, let us examine directly the effect of pro- tective tariffs on wages. Whatever affects the production of wealth may at the same time affect distribution. It is also possible that increase or decrease in the production of wealth may, under certain circumstances, alter the proportions of distribution. But it is only with the first of these questions that we have now to deal, since the second goes beyond the question of tariff, and if it shall be- come necessary to open it, that will not be until after we have satisfied ourselves as to the tendencies of pro tection. Trade, as we have seen, is a mode of production, ancf PROTEOTTOtf AND WAGES. 211 the tendency of tariff restrictions on trade is to lessen the production of wealth. But protective tariffs also operate to alter the distribution of wealth, by imposing higher prices on some citizens and giving extra profits to others. This alteration of distribution in their favor is the impelling motive with those most active in pro- curing the imposition of protective duties and in warn- ing workmen of the dire calamities that will come on them if such duties are repealed. But in what way can protective tariffs affect the distribution of wealth in favor of labor? The direct object and effect of pro- tective tariffs is to raise the price of commodities. But men who work for wages are not sellers of com- modities ; they are sellers of labor. They sell labor in order that they may buy commodities. How can in- crease in the price of commodities benefit them ? 1 speak of price in conformity to ihe custom of comparing other values by that of money. But money is only a medium of exchange and a measure of the comparative values of other things. Money itself rises and falls in value as compared with other things, vary- ing between time and time, and place and place. In reality the only true and final standard of values is labor the real value of anything being the amount of labor it will command in exchange. To speak ex- actly, therefore, the effect of a protective tariff is to in- crease the amount of labor for which certain commodi- ties will exchange. Hence it reduces the value of labor just as it increases the value of commodities. Imagine a tariff that prevented the coming in of laborers, but placed no restriction on the coming in of commodities. Would those who have commodities to sd 1 deem such a tariff for their benefit ? Yet to say this 212 PROTECTION OR FREE TRAT/E. would be as reasonable as to say that a tariff upon com- modities is for the benefit of those who have labor to sell. It is not true that the products of lower priced labor will drive the products of higher priced labor out of any market in which they can be freely sold, since, as we have already seen, low priced labor does not mean cheap production, and it is the comparative, not the absolute, cost of production that determines exchanges. And we have but to look around to see that even in the same occupation, wages paid for labor whose products sell freely together, are generally higher in large cities than in small towns, in some districts than in others. It is true that there is a constant tendency of all wages to a common level, and that this tendency arises from competition. But this competition is not the competition of the goods market ; it is the competition of the labor market. The differences between the wages paid in the production of goods that sell freely in the same market cannot arise from checks on the competition of goods for sale; but manifestly arises from checks on the competition of labor for employ- ment. As the competition of labor varies between employment and employment, or between place and place, so do wages vary. The cost of living being greater in large cities than in small towns, the higher wages in the one are not more attractive than the lower \vuges in the other, while the differing rates of wnges in different districts are manifestly maintained by the inertia and friction which retard the flow of population, or by causes, physical or social, which produce differ- ences in tin- intensity of competition in the labor market. PROTECTION AND WAGES. 21^ The tendency of wages to a common level Is quickest in the same occupation, because the transference oi labor is easiest. There cannot be, in the same place, such differences in wages in the same industry as may exist between different industries, since labor in the same industry can transfer itself from employer to employer with far less difficulty than is involved in changing an occupation. There are times when we see one em- ployer reducing wages and others following his exam- ple, but this occurs too quickly to be caused by the com- petition of the goods market. It occurs at times when there is great competition in the labor market, and the same conditions which enable one employer to reduce wages enable others to do the same. If it were the com- petition of the goods market that brought wages to a level, they could not be raised in one establishment or in one locality unless at the same time raised in others that supplied the same market ; whereas, at the times when wages go up, we see workmen in one establish- ment or in one locality first demanding an increase, and then, if they are successful, workmen in other establish- ments or localities following their example. If we pass now to a comparison of occupation with occupation, we see that although there is a tendency to a common level, which maintains between wages in different occupations a certain relation, there are, in the same time and place, great differences of wages. These differences are not inconsistent with this tendency, but are due to it, just as the rising of a balloon and the falling of a stone exemplify the same physical law. While the competition of the labor market tends to bring wages in all occupations to a common level, there are differences between occupations (which may 211- PROTKOTIOX OR FREE TRADE, be summed up as differences in attraction and differ- ences in the difficulty of access) that check in various de- grees the competition of labor and produce different rela- tive levels of wages. Though these differences exist, wages in different occupations are nevertheless held in a certain relation to each other by the tendency to a com- mon level, so that a reduction of wages in one trade tends to bring about a reduction in others, not through the competition of the goods market, but through that of the labor market. Thus cabinet makers, for instance, could not long get $2 where workmen in other trades as easily learned and practised were only getting $1, since the superior wages would so attract labor to cabinet making as to increase competition and bring wages down. But if the cabinet makers pos- sessed a union strong enough to strictly limit the num- ber of new workmen entering the trade, is it not clear that they could continue to get $2 while in other trades similar labor was only getting $1?. As a matter of fact, trades-unions, by checking the competition of labor, have considerably raised wages in many occupations. and have even brought about differences between the wages of union and non-union men in the same occupation. And what limits the possibility of thus raising wages is clearly not the free sale of commodi- ties, but the difficulty of restricting the competition of labor. Do not these facts show that what American work- men have to fear is not the sale in our goods market of (lie products of "cheap foreign labor," but the trans- ference to our labor market of that labor itself? Under the conditions existing over the greater part of tin 1 . \vorld, the minimum of wayes is li\rd 1,\ what I'KOTKCTION AND \VA(.J KS. LM.il economists call the "standard of comfort" that is to say, the poorer the mode of life to which laborers are accustomed the lower are their wages and the greater is their ability to compel a reduction in any labor market they enter. What, then, shall we say of that sort of "protection of American working-men'' which, while imposing duties upon goods, under the pretense that they are made by "pauper labor," freely admits the "pauper laborer " himself. The in-coming of the products of cheap labor is a very different thing from the in-coming of cheap labor. The effect of the one is upon the production of wealth, in- creasing the aggregate amount to be distributed ; the effect of the other is upon the distribution of wealth, decreasing the proportion which goes to the working classes. We might permit the free importation of Chinese commodities without in the slightest degree affecting wages ; but, under our present conditions, the free immigration of Chinese laborers would lessen wages. Let us imagine under the general conditions of modern civilization, one country of comparatively high wages, and another country of comparatively low wages. Let us, in imagination, bring these countries side by side, separating them only by a wall which permits the free transmission of commodities, but is impassable for human beings. Can we imagine, as pro- tectionist notions require, that the high wage country would do all the importing and the low wage country all the exporting, until the demand for labor so lessened in the one country that wages would fall to the level of the other ? That would be to imagine that the former country would go on pushing its commodities through this wall and getting back nothing in return. Clearly 2(-' PROTECTION 0]{ FRKE the one country would export no more than it got a return for, and the other could import 110 more than it gave a return for. What would go on between the two countries is the exchange of their respective productions, and, as previously pointed out, what commodities passed each way in this exchange would be determined, not by the difference in wages between the two countries, nor yet by differences between them in cost of production, but by differences in each country in the comparative cost of producing different things. This exchange of commodities would go on to the mutual advantage of both countries, increasing the amount which each ob- tained, but no matter to what dimensions it grew, how could it lessen the demand for labor or have any effect in reducing wages ? Now let us change the supposition and imagine such a barrier between the two countries as would prevent the passage of commodities, while permitting the free passage of men. No goods produced by the lower paid Inbor of the one country could now be brought into the other ; but would this prevent the reduction of wages ? Manifestly not. Employers in the higher wage coun- try, being enabled to get in laborers willing to work for less, could quickly lower wages. What we may thus see by aid of the imagination accords with what we do see as a matter of fact. In spite of the high duties which shut out commodities on the pretense of protecting American labor, Ameri- can workmen in all trades are being forced into combi- nations to protect themselves by checking the compe tition of the labor market GUI protective tariff on commodities raises the price of commodities, but what raising there is of wages has been accomplished by PROTECTION" AND WAGES. 217 trades- unions and the Knights of Labor. Break up these organizations and what would the tariff do to pre- vent the forcing down of wages in all the now organized trades ? A scheme really intended for the protection of work- ing-men from the competition of cheap labor would not merely prohibit the importation of cheap labor under contract, but would prohibit the landing of any laborer who had not sufficient means to raise him above the necessity of competing for wages, or who did not give bonds to join some trades-union and abide by its rules. And if, under such a scheme, any duties on commodi- ties were imposed, they would be imposed, in preference, on such commodities as could be produced with small capital, not on those which require large capital that is to say, the effort would be to protect industries in which workmen can readily engage on their own ac- count, rather than those in which the mere workman can never hope to become his own employer. Our tariff, like all protective tariffs, aims at nothing of this kind. It shields the employing producer from competition, but in no way attempts to lessen competi- tion among those who must sell him their labor; and the industries it aims to protect are those in which the mere workman, or even the workman with a small capital, is helpless those which cannot be carried on without large establishments, costly machinery, great amounts of capital, or the ownership of natural oppor- tunities which bear a high price. It is manifest that the aim of protection is to lessen competition in the selling of commodities, not in the selling of labor. In .no case, save in the peculiar and <'\timi;il casr A morican labor " comes most vociferously from news- rs that lie under the ban of the printers' unions; from coal and iron lords who, importing "pauper la- bor " by wholesale, have bitterly fought every effort of their men to claim anything like decent wages; and from factory owners who claim the right to dictate the votes of men. The whole spirit of protection is against the rights of labor. This is so obvious as hardly to need illustration, but there is a case in which it is so clearly to be seen as to tempt me to reference. There is one kind of labor in which capital has no : id vantage, and that a kind which has been held from antiquity to redound to the true invatm-ss and PR01 AM) glory of u this kind of labor ? While the American manufac- turer of books the employing capitalist who puts them on the market has been carefully protected from the competition of foreign manufacturers, the American author has not only not been protected from the com- petition of foreign authors, but has been exposed to the competition of labor for which nothing whatever is paid. He has never asked for any protection save that oi common justice, but this has been steadily refused. Foreign-made books have been saddled with a high pro- tective duty, a force of customs examiners is maintained in the post-office, and an American is not even allowed to accept the present of a book from a friend abroad without paying a tax for it* But this is not to protect the American author, who as an author is a mere la- borer, but to protect the American publisher, who is a capitalist. And this capitalist, so carefully protected * Although a great sum is raised in the United States every year to send the Bible to the heathen in foreign parts, we impose for the protection of the home "Bible manufacturer" a heavy tax upon the bringing of Bibles into our country. There have recently been complaints of the smuggling of Bibles across our northern frontier, which have doubtless inspired our custom-house officers to renewed vigilance, since, according to an official advertisement, the following property seized for violation of the United States revenue laws was sold at public auction in front of the Custom House, Detroit, on Saturday, February 6, 1886, at 12 o'clock noon: 1 set silver jew- elry, 3 bottles of brandy, 7 yards astrachan, 1 silk tidy, 7 books, 1 shawl, 1 sealskin cloak, 4 rosaries, 1 woolen shirt, 2 pairs of mit- tens, 1 pair of blockings, 1 bottle of gin, 1 Bible. lil^O rKOTKN ol ;. FKKK TKAOK. as to what he has to sell, has been permitted to coi.'ipel the American author to compete with stolen labor. Congress, which year after year has been maintaining a heavy tariff, on the hypocritical plea of protecting American labor, has steadily refused the bare justice of acceding to an international copyright which would prevent American publishers from stealing the work of foreign authors, and enable American authors not only to meet foreign authors on fair terms at home, but to get payment for their books when reprinted in foreign countries. An international copyright, demand- ed as it is by honor, by morals and by every dictate of patriotic policy, has always been opposed by the pro- tective interest.* Could anything more clearly show that the real motive of protection is always the profit of the employing capitalist, never the benefit of labor ? What would be thought of the Congressman who should propose, as a " working-man's measure," to di- vide the surplus in the treasury between two or three railway kings, and who should gravely argue that to do this would be to raise wages in all occupations, since the railway kings, finding themselves so much richer, would at once raise the wages of their employees ; which would lead to the raising of wages on all railways, and this again to the raising of wages in all occupations. Yet the contention that protective duties on goods raise wages involves just such assumptions. it is claimed that protection raises the wages of labor that is to say, of labor generally. It is not merely contended that it raises wages in the special industries protected by the tariff. That would be to confess that * An exception is to be made in favor of Horace (frecley, who, though a protectionistj did advocate an mtermitiomil copyright. I'KOTKCTION AM) WAdKS. 'J'Ji the benefits of protection are distributed with partiality, a thing which its advocates are ever anxious to deny. It is always assumed by protectionists that the benefits of protection are felt in all- industri ?,s, and even the wages of farm laborers (in an industry which in the United States is not and cannot be protected by the tariff) are pointed to as showing the results of protec- tion. The scheme of protection is, by checking importation to increase the price of protected commodities so as to enable the home producers of these commodities to make larger profits. It is only as it does this, and so long as it does this, that protection can have any en- couraging effect at all, and whatever effect it has upon wages must be derived from this. I have already shown that protection cannot, except temporarily, increase the profits of producers as pro- ducers, but without regard to this it is clear that the contention that protection raises wages involves two assumptions : (1) that increase in the profits of em- ployers means increase in the wages of their workmen ; and (2) that increase of wages in the protected occu- pations involves increase of wages in all occupations. To state these assumptions is to show their absurdity. Is there anyone who really supposes that because an employer makes larger profits he therefore pays higher wages ? I rode not long since on the platform of a Brooklyn horse-car and talked with the driver. He told me, bitterly and despairingly, of his long hours, hard work and poor pay how he was chained to that car, a verier slave than the horses he drove; and how by turning himself into this kind of u horse-driving machine liu PROTECTION OR FREE TRADE, could barely keep wife and children, laying by nothing for a u rainy day." I said to him " Would it not be a good thing if the Legislature ^ r erc to pass a law allowing the com- panies to raise the fare from five to six cents, so as to enable them to raise the wages of their drivers ami conductors? " The driver measured me with a quick glance, and then exclaimed: "They give us more, because they made more ! You might raise the fare to six cents or to sixty cents, and they would not pay us a penny more. No matter how much they made, we would get no more, so long as there are hundreds of men waiting and anxious to. take our places. The company would pay higher dividends or water the stock ; not raise our pay." Was not the driver right? Buyers of labor, like buyers of other things, pay, not according to what they can, but according to what they must. There are oc- casional exceptions, it is true ; but these exceptions are referable to motives of benevolence, which the shrewd business man keeps out of his business, no matter how much he may otherwise indulge them. Whether you raise the profits of a horse-car company or of a manu- facturer, neither will on that account pay any higher wages. Employers never give the increase of their profits as a reason for raising the wages of their work- men, though they frequently assign decreased profits as a reason for reducing wages. But this is an excuse, not n reason. The true reason is that the dull times which diminish their profits increase the competition of work- men for employment. Su-h excuses ;ire given !' this century, it wa ' attempted to ini- PROTECTION AND WAGES. 22;"i prove the miserable condition of agricultural laborers by "grants in aid of wages" from parish rates. Just as these grants were made, so did the wages paid by the farmers sink. The car-driver was right. Nothing could raise his wages that did not lessen the competition of those who stood ready to take his place for the wages he was get- ting. If we were to enact that every car-driver should be paid a dollar a day additional from public funds, the result would simply be that the men who are anxious to get places as car-drivers for the wages now paid would be as anxious to get them at one dollar less. If we were to give every car-driver two dollars a day, the companies would be able to get men without pay- ing them anything, just as where restaurant waiters are customarily feed by the patrons, they get little or no wages, and in some cases even pay a bonus for their places. But if it be preposterous to imagine that any effect a tariff may have to raise profits in the protected in- dustries can raise wages in those industries, what shall we say of the notion that such raising of wages in the protected industries would raise wages in all industries ? This is like saying that to clam the Hudson River would raise the level of New York Harbor and conse- qiinitl v that of the Atlantic Ocean. Wages, like water, tend to a level, and unless raised in the lowest and widest occupations can be raised in any particular oc- cupation only as it is walled in from competition. The general rate of wages in every country is mani- festly determined by the rate in the occupations which require least special skill, and to which the man who has nothing but his labor can most easily resort. As 226 PROTECTION OR FREE TRADE. they engage the greater body of labor these occupations constitute the base of the industrial organization, and are to other occupations what the ocean is to its bays. The rate of wages in the higher occupations can be raised above the rate prevailing in the lower, only as the higher occupations are shut off from the inflow of labor by their greater risk or uncertainty, by their requirement of superior skill, education or natural ability, or by re- strictions such as those imposed by trades-unions. And to secure anything like a general rise of wages, or even to secure a rise of wages in any occupation upon ingress to which, restrictions, are not at the same time placed, it is necessary to raise wages in the lower and wider oc- cupations. That is to say, to return to our former illus- tration, the level of the bays and harbors that open into it cannot be raised until the level of the ocean is raised. If it were evident in no other way, the recognition of this general principle would suffice to make it clear that duties on imports can never raise the general rate of wages. For import duties can only "protect" oc- cupations in whicli there is not sufficient labor employed to produce the supply we need. The labor thus en- gaged can never be more than a fraction of the labor en- gaged in producing commodities <>!' which we not only provide the home supply but have :i surplus for export, and the labor engaged in work that must be done on the spot. N<> mutter what the shape or size of an iceberg, the mass above the water must be very much less than the mass below the water. So no matter what be the con- ditions of a country or what the peculiarities of its in- dustry, that part of its labor engaged in occupations PBOTECTION ANP \\ .-VfiKS. 227 that can be "protected" by import duties must always be small as compared with that engaged in occupations that cannot be protected. In the United States, where protection has been carried to the utmost, the census returns show that not more than one-twentieth of the labor of the country is engaged in protected industries. In the United States, as in the world at large, the low- est and widest occupations are those in which men apply their labor directly to nature, and of these agriculture is the most important. How quickly the rise of wages in these occupations will increase wages in all occu- pations was shown in the early days of Califori-ia, as afterward in Australia. Had anything happened in California to increase the demand for cooks or car- penters or painters, the rise in such wages would have* been quickly met by the inflow of labor from oilier occupations, and in this way retarded and finally neu- tralized. But the discovery of the placer mines, which greatly raised the wages of unskilled labor, raised wages in all occupations. The difference of wages between the United States and European countries is itself an illustration of this principle. During our colonial days, before we had any protective tariff, ordinary wages were higher here than in Europe. The reason is clear. Land being easy to obtain, the laborer could readily employ himself, and wages in agriculture being thus maintained at a higher level, the general rate of wages was higher. And since up to the present time it has been easier to obtain land here than in Europe, the higher rate of wages in agri- culture has kept up a higher general rate. To raise the general rate of wages in the United States the wages of agricultural labor must, be raised. But 228 PROTECTION OR FREE TRADE. our tariff does not and cannot raise even the price ol agricultural produce, of which we are exporters, not im- porters. Yet, even had we as dense a population in proportion to our available land as Great Britain, and were we, like her, importers not exporters of agricult- ural productions, a protective tariff upon such produc- tions could not increase agricultural wages, still less could it increase wages in other occupations, which would then have become the widest. This we may see by the effect of the corn laws in Great Britain, which was to increase, not the wages of the agricultural laborer, nor even the profits of the farmer, but the rent of the agricultural landlord. And even if the differentiation between land-owner, farmer and laborer had, under the conditions I speak of, not become as clear here as in Great Britain, nothing which benefited the farmer would have the slightest tendency to raise wages, save as it benefited him, not as an owner of land or an owner of capital, but as a laborer. We thus see from theory that protection cannot raise wages. That it does not, facts show conclusively. This has been seen in Spain, in France, in Mexico, in England during protection times, and everywhere that protection has been tried. In countries where the working classes have little or no influence upon government it is never even pretended that protection raises wages. It is only in countries like the United States, where it is necessary to cajole the working class, that such a preposterous plea is made. And here the failure of protection to raise wages is shown by the most evident facts. Wages in the United States are higher than in other countries, not because of protection, but because we have had much vacant Utnd to overrun. Before we had any PROTECTION- AX I) WAGES. ' s 220 i:mfT, wages were higher here than in Europe, and far higher, relatively to the productiveness of labor, than they are now after our years of protection. In spite of all our protection and, for the last twenty-four years at least, protectionists have had it all their own way the condition of the laboring classes of the United States has been slowly but steadily sinking to that of the " pauper labor " of Europe. It does not follow that this is because of protection, but it is certain that pro- tection has proved powerless to prevent it To discover whether protection has or has not bene- fited the working classes of the United States it is not necessary to array tables of figures which only an ex- pert can verify and examine. The determining facts are notorious. It is a matter of common knowledge that those to whom we have given power to tax the Ameri- can people " for the protection of American industry," pay their employees as little as they can, and make no scruple of importing the very foreign labor against whose products the tariff is maintained. It is notorious that wages in the protected industries are, if anything, lower than in the unprotected industries, and that, though the protected industries do not employ more than a twentieth of the working population of the United States, there occur in them more strikes, more lock-outs, more attempts to reduce wages, than in all other industries. In the highly protected industries of Massachusetts, official reports declare that the operative cannot get a living without the work of wife and chil- dren. In the highly protected industries of New Jer- sey, many of the "protected" laborers are children whose parents arc driven by their necessities to find employment for them by misrepresenting their a; 230 PROTECTION OR FREE TRADE. s to evade the State law. In the highly protected in- dustries of Pennsylvania, laborers, for whose sake we iire told this high protection is imposed, are working for sixty -five cents a day, and half-clad women arefeed- iug furnace fires. " Pluck-tne stores," company tene- ments and boarding-houses, Pinkerton detectives and mercenaries, and all the forms and evidences of the op- pression and degradation of labor are, throughout the country, characteristic of the protected industries. The greater degradation and unrest of labor in the protected than in the unprotected industries may in part be accounted for by the fact that the protected employers have been the largest importers of " foreign pauper labor." But, in some part, at least, it is due to the greater fluctuations to which the protected in- dustries are exposed. Being shut off from foreign markets, scarcity of their productions cannot be so quickly met by importation, nor surplus relieved by exportation, and so with them for much of the time it is either " a feast or a famine." These violent fluctua- tions tend to bring workmen into a state of dependence, it' not of actual peonage, and to depress wages below the general standard. But whatever be the reason, the fact is that so far is protection from raising wages in the protected industries, that the capitalists who carry them on would soon "enjoy " even lower priced labor than now, were it not that wages in them are kept up by the rate of wages in the unprotected industries. CHAPTER XX. THE ABOLITION OF PROTECTION". OUR inquiry lias sufficiently shown the futility and absurdity of protection. It only remains to consider the plea that is always set up for protection when other ex- cuses fail the plea that since capital has been invested and industry organized upon the basis of protection it would be unjust and injurious to abolish protective duties at once, and that their reduction must be gradual and slow. This plea for delay, though accepted and even urged by many of those who up to this time have been the most conspicuous opponents of protection, will not bear examination. If protection be unjust, if it be an infringement of equal rights that gives certain citizens the power to tax other citizens, then anything short of its complete and immediate abolition involves a continu- ance of injustice. No one can acquire a vested right in a wrong ; no one can claim property in a privilege. To admit that privileges which have no other basis th in a legislative Act cannot at any time be taken away by legislative Act, is to commit ourselves to the absurd doctrine that has been carried to such a length in Great Britain, where it is held that a sinecure cannot be abol- ished without buying out the incumbent, and that be- cause a man's ancestors have enjoyed the privilege of living on other people, he and his descendants, to the remotest -time, have acquired a sacred riolii (> live upon 2..2 PROTECTION" OR FREE TRADE. other people. The true doctrine of which we ought never, on any pretense, to yield one iota is that enun- ciated in our Declaration of Independence, the self-evi- dent doctrine that men are endowed by their Creator with equal and unaiienable rights, and that any law or institution that denies or impairs this natural equality jnay at any time be altered or abolished. And no more salutary lesson could to-day be taught to capitalists throughout the world than that justice is an element in the safety of investments, and that the man who trades upon the ignorance or the enslavement of a people does so at his own risk. A few such lessons, and every throne in Europe would topple, and every great standing army melt away. Moreover, abolition at once is the only way in which tlic industries now protected could be treated with any fairness. The gradual abolition of protection would give rise to 1he same scrambling and pipe-laying and log-rolling which everv tariff change brings about, and ihe stronger would save themselves at the expense of the weaker. But further than this, the gradual abolition of pro- tection would not only continue for a long time, though in a diminishing degree, the waste, loss and injustice inseparable from the system, but during all this period ihe anticipation of coming changes and the uncertainty in regard to them would continue to inspire insecurity and depress business; whereas, were protection abol- ished at once, the shock, whatever it might be, would soon be over, ami exchange ;md industry could at once reorganize upon a sure basis. Even on the theory that the abolition of protection involves temporary disaster, immediate abolition is as preferable to gradual abolition TIIK ABOLITION <>F PROTECTION, as amputation at one operation is to amputation by inches. And to the working classes the classes for whom those who deplore sudden change profess to have most concern the difference would be greater still. It is always to the relative advantage of the poorer classes that any change involving disaster should be as sudden as possible, since the effect of delay is simply to give the richer classes opportunity to avoid it at the expense of the poorer. If there is to be a certain loss to any community, whether by flood, by fire, by invasion, by pestilence, or by commercial convulsion, that loss will fall more lightly on the poor and more heavily on the rich the shorter the time in which it is concentrated. If the cur- rency of a country slowly depreciates, the depreciating currency will be forced into the hands of those least able to protect themselves, the price of commodities will ad- vance in anticipation of the depreciation, while the prico of labor will lag along after it ; capitalists will have op- portunity to make secure their loans and to speculate in advancing prices, and the loss will thus fall with far greater relative severity upon the poor than upon the; rich. In the same way, if a depreciated currency be slowly restored to par, the price of labor falls more quickly than the price of commodities ; debtors struggle along in the endeavor to pay their obligations in an ap- preciating currency, and those who have the most means are best able to avoid the disadvantages and avail them- selves of the speculative opportunities brought about by the change. But the more suddenly any given change in the value of currency takes place the more equal will be its effects. VUOTECT10.N OK KKKK TRADE. So it is with the imposition of public burdens. It is manifestly to the advantage of the poorer class that in iv great public expense be met at once rather than spread over years by means of public debts. Thus, if the expenses of our Civil War had been met by taxation levied at the time, such taxation must have fallen heav- ilv upon the rich. But by the device of a public debt a twin invention to that of indirect taxation the cost of the war was not, as was pretended, shifted from present time to future time (for that would only have been possible had the means to carry on the war been borrowed from abroad, which was not the case), but taxation, which otherwise must have fallen upon in- dividuals in proportion to their wealth, was changed into taxation spread over a long series of years and falling upon individuals in proportion, not to their means, but to their consumption, thus imposing upon the poor far greater relative burdens than upon the rich. Whether the rich would have had the patriotism to support a war which thus called upon them for sacrifices more com- mensurate with thoseof the poor, who in all wars furnish the far greater portion of " the food for powder," is an- other matter ; but it is certain that the spreading of the war taxation over years has not only made the cost of il>c war many times greater, but has been to the advan- tage <>!' th' 1 rich and to the disadvantage of the working classes. Ff the abolition of protection is, as protectionists pre- dict, certain to disorganize trade and industry, then it is better for all, and especially is it better for the work- in-- classes, thai ihc change should be sharp and short. ]f tie return to a natural condition of trade and [in- duction must temporarily throw men out of employ- THE ABOLITION OF PROTECTION. 235 ment, tlien it is better that they should be thrown out at once and have done with it, than that the same loss of employment should be spread over a series of years with a constant depressing effect upon the labor market. In a sharp but short period of depression the public purse could, without serious consequences, be drawn upon to relieve distress, but any attempt to relieve in that way the less general but more protracted distress incident to a long period of depression, would tend to create an army of habitual paupers. But, in truth, the talk about the commercial convul- sions and industrial distress that would follow the ab- olition of protection is as baseless as the story with which Southern slave-holders during the war attempted to keep their chattels from running away that the Northern armies would sell them to Cuba ; as baseless as the predictions of Eepublican politicians that the election of a Democratic President would mean the as- sumption of the Confederate debt, if not the revival of the " Lost Cause." The real fear that underlies all this talk of the dis- astrous effects of the sudden abolition of protection was well exemplified in a conversation a friend of mine had awhile ago with a large manufacturer, who belongs to a combination which prevents competition at home while the tariff prevents competition from abroad. Tim manufacturer was inveighing against any meddling with the tariff, and dilating upon the ruin that would b brought upon the country by free trade. ' Yes," said my friend, who had been listening with an air of sympathetic attention, u I suppose, if the tariff were abolished, you would have to.shut up your works/' ; Well, no : not () PROTECTION OK FRttK TRADE. " We could go ahead, even with free trade ; hut then we couldn't get the same profit." The notion that our manufactures would be suspend- ed and our iron works closed and our coal mines shut down by the abolition of protection is a notion akin to that of " the tail wagging the dog." Where are the goods to come from which, are thus to deluge our mar- kets, and how are they to be paid for ? There is not productive power enough in Europe to supply them, nor are there ships to transport them, to say nothing of the effect upon European prices of the demands of sixty millions of people, who, head for head, consume more than any other people in the world. And since other countries arc not going to deluge us with the products of their labor without demanding the products of our own labor in payment, any increase in our imports from the abolition of protection would involve a correspond- ing increase in exports. The truth is that the change would not only be beneficial to our industries at large four-fifths of which, at least, arc not brought into competition with imported commodities, but it would be beneficial even to the " protected " industries. In those that are sheltered by home monopolies, profits would be re- duced, in those in which the tariff permits the use of inferior machinery and slovenly methods, better ma- chinery would have to be provided and better methods introduced ; but in the great bulk of our manufacturing industries, the effect would only be beneficial, the re- duction in the cost of material far more than compen- sating for the reduction in prices. And with a lower cost of production /o reign markets from which our manufacturers arc now shut out would be opened. If THE ABOLITION OF PROTECTION. 2P>7 any industry would be "crushed" it could only bo some industry now carried on at national loss. The increased power which the removal of restric- tions upon trade would give in the production of wealth would be felt in all directions. Instead of a collapse there would be a revivification of industry. Kings would be broken up, and where profits are now exces- sive they would come down ; but production would go on under healthier conditions and with greater energy. American manufacturers would begin to find market.* the whole world -over. American ships would again sail the high seas. The Delaware would ring like the Clyde with the clash of riveting hammers, and the United States would rapidly take that first place in the industrial and commercial world to which her popula- tion and her natural resources entitle her, but which is now occupied by England, while legislation and admin- istration would be relieved of a great cause of corrup- tion, and all governmental reforms would be made easier. CHAPTER XXL INADEQUACY OF THE FKEE TRADE ARGUMKNT. THE point we have now readied is that at which discussions of the tariff question usually end the ex- treme limit to which the avowed champions of the op- posing policies carry their controversy. AVe have, in fact, reached the legitimate end of our inquiry so far as it relates to the respective merits of protection and free trade. The stream, whose course our examination has been following, here blends with other streams, and though it still flows on, it is as p::rt of a wider and deeper river. As he who would trace the waters of the Ohio to their final union with the ocean cannot stop when the Ohio ends, but must still follow on that mighty Mississippi which unites streams from far different sources, so, as I said in the begin- ning, to really understand the tariff question we must tro beyond the tariff question. This we may now see. S< > far as relates to questions usually debated between protectionists and free traders our inquiry is now com- plete and conclusive. We have seen the absurdity of protection as a general principle and the fallacy of the jx'cial picas that are made for it. We have seen that protective duties cannot increase the aggregate wealth of the country that enforces them, an give a greater pmportimi of that wealth to the work- ing class. \Y<- ha\t- seen that their tendencies, on ihe OF THE FUKK TRADE A U< i T M ENT. &W contrary, are to lessen aggregate wealth, and to foster monopolies at the expense of the masses of the people. But although we have directly or inferentially dis- proved every argument that is made for protection, although we have seen conclusively that protection is in its nature inimical to general interests, and that free trade is in its nature promotive of general interests, yet if our inquiry were to stop here we should not have ac- complished the purpose with which we set out. For my part, did it end here, I would deem the labor I have so far spent in writing this book little better than wasted. For all that we have seen has, with more or less coherence and clearness, been shown again and again. Yet protec- tion still retains its hold on the popular mind. And until something more is shown, protection will retain this hold. In exposing the fallacies of protection I have endeav-' ored in each case to show what has made the fallacy plausible, but it still remains to explain why such ex- posures produce so little effect. The very conclusive- ness with which our examination has disproved the claims of protection will suggest that there must be something more to be said, and may well prompt the question, " If the protective theory is really so incon- gruous with the nature of things and so inconsistent with itself, how is it that after so many years of discus- sion it still obtains such wide and strong support ? " Free traders usually attribute the persistence of the belief in protection to popular ignorance, played upon by special interests. But this explanation will hardly satisfy an unbiased mind. Vitality inheres in truth, not in error. Though accepted error has always the strength of habit and authority, and the battle against it OK FI;KK TIJADK. must always beliard at first, yet the tendency of discus- sion in which error is confronted with truth is to make the truth steadily clearer. That a theory which seems wholly false holds its ground in popular belief despite wide and long discussion, should prompt its opponents to inquire whether their arguments have really gone to the roots of popular belief, and whether this belief does not derive support from truths they have not con- sidered, or from errors not .yet exposed, which still pass for truths rather than to attribute its vitality to popu- lar incapacity to recognize truth. I shall hereafter show that the protective idea does indeed derive support from doctrines that have been ac- tively taught and zealously defended by the very econo- mists who have assailed it (who, so to speak, have been vigorously defending protection with the right hand while raining blows upon it with the left), and from habits of thought which the opponents no less than the advocates of protection have failed to call in question. But what I now wish to point out is the inadequacy of the arguments which free traders usually rely on to con- vince working-men that the abolition of protection is for their interest. In our examination we have gone as far, and in cer- tain respects somewhat further than free traders usually go. But what have we proved as to the main issue? Merely that it is the tendency of free trade to increase the production of wealth, and thus to permit of the increase of wages, and that it is the tendency of protection to decrease the production of wealth and foster certain monopolies. But from this it does not follow that the abolition of protection would be of any benefit to the working class. The tendency of a brick pushed off IXADKQTACV OF THE FIIKK TKADK AUGTMKNT. li 1 1 a chimney top is to fall to the surface of the ground. But it will not fall to the surface of the ground if its fall be intercepted by the roof of a house. The tendency of anything that increases the productive power of labor is to augment wages. But it will not augment wages under conditions in which laborers are forced by compe- tition to offer their services for a mere living. In the United States, as in all countries where politi- cal power is in the hands of the masses, the vital point in the tariff controversy is as to its effect upon the earn- ings of " the poor people who have to work." * But this point lies beyond the limit to which free traders are accustomed to confine their reasoning. They prove that the tendency of protection is to reduce the production of wealth and to increase the price of com- modities, and from this they assume that the effect of the abolition of protection would be to increase the earn- ings of labor. But not merely is such an assumption logically invalid until it is shown that there is nothing in existing conditions to prevent the working classes from getting the benefit of this tendency; but, although in itself a natural assumption, it is in the minds of "the poor people who have to work " contradicted by obvi- ous facts. In this is the invalidity of the free trade argument, and here, and not in the ignorance of the masses, is the reason why all attempts to convert working-men to the free-tradeism which would substitute a revenue tariff for a protective tariff must, save under such conditions as existed in England forty years ago, utterly fail. * I find this suggestive phrase in a protectionist newspaper. But it well expresses the attitude toward labor of many of the free trade writers also. 242 PROTECTION OK FREE TRADE. While both sides have shown the same indisposition to go to the heart of the controversy, there can be no question that so far as issue is joined between protec- tionists and free traders, in current discussion, the free traders have the best of the argument. But that the belief in protection has survived long and wide discussion, that it seems to spring up again when beaten down and to arise with apparent spontane- ity in communities such as the United States, Canada and Australia, that have grown up without tariffs, and where the system lacks the advantage of inertia and of enlisted interests, proves that beyond the discussion there must be something which strongly commends pro- tection to the popular mind. This may also be inferred from what protectionists themselves say. Beaten in argument, the protectionist usually falls back upon some declaration which implies that the real grounds of his belief have been untouched, and which generally takes the form of an assertion that though free trade may be true in theory it fails in practice. In such form the assertion is untenable. A theory is but an explanation of the relation of facts, and nothing can be true in theory that is not true in practice. But free traders really beg the question when they answer by merely pointing this out. The real question is, whether the reasoning on which free trad- ers rely takes into account all existing conditions? What the protectionist means, or at least the perception that he appeals to, when he talks in this way of the difference between theory and fact, is, that the free trade theory does not take into account all existing facts. And this is true. As the tariff question is presented, there are indeed. INADEQUACY OF THE FREE TRADE ARGUMENT. :>!:? under existing social conditions, two sides to the shield, so that men who only look at one side, closing their eyes to the other, may continue, with equal confidence, to hold opposite opinions. And that the distinction between them may, with not entire inaptness, be described as that of exclusively regarding theory and that of exclu- sively regarding facts, we shall see when we have developed a theory which will embrace all the facts, and which will explain not only why it is that honest men have so diametrically differed upon the question of protection vs. free trade, but why the advocates of neither policy have been inclined to press on to that point where honest differences may be reconciled. For we have reached the place where the Ohio of the tariff question flows into the Mississippi of the great social question. It need not surprise us that both parties to the controversy, as it has hitherto been conducted, should stop here, for it would be as rational to expect any thorough treatment of the social question from the well-to-do class represented in the English Cobden Club or the American Iron and Steel Association, or from their apologists in professorial chairs, as it would be to look for any thorough treatment of the subject of per- sonal liberty in the controversies of the slave-holding Whigs and slave-holding Democrats of forty years ago, or in the sermons of the preachers whose salai^ies were paid by them. CHAPTER XXII. THE EEAL WEAKNESS OF FBEE TRADE. How the abolition of protection would stimulate pro- duction, weaken monopolies and relieve government of a great cause of corruption, we have seen. u But what," it will be asked, " would be the gain to working-men ? Will wages increase ? " For some time, and to some extent, yes. For the spring of industrial energy consequent upon the re- moval of the dead weight of the tariff would for a time make the demand for labor brisker and employment steadier, and in occupations where they can combine, workingmen would have better opportunity to reduce their hours and increase their wages, as, since the abo- lition of the protective tariff in England, many trades there have done. But even from the total abolition of protection, it is impossible to predict any general and permanent increase of wages or any general and pernui- in'iit improvement in the condition of the working hisses. The effect of the abolition of protection, great ;i nd beneficial though it must be, would in nature l>e similar to that of the inventions and discoveries which in our time have so greatly increased the production of wealth, yet have nowhere really raised \v:igos or of themselves improved the condition of the working classes. THE REAL WEAKNESS OF FREE TRADE. 245 Here is the weakness of free trade as it is generally Advocated and understood. The working-man asks the free trader : " How will the change you propose benefit me ? " The free trader can only answer : " It will increase wealth and reduce the cost of commodities. " But in our own time the working-man has seen wealth enormously increased without feeling himself a sharer in the gain. He has seen the cost of commodities great- ly reduced without finding it any easier to live. He looks to England, where a revenue tariff has for some time taken the place of a protective tariff, and there he finds labor degraded and underpaid, a general standard of wages lower than that which prevails here, while such improvements as have been made in the condition of the working classes since the abolition of protection are clearly not traceable to that, but to trades- unions, to temperance and beneficial societies, to emigration, to education, and to such acts as those regulating the labor of women and children, and the sanitary conditions of factories and mines. And seeing this, the working-man, even though he may realize with more or less clearness the hypocrisy of the rings and combinations which demand tariff duties for u the protection of American labor," accepts the fallacies of protection, or at least makes no effort to throw them off, not because of their strength so much as of the weakness of the appeal which free trade makes to him. A considerable proportion, at least, of the most intelli- gent and influential of American working-men are fully conscious that " protection " does nothing for labor, but neither do they see what free trade could do. And so they regard the tariff question as one of no practical con- PROTECTION OR FREH: THA'Dti. cern to working-men an attitude hardly less satisfac- tory to the protected interests than a thorough belief in protection. For when an interest is already intrenched in law and habit of thought, those who are not against it are for it. To prove that the abolition of protection would tend to increase the aggregate wealth is not of itself enough to evoke the strength necessary to overthrow protec- tion. To do that, it must be proved that the abolition of protection would mean improvement in the condition of the masses. It is, as I have said, natural to assume that increased production of wealth would be for the benefit of all, and to a child, a savage, or a civilized man who lived in his study and did not read the daily papers, this would doubtless seem a necessary assumption. Yet, to the majority of men in civilized society, so far is this as- sumption from seeming necessary, that current explana- tions of the most important social phenomena involve the reverse. Without question the most important social phe- nomena of our time arise from that partial paralysis of industry which in all highly civilized countries is in some degree chronic, and which at recurring periods becomes intensified in widespread and long-continued industrial depressions. What is the current explanation of these phenomena? Is it not that which attributes them to over-production ? This explanation is positively or negatively support- ed even by men who attribute to popular ignorance the failure of the masses to appreciate the benefit* of sub- stituting a revenue rarilT for a protective tariff. But so lon- as eoji/litions, which bring mekiug anxiety and THE HEAL AVEAKNESS OF FKEE TKADE. "24 bitter privation to millions iire commonly attributed in the over-production of wealth, is it any wonder that a reform which is urged on the ground that it would still further increase the production of wealth should fail to arouse popular enthusiasm ? If, indeed, it be popular ignorance that gives persist- ence to the belief in protection, it is an ignorance that extends to questions far more important and pressing than any question of tariff an ignorance that the ad- vocates of free trade have done nothing to enlighten, and that they can do nothing to enlighten until they explain why it is that in spite of the enormous increase of productive power that has been going on with ac- celerating rapidity all this century it is yet so hard for the mere laborer to get a living. ' In this great fact, that increase in wealth and in the power of producing wealth does not bring any general benefit in which all classes share does not for the great masses lessen the intensity of the struggle to live, lies the explanation of the popular weakness of free trade. It is owing to the increasing appreciation of this fact, smd not to accidental causes, that all over the civilized world the free trade movement has for some time been losing energy. American revenue reformers delude themselves if they imagine that protection can now be overthrown in the United States by a movement on the lines of the Cpbden Club. The day for that has passed. It is true that the British tariff reformers of forty years ago were enabled on these lines to arouse the popular enthusiasm necessary to overthrow protection. But not only did the fact that the British tariff made food dear enable them to appeal to sympathy and LMS FKOTI'XTIOX OK FREE TTtADK. imagination with a directness and force impossible where the commodities affected by a tariff are not of such prime importance; but the feeling of that time in regard to such reforms was far more hopeful. The great social problems which to-day loom so dark on the horizon of the civilized world were then hardly per- ceived. In the destruction of political tyranny and the removal of trade restrictions ardent and generous spirits saw the emancipation of labor and the eradica- tion of chronic poverty, and there was a confident belief that the industrial inventions and discoveries of the new era which the world had entered would elevate society from its very foundations. The natural assump- tion that increase in the general wealth must mean a general improvement in the condition of the people was then confidently made. But disappointment after disappointment has chilled these hopes, and, just as faith in mere republicanism has weakened, so the power of the appeal that free ini'lers make to the masses has weakened with the decline of the belief that mere increase in the power of production will increase the rewards of labor. In- stead of the abolition of protection in Great Britain being followed, as was expected, by the overthrow of protection everywhere, it is not only stronger through- out the civilized world than it was then, but is again raising its head in Great Britain. It is useless to tell working-men that increase in the ;M-iieral wealth, means improvement in their condition. They know by experience that this is not true. The working classes of the United States have seen the general wealth enormously increased, and they have also seen that, as wealth has increased, the fortunes of THE UKAL WKAKNKSS OK FKUM T11ADK. tMO the rich have grown larger, without its becoming a whit easier to get a living by labor. It is true that statistics may be arrayed in such way as to prove to the satisfaction of those who wish to believe it, that the condition of the working classes is steadily improving. But that this is not the fact working-men well know. It is true that the average consumption has increased, and that the cheapening of commodities has brought into common use things that were once considered luxuries. It is also true that in many trades wages have been somewhat raised arid hours reduced by combinations among workmen. But although the prizes that are to be gained in the lottery of life or, if any one prefers so to call them, the prizes that are to be gained by superior skill, energy and foresight are constantly becoming greater and more glittering, the blanks grow more numerous. The man of superior powers and opportunities may hope to count his millions where a generation ago he could have hoped to count his tens of thousands ; but to the ordinary man the chances of failure are greater, the fear of want more pressing. It is harder for the aver- age man to become his own employer, to provide for a family and to guard against contingencies. The anxi- eties attendant on the fear of losing employment ;nv becoming greater and greater, and the fate of him who falls from his place more direful. To prove this it is not necessary to cite the statistics that show how pau- perism, crime, insanity and suicide are increasing faster than our increase in population. Who tliat reads our daily papers needs any proof that the increase in tlio aggregate of wealth does not mean increased KIS*- of gaining a living by labor? 250 PROTECTION OK FREE TRADE. Here is an item which I take from the papers as I write. I do not take it because equally striking items are rare, but because I find a comment on it which I would also like to quote: 'STARVED TO DEATH IN OHIO. "DAYTON, O., August 26. One of the most horrible deaths that ever occurred in a civilized community was that of Frank Waltz- man, which happened in this city yesterday morning. He has seven children and a wife, and was once a prominent citizen of Xenia, O. He tried his hand at any kind of business where he could find opportunity, and finally was compelled to shovel gravel to get a crust for his children. He worked at this all last week, and on Saturday night was brought home in a wagon, unable to walk. This morning he was dead. An investigatipn of the affair established the fact that tho man had starved to death. The family had been without food for nearly two weeks. His wife tells a horrible story of his death, saying that while he lay dying his children surrounded his couch and sobbed piteously for bread." And here is the typical comment which the New York Tribune, shocked for a moment out of its attempt to convince working-men that the tariff has improved their condition, makes upon this item : "STARVED TO DEATH. "The Tribune, Tuesday, laid before its readers a very sad story of death by literal starvation, at Dayton, O. The details of this case must have struck many thoughtful persons as more resembling the catastrophes we are accustomed to regard as appertaining to Euro- pean life than those indigenous here. The story is old enough in general outline. First, a merchant, prospering ; then decline of business, bankruptcy, and by degrees destitution, until pride and shame together brought on the culminating disaster. A few years ago it would have been said that such a fact was impossible in America, and certainly there was a time when no one with power and will to work need have starved in any part of this country. During that period, too, the strong elasl icily and recuperative power of Americans were the world's wonder. No man thought much of failuiv in business. The demand Cor enlerprise of all TIIK i;KAl; WKAKNKSS OK KKUK TI.'ADK. :!">! kinds was such that 110 mail of ordinary pluck and energy could be kept down. Perhaps this ability to recover was not so much a national peculiarity as an effect of the existing state of society. Certainly, as things settle more and more into regular grooves in the older States, the parallel between American and European civilization becomes closer, and the social problems which perplex those societies are beginning to overshadow this one also. Compe- tition in our centres of population narrows more and more the field of unmoneyed enterprise. It is no longer so easy for those who fall to rise again. And social conventions fetter men more and tend to hold them within narrower bounds. ' ' The poor fellow who starved to death at Dayton the other day suffered an Old World fate. He was down and could not get up. He was deprived of his old resources and could not invent new ones. His large family increased his difficulties. He could not compete successfully with younger and less handicapped contemporaries, and so he sank, as thousands have done in the great capitals of Europe, but as hitherto very few, it is to be hoped, have sunk in an American community. Yet this is the tendency of a rapid increase of popu- lation and wealth. The struggle becomes fiercer all the time ; and while the exactions of society enslave and hamper the ambitious increasingly, the average fertility of resource and swift adapta- bility decline, just as the average skill of workmen declines with the perfection of mechanical appliances. Commerce and the arti- ficial requirements of social tyranny have already educated among us a class of people whose lives are a perpetual struggle and as perpetual an hypocrisy. They could live comfortably if they could give up display, but they cannot do it, and so they make themselves wretched and demoralize themselves at the same time. The sound, healthy American characteristics are being eliminated in this way, and we are rearing up instead a generation of feeble folks who may in turn become the parents of such hewers of wood and drawers of water as the Old World city masses have long been. And here, as there, our remedy and regeneration must come from the more vigorous and better-trained products of the country life." I will not ask how regeneration is to come from the more vigorous products of the country life, when every census shows a greater and greater proportion of our ^f>2 PROTECTION OH FREE TKADEL population concentrating in cities, and when country roads to the remotest borders are filled with tramps. 1 merely reprint this article as a sample of the recogni- tion one meets everywhere, even on the part of those who formally deny it, of the obvious fact, that it is becoming harder and harder for the man who has noth- ing but his own exertions to depend on to get a living in the United States. This fact destroys the assump- tion that our protective tariff raises and maintains wages, but it also makes it impossible to assume that the abolition of protection would in any way alter the tendency which as wealth increases makes the struggle for existence harder and harder. This tendency shows itself throughout the civilized world, and arises from the more unequal distribution which everywhere ac- companies the increase of wealth. How could the abo- lition of protection affect it ? The worst that can, in this respect, be said of protection is that it somewhat accelerates this tendency. The best- that could be promised for the abolition of protection is that it might somewhat restrain it. In England the same tendency has continued to manifest itself since the abolition of protection, despite the fact that in other ways great agencies for the relief and elevation of the masses have been at work. Increased emigration, the greater diffu- -ion of education, the growth of trades-unions, sanil;irv improvements, the better organization of charity. ;md governmental regulation of labor and its conditions have during all these years directly tended to improve the condition of the working class. Yet the depths of poverty are as dark as ever, and the contrast be- 't \veo.n wjinl ;md wealth more, ^l.-irin^;. Tlie fWn-L:i\v Reformer;; t lion;- lit fo mul-.e 1 1 ungcr impossible, but TUN HKAT, WKAKNKSS OK FRK.K, TliADM. li.VJ though the Com laws have long since been abolished, starvation still figures in the mortuary statistics of a country overflowing with wealth. While " statisticians " marshal figures to show to Dives's satisfaction how much richer Lazarus is becom- ing, here is what the Congregational clergymen of the greatest and richest of the world's great cities declare in their "Bitter Cry of Outcast London": " While we have been building our churches and solacing ourselves with our religion and dreaming that the millennium was coming, the poor have been growing poorer, the wretched more miserable and the immoral more corrupt. The gulf has been daily widening which separates the lowest classes of the community from our churches and chapels and from all decency and civilization. It is easy to bring an array of facts which seem to point to the opposite conclusion. But what does it all amount to ? We are simply liv- ing in a fool's paradise if we imagine that all these agencies com- bined are doing a thousandth part of what needs to be done. We must face the facts, and these compel the conclusion that this terri- ble flood of sin and misery is gaining on us. It is rising every day." This is everywhere the testimony of disinterested and sympathetic observers. Those who are raised above the fierce struggle may not realize what is going on beneath them. But whoever chooses to look may see. And when we take into account longer periods of time than are usually considered in discussions as to whether the condition of the working-man has or has riot improved with improvement in productive agencies and increase in wealth, here is a great broad fact : Five centuries ago the wealth-producing power of England, man for man, was small indeed compared with what it is now. Not merely were all the great inventions and discoveries which since the introduc- tion of steam have revolutionized mechanical industry then undreamed of, but even agriculture was far ruder l-'-M rROTKOTlOX OR FRIvK TKVADK. and less productive. Artificial grasses had not been discovered. The potato, the carrot, the turnip, the beet, and many other plants and vegetables which the farmer now finds most prolific, had not been introduced. The advantages which ensue from rotation of crops were un- known. Agricultural implements consisted of the spade, the sickle, the flail, the rude plow and the har- row. Cattle had not been bred to more than one-half the size they average now, and sheep did not yield half the fleece. Roads, where there were roads, were extremely bad, wheel vehicles scarce and rude, and places a hun- dred miles from each other were, in difficulties of trans- portation, practically as far apart as London and Hong- Kong, or San Francisco and New York, are now. Yet patient students of those times such men as Professor Thorold Rogers, who has devoted himself to the history of prices, and has deciphered the records of colleges, manors and public offices tell us that the con- dition of the English laborer was not only relatively, but absolutely better in those rude times than it is in England to-day, after five centuries of advance in the productive arts. They tell us that the working-man did not work so hard as he does now, and lived better ; that he was exempt from the harassing dread of being forced by loss of employment to want and beggary, or of leaving a family that must apply to charity to avoid starvation. Pauperism as it prevails in the ribh Eng- land of the nineteenth century was in the far poorer England >!' the fourteenth century absolutely unknown. Medicine was empirical and superstitious, sanitary r< -filiations and precautions were all but unknown, TlxMv, was frequently plague and occasionally fainim-, J"i o" in;; t<> the difficulties of transportation, the THE REAL WEAKNESS OF FREE TRADE. 255 scarcity of one district could not be relieved by the plenty of another. But men did not, as they do now, starve in the midst of abundance ; and what is perhaps the most significant fact of all is that not only were women and children not worked as they are to-day, but the eight-hour system, which even the working classes of the United States, with all the profusion of labor-saving machinery and appliances have not yet attained, was then the common system ! If this be the result of five centuries of such increase in productive power as has never before been known in the world, what ground is there for hoping that the mere abolition of protective tariffs would permanently benefit working-men? And not merely do facts of this kind prevent us from assuming that the abolition of protection could more than temporarily benefit working-men, but they suggest the question, whether it could more than tem- porarily increase the production of wealth? Inequality in the distribution of wealth tends to lessen the production of wealth on the one side, by lessening intelligence and incentive among workers ; and, on the other side, by augmenting the number of idlers and those who minister to them, and by increas- ing vice, crime and waste. Now, if increase in the production of wealth tends to increase inequality in distribution, not only shall we be mistaken in expecting its full effect from anything which tends to increase production, but there may be a point at which increased inequality of distribution will neutralize increased power of production, just as the carrying of too much sail may leaden a ship's way. 2ofi PROTECTION OR FKKK TiL\DK. Trade is a labor-saving method of production, and the effect of tariff restrictions upon trade is unquestion- ably to diminish productive power. Yet, important as may be the effects of protection in diminishing the production of wealth, they are far less important than the waste of productive forces which is commonly attributed to the very excess of productive power. The existence of protective tariffs will not suffice to explain that paralysis of industrial forces which in all departments of industry seems to arise from an excess of productive power, over the demand for consumption, find which is everywhere leading to combinations to re- strain production. And considering this, can we feel quite sure that the effect of abolishing protection would be more than temporarily to increase the production of wealth? CHAPTER XXIII. THE REAL STRENGTH OF PROTECTION. THE pleas for protection are contradictory and ab- surd ; the books in which it is attempted to give it the semblance of a coherent system are confused and illog- ical.* But we all know that the reasons men give for their conduct or opinions are not always the true reasons, and that beneath the reasons we advance to others or set forth to ourselves there often lurks a feeling or percep- tion which we may but vaguely apprehend or may even be unconscious of, but which is in reality the determin- ing factor. * The latest apology for protection, " Protection vs. Free Trade the scientific validity and economic operation of defensive duties in the United States," by ex-Governor Henry M. Hoyt, of Pennsyl- vania (New York, 1886), is hardly below the average in this respect, yet in the very preface the author discloses his equipment for eco- nomic investigation by talking of value as though it were a mea- sure of quantity, and supposing the case of a farmer who has .$3,500 worth of produce which he cannot sell or barter. With this begin- ning it is hardly to be wondered at that the 420 pages of his work bring him to the conclusion, which he prints in italics, that "the nearer we come to organizing and conducting our competing indus- tries as if we were the only nation on the planet, the more we shall make and the more we shall have to divide among the makers." An asteroid of about the superficial area of Pennsylvania would doubt- less seem the most desirable of worlds to this protectionist statesman and philosopher. K 258 PROTECTION OR FREE TRADE. I have been at pains to examine the arguments by which protection is advocated or defended, and this has been necessary to our inquiry, just as it is necessary that an advancing armv should first take the outworks before it can move on the citadel. Yet though these arguments are not merely used controversially, but justify their faith in protection to protectionists them- selves, the real strength of protection must be sought elsewhere. One needs but to talk with the rank and file of the supporters of protection in such a way as to discover their thoughts rather than their arguments, to see that beneath all the reasons assigned for protection there is something which gives it vitality, no matter how clearly those reasons may be disproved. The truth is, that the fallacies of protection draw their real strength from a great fact, which is to them as the earth was to the fabled Antaeus, so that they are beaten down only to spring up again. This fact is one which neither side in the controversy endeavors to ex- plain which free traders quietly ignore and protec- tionists quietly utilize ; but which is of all social facts most obvious and important to the working classes the fact that as soon, at least, us n certain stage of social development is reached, there are more laborers seek- ing employment than can find it a surplus which at recurring periods of industrial depression becomes very large. Thus the opportunity of work comes to be regarded as a privilege, and work itself to be deemed in common thought a good.'"" * The getting of work, not the getting of the results of work, is assumed !>y protectionist writers to be the end at which ;i true na- tional policy should aim, though for obvious reasons they rk, ;ind lends men to think and speak talking with fanners, ili.-ii Mir ;iver;ii;v farmer feds thai "Ihi-iv are idreadyloo many people, in i':inninir," and hence is not ill-disposed toward a policy which, though it may increase, the prices he has to yay, claims to " make work" in oilier branches of industry. THE EEAL STRENGTH OF PROTECTION. 263 of wanting work when what they really want are the wages that are to be got by work. But the fact that these wages are based upon the doing of work, not upon its productiveness, dissociates the idea of return to the laborer from the idea of the actual productive- ness of his labor, throwing this latter idea into the background or eliminating it altogether. In our modern civilization the masses of men pos- sess only the power to labor. It is true that labor is the producer of all wealth, in the sense of being the active factor of production ; but it is useless without the no less necessary passive factor. With nothing to exert itself upon, labor can produce nothing, and is ab- solutely helpless. And so, the men who have nothi ng but the power to labor must, to make that power of any use to them, either hire the material necessary to the exertion of labor, or, as is the prevailing method in our industrial organization, sell their labor to those who have the material. Thus it comes that the majority of men must find some one who will set them to work and pay them wages, he keeping as his own what their ex- penditure of labor produces. "We have seen how in the exchange of commodities through the medium of money the idea arises, almost insensibly, that the buyer confers an obligation upon the seller. But this idea attaches to the buying and selling of labor with greater clearness and far greater force than to the buying and selling of commodities. There are several reasons for this. Labor will not keep. The man who does not sell a commodity to-day may sell it to-morrow. At any rate he retains th& commodity. But the labor of the man who has stood idle to-dav because no one would hire him cannot be 264 PROTECTION OR FREE TRADE. sold -to-morrow. The opportunity has gone from the man himself, and the labor that he might have exerted, had he found a buyer for it, is utterly lost. The men who have nothing but their labor are, moreover, the poorest class the class who live from hand to mouth and who are least able to bear loss. Further than this, the sellers of labor are numerous as compared with buyers. All men in health have the power of labor, ,but under the conditions which prevail in modern civi- lization only a comparatively few have the means of employing labor, and there are always, even in the best of times, some men who find it difficult to sell their labor and who are thus exposed to privation and anx- iety, if not to physical suffering. Hence arises the feeling that the man who employs another to work is a benefactor to him a feeling which even the economists who have made war upon some of the popular delusions growing out of it have done their best to foster, by teaching that capital employs and maintains labor. This feeling runs through all classes, and colors all our thought and speech. One cannot read our newspapers without seeing that the notice of ji new building or projected enterprise of any kind usually concludes by stating that it will give employ- ment to so many men, as though the giving of employ- ment, the providing of work, were the measure of its public advantage, and something for which all should be grateful. This feeling, strong among employed, is stronger still among employers. The rich manufac- turer, or iron worker, or ship-builder, talks and thinks of the men to whom he has "given employment" as though he had actually given something which entitled him to their gratitude, and he is inclined to think, and THE REAL STRENGTH OF PROTECTION. 265 in most cases does think, that in combining to demand higher wages or less hours, or in any way endeavoring to put themselves in the position of freely contracting parties, they are snapping at the hand that has fed them, although the obvious fact is that such an em- ployer's men have given him a greater value than he has given them, else he could not have grown rich by employing them. This habit of looking on the giving of employment as a benefaction and on work as a boon, lends easy currency to teachings which assume that work is de- sirable in itself something which each nation ought to try to get the most of and makes a system which professes to prevent other countries from doing for us work we might do for ourselves seem like a system for the enrichment of our own country and the benefit of its working-classes. It not only indisposes men to grasp the truth that protection can only operate to reduce the productiveness of labor; but it indis- poses them to care anything about that. It is the need for labor, not the productiveness of labor, that they are accustomed to look upon as the thing to bo desired. So confirmed is this habit, that nothing is more com- mon than to hear it said of a useless construction or expenditure that " it has done no good, except to pro- vide employment," while the most popular argument for the eight-hour system is that machinery has so reduced the amount of work to be clone that there is not now enough to go around unless divided into smaller "takes." When men are thus accustomed to think and speak of work as desirable in itself, is it any wonder that a 266 PROTECTION OK FREE TRADE. system which proposes to " make work " should easily obtain popularity? Protectionism viewed in itself is absurd. But it is no more absurd than many other popular beliefs. Pro- fessor W. G. Sumner of Yale College, a fair representa- tive of the so-called free traders who have been vainly trying to weaken the hold of protectionism in the United States without disturbing its root, essayed, be- fore the United States Tariff Commission in 1882, to bring protectionism to a reductio ad absurdum by declar- ing that the protectionist theory involved such prop- ositions as these : that a big standing army would tend to raise wages by withdrawing men from competition in the labor market ; that paupers in almshouses and convicts in prisons ought for the same reason to be maintained without labor ; that it is better for the laboring class that rich people should live in idleness than that they should work ; that trades unions should prevent their members from lessening the supply of work by doing too much ; and that the destruction of property in riots must be a good thing for the laboring class, by increasing the work to be done. But whoever will listen to the ordinary talk of men and read the daily newspapers, will find that, so far from such notions seeming absurd to the common mind, they are accustomed ideas. Is it not true that the " good times during the war " are widely attributed to the " employment furnished by government " in calling so many men into the army, and to the brisk demand for commodities caused by their unproductive consump- tion ;ml by actual destruction ? Is it not true that all over the United States tin- working-classes are protest- ing iigaiiist tin.' employment of convicts in this, that, or THE REAL STRENGTH OF PROTECTION. 267 the other way, and would much rather have them kept in idleness than have them " take work from honest men " ? Is it not true that the rich man who " gives employment " to others by his lavish waste is univer- sally regarded as a better friend to the workers than the rich man who " takes work from those who need it " by doing it himself ? In themselves these notions may be what the Pro- fessor declares them,' "miserable fallacies which sin against common sense," but they arise from the recog- nition of actual facts. Take the most preposterous of them. The burning down of a city is indeed a lessen- ing of the aggregate wealth. But is the waste involved in the burning down of a city any more real than the waste involved in the standing idle of men who would gladly be at work in building up a city ? Where every one who needed to work could find opportunity, there it would indeed be clear that the maintenance in idle- ness of convicts, paupers, or rich men must lessen the rewards of workers ; but where hundreds of thousands must endure privation because of their inability to find work, the doing of work by those who can support themselves, or will be supported without it, seems like taking the opportunity to work from those who most need or most deserve it. Such " miserable fallacies " must continue to sway men's minds until some satisfac- tory explanation is afforded of the facts that make the " leave to toil " a boon. To attempt, as do " free- traders " of Professor Sumner's class, to eradicate pro- tectionist ideas while ignoring these facts, is utterly hopeless. What they take for a seedling that may be pulled up with a vigorous effort, is in reality the shoot of a tree whose spreading roots reach to the bed-rock 268 PROTECTION OR FREE TRADE. of society. A political economy that will recognize no deeper social wrong than the framing of tariffs on a protective instead of on a revenue basis, and that, with such trivial exceptions, is but a justification of " things as they are," is repellent to the instincts of the masses. To tell world ngrn en, as Professor Sumner does, that " trades-unionism and protectionism are falsehoods," is simply to dispose them to protectionism, for whatever may be said of protection they well know that trades- unions have raised wages in many vocations, and that they are the only things that have yet given the work- ing-classes any power of resisting a strain of competi- tion that, unchecked, must force them to the maximum of toil for the minimum of pay. Such free-tradeism as Professor Sumner represents and it is this that is taught in England, and that in the United States has essayed to do battle with protectionism must, wherever the working-classes have political power, give to protec- tion positive strength. But it is not merely by indirection that what is known as the "orthodox political economy" strengthens pro- tection. While condemning protective tariffs it has justified revenue tariffs, and its most important teach- ings have not merely barred the way to such an ex- planation of social phenomena as would cut the ground from under protectionism, but have been directly cal- culated to strengthen the beliefs which render protec- tion plausible. The teaching that labor depends for employment upon capital, and that wages are drawn from capital and arc determined by the ratio between tin'. niinilxM- of laborers and the amount of capital de- voted to their employment ; all the teachings, in short, which have degraded labor to the position of a second- THE REAL STRENGTH OF PROTECTION. 269 ary and dependent factor in production, have tended to sanction that view of things which disposes the labor- ing-class to look with favor upon anything which by preventing the coming into a country of the produce of other countries, seems, at least, to increase the require- ment for work at home. CHAPTER XXIV. THE PAKADOX. IF our investigation has as yet led to no satisfactory conclusion it has at least explained why the controversy so long carried on between protectionists and free tra- ders has been so indeterminate. The paradox we have reached is one toward which all the social problems of our day converge, and had our examination been of any similar question it must have come to just such a point. Take, for instance, the question of the effects of ma- chinery. The opinion that finds most influential ex- pression is that labor-saving invention, although it may sometimes cause temporary inconvenience or even hard- ship to a few, is ultimately beneficial to all. On the other hand, there is among workingmen a widespread belief that labor-saving machinery is injurious to them, although, since the belief does not enlist those power- ful special interests that are concerned in the advo- cacy of protection, it has not been wrought into an elab- orate system and does not get anything like the same representation in the organs of public opinion. Now, should we subject this question to such an ex- amination as we have given to the tariff question we should reach similar results. We should find the notion that invention ought to be restrained as incon- gruous as the notion that trade ought to be restrained as incapable of being carried to its logical conclusions THE PARADOX. 271 without resulting in absurdity. And while the use of machinery enormously increases the production of wealth, examination would show in it nothing to cause inequality in distribution. On the contrary, we should see that the increased power given by invention inures primarily to labor, and that this gain is so diffused by exchange that the effect of an improvement which in- creases the power of labor in one branch of industry must be shared by labor in all other branches. Thus the direct tendency of labor-saving improvement is to augment the earnings of labor. Nor is this tendency neutralized by the fact that labor-saving inventions generally require the use of capital, since competition, when free to act, must at length bring the profits of capital used in this way to the common level. Even the monopoly of a labor-saving invention, while it can seldom be maintained for any length of time, cannot prevent a large (and generally much the largest) part of the benefits from being diffused.* From this we might conclude with certainty, that the tendency of labor-saving improvements is to benefit all, and especially to benefit the working-class, and hence might naturally attribute any distrust of their beneficial effects partly to the temporary displacements which, in a highly organized society, any change in the forms of industry must cause, and partly to the in- creased wants called forth by the increased ability to satisfy want. Yet, while as a matter of theory it is clear that labor- saving inventions ought to improve the condition of all ; as a matter of fact it is equally clear that they do not. * For a fuller examination of the effects of machinery see my Social Problems. 272 PROTECTION OR FREE TRADE. In countries like Great Britain there is still a large class living on the verge of starvation, and constantly slipping over it a class who have not derived the slightest benefit from the immense increase of produc- tive power, since their condition never could have been any worse than it is a class whose habitual condition in times of peace and plenty is lower, harder, more precarious and more degraded than that of any sav- ages. In countries like the United States, where such a class did not previously exist, its development has been contemporaneous with wondrous advances of labor- saving invention. The laws against tramps which have been placed upon the statute books of our states, the re- strictions upon child labor which have been found necessary, the walking advertisements of our cities, the growing bitterness of the strife which workingmen are forced to wage, indicate unmistakably that while dis- covery and invention have been steadily increasing the productive power of labor in every department of in- dustry, the condition of the mere laborer has been, growing worse. It can be proved that labor-saving invention tends to benefit labor, but that this tendency is in some way aborted is even more clearly evident in the facts of to- day than it was when John Stuart Mill questioned if mechanical invention had lightened the day's toil of any human being. That in some places and in some occupations there has been improvement in the condi- tion of labor is true. But not only is such improve- ment nowhere commensurate with the increase of pro- ductive power ; it is clearly not due to it. It exists only where it has been won by combinations of work- THE PARADOX. men or by legal interference. It is trade unions, not the increased power given by machinery, that have in many occupations in Great Britain reduced hours and increased pay ; it is legislation, not any improvement in the general condition of labor, that has stopped the harnessing of women in mines and the working of little children in mills and brickyards. Where such influ- ences have not been felt, it is not only certain that labor- saving inventions have not improved the condition of labor, but it seems as if they had exerted a depressing effect operating to make labor a drug instead of to make it more valuable. Thus, in relation to the effects of machinery, as in relation to the effects of tariffs, there are two sides to the shield. Conclusions to which we are led by a con- sideration of principles are contradicted by conclusions we are compelled to draw from existing facts. But, while discussion may go on interminably between those who, looking only at one side of the shield, refuse to consider what their opponents see, yet to recognize the contradictory aspects of such a question is to realize the possibility of an explanation that will include both. The problem we must solve to explain why free trade or labor-saving invention or any similar cause fails to produce the general benefits we naturally ex- pect, is a problem of the distribution of wealth. "When increased production of wealth does not proportionately benefit the working-classes, it must be that it is accom- panied by increased inequality of distribution. In themselves free trade and labor-saving inventions do not tend to inequality of distribution. Yet it is possible that they may promote such inequality, not by virtue of anything inherent in their tendencies, but 18 274 PROTECTION OR FREE TRADE. through their effect in increasing production, for, as already pointed out, increase or decrease in the produc- tion of wealth may of itself, under certain circum- stances, alter the proportions of distribution. Let me illustrate : Smith, a plumber, and Jones, a gas-fitter, form a partnership in the usual way, and go into the business of plumbing and gas-fitting. In this case whatever increases or decreases the profits of the firm will affect the partners equally, and whether these profits be much or little, the proportion which each takes will be the same. But let us suppose their agreement to be of a kind occasionally made, that the plumber shall have two- thirds of the profits on all plumbing done by the firm, and the gas-fitter two-thirds of the profits on all gas- fitting. In such case, every job they do will not only increase or decrease the profits of the firm, but, accord- ing as it is a job of plumbing or of gas-fitting, will directly affect the distribution of profits between the partners. Or, again, let us suppose that the partners differ in tlicir ability to take risks. Smith has a family and must have a steady income, while Jones is a bachelor who could get along for some time without drawing from the firm. To better assure Smith of a living, it is agreed that he shall draw a fixed sum before any profits are distributed, and, in return for this guaranty, si in 11 get only a quarter of the profits remaining. In such a case, increase or decrease of profits would of itself alter the proportions of distribution. Increase of profits would affect distribution in favor of Jones, and might go so far as to raise his share to nearly 75 THE PARADOX. 275 per cent, and reduce the share of Smith to little over 25 per cent. Decrease of profits on the other hand would affect distribution in favor of Smith, and might go so far as to give him 100 per cent, while reducing Jones's share to nothing. In such a case as this, any circumstance which affected the amount of profits would affect the terms of distribution, but not by vir- tue of anything peculiar to the circumstance. Its real cause would be something external to, and unconnected with, such circumstance. The social phenomena we have to explain resemble those presented in this last case. The increased in- equality of distribution which accompanies material progress is evidently connected with the increased pro- duction of wealth, and does not arise from any direct effect of the causes which increase wealth. Our illustration, however, yet lacks something. In the case we have supposed, increase of their joint profits would benefit both partners, though in different degrees. Even when Smith's share diminished in pro- portion, it would increase in amount. But in the social phenomena we are considering, it is not merely that with increasing wealth the share that some classes ob- tain is not increased proportionately; it is that it is not increased absolutely, and that in some cases it is even absolutely, as well as proportionately, diminished. To get an illustration that will cover this point as well, let us therefore take another case. Let us go back to Robinson Crusoe's island, which may well serve us as an example of society in its simplest ana therefore most intelligible form. The discovery of the island which we have heretofore supposed, involving calls by other ships, would greatly 276 PROTECTION OR FREE TRADE. increase the wealth which the labor of its population of two could obtain. But it would not follow that in the increased wealth both would gain. Friday was Crusoe's slave, and no matter how much the opening of trade with the rest of the world might increase wealth, he could only demand the wages of a slave enough to maintain him in working ability. So long as Crusoe himself lived he would doubtless take good care of the companion of his solitude, but when in the course of time the island had fully come into the circle of civil- ized life, and had passed into the possession of some heir of Crusoe's, or of some purchaser, living probably in England, and was cultivated with a view to making it yield the largest income, the gulf between the pro- prietor who owned it and the slave who worked upon it would not merely have enormously widened as com- pared with the time when Crusoe and Friday shared with substantial equality the joint produce of their labor, but the share of the slave might have become absolutely less, and his condition lower and harder. It is not necessary to suppose positive cruelty or wanton harshness. The slaves who in the new order of things took Friday's place might have all their animal wants supplied they might have as much to eat as Friday had, might wear better clothes, be lodged in better houses, be exempt from the fear of cannibals, and in illness have the attendance of a skilled physician. And seeing this, island "statisticians" might collate figures or devise diagrams to show how much better off these toilers were than their predecessor, who woro goatskins, slept in a cave and lived in constant dread of being eaten, and the conclusions of these gentlemen it be paraded in all the island newspapers, with a THE PARADOX. 277 chorus of : " Behold, in figures that cannot lie and dia- grams that can be measured, how industrial progress benefits everybody, even the slave ! " But in things of which the statistician takes no ac- count they would be worse off than Friday. Compelled to a round of dreary toil, unlightened by variety, un- dignified by responsibility, unstimulated by seeing re- sults and partaking of them, their life, as compared with that of Friday, would be less that of men and more that of machines. And the effect of such changes would be the same upon laborers such as we call free free, that is to say, to use their own power to labor, but not free to that which is necessary to its use. If Friday, instead of setting Crusoe's foot upon his head, in token that he was thenceforward his slave, had simply acknowledged Crusoe's ownership of the island, what would have been the difference ? As he could only live upon Cru- soe's property on Crusoe's terms, his freedom would simply have amounted to the freedom to emigrate, to drown himself in the sea, or to give himself up to the cannibals. Men enjoying only such, freedom that is to say, the freedom to starve or emigrate -as the alter- native of getting some one else's permission to. labor cannot be enriched by improvements that increase the production of wealth. For they have no more power to claim any share of it than has the slave. Those who want them to work must give them what the master must give the slave if he wants him to work enougli to support life and strength ; but when they can find no one who wants them to work they must starve, if they cannot beg. Grant to Crusoe ownership of the island, and Friday, the free man, would be as much subject to 278 PROTECTION OR FREE TRADE. his will as Friday, the slave; as incapable of claiming any share of an increased production of wealth, no matter how great it might be nor from what cause it might come. And what would be true in the case of one man would be true of any number. Suppose ten thousand Fridays, all free men, all absolute owners of themselves, and but one Crusoe, the absolute owner of the island. So long as his ownership was acknowledged and could be enforced, would not the one be the master of the ten thousand as fully as though he were the legal owner of their flesh and blood ? Since no one could use his island without his consent, it would follow that no one could labor, or even live, without his permission. The order, "Leave my property" would be a sentence of death. This owner of the island would be to the other ten thousand "free men" who lived upon it, their land lord or land god, of whom they would stand in more real awe than of any deity that their religion taught them reigned above. For as a Scottish landlord told his tenants : " God Almighty may have made the land, but I own it. And if you don't do as I say, off you go!" No increase of wealth could enable such " free " laborers to claim more than a bare living. The open- ing up of foreign trade, the invention of labor-saving machines, the discovery of mineral deposits, the intro- duction of more prolific plants, the growth of skill, would simply increase the amount their land lord would charge for the privilege of living on his island, and could in no wise increase what those, who had noth- ing Iml their labor could demand. If Heaven itself rained down wealth upon the island that wealth would THE PARADOX. 279 be his. Arid so, too, any economy that might enable these mere laborers to live more cheaply would simply increase the tribute that they could pay and that he could exact. Of course, no man could utilize a power like this to its full extent or for himself alone. A single landlord in the midst of ten thousand poor tenants, like a single master amid ten thousand slaves, would be as lonely as was Robinson Crusoe before Friday came. The human being is by nature a social animal, and no matter how selfish such a man might be, he would desire com- panions nearer his own condition. Natural impulse would prompt him to reward those who pleased him, prudence would urge him to interest the more influen- tial among his ten thousand Fridays in the maintenance of his ownership, while experience would show him if calculation did not, that a larger income could be ob- tained by leaving to superior energy, skill and thrift some part of what their efforts secured. But while the single owner of such an island would thus be in- duced to share his privileges by means of grants, leases, exemptions or stipends, with a class more or less nu- merous, who would thus partake with him in the ad van- tages of any improvement that increased the power of producing wealth, there would yet remain a class, the mere laborers of only ordinary ability, to whom such improvement could bring no benefit. And it would only be necessary to be a little chary in granting per- mission to work upon the island, so as to keep a small percentage of the population constantly on the verge of starvation and begging to be permitted to use their power to labor, to create a competition in which, bidding against each other, men would of themselves offer all 280 PROTECTION OR FREE TRADE. that their labor could procure save a bare living, for the privilege of getting that. We can sometime^ see principles all the clearer if we imagine them brougLt out under circumstances to which we are not habituated ; but, as a matter of fact, the social adjustment which in modern civilization creates a class who can neither labor nor live save by permis- sion of others, never could have arisen in this way. The reader of The Further Adventures of Robinson Crusoe, as related by De Foe, will remember that during Crusoe's long absence, the three English rogues, led by Will Atkins, set up a claim to the ownership of the island, declaring that it had been given to them by Kobinson Crusoe, and demanding that the rest of the inhabitants should work for them by way of rent. Though used in their own countries to the acknowledg- ment of just such claims, -set up in the name of men gone, not to other lands, but to another world, the Spaniards, as well as the peaceable Englishmen, laughed at this demand, and, when it was insisted on, laid Will Atkins and his companions by the heels until they had got over the notion that other people should do their work for them. But if the three English rogues had got possession of all the fire-arms before asserting their claim to own the island, the rest of its population might have been compelled to acknowledge it. Thus a class of land-owners and a class of non-land-owners would have been established, to which arrangement the whole population might in a few generations have become so habituated as to think it the natural order, and when they had begun, in course of time, to colonize other islands, they would have established the same institu- tion there. Now, what might thus have happened on THE PARADOX 281 Crusoe's island, had the three English rogues got posses- sion of all the lire-arms, is precisely what on a larger scale, did happen in the development of European civilization, and what is happening in its extension to other parts of the world. Thus it is that we find in civilized countries a large class who, while they have power to labor, are denied any right to the use of the elements necessary to make that power available, and who, to obtain the use of those elements, must either give up in rent a part of the produce of their labor, or take in wages less than their labor yields. A class thus helpless can gain nothing from advance in productive power. Where such a class exists, increase in the general wealth can only mean increased inequality in distribution. And though this tendency may be a little checked as to some of them by trades-unions or similar combinations which artifically lessen competi- tion, it will operate to the full upon those outside of such combinations. And, let me repeat it, this increased inequality in distribution does not mean merely that the mass of those who have nothing but the power to labor do not proportionately share in the increase of wealth. It means that their condition must become absolutely, as well as relatively, worse. It is in the nature of industrial advance it is of the very essence of those prodigious forces which modern invention and discovery are un- loosing, that they must in jure where they do not benefit. These forces are not in themselves either good or evil They bring good or evil according to the conditions under which they are exerted In a state of society in which all men stood upon an equality with relation to the use of the material universe their effects could be 282 PKOTECTION OR FREE TRADE. only beneficent. But in a state of society in which some men are held to be the absolute owners of the material universe, while other men cannot use it without paying tribute, the blessing these forces might bring is changed into a curse their tendency is to destroy independence, to dispense with skill and convert the artisan into a " hand," to concentrate all business and make it harder for an employee to become his own em- ployer, and to compel women and children to injurious and stunting toil. The change industrial progress is now working in the conditions of the mere laborer, and which is only somewhat held in check by the opera- tions of trades-unions, is that change which would convert a slave who shared the varied occupations and rude comforts of his goatskin-clothed master into a slave held as a mere instrument of factory production. Compare the skilled craftsman of the old order with the operative of the new order, the mere feeder of a machine. Compare the American farm " help " of an earlier state, the social equal of his employer, with, the cowboy, whose dreary life is enlivened only by a " round up " or " drunk," or with the harvest hand of the u wheat fac- tory," who sleeps in barracks or barns, and after a few months of employment goes on a tramp. Or compare the poverty of Connemara or Skye with the infinitely more degraded poverty of Belfast or ( flasgow. Do this, arid then say if to those who can only hope to sell their labor for a subsistence, our very industrial progress has not a dark side. And that this must bo :he tendency of labor-saving invention or reform in a society where the planet is held to be private propt-rt.v, and the children that emne into life upon it are denied all right to its use except THE PARADOX. 283 as they buy or inherit the title of some dead man, we may sec plainly if we imagine labor-saving inven- tion carried to its farthest imaginable extent. When we consi.der that the object of work is to satisfy want, the idea that labor-saving invention can ever cause want by making work more productive seems preposterous. Yet, could invention go so far as to make it possible to produce wealth without labor, what would be the effect upon a class who can call nothing their own, save the power to labor, and who, let wealth be never so abundant, can get no share of it except by selling this power ? vYould it not be to reduce to naught the value of what this class have to sell; to make them paupers in the midst of all possible wealth to deprive them of the means of earning even a poor livelihood, and to compel them to beg or starve, if they could not steal? Such a point it may be impossible for invention ever to reach, but it is a point toward which modern invention drives. And is there not in this some explanation of the vast army of tramps and paupers, and of deaths by want and starvation in the very midst of plenty ? The abolition of protection would tend to increase the production of wealth that is sure. But under conditions that exist, increase in the production of wealth may itself become a curse first to the laboring- class, and ultimately to society at large. Is it not true, then, it may be asked, that protection, for the reason at least that it does check that freedom and extension of trade which are essential to the full play of modern industrial tendencies, is favorable to the working-classes ? Much of the strength of protec- tion among workingmen comes, I think, from vague feelings of this kind. 284 PROTECTION OR FREE TRADE. My reply would be negative. Not only has protec- tion which is merely the protection of producing cap- italists against foreign competition in the home market tendencies in itself toward monopoly and inequality, but it is impotent to check the concentrating tenden- cies of modern inventions and processes. To do this by " protection " we must not only forbid foreign commerce, but restrain internal commerce. We must not only prohibit any new applications of labor-saving inven- tion, but must prevent the use of the most important of those already adopted. We must tear up the rail- way and go back to the canal boat and freight wagon ; cut down the telegraph wire and rely upon the post horse ; substitute the scythe for the reaper, the needle for the sewing-machine, the hand loom for the factory ; in short, discard all that a century of invention has given us, and return to the industrial processes of a hundred years ago. This is as impossible as for the chicken to go back to the egg. A man may become decrepit and childish, but once manhood is reached he cannot again become a child. No ; it is not in going backward, it is in going for- ward, that the hope of social improvement lies. CHAPTER XXY. THE ROBBER THAT TAKES ALL THAT JS LEF1. IN itself the abolition of protection is like the driving off of a robber. But it will not help a man to drive off one robber, if another, still stronger and more rapacious, be left to plunder him. Labor may be likened to a man who as he carries home his earnings is waylaid by a series of robbers. One demands this much, and another that much, but last of all stands one who demands all that is left, save just enough to enable the victim to maintain life and come forth next day to work. So long as this last robber remains, what will it benefit such a man to drive off any or all of the other robbers ? Such is the situation of labor to-day throughout the civilized world. And the robber that takes all that is left, is private property in land. Improvement, no matter how great, and reform, no matter now beneficial in itself, cannot help that class who deprived of all right to the use of the material elements, have only the power to labor a power as useless in itself as a sail without wind, a pump without water, or a saddle without a horse. I have likened labor to a man beset by a series of robbers, because there are in every country other things than private property in land which tend to diminish 286 PROTECTION OR FREE TRADE. national prosperity and divert the wealth earned by labor into the hands of non-producers. This is the tendency of monopoly of the processes and machinery of production and exchange, the tendency of protect- ive tariffs, of bad systems of currency and finance, of corrupt government, of public debts, of standing ar- mies, and of wars and preparations for war. But these things, some of which are conspicuous in one country and some in another, cannot account for that impover- ishment of labor which is to be seen everywhere. They are the lesser robbers, and to drive them off is only to leave more for the great robber to take. If the all-sufficient cause of the impoverishment of labor were abolished, then reform in any of these direc- tions would improve the condition of labor; but so long as that cause exists, no reform can effect any per- manent improvement. Public debts might be abolish- ed, standing armies disbanded, war and the thought of war forgotten, protective tariffs everywhere dis- carded, government administered with the greatest purity and economy, and all monopolies, save the monopoly of land, destroyed, without any permanent improvement in the condition of the laboring-class. For the economic effect of all these reforms would simply be to diminish the waste or increase the production of wealth, and so long as competition for employment on the part of men who arc powerless to employ them- selves tends strndilv to force wages to the minimum that gives the laborer but a bare living, 1.1 1 is is all the ordinary laborer can get. So long as this tendency exists and it must continue to exist so long as private property in Innd exists improvement (even if possible) in tlir ]HTs<,n;il (jiialities of the laboring masses, such THE ROBBER THAT TAKES ALL THAT IS LEFT. 287 as improvement in skill, in intelligence, in temperance or in thrift, cannot improve their material condition. Improvement of this kind can only benefit the individ- ual while it is confined to the individual, and thus gives him an advantage over the body of ordinary labor- ers whose wages form the regulative basis of all other wages. If such personal improvements become general the effect can only be to enable competition to force wages to a lower level. Where few can read and write, the ability to do so confers a special advantage and raises the individual who possesses it above the level of ordinary labor, enabling him to command the wages of special skill. But where all can read and write, the mere possession of this ability cannot save ordinary laborers from being forced to as low a position as though they could not read and write. And so, where thriftlessness or intemperance pre- vails, the thrifty or temperate have a special advantage which may raise them above the conditions of ordinary labor; but should these virtues become general that advantage would cease. Let the great body of working- men so reform or so degrade their habits that it would become possible to live on one-half the lowest wages now paid, and that competition for employment which drives men to work for a bare living must proportion- ately reduce the level of wages. I do not say that reforms that increase the intelli- gence or improve the habits of the masses are even in this view useless. The diffusion of intelligence tends to make men discontented with a life of poverty in the midst of wealth, and the diminution of intem- perance better fits them to revolt against such a lot. Public schools and temperance societies are thus pre- 288 PROTECTION OR FREE TRADE. revolutionary agencies. But they can never abolish poverty so long as land continues to be treated as pri- vate property. The worthy people who imagine that compulsory education or the prohibition of the drink traffic can abolish poverty are making the same mis- take that the Anti-Corn Law reformers made when they imagined that the abolition of protection would make hunger impossible. Such reforms are in their own nature good and beneficial, but in a world like this, tenanted by beings like ourselves, and treated by them as the exclusive property of a part of their number, there must, under any conceivable conditions, be a class on the verge of starvation. This necessity inheres in the nature of things; it arises from the relation between man and the external universe. Land is the superficies of the globe that bottom of the ocean of air to which our physical structure confines us. It is our only possible standing place, our only possible workshop, the only reservoir from which we can draw material for the supply of our needs. Considering land in its narrow sense, as distinguished from water and air, it is still the element necessary to our use of the other elements. Without land man could not even avail himself of the light and heat of the sun or utilize the forces that pulse through matter. And whatever be his essence, man, in his physical constitution, is but a changing form of matter, a passing mode of motion, constantly drawn from na- ture's reservoirs and as constantly returning to them airain. In physical structure and powers he is related to land as the fountain jet is related to the stream, or the flame of a or can produce on his land for the privilege of sup- port i 11,11; themselves and their families out of the other hull'. This gives him more of the produce of labor than he could exact from so many chattel slaves. And as time L-oes on and American citi/ens become more THE ROBBER THAT TAKES ALL TIT AT IS LKKT. 2i)l plentiful, the ownership of this land will enable him to get more of them to work for him, and on lower terms. His speculation in land is as much a speculation in the growth of men as though he had bought children and contracted for infants }^et to be born. For if infants ceased to be born and men to grow up in America, his land would be valueless. The profits on such investment do not arise from the growth of .land or increase of its capabilities, but from growth of population. Land in itself has no value. Value arises only from human labor. It is not until the ownership of land be- comes equivalent to the ownership of laborers that any value attaches to it. And where land has a speculative value it is because of the expectation that the growth of society will in the future make its ownership equiva- lent to the ownership of laborers. It is true that all valuable things have the quality of enabling their owner to obtain labor or the produce of labor in return for them or for their use. But with things that are themselves the produce of labor such transactions involve an exchange the giving of an equivalent of labor-produce in return for labor or its produce. Land, however, is not the produce of labor ; it existed before man was, and, therefore, when the ownership of land can command labor or the products of labor, the transaction, though in form it may be an exchange, is in reality an appropriation. The power which the ownership of valuable land gives, is that of getting human service without giving human service, a power essentially the same as that power of appro- priation which resides in the ownership of slaves. It is not a power of exchange, but a power of blackmail, such as would be asserted were some men compelled to 292 PROTECTION OR FREE TRADE. pay other men for the use of the ocean, the air or the sunlight. The value of such things as grain, cattle, ships, houses, goods, or metals is a value of exchange, based upon the cost of production, and therefore tends to diminish as the progress of society lessens the amount of labor necessary to produce such things. But the value of land is a value of appropriation, based upon the amount that can be appropriated, and therefore tends to increase as the progress of society increases production. Thus it is, as we see, that while all sorts of products steadily fall in value, the value of land steadily rises. Inventions and discoveries that in- crease the productive power of labor lessen the value of the things that require labor for their production, but increase the value of land, since they increase the amount that labor can be compelled to give for its usa And so, where land is fully appropriated as private property no increase in the production of wealth, no economy in its use, can give the mere laborer more than the wages of the slave. If wealth rained down from heaven or welled up from the depths of the earth it could not enrich the laborer. It could merely increase the value of land. Nor do we have to appeal to the imagination to see this. In Western Pennsylvania it has recently been discovered that if borings are made into the earth com- bustible gas will force itself up a sheer donation, as it were, by Nature, of a thing that heretofore could only be produced by labor. The direct and natural tend- ency of this new power of obtaining by boring and piping what has heretofore required the mining and retorting of coal it* to make labor more valuable and to THE ROBBER THAT TAKES ALL THAT IS LEFT. 293 increase the earnings of the laborer. But land in Penn- sylvania being treated as private property, it can have no such effect. Its effect, in the first place, is to enrich the owners of the land through which the borings must be made, who, as legal owners of the whole material universe above and below their land, can levy a toll on the use of Nature's gift. In the next place, the cap- italists who have gone into the business of bringing the gas in pipes to Pittsburgh and other cities have formed a combination similar to that of the Standard Oil Company, by which they control the sale of the natural gas, and thus over and above the usual returns of cap- ital make a large profit. Still, however, a residue of advantage is left, for the new fuel is so much more easily handled, and produces so much more uniform a heat, that the glass and iron workers of Pittsburgh find it more economical than the old fuel, even at the same cost. But they cannot long retain this advantage. If it prove permanent, other glass and iron workers will soon be crowding to Pittsburgh to share in it, and the result will be that the value of city lots in Pittsburgh will so increase as finally to transfer this residual advan- tage to the owners of Pittsburgh land.* And if the monopoly of the piping company is abolished, or if by legislative regulation its profits are reduced to the ordinary earnings of capital, the ultimate result will, in the same way, be not an advantage to workers, but an advantage to land-owners. * The largest owners of Pittsburgh land are an English family named Schenley, who draw in ground rents a great revenue, thus (to the gratification of Pennsylvania protectionists) increasing our exports over our imports, just as though they owned so many Penn- sy Iranians. 294 PROTECTION OR FREE TRADE. Thus it is that railways cheapen transportation only to increase the value of land, not the value of labor, and that when their rates are reduced it is land-owners not laborers who get the benefit. So it is with all im- provements of whatever nature. The Federal gov- ernment has acted the part of a munificent patron to Washington City. The consequence is that the value of lots has advanced. If the Federal government were to supply every Washington householder with free light, free fuel and free food, the value of lots would still further increase, and the owners of Washington " real estate " would ultimately pocket the donation. The primary factors of production are land and labor. Capital is their product, and the capitalist is but an intermediary between the landlord and the laborer. Hence workingmen who imagine that capital is the oppressor of labor are " barking up the wrong tree." In the first place, much that seems on the sur- face like oppression by capital is in reality the result of the helplessness to which labor is reduced by being denied all right to the use of land. " The destruction of the poor is their poverty." It is not in the power of capital to compel men who can obtain free access to nature to sell their labor for starvation wages. In the second place, whatever of the earnings of labor capital- istic monopolies may succeed in appropriating, they are merely lesser robbers, who take what, if they were abolished, land ownership would take. No matter whether the social organization be simple or complex, no matter whether the intermediaries be- tween the owners of land and the owners of the mere power to labor be few <>r ninny, \vlim;ver the available land has been fully appropriated as the property of THE ROBBER THAT TAKES ALL THAT IS LEFT. 295 some of the people, there must exist a class, the labor- ers of ordinary ability and skill, who can never hope to get more than a bare living for the hardest toil, and who are constantly in danger of failure to get even that. We see that class existing in the simple industrial organization of Western Ireland or the Scottish High- lands, and we see it, still lower and more degraded, in the complex industrial organization of the great Brit- ish cities. In spite of the enormous increase of produc- tive power, we have seen it developing in the United States, just as the appropriation of our land has gone on. This is as it must be, for the most fundamental of all human relations is that between man and the planet he inhabits. How the recognition of the consequences involved in the division of men into a class of world owners and a class who have no legal right to the use of the world explains many things otherwise inexplicable I cannot here point out, since I am dealing only with the tariff question. We have seen why what is miscalled " free trade" the mere abolition of protection can only temporarily benefit the working-classes, and we have now reached a position which will enable us to proceed with our inquiry and ascertain what the effects of true free trade would be. CHAPTER XXYI. TRUE FREE TRADE. " COME with me," said Richard Cobden, as John Bright turned heart-stricken from a new-made grave. " There are in England women and children dying with hunger with hunger made by the laws. Come with me, and we will not rest until we repeal those laws." In this spirit the free trade movement waxed and grew, arousing an enthusiasm that no mere fiscal re- form could have aroused. And intrenched though it was by restricted suffrage and rotten boroughs and aristocratic privilege, protection was overthrown in Great Britain. And there is hunger in Great Britain still, and women and children yet die of it. But this is not the failure of free trade. When pro- tection had been abolished and a revenue tariff substi- tuted for a protective tariff, free trade had only won an outpost. That women and children still die of hunger in Great Britain arises from the failure of the reformers to go on. Free trade has not yet been tried in Great Britain. Free trade in its fullness and entirety vould indeed abolish hunger. This we may now see. Our inquiry has shown that the reason why the abolition of protection, ,invatly as it would* increase the production of wealth, can accomplish no permanent benefit for the laboring-class, is, that so long as the TEUE FKEE TRADE. 297 land on which all must live is made the property of some, increase of productive power can only increase the tribute which those who own the land can demand for its use. So long as land is held to be the individual property of but a portion of its inhabitants no possible increase of productive power, even if it went to the length of abolishing the necessity of labor, and no im- aginable increase of wealth, even though it poured down from heaven or gushed up from the bowels of the earth, could improve the condition of those who possess only the power to labor. The greatest imagin- able increase of wealth could only intensify in the greatest imaginable degree the phenomena which we are familiar with as "over-production" could only reduce the laboring-class to universal pauperism. Thus it is, that to make either the abolition of pro- tection or any other reform beneficial to the working- class we must abolish the inequality of legal rights to land, and restore to all their natural and equal rights in the common heritage. How can this be done? Consider for a moment precisely what it is that needs to be done, for it is here that confusion some- times arises. To secure to each of the people of a country his equal right to the land of that county does not mean to secure to each an equal piece of land. Save in an extremely primitive society, where popula- tion was sparse, the division of labor had made little progress, and family groups lived and worked in com- mon, a division of land into anything like equal pieces would indeed be impracticable. In a state of society such as exists in civilized countries to day, it would be extremely difficult, if not altogether impossible, to 298 PROTECTION OR FREE TRADE. make an equal division of land. Nor would one such division suffice. With the first division the difficulty would only begin. Where population is increasing and its centres are constantly changing ; where differ- ent vocations make different uses of lands and require different qualities and amounts of it ; where improve- ments and discoveries and inventions are constantly bringing out new uses, and changing relative values, a division that should be equal to-day would soon be- come very unequal, and to maintain equality a re- division every year would be necessary. But to make a re-division every year, or to treat land as a common, where no one could claim the ex- clusive use of any particular piece, would only be practicable where men lived in movable tents and made no permanent improvements, and would effectually prevent any advance beyond such a state. No one would sow a crop or build a house, or open a mine, or plant an orchard, or cut a drain, so long as anyone else could come in and turn him out of the land in which or on which such improvements must be fixed. Thus it is absolutely necessary to the proper use and improve- ment of land that society should secure to the user and improver safe possession. This point is constantly raised by those who resent any questioning of our present treatment of land. They seek to befog the issue by persistently treating every proposition to secure equal rights to land as though it were a proposition 1<> scrum an equal division .of land, and attempt to defend private property in land by setting forth the necessity of securing safe posses- sion to the improver. But the two things arc essentially different. TRUE FREE TRADE. 299 In the first place equal rights to land could not be se- cured by the equal division of land, and in the second place it is not necessary to make land the private prop- erty of individuals in order to secure to improvers that safe possession of their improvements that is needed to induce men to make improvements. On the contrary, private property in land, as we may see in any country where it exists, enables mere dogs-'in-the-manger to lew blackmail upon improvers. It enables the mere owner of land to compel the improver to pay him for the privilege of making improvements, and in many cases it enables him to confiscate the improvements. Here are two simple principles, both of which are self* evident : I. That all men have equal rights to the use and enjoyment of the elements provided by nature. II. That each man has an exclusive right to the use and enjoyment of what is produced by his own labor* There is no conflict between these principles. On the contrary they are correlative. To fully secure the individual right of property in the produce of laj)or we must treat the elements of nature as common property. If any one could claim the sunlight as his property and could compel me to pay him for the agency of the sun in the growth of crops I had planted, it would neces- sarily lessen my right of property in the produce of my labor. And conversely, where every one is secured the full right of property in the produce of his labor, no one can have any right of property in what is not the produce of labor. No matter how complex the industrial organization, nor how highly developed the civilization, there is no real difficulty in carrying out these principles. All we 300 PROTECTION OR FREE TRADE. have to do is to treat the land as the joint property of the whole people, just as a railway is treated as the joint property of many shareholders, or as a ship is treated as the joint property of several owners. In other words, we can leave land now being used in the secure possession of those using it, and leave land now unused to be taken possession of by those who wish to make use of it, on condition that those who thus hold land shall pay to the community a fair rent for the ex- clusive privilege they enjoy that is to say, a rent based on the value of the privilege the individual receives from the community in being accorded the exclusive use of this much of the common property, and which should have no reference to any improvement he had made in or on it, or to any profit due to the use of his labor and capital. In this way all would be placed upon an equality in regard to the use and enjoyment of those natural elements which are clearly the com- mon heritage, and that value which attaches to land, not because of what the individual user does, but be- cause of the growth of the community, would accrue to the community, and could be used for purposes of common benefit. As Herbert Spencer has said of it: " Such a doctrine is consistent with the highest state of civiliza- tion; maybe carried out without involving a community of goods, and need cause no very serious revolution in existing arrangements. The change required would be simply a change of landlords. Sep- arate ownership would merge into the joint-stock ownership of the public. Instead of being in the possession of individuals, the coun- try would be held by the great corporate body society. * * * A state of things so ordered would be in perfect harmony with the moral law. Under it nil men would be equally landlords, all men would be alike free to become tenants. Clearly, therefore, on such a system the earth mi.^ht lit- inclosed, occupied and cultivated, in entire subordination to the law of equal freedom." TRUE FREE TRADE. 801 That this simple change would, as Mr. Spencer says, involve no serious revolution in existing arrangements is in many cases not perceived by those who think of it for the first time. It is sometimes said that while this principle is manifestly just, and while it would be easy to apply it to a new country just being settled, it would be exceedingly difficult to apply it to an already settled country where land had already been divided as private property, since, in such a country, to take pos- session of the land as common property and let it out to individuals would involve a sudden revolution of the greatest magnitude. This objection, however, is founded upon the mistaken idea that it is necessary to do everything at once. But it often happens that a precipice we could not hope to climb, and that we might well despair of making a lad- der long enough and strong enough to scale, may be surmounted by a gentle road. And there is in this case a gentle road open to us, which will lead us so far that the rest will be but an easy step. To make land virtu- ally the common property of the whole people, and to appropriate ground rent for public use, there is a much simpler and easier way than that of formally as- suming the ownership of land and proceeding to rent it out in lots a way that involves no shock, that will conform to present customs, and that, instead of requir- ing a great increase of governmental machinery, will permit of a great simplification of governmental ma- chinery. In every well-developed community large sums are needed for common purposes, and the sums thus needed increase with social growth, not merely in amount, but proportionately, since social progress tends steadily 302 PROTECTION OR FREE TRADE. to devolve on the community as a whole functions which in a ruder stage are discharged by individuals. Now, while people are not used to paying rent to gov- ernment, they are used to paying taxes to government. Some of these taxes are levied upon personal or mov- able property ; some upon occupations or businesses or persons (as ii; the case of income taxes, which are in re* ality taxes on persons according to income) ; some upon the transportation or exchange of commodities, in which last category fall the taxes imposed by tariffs ; and some, in the United States at least, on real estate that is to say, on the value of land and of the improvements upon it, taken together. That part of the tax on real estate which is assessed on the value of land irrespective of improvements is, in its nature, not a tax, but a rent a taking for the common use of the community of a part of the income that prop- erly belongs to the communit} r by reason of the equal right of all to the use of land. Now it is evident that, in order to take for the use of the community the whole income arising from land, just as effectually as it could be taken by formally ap- propriating and letting out the land, it is only necessary to abolish, one after another, all other taxes now levied, and to increase the tax on land values till it reaches, as near as may be, the full annual value of the land. Whenever this point of theoretical perfection is iv.irlicd, the selling value of land will entirely disap- :md llu 1 charge made to the individual by the com- munity for the use of the common property will become in i"nu what it is in fact a rent. But until that point is iv:u:lu;d, this rent may be collected by the simple in- TRUE FREE TRADE. crease of a tax already levied in all our states, assessed (as direct taxes are now assessed) upon the selling value of land irrespective of improvements a value that can be ascertained more easily and more accurately than any other value. For a full exposition of the effects of this change in the method of raising public revenues, I must refer the reader to the works in which I have treated this branch of the subject at greater length than is here possible. Briefly, they would be threefold : In the first place, all taxes that now fall upon the exertion of labor or use of capital would be abolished. No one would be taxed for building* a house or improv- ing a farm or opening a mine, for bringing things in from foreign countries, or for adding in any way to the stock of things that satisfy human wants and con- stitute national wealth. Every one would be free to make and save wealth ; to buy, sell, give or exchange, without let or hindrance, any article of human produc- tion the use of which did not involve any public in- jury. All those taxes which increase prices as things pass from hand to hand, falling finally upon the con- sumer, would disappear. Buildings or other fixed im- provements would be as secure as now, and 'could be bought and sold, as now, subject to the tax or ground rent due to the community for the ground on which they stood. Houses and the ground they stand on, or other improvements ana the land they are made on, would also be rented as now. But the amount the tenant would have to pay would be less than now, since the taxes now levied on buildings or improve- ments fall ultimately (save in decaying communities) on the user, and the tenant would therefore get the 304 PROTECTION OR FREE TRADE. benefit of their abolition. And in this reduced rent the tenant wou^d pay all those taxes that he now has to pay in addition to his rent any remainder of what he paid on account of the ground going not to increase the wealth of a landlord, but to add to a fund in which the tenant himself would be an equal sharer. In the second place, a large and constantly increasing fund would be provided for common uses, without any tax on the earnings of labor or on the returns of capi- tal a fund which in well settled countries would not only suffice for all of what are now considered necessary expenses of government, but would leave a large surplus to be devoted to purposes of general benefit. In the third place, and most important of all, the monopoly of land would be abolished, and land would be thrown open and kept open to the use of labor, since it would be unprofitable for any one to hold land without putting it to its full use, and both the tempt- ation and the power to speculate in natural opportuni- ties would be gone. The speculative value of land would be destroyed as soon as it was known that, no matter whether land was used or not, the tax would increase as fast as the value increased; and no one would want to hold land that he did not use. With the disappearance of the capitalized or selling value of land, the premium which must now be paid as pur- chase money by those who wish to use land would disappear, differences in the value of land being meas- ured by what would have to be paid for it to the community, nominally in taxes but really in rent. So long as any unused land remained, those who wished to use it could obtam it, not only without th TRUE FREE TRADE. 305 payment of any purchase price, but without the pay- ment of any tax or rent. Nothing would be required for the use of land till less advantageous land came into use, and possession thus gave an advantage over and above the return to the labor and capital expended upon it. And no matter how much the growth of population and the progress of society increased the value of land, this increase would go to the whole com- munity, swelling that general fund in which the poorest would be an equal sharer with the richest. Thus the great cause of the present unequal distri- bution of wealth would be destroyed, and that one- sided competition would cease which now deprives men who possess nothing but power to labor of the benefits of advancing civilization, and forces wages to a minimum no matter what the increase of wealth. Labor, free to the natural elements of production, would no longer be incapable of employing itself, and compe- tition, acting as fully and freely between employers as between employed, would carry wages up to what is truly their natural rate the full value of the produce of labor and keep them there. Let us turn again to the tariff question. The mere abolition of protection the mere substi- tution of a revenue tariff for a protective tariff is such a lame and timorous application of the free-trade principle that it is a misnomer to speak of it as free trade. A revenue tariff is only a somewhat milder re- striction on trade than a protective tariff. Free trade, in its true meaning, requires not merely the abolition of protection but the sweeping away of all tariffs the abolition of all restrictions (save those 806 PROTECTION OK FREE TRADE. imposed in the interests of public health or morals) on the bringing of things into a country or the carry- ing of things out of a country. But free trade cannot logically stop with the abo- lition of custom-houses. It applies as well to domestic as to foreign trade, and in its true sense requires the abolition of all internal taxes that fall on buying, sell- ing, transporting or exchanging, on the making of any transaction or the carrying on of any business, save of course where the motive of the tax is public safety, health or morals. Thus the adoption of true free trade involves the abolition of all indirect taxation of whatever kind, and the resort to direct taxation for all public revenues. But this is not all. Trade, as we have seen, is a mode of production, and the freeing of trade is bene- ficial because it is a freeing of production. For the same reason, therefore, that we ought not to tax any one for adding to the wealth of a country by bringing valuable things into it, we ought not to tax any one for adding to the wealth of a country by producing within that country valuable things. Thus the prin- ciple) of free trade requires that we should not merely abolish all indirect taxes, but that we should abolish as well all direct taxes on things that are the produce of labor; that we should, in short, give full play to the natural stimulus to production the possession and en- joyment of the things produced by imposing no tax whatever upon the production, accumulation or pos- session of wealth (i. accept the teachings and imbibe the prejudices of the one above it ; while the men of superior ability that arise within it and elbow their way to the front are constantly received into the ranks of the superior class and interested in its service, for this is the class that has rewards to give. Thus it is that social injus- tice so long endures and is so difficult to make head against. Thus it was that in our Southern States while slavery prevailed, the influence, not only of the slaveholders themselves, but of churches and colleges, the profes- THE LION IN THE WAY. 317 sions and the press, condemned so effectually any ques- tioning of slavery, that men who never owned and never expected to own a slave were ready to persecute and ostracize any one who breathed a word against property in flesh and blood ready, even, when the time came, to go themselves and be shot in defence of the " peculiar institution." Thus it was that even slaves believed abolitionists the worst of human kind, and were ready to join in the sport of tarring and feathering one. And so, an insti- tution in which only a comparatively small class were interested, and which was in reality so unprofitable, even to them, that now that slavery has been abolished, it would be hard to find an ex- slaveholder who would restore it if he could, not only dominated public opinion where it existed, but exerted such influence at the North, where it did not exist, that "abolitionist" was for a long time suggestive of " atheist," "communist" and "incendiary." The effect of the introduction of steam and labor-sav- ing machinery upon the industries of Great Britain was such a development of manufactures as to do away with all semblance of benefit to the manufacturing classes from import duties, to raise up a capitalistic power capable of challenging the dominance of the "landed interest," and by concentrating workmen in towns to make of them a more important political factor. The abolition of protection in Great Britain was carried, against the opposition of the agricultural landholders, by a combination of two elements, capital and labor, neither of which would, of itself, have been capable of winning the victory. But, of the two, that which was represented by the Manchester manufacturers possessed 818 PROTECTION OR FREE TRADE. much, more effective and independent strength than that whose spirit breathed in the Anti-Corn Law rhymes. Capital furnished the leadership, the organizing ability, and the financial means for agitation, and when it was satisfied, the further progress of the free-trade move- ment had to wait for the growth of a power which, as an independent factor, is only now beginning to make its entrance into British politics. Any advance toward the abolition of revenue duties would not only have added the strength of the holders of municipal and mining land to that of the holders of agricultural land, but would also have arrayed in opposition the very class most efficient in the free-trade movement. For, save where their apparent interests come into clear and strong opposition, as they did in Great Britain upon the question of protective duties, capitalists as a class share the feelings that animate landholders as a class. Even in England, where the division between the three eco- nomic orders landholders, capitalists, and laborers is clearer than anywhere else, the distinction between landholders and capitalists is more theoretical than real. That is to say, the landholder is generally a capitalist ;is well, and the capitalist is generally in actuality or ex- pectation to some extent a landholder, or by the agency of leases and mortgages is interested in the profits of landholding. Public debts and the investments based thereon constitute, moreover, a further powerful agency in disseminating through the whole " House of^Have " a bitter antipathy to any thing that might bring the origin of property into discussion. In the United States the same principles have oper- ated, llioiiifh owing to differences in industrial develop- ment the combinations have been different. Here the THE LION IN THE WAY. 3l9 interest that could not be "protected" lias been the agricultural, and the active and powerful manufactur- ing interest has been on the side of protective duties. And though the " landed interest " here has not been so well intrenched politically as in Great Britain, jet not only has land ownership been more widely diffused, but our rapid growth has interested a larger proportion of the present population in anticipating, by speculation based on increasing land values, the power of levying tribute on those yet to come. Thus private property in land has been in reality even stronger here than in Great Britain, while it has been to those interested in it that the opponents of protection have principally appealed. Under such circumstances there has been here even less disposition than in Great Britain to carry the free-trade principle to its legitimate conclusions, and free trade has been presented to the American people in the emasculated shape of a " revenue reform " too timid to ask for even " British free trade." CHAPTER XXVIII. FREE TRADE AND SOCIALISM. THROUGHOUT the civilized world, and pre-eminently in Great Britain and the United States, a power is now arising which is capable of carrying the principles of free trade to their logical conclusion. But there are difficulties in the way of concentrating this power on such a purpose. It requires reflection to see that manifold effects result from a single cause, and that the remedy for a multitude of evils may lie in one simple reform. As in the infancy of medicine, men were disposed to think each distinct symptom called for a distinct remedy, so when thought begins to turn to social subjects there is a disposition to seek a special cure for every ill, or else (another form of the same shortsightedness) to imagine the only adequate remedy to be something which pre- supposes the absence of those ills ; as, for instance, that all men should be good, as the cure for vice and crime; 01- that nil men should be provided for by the State, as the cure for poverty. There is now sufficient social discontent and a sufficient desire for social reform to accomplish great ihings if concentrated on one line. But attention is dis- tracted and effort divided by schemes of reform which though they may be good in themselves are, with refer- FREE TRADE AND SOCIALISM. 321 ence to the great end to be attained, either inadequate or super-adequate. Here is a traveler who, beset by robbers, has been left bound, blindfolded, and gagged. Shall we stand in a knot about him and discuss whether to put a piece of court-plaster on his cheek or a new patch on his coat, or shall we dispute with eaoh other as to what road he ought to take and whether a bicycle, a tricycle, a horse and wagon, or a railway, would best help him on ? Should we not rather postpone such discussion until we have cut the man's bonds? Then he can see for him- self, speak for himself, and help himself. Though with a scratched cheek and a torn coat, he may get on his feet, and if he cannot find a conveyance to suit him, he will at least be free to walk. Very much like such a discussion is a good deal of that now going on over " the social problem "- - a dis- cussion in which all sorts of inadequate and impossible schemes are advocated to the neglect of the simple plan of removing restrictions and giving Labor the use of its own powers. This is the first thing to do. And, if not of itself sufficient to cure all social ills and bring about the, highest social state, it will at least remove the primary cause of widespread poverty, give to all the opportu- nity to use their labor and secure the earnings that are its due, stimulate all improvement, and make all other reforms easier. It must be remembered that reforms and improve- ments in themselves good may be utterly inefficient to work any general improvement until some more funda- mental reform is carried out. It must be remembered that there is in every work a certain order which must M 322 PROTECTION OR FREE TRADE. be observed to accomplish anything. To a habitable house a roof is as important as walls ; and we express in a word the end to which a house is built when we speak of putting a roof over our heads. But we can- not build a house from roof down ; we must build from foundation up. To recur to our simile of the laborer habitually preyed upon by a series of robbers. It is surely wiser in him to fight them one by one, than all together. And the robber that takes all he has left is the one against whom his efforts should first be directed. For no matter how he may drive off the other robbers, that will riot avail him except as it may make it easier to get rid of the robber that takes all that is left. But by withstanding this robber he will secure immediate re- lief, and being able to get home more of his earnings than before, will be able so to nourish and strengthen himself that he can better contend with robbers can, perhaps, buy a gun or hire a lawyer, according to the method of fighting in fashion in his country. It is in just such a way as this that Labor must seek to rid itself of the robbers that now levy upon its carn- .ings. Brute strength will avail little unless guided by intelligence. The first attempts of workingmen to improve their condition are by combining to demand higher wages of their direct employers. Something can be done in this \vn v for those within such organizations ; but it is after :ill very little. For atrades-union can only arti licially lessen competition within the trade; it cannot affect Ilio^vmTii] conditions which force men into bitter competition with each other for the opportunity to gain a living. And such organizations as the Knights of Labor, which are FREE TRADE AND SOCIALISM. 323 to trades-unions what the trades-union is to its individ- ual members, while they give greater power, must en- counter the same difficulties in their efforts to raise wages directly. All such efforts have the inherent dis- advantage of struggling against general tendencies. They are like the attempts of a man in a crowd to gain room by forcing back those who press upon him like attempts to stop a great engine by the sheer force of human muscle, without cutting off steam. This, those who are at first inclined to put faith in the power of trades-unionism are beginning to see, and the logic of events must more and more lead them to see. But the perception that to accomplish large re- sults general tendencies must be controlled, inclines those who do not analyze these tendencies into their causes to transfer faith from some form of the volun- tary organization of labor to some form of governmental organization and direction. All varieties of what is vaguely called socialism rec- ognize with more or less clearness the solidarity of the interests of the masses of all countries. Whatever may be objected to socialism in its extremest forms, it has at least the merit of lessening national prejudices and aiming at the disbandment of armies and the suppres- sion of war. It is thus opposed to the cardinal tenet of protectionism that the interests of the people of different "nations" are diverse and antagonistic. But, on the other hand, those who call themselves socialists, so far from being disposed to look with disfavor upon govern- mental interference and regulation, are disposed to sym- pathize with protection as in this respect in harmony with socialism, and to regard free trade, at least as it has been popularly presented, as involving a reliance 324 PROTECTION OR FREE TRADE. on that principle of free competition which to their thinking means the crushing of the weak. Let us endeavor, as well as can in brief be done, to trace the relations between the conclusions to which we have come and what, with various shades of meaning, is termed " socialism. " * In socialism as distinguished from individualism there is an unquestionable truth and that a truth to which (especially by those most identified with free- trade principles) too little attention has been paid. Man is primarily an individual a separate entity, dif- fering from his fellows in desires and powers, and re- quiring for the exercise of those powers and the gratifi- cation of those desires individual play and freedom. But he is also a social being, having desires that har- monize with those of his fellows, ano powers that can only be brought out in concerted action. There is thus a domain of individual action and a domain of social action some things which can best be done when each acts for himself, and some things which can best be done when society acts for all its members. And * The term " socialism " is used so loosely that it is hard to attach to it a definite meaning. I myself am classed as a socialist by those who denounce socialism, while those who profess themselves social- ists declare me not to be one. For my own part I neither claim nor repudiate the name, and realizing as I do the correlative truth of both principles can no more call myself an individualist or a social- ist than one who considers the forces by which the planets are held to their orbits could call himself a centrifugalist or a centripetalist. The German socialism of the school of Marx (of which the leading representative in England is Mr. H. M. Hyndman, and the best exposition in America has been given by Mr. Laurence Gronlund), seems to me a high-purposed but incoherent mixture of truth and fallacy, the defects of which may be summed up in its want of radi- calismthat is to say, of going to the root. FREE TRADE AND SOCIALISM. 325 the natural tendency of advancing civilization is to make social conditions relatively more important, and more and more to enlarge the domain of social action. This has not been sufficiently regarded, and at the present time, evil unquestionably results from leaving to in- dividual action functions that by reason of the growth of society and the development of the arts have passed into the domain of social action ; just as on the other hand, evil unquestionably results from social inter- ference with what properly belongs to the individual. Society ought not to leave the telegraph and the rail- way to the management and control of individuals; nor yet ought society to step in and collect individual debts or attempt to direct individual industry. But while there is a truth in socialism which in- dividualists forget, there is a school of socialists who in like manner ignore the truth there is in individualism, and whose propositions for the improvement of social conditions belong to the class I have called "super-ade- quate." Socialism in its narrow sense the socialism that would have the State absorb capital and abolish competition is the scheme of men who, looking upon society in its most complex organization, have failed to see that principles obvious in a simpler stage still hold true in the more intimate relations that result from the division of labor and the use of complex tools and methods, and have thus fallen into fallacies elaborated by the economists of a totally different school, who have taught that capital is the employer and sustainer of labor, and have striven to confuse the distinction between property in land and property in labor-products. Their scheme is that of men who, while revolting from the heartlessiiess and hopelessness 326 PROTECTION OR FREE TRADE. of the " orthodox political economy," are yet entangled in its fallacies and blinded by its confusions. Con- founding " capital " with " means of production," and ac- cepting the dictum that " natural wages " are the least on which competition can force the laborer to live, they essay to cut a knot they do not see how to unravel, by making the State the sole capitalist and employer, and abolishing competition. The carrying on by government of all production and exchange, as a remedy for the difficulty of finding em- ployment on the one side, and for overgrown fortunes on the other, belongs to the same category as the prescrip- tion that all men should be good. That if all men were assigned proper employment and all wealth fairly dis- tributed, then none would need employment and there would be no injustice in distribution, is as indisputable a proposition as that if all were good none would be bad. But it will not help a man perplexed as to his path to tell him that the way to get to his journey's end is to get there. That all men should be good is the greatest desidera- tum, but it can only be secured by the abolition of con- ditions which tempt some and drive others into evil doing. That each should render according to his abilities and receive according to his needs, is indeed the very highest social state of which we can conceive, but how shall we hope to attain such perfection until we can first find some way of securing to every man the opportunity to labor and the fair earnings of his labor. Shall we try to be generous before we have learned how to be just? All schemes for securing equality in the conditions of men by placing the distribution of wealth in the FREE TRADE AND SOCIALISM. 327 hands of government have the fatal defect of beginning at the wrong end. They pre-suppose pure government ; but it is not government that makes society ; it is so- ciety that makes government ; and until there is some- thing like substantial equality in the distribution of wealth, we cannot expect pure government. But to put all men on a footing of substantial equal- ity, so that there could be no dearth of employment, no "over-production," no tendency of wages to the min- imum of subsistence, no monstrous fortunes on the one side and no army of proletarians on the other, it is not necessary that the state should assume the ownership of all the means of production and become the genercl employer and universal exchanger ; it is necessary only that the equal rights of all to that primary means of production which is the source all other means of pro- duction are derived from, should be asserted. And this, so far from involving an extension of govern- mental functions and machinery, involves, as we have seen, their great reduction. It would thus tend to purify government in two ways first by the better- ment of the social conditions on which purity in gov- ernment depends, and second, by the simplification of administration. This step taken, and we could safely begin to add to the functions of the state in its proper or co-operative sphere. There is in reality no conflict between labor and capi- tal ; * the true conflict is between labor and monopoly. * The great source of confusion in regard to such matters arises from the failure to attach any definite meaning to terms. It must always be remembered that nothing that can be classed either as labor or as land can be accounted capital in any definite use of the term, and that much that we commonly speak of as capital such as solvent debts, government bonds, etc is in reality not even 328 PROTECTION OR FREE TRADE. That a rich employer "squeezes" needy workmen may be true. But does this squeezing power result from his riches or from their need ? No matter how rich an employer might be, how would it be possible for him to squeeze workmen who could make a good living for themselves without going into his employment ? The competition of workmen with workmen for employment, which is the real cause that enables, and even in most cases forces, the employer to squeeze his workmen, arises from the fact that men, debarred of the natural opportunities to employ themselves, are compelled to bid against one another for the wages of an employer. Abolish the monopoly that forbids men to employ themselves, and capital could not possibly oppress labor. In no case could the capitalist obtain labor for less than the laborer could get by employing himself. Once remove the cause of that injustice which deprives the laborer of the capital his toil creates, and the sharp dis- tinction between capitalist and laborer would, in fact, cease to exist. They who, seeing how men are forced by competi- tion to the extreme of human wretchedness, jump to the conclusion that competition should be abolished, are like those who, seeing a house burn down, would prohibit the use of fire. The air we breathe exerts upon every square inch of our bodies a pressure of fifteen pounds. Were this pressure exerted only on one side, it would pin us to the ground and crush us to a jelly. But being exerted on all sides, we move under it with perfect freedom. It \vr;dih- which ;ill Inn- capital must be. For a fuller elucidation. <>f thn. ;is of similar points, 1 must refer the ic.adcr to my FREE TRADE AND SOCIALISM. 329 not only does not inconvenience us, but it serves such indispensable purposes that, relieved of its pressure, we should die. So it is with competition. Where there exists a class denied all right to the element necessary to life and labor, competition is one-sided, and as population increases must press the lowest class into virtual slavery, and even starvation. But where the natural rights of all are secured, then competition, acting on every hand be- tween employers as between employed ; between buyers as between sellers can injure no one. On the contrary' it becomes the most simple, most extensive, most elastic, and most refined system of co-operation, that, in the present stage of social development, and in the domain where it will freely act, we can rely on for the co-ordi- nation of industry and the economizing of social forces. In short, competition plays just such a part in the social organism as those vital impulses which are be- neath consciousness do in the bodily organism. With it, as with them, it is only necessary that it should be free. The line at which the state should come in is that where free competition becomes impossible a line analogous to that which in the individual organism separates the conscious from the unconscious functions. There is such a line, though extreme socialists and ex- treme individualists both ignore it. The extreme in- dividualist is like the man who would have his hunger provide him food ; the extreme socialist is like the man who would have his conscious will direct his stomach how to digest it. Individualism and socialism are in truth not antag- onistic but correlative. Where the domain of the one principle ends that of the other begins. And although 830 PROTECTION OR FREE TRADE. the motto Laissez faire has been taken as the watch- word of an individualism that tends to anarchism, and so-called free traders have made " the law of supply and demand " a stench in the nostrils of men alive to social injustice, there is in free trade nothing that conflicts with a rational socialism. On the contrary, we have but to carry out the free trade principle to its logical con- clusions to see that it brings us to such socialism. The free-trade principle is, as we have seen, the prin* ciple of free production it requires not merely the abolition of protective tariffs, but the removal of all re- strictions upon production. Within recent years a class of restrictions on produc- tion, imposed by concentrations and combinations which have for their purpose the limiting of production and the increase of prices, have begun to make themselves felt and to assume greater and greater importance. This power of combinations to restrict production arises in some cases from temporary monopolies granted by our patent laws, which (being the premium that society holds out to invention), have a compensatory principle, however faulty they may be in method. Such cases aside, this power of restricting produc- tion is derived, in part, from tariff restrictions. Thus the American steel makers who have recently limited their production, and put up the price of rails 40 per cent, at one stroke, are enabled to do this only by the heavy duty on imported rails. They are able, by com- bination, to put up the price of steel rails to the point at which they could be imported plus the duty, but no further. Hence, with the abolition of the duty this power would be gone. To prevent the play of compe- tition, a combination of the steel workers of the whole FREE TRADE AND SOCIALISM. 331 world would then be necessary, and this is practically impossible. In other part, this restrictive power arises from abil- ity to monopolize natural advantages. This would be destroyed if the taxation of land values made it un- profitable to hold land without using it. In still other part, it arises from the control of businesses which in their nature do not admit of competition, such as those of railway, telegraph, gas, and other similar companies. I read in the daily papers that half a dozen repre- sentatives of the " anthracite coal interest " met last even- ing (March 24, 1886), in an office in New York. Their conference, interrupted only by a collation, lasted till three o'clock in the morning. When they separated they had come to "an understanding among gentle- men" to restrict the production of anthracite coal and advance its price. Now how comes it that half a dozen men, sitting around some bottles of champagne and a box of cigars in a New York office, can by an " understanding among gentlemen " compel Pennsylvania miners to stand idle, and advance the price of coal along the whole eastern seaboard? The power thus exercised is derived in various parts from three sources. 1. From the protective duty on coal. Free trade would abolish that. 2. From the power to monopolize land, which enables them to prevent others from using coal deposits which they will not use themselves. True free trade, as we . have seen, would abolish that. 3. From the control of railways, and the consequent power of fixing rates and making discriminations in transportation. 332 PROTECTION OR FREE TRADE. The power of fixing rates of transportation, and in this way of discriminating against persons and places, is a power essentially of the same nature as that ex- ercised by governments in levying import duties. And the principle of free trade as clearly requires the removal of such restrictions as it requires the removal of import duties. But here we reach a point where positive action on the part of government is needed. Except as between terminal or " competitive " points where* two or more roads meet (and as to these the ten- dency is, by combination or " pooling," to do away with competition), the carrying of goods and passengers by rail, like the business of telegraph, telephone, gas, water, or similar companies, is in its nature a monopoly. To prevent restrictions and discriminations, governmental control is therefore required. Such control is not only not inconsistent with the free-trade principle ; it follows from it, just as the interference of government to prevent and punish assaults upon persons and prop- erty follows from the principle of individual liberty. Thus, if we carry free trade to its logical conclusions we are inevitably led to what monopolists, who wish to be "let alone" to plunder the public, denounce as "so- cialism," and which is, indeed, socialism, in the sense that it recognizes the true domain of social functions. Whether businesses in their nature monopolies should be regulated by law or should be carried on by the com- munity, is a question of method. It seems to me, how- ever, that experience goes to show that better results can be secured, with less risk of governmental corrup- tion, l>v stale management limn by state mi 1 illation. But the M-reiit simplification <>f L-overnmenl which would result from ihe abolition of the present complex and modes of taxation would vastl increase FREE TRADE AND SOCIALISM. 333 the ease and safety with which either of these methods could be applied. The assumption by the state of all those social functions in which competition will not op- erate would involve nothing like the strain upon gov- ernmental powers, and would be nothing like as pro- vocative of corruption and dishonesty, as our present method of collecting taxes. The more equal distribu- tion of wealth that would ensue from the reform which thus simplified government, would, moreover, increase public intelligence and purify public morals, and enable us to bring a higher standard of honesty and ability to the management of public affairs. We have no right to assume that men would be as grasping r.nd dishonest in a social state where the poorest could get an abun- dant living as they are in the present social state, where the fear of poverty begets insane greed. There is another way, moreover, in which true free trade tends strongly to socialism, in the highest and best sense of the term. The taking for the use of the community of that value of privilege which attaches to the possession of land, would, wherever social develop- ment has advanced beyond a certain stage, yield rev- enues even larger than those now raised by taxation, while there would be an enormous reduction in public expenses consequent, directly and indirectly, upon the abolition of present modes of taxation. Thus would be provided a fund, increasing steadily with social growth, that could be applied to social purposes now neglected. And among the purposes which will sug- gest themselves to the reader by which the surplus in- come of the community could be used to increase the sum of human knowledge, the diffusion of elevating- tastes, and the gratification of healthy desires, there is none more worthy than that of making honorable pro- PROTECTION OR FREE TRADE. vision for those deprived of their natural protectors, or through no fault of their own incapacitated for the struggle of life. "We should think it sin and shame if a great steamer, dashing across the ocean, were not brought to a stop by a signal of distress from the meanest smack; at the sight of an infant lashed to a spar, the mighty ship would round to, and men would spring to launch a boat in angry seas. Thus strongly does the bond of our common humanity appeal to us when we get beyond the hum of civilized life. And yet a miner is entombed alive, a painter falls from a scaffold, a brakeman is crushed in coupling cars, a merchant fails, falls ill and dies, and organized society leaves widow and children to bitter want or degrading alms. This ought not to be. Citizenship in a civilized community ought of itself to be insurance against such a fate. And having in mind that the income which the community ought to obtain from the land to which the growth of the com- munity gives value is in reality not a tax but the pro- ceeds of a just rent, an English Democrat (William Saunders, M.P.) puts in this phrase the aim of true free trade : " No taxes at all, and a pension to everybody" This is denounced as " the rankest socialism " by those whose notion of the fitness of things is, that the descendants of royal favorites and blue-blooded thieves should be kept in luxurious idleness all their lives long, by pensions wrun-- from stni^lin^ industry, while the luboivr jind his wife, worn out by h:inl work, for which they hnvc received scarce living wa^vs, am leurau'ed ly a parish dole, or separated from e;ich other in a " work-house." If this is socialism, then, indeed, is it true that free trade leads to socialism, CHAPTER XXIX. PRACTICAL POLITICS. ON a railway train I once fell in with a Pittsbnrg brass band that was returning from a celebration. The leader and I shared the same seat, and between the tunes with which they beguiled the night, we got into a talk which, from politics, touched the tariff. I nei- ther expressed my own opinions nor disputed his, but asked him some questions as to how protection bene- fited labor. His answers seemed hardly to satisfy him- self, and suddenly he said : " Look here, stranger, may I ask you a question ? I mean no offense, but I'd like to ask you a straight- forward question. Are you a free trader ? " " I am." "A real free trader one that wants to abolish the tariff?" "Yes, a real free trader. I would have trade be- tween the United States and the rest of the world as tree as it is between Pennsylvania and Ohio." " Give me your hand, stranger," said the band leader, jumping up. " I like a man who's out and out." " Boys," he exclaimed, turning to some of his bands- men, "here's a sort of man you never saw; here's a real free trader, and he ain't ashamed to own it." And when the "boys" had shaken hands with me> very much as they might have shaken hands with the " Liv- 386 PROTECTION OR FREE TRADE. ing Skeleton " or the " Chinese Giant," " Do you know, stranger," the bandmaster continued, " I've been hear- ing of free traders all my life, but you're the first I ever met. I've seen men that other people called free traders, but when it came their turn they always de- nied it. The mpst they would admit was that they wanted to trim the tariff down a little, or fix it up bet- ter. But they always insisted we must have a tariff, and I'd got to believe that there were no real free traders; that they were only a sort of bugaboo." My Pittsburg friend was in this respect, I think, no unfair sample of the great body of the American peo- ple of this generation. The only free traders most of them have seen and heard have been anxious to deny the appellation or at least to insist that we always must have a tariff, and to deprecate sudden reductions. Is it any wonder that the fallacies of protection run rampant when such is the only opposition they meet? Dwarfed into mere revenue reform the harmony and beauty of free trade are hidden ; its moral force is lost ; its power to remedy social evils cannot be shown, and the injustice and meanness of protection cannot be ar- raigned. The " international law of God " becomes a mere fiscal question which appeals only to the intellect and not to the heart, to the pocket and not to the con- science, and on which it is impossible to arouse the en- thusiasm that is alone capable of contending with pow- erful interests. When it is conceded that custom-houses must be maintained and import duties levied, the aver- age man will conclude that these duties might as well be protective, or at least will trouble himself little about them. When told that they must beware of moving too quickly, people nrc- not likely to move at all. PRACTICAL POLITICS. 387 Such advocacy is not of tlic sort that can compel dis- cussion, awaken thought, and press forward a great cause against powerful opposition. Half a truth is not half so strong as a whole truth, and to minimize such a principle as that of free trade in the hope of disarming opposition, is to lessen its power of securing support in -far greater degree than to lessen the antagonism it must encounter. A principle that in its purity will be grasped by the popular mind loses its power when befogged by concessions and enervated by compromises. But the mistake which such advocates of free trade make has a deeper root than any misapprehension as to policy. They are, for the most part, men who derive their ideas from the emasculated and incoherent political economy taught in our colleges, or from political tradi- tions of " states rights " and " strict construction " now broken and weak. They do not present free trade in its beauty and strength because they do not so see it. They have not the courage of conviction, because they have not the conviction. They have opinions, but these opinions lack that burning, that compelling force that springs from a vital conviction. They see the absurd- ity and waste of protection, and the illogical character of the pleas made for it, and these things offend *heir sense of fitness and truth ; but they do not see that free trade really means the emancipation of labor, the aboli- tion of poverty, the restoring to the disinherited of their birthright. Such free traders are well represented by journals which mildly oppose protection when no elec- tion is on, but which at election times are as quiet as mice. They are in favor of what they call free trade, as a certain class of good people are in favor of the con- version of the Jews. When entirely convenient they 338 PROTECTION OR FREE TRADE. will speak, write, attend a meeting, eat a dinner or give a little money for the cause, but they will hardly break with their party or "throw away" a vote. Even the most energetic and public-spirited of these men are at a fatal disadvantage when it comes to a popu- lar propaganda. They can well enough point out the abuses of protection and expose its more transparent sophistries, but they cannot explain the social phenom- ena in which protection finds its real strength. All they can promise the laborer is that production shall be increased and many commodities cheapened. But how can this appeal to men who are accustomed to look upon "over-production" as the cause of widespread distress, and who are constantly told that the cheapness of commodities is the reason why thousands have to suffer for the want of them ? And when confronted by the failure of revenue reform to eradicate pauperism and abolish starvation when asked why in spite of the adoption in Great Britain of the measures he proposes, wages there are so low and poverty so dire, the free trader of this type can make no answer that will satisfy the questioner, even if he can give one satisfactory to himself. The only answer his philosophy can give the only answer he can obtain from the political econ- omy taught by the " free-trade" text-books is that the bitter struggle for existence which crushes men into pauperism and starvation is of the nature of things. And whether he attributes this nature of things to the conscious volition of an intelligent Creator or to the working; of blind forces, the man who either defi- nitely or vaguely accepts this answer is incapable of feeling himself or of calling forth in others the spirit of Cobden's appeal to Bright. PRACTICAL POLITICS. 339 Thus it is that free trade, narrowed to a mere fiscal reform, can only appeal to the lower and weaker mo- tivesto motives that are inadequate to move men in masses. Take the current free-trade literature. Its aim is to show the impolicy of protection, rather than its injustice ; its appeal is to the pocket, not to the sympathies. Yet to begin and maintain great popular movements it is the moral sense rather than the intellect that must be appealed to, sympathy rather than self- interest. For however it may be with any individual, the sense of justice is with the masses of men keener and truer than intellectual perception, and unless a question can assume the form of right and wrong it can- not provoke general discussion and excite the many to action. And while material gain or loss impresses us less vividly the greater the number of those we share it with, the power of sympathy increases as it spreads from man to man becomes cumulative and conta- gious. But he who follows the principle of free trade to its logical conclusion can strike at the very root of protec- tion ; can answer every question and meet every objec- tion, and appeal to 'the surest of instincts and the strongest of motives. He will see in free trade not a mere fiscal reform, but a movement which has for its aim and end nothing less than the abolition of poverty, and of the vice and crime and degradation that flow from it, by the restoration to the disinherited of their natural rights and the establishment of society upon the basis of justice. He will catch the inspiration of a cause great enough to live for and to die for, and be moved by an enthusiasm that he can evoke in others. It is true that to advocate free trade in its fullness 34:0 PROTECTION OR FREE TRADE. would excite the opposition of interests far strongei than those concerned in maintaining protective tariffs But on the other hand it would bring to the standard of free trade, forces without which it cannot succeed. And what those who would arouse thought have to fear is not so much opposition as indifference. With- out opposition that attention cannot be excited, that energy evoked, that are necessary to overcome the in- ertia that is the strongest bulwark of existing abuses. A party can no more be rallied on a question that no one disputes than steam can be raised to working pres- sure in an open vessel. The working class of the United States, who have constituted the voting strength of protection, are now ready for a movement that will appeal to them on be- half of real free trade. For some years past educative agencies have been at work among them that have sapped their faith in protection. If they have not learned that protection cannot help them, they have at least become widely conscious that protection does not help them. They have been awakening to the fact that there is some deep wrong in the constitution of society, although they may not see clearly what that wrong is ; they have been gradually coming to feel "that to emanci- pate labor radical measures are needed, although they may not know what those measures are. And scattered through the great body thus beginning to stir and grope are a rapidly increasing number of men who do know what this primary wrong is men who see that in the recognition of the equal right of all to the element necessary to life and labor is the hope, and the only hope, of curing social injustice. It is to men of this kind that 1 would particularly PRACTICAL POLITICS. 341 speak. They are the leaven which has in it power to leaven the whole lump. To abolish private property in land is an undertak- ing so great that it may at first seem impracticable. But this seeming impracticability consists merely in the fact that the public mind is not yet sufficiently awakened to the justice and necessity of this great change. To bring it about is simply a work of arous- ing thought. How men vote is something we need not much concern ourselves with. The important thing is how they think. Now the chief agency in promoting thought is dis- cussion. And to secure the most general and most effective discussion of a principle it must be embodied in concrete form and presented in practical politics, so that men, being called to vote on it, shall be forced to think and talk about it. The advocates of a great principle should know no thought of compromise. They should proclaim it in its fullness, and point to its complete attainment as their goal. But the zeal of the propagandist needs to be supplemented by the skill of the politician. While the one need not fear to arouse opposition, the other should seek to minimize resistance. The political art, like the military art, consists in massing the greatest force against the point of least resistance ; and, to bring a principle most quickly and effectively into prac- tical politics, the measure which presents it should be so moderate as (while involving the principle) to secure the largest support and excite the least resistance. For whether the first step be long or short is of little consequence. When a start is once made in a right direction, progress is a mere matter of keeping on. 342 PROTECTION OR FREE TRADE. It is in this way that great questions always enter the phase of political action. Important political bat- tles begin with affairs of outposts, in themselves of little moment, and are generally decided upon issue joined not on the main question, but on some minor or collateral question. Thus the slavery question in the United States came into practical politics upon the issue of the extension of slavery to new territory, and was decisively settled upon the issue of secession. He- garded as an end, the abolitionist might well have looked with contempt on the proposals of the Republi- cans, but these proposals were the means of bringing to realization what the abolitionists would in vain have sought to accomplish directly. So with the tariff question. Whether we have a protective tariff or a revenue tariff is in itself of small importance, for, though the abolition of protection would increase production, the tendency to unequal distribution would be unaffected and would soon neu- tralize the gain. Yet, what is thus unimportant as an end, is all-important as a means. Protection is a little robber, it is true ; but it is the sentinel and outpost of the great robber the little robber who cannot be routed without carrying the struggle into the very stronghold of the great robber. The great robber is so well in- trenched, and people have so long been used to his ex- actions, that it is hard to arouse them to assail him directly. But to help those engaged in a conflict with this little robber will be to open the easiest way to at- tack his master, and to arouse a spirit that must push on. To secure to all the free use of the power to labor and the ful! enjoyment of its products, equal rights to land must be secured. PRACTICAL POLITICS. 343 To secure equal rights to land there is in this stage of civilization but one way. Such measures as peasant proprietary, or "land limitation," or the reservation to actual settlers of what is left of the public domain, do not tend toward it ; they lead away from it. They can affect only a comparatively unimportant class, and that temporarily, while their outcome is not to weaken land-ownership but rather to strengthen it, by interest- ing a larger number in its maintenance. The only way to abolish private property in land is by the way of taxation. That way is clear and straightforward. It consists simply in abolishing, one after another, all im- posts that are in their nature really taxes, and resorting for public revenues to economic rent, or ground value. To the full freeing of land, and the complete emancipa- tion of labor, it is, of course, necessary that the whole of this value should be taken for the common benefit; but that will inevitably follow the decision to collect from this source the revenues now needed, or even any con- siderable part of them, just as the entrance of a victori- ous army into a city follows the rout of the army that defended it. In the United States the most direct way of moving on property in land is through local taxation, since that is already to some extent levied upon land values. And that is doubtless the way in which the final and decisive advance will be made. But national politics dominate state politics, and a question can be brought into discussion much more quickly and thoroughly as a national than as a local question. Now to bring an issue into politics it is not necessary to form a party. Parties are not to be manufactured ; they grow out of existing parties by the bringing for- 344 PROTECTION OR FREE TRADE. \vitn I of issues upon which men will divide. We have, ready to our hand, in the tar ill question, a means of bringing the whole subjeet of taxation, and, through it, the whole social question, into the fullest discus- sion. As we have seen in the inquiry through which we have passed, the tariff question necessarily opens the whole social question. Any discussion of it to-day must go further and deeper than the Anti-Corn Law agitation in Great Britain, or than the tariff controver- sies of Whigs and Democrats, for the progress of thought and the march of invention have made the distribution of wealth fhe burning question of our times. The making of the tariff question a national political issue must now mean the discussion in every newspaper, on every stump, and at every cross-roads where 1 two men meet, of questions of work and wages, of capital and labor, of the incidence of taxation, of the nature and rights of property, and of the question to which all these questions lead the question of the relation of men to the planet on which they live. In this way more can be accomplished for popular economic education in a year than could otherwise be accomplished in decades. Therefore it is that I would urge earnest men who aim at the emancipation of labor and the establishment of social justice, to throw themselves into the free-trade movement with might and main, and to force the tariff question to the front. It is not merely that the free- trade side of the tariff controversy best consorts with the interests of labor; it is not merely that until work- ingmen get over thinking of labor as a poor thing that needs to be "protected," and of work as a dole from gracious capitalists or paternal governments, they cannot PRACTICAL POLITICS. 345 rise to a sense of tlieir rights ; but it is that the move- ment for free trade is in reality the van of the struggle for the emancipation of labor. This is the way the hull must go to untwist his rope. It makes no cliff erence how timorously the issue against protection is now pre- sented ; it is still the thin end of the wedge. It makes no difference how little we can hope at once to do ; social progress is by steps, and the step to which we should address ourselves is always the next step.* * There is no reason why at least the bulk of the revenues needed for the national government under our system should not be col- lected from a percentage on land values, leaving the rest for the local governments, just as state, county and municipal taxes are collected on one assessment and by one set of officials. On the contrary there is, over and above the economy that would thus be secured, a strong reason for the collection of national revenues from land values in the fact that the ground values of great cities and mineral deposits are due to the general growth of population. But the total abolition of the tariff need not await any such ad- justment. The issuance of paper money, a function belonging properly to the General Government, would, properly used, yield a considerable income; while independent sources of any needed amount of revenue could be found in various taxes, which though not economically perfect, as is the tax on land values, are yet much less objectionable than taxes on imports. The excise tax on spiritu- ous liquors ought to be abolished, as it fosters corruption, injuri- ously affects many branches of manufacture and puts a premium on adulteration ; but either by a government monopoly, or by license taxes on retail sales, a large revenue might be derived from the liquor traffic with much greater advantage to pu lie health and morals than by the present system. There are also some stamp taxes which are comparatively uninjurious and can be collectected easily and cheaply. But of all methods of raising an independent Federal revenue, that which would yield the largest return with the greatest ease and least injury is a tax upon legacies and successions. In a large population Hie proportion of deaths is as regular as that of births, -ind with proper exemptions in favor of widows, minor children ;m 119/157, 188, 220. Gi'onlund, Laurence, 324. Hoyt, Henry M., 257. Hyndman, H. M., 324. Imports, in a profitable trade should exceed exports, 125; do not always imply exports, 126. Import duties, fall on consumers, 78; claim that they are paid by foreigners, 93. Interest, rate of, as reason for protection, 154. individualism, 324. Invention, effects of labor-saving 281. Ireland, tariffs and industry of, 1 8 ; American remittances to. Pj7. 358 INDEX. Iron, effect of the duty on, 160, 189. Labor, efficiency varies with wages, 149; value the measure of embodied, 118, 147; relative not absolute cost of, determines exchanges, 157; the true stand- ard of value, 211; not pro- tected by tariffs, 218; condi- tions becoming harder, 24i), 275; of itself helpless, 268; cause of its impoverishment, 285. Laborer, full meaning of tho term, 75. Land, value of, increases as wages fall, 152; effects of private ownership of, 176, 184, 285; the passive factor in produc- tion, 184; monopoly of timber and mineral lands, 183; influ- ence of price o"f , on wages, 227 ; monopoly of, gives control of labor, 277, 295; value of, 290; how equal rights to, may be asserted, 297; necessity of se- cure possession, 298. Land-owner, not a producer, 185. Machinery, effects of, 270. Malthus, 9. Manufactures, natural develop- ment of, 16;]; localization of, 169 ; large demand necessary to, 171. Marx, Karl, 324. Mill, John Stuart, 9, 94. Middlemen, 70. Mining royalties, 188. Money, confusions arising from use of, 132; fluctuations in the value of, 211. Navigation laws, effects of, 206. Over-production, 2-!6. Octroi, 71. Physiocrats, 15,310, 312. Political economy, simplicity of, 8; method of, 27; mercantile system of, 137. Production, what it embraces, 66; cost of, not determined by wages, 147; advantages for, 15; factors of, Ib4; increase of, does not benefit all, 246. Protection reasserting itself in Great Britain, 3, 112, 159; ends praiseworthy, 5; general ac- ceptance, 12; influences it en- lists, 13; not American, 14, 45; in the case of Ireland, 18; causes that dispose working- men in its favor, 20, 257; its spirit that of enmity, 14, 34, 350 ; its corrupting tendencies, 35, 84, 100; what it prevents, 49; a world suited to, 57; its genesis, 76, 82, 137; is boy- cotting of ourselves, 114, 160; its real beneficiaries, 177; ef- fect on prices, 96; effect on profits, 96, 177; effect upon other countries, 160; effect on land values, 186; first asked for the establishment of new industries, 103; difference be- tween protectionist writers and popular pleas,. 107; derives strength from confusions of thought arising from the use of money, 137; effects on American industry, 193; in- jurious to the development of manufactures, 163, 177, 193; tends to unjust distribution, 252; home market argument, 112; balance -of- trade argu- ment, 121 ; high-wages argu- ment, 145; arguments drawn from advantages or disadvan- tages, 154; abolition of, would stimulate industry, 192, 231; pica for gradual abolition, 231 ; effect on wages, 244; cannot be abolished in the United States on the SJU..G lines as in Great Britain, 247; and wages, 208.' cannot protect labor, 215; real strength of, 257; how it makes INDEX, 35$ work, 258; cannot check con- centrating tendencies, 283; strengthened by opponents, 268; its relation to monopoly of land, 343. Protective, theory of, universal, 30 ; opposed to natural percep- tions and impulses, 38, 64; unit, arbitrary and shifting character of, 40; inconsist- encies, 40, 101; applies to smaller even more than to larger divisions, 43; cannot be carried into practice, 99; tar- iffs, 88. Property in land, 176, 184, 285, 349; how instituted in Great Britain, 314. Public debts, 234. Quesnay, 15, 312. Revenue, Federal, possible sources of, 345. Rogers, Prof. Thorold, 254. Sailors, character of, 202. Savages, their nide methods due to isolation, 171. Scully, Wm., American estates of, 129. Shipping, American, 198. Slavery, two forms of, 2S9; in- fluence of American on public opinion, 316. Smith, Adam, 9, 15, 98, 115, 312. Smith, E. P., 87. Socialism, relations of free trade to, 322. Spencer, Herbert, 300. Sumner, Prof. W. G., 266. Tariffs, origin of, 76; first Amer- ican, 17; are restrictions, not on foreigners, but on the peo- ple that impose them, 49, 160; for revenue, 76; for protection, 88; frequent modifications of, 181; Act of 1883, typical blun- der in, 100. Tariff question, its importance, 3; not safely to be left to spe- cialists, 6; not recondite, 7; not yet thoroughly discussed, 7; cannot be understood without going further, 10, 238; para- dox to which it leads, 270. Taxation, indirect, a farming of revenue, 84. Taxes, direct and indirect, con- sidered, 77; on ostentation, 307; on land values, 307 ; Federal, 345. Thompson, Prof. R. E., 40, 61, 09, 86, 107, 140, 203, 259. Tobacco and cigars, taxes on, 77. Trade, nature and function or', 49 ; a mode of production, 210. Trades-unions, influence on com- petition, 214, 223; can do lit- tle, 323. Value, the measure of embodied labor, 118, 147. Wages, a high standard of, a proper concernment of the State, 5; assumption that they are higher in U. S. because of tariff, ~ ; 5; not the determining factor in cost of production, 147; rate of, as related to land values, 152, 227; effect of pro- tection on, 208; tendency to a common level, 21> ; governed by competition in labor mar- ket, not in goods market, 212; do not increase with employers' profits, 221 ; in widest occupa- tions, determine general rate of, 225; effects of abolition of protection on, 244. Wealth, increase of, does not benefit all classes, 245. Wells, I). A,, 179. Work, treated by protectionists as an end, 258; how this feeling arises, 262. LONDON PhlNTKI) J!V GILBERT AM) UIV1MITOX, U>. y'i 1 . JOHN'S JIOTSE, CLKP.K^X \VKLL, E.C. &^Ss? a r ' CEN TS JUH *934 -6 AP* L~5C