AGO 4829
 
 &/K0S*/ SA 
 
 THE NATIONAL REVENUES: 
 
 A COLLECTION OF PAPERS 
 
 BY AMERICAN ECONOMISTS. 
 
 EDITED KY ALBERT SHAW, PH.D. 
 
 AtJTHOB OF " CO-OPERATION IN A WESTEKN ClTY, 1 ' " ICARIA ; A CHAPTER 
 IN THK HlSTOKY OF COMMUNISM," ETC. 
 
 WITH AN INTRODUCTION, AND AN APPENDIX OF 
 STATISTICAL TABLES. 
 
 CHICAGO: 
 A. C. McCLURG & COMPANY. 
 
 1888.
 
 COPYRIGHT 
 
 BY A. C. McCLURG & COMPAXT, 
 A. D. 13S3. 
 
 flblversity of Southern California
 
 CONTENTS. 
 
 PAGE. 
 
 I. INTRODUCTORY. By the Editor, 7 
 
 II. PROTECTIVE TARIFFS AS A QUESTION OF NA- 
 TIONAL ECONOMY. By Professor William 
 W. Folwell, of the University of Minnesota, 32 
 
 III. SURPLUS FINANCIERING. By Professor Henry 
 
 C. Adams, of the University of Michigan, 45 
 
 IV. THE TARIFF AND TRUSTS EXPENDITURES 
 
 FOR INTERNAL IMPROVEMENTS. By Pro- 
 fessor Richard T. Ely, of the Johns Hop- 
 kins University, 56 
 V. SHALL THE INTERNAL REVENUE BE RE- 
 TAINED ? By Professor Richmond M. 
 Smith, of Columbia College, - - - 68 
 VI. A DEFENSE OF THE PROTECTIVE POLICY. 
 By Professor Robert Ellis Thompson, of the 
 University of Pennsylvania, - - - 78 
 VII. THE READJUSTMENT OF THE REVENUES. 
 By Professor Edwin R. A. Seligman, of 
 Columbia College, - - 86 
 VIII. THE THEORY AND PRACTICE OF PROTECTION. 
 
 By Professor Jesse Macy, of Iowa College, 93 
 IX. THE CERTAINTIES OF THE TARIFF QUESTION. 
 By Professor, John B. Clark, of Smith Col- 
 lege, too 
 
 X. TAXATION AND APPROPRIATION. By Profes- 
 sor Woodrow Wilson, of the Bryn Mawr 
 College, 106 
 
 XI . EQUALITY IN TAXATION COMMERCIAL UNION 
 WITH CANADA. By Professor Anson D. 
 Morse, of Amherst College, - - - 112 
 
 8
 
 4 The National Revenues. 
 
 PAOK. 
 XII. A GENERAL VIEW. By Chancellor Irving J. 
 
 Manatt, of the University of Nebraska, - 124 
 
 XIII. STEAMSHIP SUBSIDIES AS A MEANS OF RE- 
 
 DUCING THE SURPLUS. By Professor Arthur 
 T. Hadley, of Yale College, . - - 126 
 
 XIV. THE IMMEDIATE TASK. PROTECTION AND 
 
 AMERICAN AGRICULTURE. By President 
 Francis A. "Walker, of the Massachusetts 
 Institute of Technology, - - - - 135 
 XV. THE TARIFF AND THE WESTERN FARMER. 
 By Professor James H. Canfield, of the Uni- 
 versity of Kansas, - - - -152 
 
 XVI. INTERNAL TAXATION AND A REVENUE 
 TARIFF. By Professor Arthur Yager, of 
 the Georgetown (Kentucky) College, - - 161 
 XVII. A PLAN OF TARIFF REDUCTION. By Profes- 
 sor Edward W. Bemis, of Vanderbilt Uni- 
 versity, 167 
 
 XVIII. WAGES AND THE TARIFF. By Professor J. 
 
 Laurence Laughlin, of Harvard University, 176 
 
 XIX. THE SCIENTIFIC BASIS OF TARIFF LEGISLA- 
 TION. By Hon. Carroll D. Wright, United 
 States Commissioner of Labor, - - - 189 
 
 XX. CONCLUDING CHAPTER. By the Editor, - - 217 
 
 APPENDIX OF STATISTICAL TABLES. 
 
 PAGE. 
 I. Analysis of United States Revenues for year 
 
 ending June 30, 1887, - - 229 
 
 II. Analysis of United States Expenditures for 
 
 year ending June 30, 1887, - - - 229 
 
 III. Receipts of the United States by years, for 
 thirty years, from Customs, Internal Rev- 
 enue, and all other Sources, - - - 230
 
 Contents. 6 
 
 Pimm. 
 
 IV. Expenditures of the United States for thirty 
 
 years, analyzed by years, - 231 
 
 V. Analysis of Interest-bearing Public Debt, 
 
 January 1, 1887, and January 1, 1888, 232 
 VI. Disposition of Surplus for year ending June 
 
 30, 1887, ... - 232 
 
 VII. Accumulation of Surplus in Treasury, by 
 
 months, from July 1, 1887, to May 1, 1888. 232 
 VIII. Statement of Amount of Interest-bearing 
 Debt each- year for thirty years, with 
 Amount of Annual Interest Charge, - - 233 
 IX. List of Leading Articles of "Free-list" Im- 
 ports, with Values of Goods Imported free 
 of duty in fiscal year 1887. Leading 
 Dutiable Articles, with Values of Importa- 
 tions, Amounts of Duties collected, and 
 Average (ad valorem) Rates of Duty, - - 234 
 X. Table showing Relative Values of Principal 
 
 Classes of Free and Dutiable Imports, etc , 239 
 XL Percentages of Total Duty paid by Leading 
 
 Articles and Classes of Imports, - 240 
 XII. Analysis of Internal Revenue Receipts for 
 
 1886 and 1887, 241 
 
 XIII. Table showing Estimate of the Effect of the 
 
 "Mills Bill" on Revenues from Customs, 242 
 
 XIV. Table showing Estimate of the Effect of the 
 
 " Mills Bill " upon Receipts from Internal 
 
 Revenue, ....... 243 
 
 XV. List of Revenue Reductions since the War, 
 
 with Estimated Amounts of Reduction, - 244 
 XVI. General Features of our Export Trade for 
 
 Fiscal Year 1887, 244 
 
 XVII. Carrying Trade in American and Foreign 
 
 Vessels for Fiscal Year 1887, ... 245
 
 THE NATIONAL REVENUES. 
 
 INTRODUCTORY. 
 
 I. 
 
 The people of the United States are just now 
 engaged, with greater interest, candor and intel- 
 ligence than at any previous time in their his- 
 tory, in studying the problems of public econo- 
 mics. Circumstances all unite to make the times 
 favorable for this study, There is nothing else 
 in our national situation, external or internal, of 
 such paramount or pressing importance as to 
 divert the attention of the government and the 
 people from the questions that are chiefly admin- 
 istrative and economic in their nature. 
 
 The European powers are of necessity so 
 engrossed with affairs of diplomacy and interna- 
 tional politics that they are obliged to adjust 
 their economic arrangements to serve their polit- 
 ical and military exigencies first, and only as 
 a secondary consideration to enhance the well- 
 being of their people. Our country, happily, is 
 almost as free from the danger of invasion and 
 foreign war as if it were alone on the planet. It 
 7
 
 8 The National Revenues. 
 
 has outgrown its earlier fears and dangers, and 
 it need have no thought of war, except for those 
 safeguards that common prudence might dictate 
 even in that golden era of world-federation and 
 universal peace that the poets foresee and the 
 philanthropists strive to realize. 
 
 Nor are we embarrassed by the distractions of 
 great domestic political problems of a funda- 
 mental nature, unsolved and irrepressible. The 
 franchise rests upon the broad basis of manhood; 
 we have no privileged classes ; we are, therefore, 
 exempt from those struggles between democracy 
 and hereditary privilege that form the principal 
 chapters in the recent constitutional history of 
 the European States. Fortunately, we began at 
 the point toward which the rest of the world is 
 inevitably moving, and have been spared the 
 agitation which always accompanies the process 
 of broadening the political fabric at its base. 
 Unfortunately, a "peculiar domestic institu- 
 tion," which was absolutely incompatible with 
 our civilization and our political system was 
 allowed to remain in existence, and a conflict of 
 three-quarters of a century was required to 
 eliminate it and to deal with the issues growing 
 out of it. While it remained, the nature of the 
 Federal Union and the supremacy of the Consti- 
 tution were in constant and grave dispute. So 
 long as there was lack of substantial agreement 
 as to the indissolubility and sovereignty of the
 
 Introductory. 9 
 
 Union, it was impossible to deal upon their 
 merits with ordinary questions of national policy. 
 The difficulty of adopting broad and permanent 
 fiscal policies was made doubly great by the tact 
 'that the slaveholding States had not only dis- 
 tinct constitutional views to uphold, but had 
 also an industrial system so radically antagonistic 
 in principle to the system of the North that the 
 prosperity of the whole country under one com- 
 mon policy as regarded trade and industry 
 seemed impossible. 
 
 The South produced a few staple crops, largely 
 for export, by slave labor, and had no desire for 
 either diversified agriculture or manufactures. 
 The men of the North, realizing the vast and 
 varied natural resources of the country, its geo- 
 graphical isolation and completeness and its con- 
 tinental extent, had a vision of national economic 
 independence through the utilization of natural 
 advantages and the diversification of industries. 
 They saw, at least more or less clearly, the close 
 relationship between the growth of cities and 
 industries and a complex economic life on the 
 one hand, and the attainment of a high civiliza- 
 tion on the other ; and they were willing to 
 make the sacrifices and pay the cost. Partly 
 through the promptings of a fine spirit of patri- 
 otism, partly through the necessities and oppor- 
 tunities arising from wars in Europe and wars 
 with Europe, partly through the superiority of
 
 10 The National Revenues. 
 
 Yankee inventiveness and the unequalled pro- 
 ductivity of American labor, partly through 
 bounties given by the State governments, and 
 partly through the operation of national tariffs 
 so imposed as to discriminate in favor of Ameri- 
 can production, an agricultural North acquired 
 factories, shops, and cities, imported industries 
 instead of wares, increased rapidly in population, 
 and at the same time developed a more intensive, 
 more diverse and more prosperous agriculture. 
 It is quite impossible to determine satisfacto- 
 rily what part one factor or another played in 
 bringing about this result. They were all coop- 
 erating elements in this process of the rapid 
 economic upbuilding of a people. To regard 
 the discriminating tariff as a sort of deus ex 
 mac/iina, of its own inherent potential energy 
 bringing about the wonderful progress from a 
 simple farming people, few in number and of 
 small wealth, to a great and populous nation with 
 huge industries and splendid cities, is absurd. 
 But that a young people with high spirit and a 
 powerful awakening of national consciousness 
 should employ the protective tariff system as one 
 of various instruments and expedients for accel- 
 erating their material progress and attaining a 
 completeness and independence of the national 
 economic life that should in some measure corre- 
 spond with and minister to the political inde- 
 pendence of the country, is not at all absurd.
 
 Introductory. 11 
 
 It was, under the circumstances then existing, 
 the most natural thing in the world. 
 
 Whether such an instrument can be maae 
 really effective, whether it can be made to pay 
 in social and political results not to speak of 
 economic results anything which compensates 
 for its initial pecuniary cost to the people who 
 employ it, must depend wholly upon the people 
 themselves, their territorial situation and natural 
 advantages, the vigor with which they use other 
 means for the national advancement, and, in 
 short, the degree of potency possessed by those 
 nascent forces in the young life of the nation 
 that are transforming it from one stage of eco- 
 nomic development to another. 
 
 There is certainly much reason to believe 
 that if slavery had not existed in the South, 
 making industrial progress beyond the simplest 
 forms of agriculture impossible for that portion 
 of the country, and making the free exchange of 
 cotton and tobacco for the cheap manufactures 
 of Europe the obvious and permanent policy of 
 the planters, the country would have made a 
 much more united, systematic and scientific trial 
 of the protective system. For both cotton and 
 iron manufactures the South had better advan- 
 tages than the North. New England's seafaring 
 industries and foreign commerce on the one 
 hand, and the South's superior resources on the 
 other, might possibly have reversed the tradi-
 
 12 The National Revenues. 
 
 tional policies of the two sections and made the 
 South more ardent for protection to home indus- 
 tries, and the North more inclined to favor un- 
 hampered freedom for foreign trade. 
 
 But sectional lines would hardly have been 
 drawn. We should not have had two mutually 
 destructive economic systems within our nation- 
 al limits, but rather a thoroughly homogeneous 
 economic life throughout the entire country. 
 Whatever use, under the circumstances, the 
 American people might have made of protective 
 tariffs, they would assuredly have made material 
 progress " by leaps and by bounds." Slavery 
 retarded American development. If it had been 
 stamped out a hundred years ago we should have 
 had a hundred millions of people and a national 
 wealth almost doubled. It was the irrepressible 
 national development that finally, bursting its 
 vexatious bounds, overthrew slavery, settled the 
 old dispute as to the constitutional right of the 
 nation to build itself up as a nation, and made pos- 
 sible for the first time an economic policy freed 
 from the reproach, just or unjust, of sectionalism. 
 
 If the North had not persistently fostered 
 manufactures, in spite of Southern opposition 
 and consequent fluctuations of national policy, 
 slavery could not have been overthrown. The 
 truth of this proposition is so obvious to all 
 discerning minds that it needs no demonstration. 
 It was the true instinct of self-preservation that
 
 Introductory. 13 
 
 guided, in the main, our economic progress, and 
 made us at length a nation in reality. 
 
 The painful period of Reconstruction could 
 not be omitted or bridged over ; it was inevit- 
 able. But fundamental issues were settled. The 
 constitutional dispute was at an end. The con- 
 dition of a true "federative balance" had been 
 attained between states and nation, and the 
 people of all parties and all sections are to-day 
 in substantial accord upon all fundamental 
 questions affecting our political structure. Such 
 temporary problems, growing out of the war, 
 as those of the suspension and resumption of 
 specie payments have been solved. The vigorous 
 industrial life of the North is rapidly assimilat- 
 ing that of the South. We have thus, for the 
 first time in our history, reached a point where, 
 without serious distractions from without or any 
 deep-lying sources of division within, we may 
 devote ourselves as a united people, with har- 
 mony of interests and with recognized oneness 
 of destiny, to the consideration of questions of 
 national administration and economics. 
 
 The dawning of this fortunate period brings 
 with it the demand for a new kind of statesman- 
 ship and a new kind of knowledge diffused 
 among the people. The questions now upper- 
 most require for their wise solution a large 
 knowledge of public economy as a science. No 
 nation has ever offered so vast and inviting
 
 14 The National Revenues. 
 
 a field as ours now presents, both for the study 
 of economic subjects and for the application, 
 through broad and well-informed statesmanship, 
 of the results of economic study to the solution 
 of practical questions. 
 
 It would be an easy thing to enumerate scores 
 of vital subjects affecting our American life, as 
 that of a social, industrial and political entity, 
 upon which political and economic science can 
 throw valuable light. A practical exigency has 
 made the National Revenue System uppermost 
 of all these questions. 
 
 By common consent and long usage, the 
 reasons of which our financial history supplies 
 abundantly, customs duties and excise taxes 
 have been appropriated by the federal govern- 
 ment as its exclusive sources of income, Avhile 
 direct taxation has been left to the States and 
 their subordinate municipalities as their princi- 
 pal means of support. So colossal was the 
 national expenditure during the period of civil 
 war and immediately following it, that the gov- 
 ernment was obliged to consult ways and means 
 for the largest possible income with compara- 
 tively little regard to the niceties of finance as a 
 science. The national conditions made depend- 
 ence upon home production more imperative 
 than ever before. 
 
 The South had" withdrawn from Congress, and 
 in the construction of the new tariff there was
 
 Introductory. 15 
 
 something like unanimous consent to the most 
 pronounced protective measures the country 
 had ever adopted. But the decay of 
 foreign trade incident to the war reduced the 
 customs revenue to a minimum, and made 
 recourse to a most elaborate and unsparing 
 system of excise and "internal revenue" 
 taxation an unavoidable necessity. For four 
 years the aggregate income from internal taxes 
 was twice as great as that from customs. But 
 after the war there came a revival of foreign 
 commerce with an accompanying increase in the 
 revenue from customs, and there followed a 
 gradual cutting off of the more burdensome 
 internal taxes, until little was left of the once 
 elaborate schedule except the taxes upon liquor 
 and tobacco. 
 
 These sources of income have supplied the 
 treasury so abundantly as to permit not only the 
 most liberal current expenditure but also the un- 
 precedentedly rapid reduction of the interest- 
 bearing public debt, sixty per cent, of which 
 has been paid off, while the annual interest 
 charge has been reduced to one-fourth of the 
 amount paid in 1865 when the debt was at its 
 highest point. A cessation of debt payment re- 
 sulting from the fact that of the bonds now out- 
 standing none will be due until 1891, has been 
 followed by the rapid accumulation of a large 
 surplus of revenue in the treasury.
 
 16 The National Revenues. 
 
 This situation, in many indirect ways a very 
 serious one, has brought about a discussion 
 that is destined to result in something more 
 than the averting of an immediate crisis. The 
 country has a mind to deal critically and 
 thoroughly with the whole question of its na- 
 tional revenue system. If the protective idea is 
 henceforth to govern in the imposition of cus- 
 toms taxes, the people desire to know more pre- 
 cisely what its objects are and how its arrange- 
 ments actually affect the industrial life of the 
 nation. They desire to learn what it costs, and 
 to what extent and by what means its cost is 
 distributed ; and also what in kind and amount 
 its benefits are, and how generally those benefits 
 are diffused. They also desire to know the rel- 
 ative merits of the excise system and the cus- 
 toms system. In short, they desire not only to 
 know at what points it is wisest to cut away 
 sources of revenue in view of the present 
 superabundance, but also upon what general 
 lines an intelligent readjustment of the revenue 
 system as a whole shall proceed. 
 
 Evidently these are not questions of a day or 
 a single session of Congress. They can only be 
 settled after much thought and discussion; and 
 it is well that people should have the educa- 
 tional benefit of a thorough, protracted and 
 popular agitation of all the phases of the com- 
 plicated subject. These are matters for careful
 
 Introductory. 17 
 
 study and candid judgment, rather than for party 
 clamor. They are matters about which the 
 scientific students of public economy may have 
 opinions worthy to be taken into account. 
 
 n. 
 
 The present little volume makes no pretense 
 to be a treatise. It is, on the contrary, some- 
 what impromptu and quite unambitious. Never- 
 theless, it is believed that it will serve a useful 
 purpose. Our political economists are no longer 
 to be likened to " astronomers who have never 
 seen the stars." Their attention is given very 
 much less to philosophical abstractions and dia- 
 lectical diversions than to the study of actual 
 problems of social organization, economic wel- 
 fare, and public administration. While the 
 statesman's task is a different one, he is no closer 
 to the facts of history and of the current life of 
 society than is the economist of to-day; and he is 
 learning to rely upon the student of economic 
 science with growing confidence. 
 
 The last decade, and more especially the last 
 half decade, has witnessed a remarkable im- 
 pulse in this country to economic study and 
 writing. The universities have become the 
 recognized centers of this activity. Original 
 investigation in economic fields has increased 
 ten-fold. The study of political science has
 
 18 The National Revenues. 
 
 become prominent and popular at all our leading 
 seats of learning, and the new work of the spe- 
 cialists in economic and historical research has 
 begun to exert a marked influence upon public 
 affairs. Not many years ago it was a common 
 thing to hear men refer to the college professors 
 as unpractical in their views, and to their politi- 
 cal economy as a " science based on assump- 
 tions." 
 
 But there has come a change. The method 
 and spirit of economic study has been greatly 
 transformed. It can no longer be said, if ever 
 it was said truly, that all our college graduates 
 are free-traders when they leave school by vir- 
 tue of a few easy and captivating syllogisms 
 learned from their professors, and that alt be- 
 come protectionists a few years later by virtue 
 of their contact with affairs and their participa- 
 tion in the actual economic life of the nation. 
 Some college teaching of economics may still 
 be as shallow and as unrelated to the facts of 
 history and the life of nations as some college 
 teaching formerly was; but the best teaching is 
 open to no such reproach, and fortunately there 
 is now much of the thorough and truly scientific 
 instruction. 
 
 It has occurred to the writer that the opinions 
 of a number of our American economists, chiefly 
 university professors, upon phases general and 
 particular of the national revenue situation,
 
 Introductory. 19 
 
 might just at this time be read with interest and 
 profit. This collection of brief essays is the re- 
 sult of that thought. The papers are not elabo- 
 rate studies. They were sent in response to re- 
 quests which did not call for very extended or 
 laborious replies. It was believed that the ex- 
 pressions taken as a whole would reveal the 
 trend of thought among our foremost economic 
 students, and would also help the average citi- 
 zen to find the main bearings of subjects the in- 
 telligent approach to which puzzles very many. 
 Whether the result justifies that anticipation, the 
 reader must decide for himself. The collection 
 of the papers has involved no little correspond- 
 ence, and the attempt was made to secure some 
 range and variety by suggesting special phases 
 for treatment by particular individuals. The 
 following general letter explanatory of the plan 
 was also sent out: 
 
 "The people of the Uiiited States seem to be more 
 generally and thoroughly interested just now than for many 
 years past in the problems of national taxation. Candid 
 discussion of these problems upon their merits, without 
 reference to supposed party advantage, and without the bias 
 of class interest or locality interest, is unfortunately too 
 rare. I am persuaded that the views of our prominent 
 political economists would at this time receive marked at- 
 tention and exert a valuable influence. The importance of 
 the numerous writings in general or special fields of finance 
 and administration that have recently emanated from the 
 American universities, is recognized at home and abroad, 
 and the country is turning to the schools of political science,
 
 20 The National Revenues. 
 
 as never before, for light and aid in questions of practical 
 statesmanship. 
 
 "After the holiday recess Congress must grapple in 
 earnest the economic problems of the day. They are not 
 to be finally adjusted by any mere makeshift, nor are they 
 to be very quickly settled in one way or in another. An 
 unusual number of men in public life as well as of private 
 citizens are in an inquiring frame of mind and are open to 
 conviction. It is my purpose to secure expressions of opin- 
 ion from a score or more of those economists who are well 
 known as writers and instructors, who are versed in the 
 principles of taxation, and who know the economic experi- 
 ence of other countries as well as the history and present 
 condition of our own national finances. 
 
 "It is perhaps to be preferred that these brief papers 
 should give more prominence to conclusions than to the 
 methods pursued iu reaching them. I prefer not to present 
 a list of questions for categorical reply, altnough I shall be 
 glad, of course, to have the statements as frank and specific 
 in their prescriptions as the writers may be ready and will- 
 ing to make them It is not my plan to pit different eco- 
 nomic schools against one another, or to obtain material for 
 controversial uses. I confidently hope to secure a series of 
 brief statements or papers that will as a whole greatly aid 
 the intelligent reader in finding the bearings of those great 
 subjects, national taxation and revenue. Some plain, clear 
 statements by gentlemen whose views of a national eco- 
 nomic policy are presented from the scientific standpoint, 
 will serve a real educational purpose. 
 
 " It being generally conceded that Congress must cut off 
 some existing sources of revenue, and reduce the. surplus 
 income, in what way should the reduction be made, and 
 upon what governing considerations ? 
 
 " Should it be attempted, by refunding or in some other 
 way, to bring the public debt into such form as to permit 
 the continuance of a policy of somewhat rapid payment, 
 or should we adjust the revenues upon a plan that will al-
 
 Introductory. 21 
 
 low nothing for debt payment beyond sinking-fund require- 
 ments? 
 
 " In a policy for the more immediate future should we 
 contemplate the special encouragement of trade with 
 Canada, Mexico, and the states of Central and South Amer- 
 ica, by means of a ' commercial union ' or ' zollverein ' 
 arrangement, steamship subsidies, reciprocity treaties, or 
 otherwise? 
 
 " What do you regard as the probable or proper future 
 of the American protective system, and what would be the 
 ideal sources of a national revenue? " 
 
 Several gentlemen from whom contributions 
 were asked were unable for various reasons to 
 comply. Because a "qualitative" rather than 
 a " quantitative " analysis was sought, it was 
 endeavored to secure expressions that would be 
 representative ; and while further extension of 
 the inquiry might have obtained the opinions of 
 as many more gentlemen equally entitled to 
 speak for the economists of the United States, 
 the tone of the collection would hardly have 
 been altered. 
 
 The recent writer of an anonymous book on 
 "Class Interests" has a suggestive chapter on 
 the "Biases of Economical Teachers." Speak- 
 ing of their teachings on the subject of " Ameri- 
 can protection," he says: "We think there are 
 very many intelligent people with hearts aright 
 who have not reflected sufficiently on the influ- 
 ences affecting their own minds in relation to 
 class interests to realize why their sympathies 
 incline to one view rather than to another.
 
 22 The National Revenues. 
 
 Manly sympathies indeed they have, but these 
 are often misdirected from perversion of judg- 
 ment under the influence of bias." Perhaps 
 the thoughtful reader of this collection of letters 
 from " economical teachers" upon "American 
 Protection" may detect here and there the 
 unconscious working of class bias. 
 
 III. 
 
 It may not be out of order to say something 
 briefly of the gentlemen whose contributions 
 make up this volume. The productive activity 
 of the colleges and universities has been already 
 mentioned as the most noteworthy fact respect- 
 ing recent American writing in the general 
 domain of political and social science. And 
 reference has also been made, as a part of the 
 same striking tendency, to the growing intimacy 
 between the universities and the administration 
 of public affairs. With the assumption of an 
 eminently practical and scientific cast, the eco- 
 nomic study of the day is receiving a deference 
 and attention from the public altogether unpre- 
 cedented. 
 
 The consideration which General Francis A. 
 Walker's important works on "Wages" and 
 "Money" received upon their appearance a few 
 years ago, and the recognition of his ability as a 
 statistician and economist which his appointment
 
 Introductory. 23 
 
 as superintendent of the last federal census indi- 
 cated, are no longer exceptional. Yet as Presi- 
 dent of the Massachusetts Institute of Tech- 
 nology, as President of the American Economic 
 Association, as an author and scholar of world- 
 wide repute, and as a practical man of affairs, 
 Gen. Walker's influence is probably greater than 
 that of any other American economist. His 
 brief remarks in the following pages upon the 
 surplus revenue crisis are full of weight. 
 
 Professor Richard T. Ely, of the Johns Hop- 
 kins University, is widely esteemed and read as 
 an authority upon questions of labor, taxation, 
 and national economics ; and besides his better 
 known writings he has lately issued a most 
 instructive report upon systems and methods of 
 State and municipal taxation, the outcome of his 
 practical experience as a member of the tax 
 commission of Maryland and of a board charged 
 with the revision of the tax system of Baltimore. 
 
 Professor Henry C. Adams, lately of Cornell 
 and now of Michigan University, discusses 
 questions of American finance as a recognized 
 authority. His treatise on "Public Debts" is 
 perhaps the most important systematic work in 
 the science of finance that has been accomplished 
 by an American ; and while it is theoretical in 
 the sense that it discovers underlying principles 
 and defines broad rules of action, it is practical 
 in the sense that it deals with actual problems in
 
 24 The National Eevenues. 
 
 such a way as to have influence in shaping the 
 policies of government. 
 
 Professor Arthur T. Hadley, of Yale, who 
 contributes to this collection a paper on subsidies 
 as a means for the employment of surplus reve- 
 nue, illustrates well the new relation of intimacy 
 between the universities and public affairs. His 
 book on " Railroad Transportation " was contin- 
 ually cited as high authority in the Congres- 
 sional debates that preceded the enactment of the 
 Inter-State Commerce law, and is a text-book in 
 the hands alike of railroad officials and of State 
 legislators. It is understood that Professor 
 Hadley was proffered a place in the Inter-State 
 Commerce Commission. His merits as a student 
 of industrial society led to his appointment as 
 labor commissioner of Connecticut, a post which 
 he held for two years with rare ability. 
 
 Professor Robert Ellis Thompson, of the 
 Wharton School of Finance and Economy at the 
 University of Pennsylvania, represents an insti- 
 tution which has long given especial prominence 
 to American history and economics, with a pro- 
 nounced influence upon affairs of state. Professor 
 Thompson is one of the foremost advocates of 
 protection as a national economic policy. He is 
 also a constant writer for the press, and an expo- 
 nent of the views of those who urge "commer- 
 cial union" between the United States and 
 Canada and the policy of freer and more intimate
 
 Introductory. 25 
 
 trade relations throughout the western hemis- 
 phere. 
 
 As further instances of the new relation of 
 political economists to public affairs it may be 
 noted that Professor A. S. Bolles, recently a 
 colleague of Professor Thompson, and well- 
 known as the author of a "Financial History of 
 the United States" and the editor of the "Bank- 
 er's Magazine," has become the Commissioner of 
 Labor Statistics for the State of Pennsylvania ; 
 and that the retention of the Philadelphia Gas 
 Works as public property is attributed in large 
 part to the personal activity of Professor E. J. 
 James, another colleague of Professor Thomp- 
 son, and to the influence of his convincing 
 monograph on the " Relation of the Modern 
 Municipality to the Gas Supply." 
 
 The Columbia College (New York) School of 
 Political Science is represented in these pages by 
 its teachers of political economy, Professor Rich- 
 mond M. Smith and his colleague Professor Ed- 
 win R. A. Seligman, both of whom are economic 
 writers of great force and keen perception, 
 whose work is notable at once for its scholarly 
 qualities and its practical spirit and direction, as 
 witness Professor Seligman's admirable book 
 entitled "Railway Tariffs and the Inter-State 
 Commerce Law," and Professor Smith's current 
 writing on the control of immigration. 
 
 Political economy at Harvard University has
 
 26 The National Revenues. 
 
 attained a constantly growing prominence under 
 the enthusiasm and activity of Professors Dun- 
 bar, Laughlin and Taussig. Professor J. 
 Laurence Laughlin, who contributes to the pres- 
 ent collection a paper on the tariff and wages, is 
 the author of an important historical and critical 
 work on "Bimetallism in the United States," 
 and has^obtained rank as an authority on curren- 
 cy questions and other problems of national 
 economics, while deservedly holding a high place 
 as a writer in the general science of political 
 economy. 
 
 Professor John B. Clark of Smith College 
 (Northampton, Massachusetts), who writes a 
 paper on "The Certainties of the Tariff Ques- 
 tion," has reflected much credit upon the study 
 of political economy in America by his elucida- 
 tion of principles in the light of such modern 
 facts as great combinations of capital, labor or- 
 ganizations, enlarged governmental activity, 
 etc., a line of fundamental study of exceeding 
 importance as a pre-requisite to intelligent legis- 
 lation. 
 
 Professor Anson D. Morse, of Amherst Col- 
 lege, is well known as a student and writer in 
 the fields of American history and political 
 science. 
 
 Professor Woodrow Wilson, of the Bryn 
 Mawr College, the author of " Congressional 
 Government," is recognized as one of the keen-
 
 Introductory. 27 
 
 est and most brilliant of all the writers who have 
 undertaken the critical discussion of our 
 constitutional machinery and administrative 
 method. 
 
 Professor William W. Folwell, of the Univer- 
 sity of Minnesota, who contributes a remarkably 
 clear elucidation of the position and character of 
 the tariff question in a general scheme of eco- 
 nomics, is one of the most accomplished, most 
 experienced and most truly representative of 
 American economists. 
 
 Professor Jesse Macy, of Iowa College, has 
 rendered a great service to education and citi- 
 zenship by his successful efforts to promote 
 under proper methods the study of civil gov- 
 ernment and of the elements of political science 
 in the common schools of America ; and in his 
 text-book "Our Government 1 ' he has given the 
 best and fullest view ever presented of our 
 hierarchy of institutions, beginning with the 
 primary political groups, the townships, etc., 
 and ascending finally to the organs of the 
 national administration. 
 
 Professor James H. Canfield, of the University 
 of Kansas, is widely known among American 
 educators, and is specially commended as a 
 university professor who keeps the work of his 
 department of history and political science in 
 close sympathy and relationship with the history- 
 making activity of the surrounding life.
 
 28 The National Revenues. 
 
 Chancellor Irving J. Manatt, the head of the 
 University of Nebraska, though disavowing all 
 claim to speak as a specialist, is an excellent 
 representative of the men of varied scholarship 
 and wide observation, who stand as leaders in 
 American education. 
 
 Among the young men of rising reputation 
 who are finding places in college chairs of poli- 
 tical science, are Professors Arthur Yager and 
 Edward W. Bemis. Dr. Yager, of the George- 
 town (Kentucky) College, has written ably upon 
 American war financiering ; and Dr. Bemis, now 
 of the Vanderbilt University (Tennessee), has pub- 
 lished valuable monographs upon industrial co- 
 operation and other phases of the the labor 
 question. 
 
 Of the work as an industrial statistician of 
 Hon. Carroll D. Wright, the United States 
 Commissioner of Labor, and long the Chief of 
 the Massachusetts Bureau of Statistics of Labor, 
 it would be almost superfluous to speak. His 
 timely and impartial investigations have thrown 
 floods of light upon obscure and difficult prob- 
 lems, and have furnished a safe guide for much 
 legislation that otherwise must have proceeded 
 blindly and uncertainly. His proposal in these 
 pages of a scientific basis for tariff legislation is 
 worthy of the most serious consideration. 
 
 In the recent movement which has given the 
 study of political science so remarkable an im-
 
 Introductory. 29 
 
 petus in this country, history and economics 
 have been closely allied, so closely, indeed, 
 that their teaching and investigation have been 
 inseparably blended. And nothing could be 
 more fortunate for both than this alliance. As 
 Professor Herbert B. Adams truly says, in his 
 recent comprehensive work on the "The Study 
 of History in American Colleges and Universi- 
 ties," while discussing the historical method in 
 economics, "The two subjects are naturally al- 
 lied, and can never be absolutely separated in 
 American university life with its present ten- 
 dencies. Without indulging extreme or one- 
 sided views, the writer believes it the destiny of 
 history to become more economic, and of eco- 
 nomics to become more historical in both object 
 and method. History has too long neglected 
 the ways and means, the practical side of social 
 and political life, and economics have too long 
 neglected the simple facts." 
 
 It is cordially admitted on all sides that noth- 
 ing else has done so much to give impulse to the 
 investigation under American college and uni- 
 versity auspices of our past and present insti- 
 tutional and economic life, as the publication of 
 the "Johns Hopkins University Studies in His- 
 torical and Political Science," now in their sixth 
 annual series under the editorship of their origin- 
 ator Professor Adams. From the impetus which 
 must be ascribed in no small part to these pub-
 
 30 The National Revenues. 
 
 lications sprang the American Historical and 
 the American Economic Associations, the two 
 being composed very largely of the same mem- 
 bership. These societies show remarkable 
 vigor, and are more successful in fostering 
 original and scientific research than the most 
 sanguine of their founders had dared to expect. 
 Both of them issue publications in regular mono- 
 graphic series. 
 
 As further welcome results of the new im- 
 pulse have been founded two quarterly reviews, 
 one at Columbia and the other at Harvard, both 
 of which have sprung at once into mature exist- 
 ence and taken rank among the most important 
 journals of their character in the world. The 
 "Political Science Quarterly," edited by the 
 faculty of political science of Columbia College, 
 now beginning its third year, is "a review de- 
 voted to the historical, statistical, and compara- 
 tive study of politics, economics, and public 
 law." The " Quarterly Journal of Economics," 
 under the auspices of Harvard University, now 
 about completing its second volume, is devoted 
 to the discussion by the best economic writers 
 and investigators of the most practical problems 
 of the day. At the University of Pennsylvania, 
 also, a series of publications in the line of eco- 
 nomics and public law has been begun under the 
 editorship of Professor E. J. James. Through 
 these various avenues of publication there has
 
 Introductory. 31 
 
 appeared within the last half decade an aggregate 
 mass of economic literature possessing extra- 
 ordinary variety, permanent inportance, and 
 current practical value of the highest order. 
 
 The editor of this volume scarcely need make 
 apology for having spoken thus at length, 
 although necessarily in a general and incomplete 
 way, of the new movement in the American 
 study of political economy, of its personnel, its 
 methods, and its already visible results. It may 
 be further unnecessary to say that the editor, 
 himself so situated as to be free from the possi- 
 bility of " the biases of economical teachers," 
 stands committed neither to the views of indi- 
 vidual contributors, nor to what may be regarded 
 as the prevailing tone of the contributions as a 
 whole, upon national revenue questions. The 
 collection of views is published simply for what 
 it may be worth for the elucidation of practical 
 questions of great moment, and for the disclos- 
 ure of the present mental attitude of the schools 
 towards national policies and problems of states- 
 manship. 
 
 ALBERT SHAW.
 
 PROTECTIVE TARIFFS AS A QUESTION OF 
 NATIONAL ECONOMY. 
 
 BY PROFESSOR WILLIAM W. FOLWELL, OF THE 
 UNIVERSITY OF MINNESOTA. 
 
 There is but one live question in general poli- 
 tics at the present moment. The revenue sys- 
 tem of the general government had been organ- 
 ized upon the expectation that the income would 
 for an indefinite period be exhausted in liquida- 
 ting the war debt. By a mistake in estimating 
 the paying ability of the nation, a thousand mil- 
 lions of that debt were put into " long bonds," to 
 mature, one-fourth in 1891, the remainder in 1907. 
 An act of 1881 authorized the Secretary of the 
 Treasury to devote any surplus of funds to the 
 purchase of any bonds which holders might 
 please to offer. Opinions differ as to whether 
 this act was or was not of mere temporary force; 
 the present administration chose to give it the 
 construction of a temporary provision, whose 
 authority has been exhausted. In consequence, 
 there soon appeared masses of unusable money 
 in the vaults of the treasury. The 49th Con- 
 gress was aware of this, but neglected to give 
 any definite construction to the Act of 1881, and 
 this laches apparently sustained the construction 
 of the administration. The surplus grew and 
 32
 
 Protective Tariffs. 33 
 
 still continues to swell, and the prospect now is 
 that the end of the present fiscal year will find 
 the treasury in possession of a hundred and 
 forty millions of which it can make no use, un- 
 less the legislature in the meantime provides 
 for its disposition. 
 
 This fact is an alarming one. It is a maxim 
 universally accepted that the taxing power 
 should never be exercised so as to allow a gov- 
 ernment to take out and keep out of the pockets 
 of the people, more money than the uses of the 
 government require. Excessive revenue tempts 
 to unusual and extravagant expenditure, by 
 which individuals, classes or localities unjustly 
 may profit. 
 
 The President had a right to be alarmed, and 
 it was his duty to lay the dangerous condition of 
 the finances before Congress. It is, however, a 
 question whether the situation was so desperate 
 as to justify the executive in departing from 
 long and well established usage in the composi- 
 tion of the annual message. It was probably 
 not necessary, in order to arouse sleeping 
 Senators and drowsy representatives, that a cam- 
 paign document be flung in the face of the 
 country. 
 
 And such a document the annual message of 
 
 the President to the first session of the 50th 
 
 Congress has proved to be, whether so intended 
 
 or not. The President's text was the treasury 
 
 3
 
 34 The National Revenues. 
 
 surplus ; his sermon was upon the wicked tariff 
 tax, and his outpouring was so impassioned that 
 a suspicion has naturally arisen that it was not, 
 after all, the surplus itself which lay so heavy on 
 the Presidential heart. 
 
 The head of the State has made the tariff 
 question the issue of the campaign which is now 
 opening. It is one worthy the mettle of states- 
 men and of great parties. The clans are already 
 gathering and are taking up their positions in 
 the opposing lines of battle. In such crises 
 issues have to be simplified ; contestants must 
 be furnished with short and easy formulas ; ar- 
 gument gives place to noisy iteration. Extreme 
 statements answer these ends better than mod- 
 erate ones, which need to be guarded and lim- 
 ited. 
 
 We are assured by the Free Traders that the 
 non-manufacturing producers of the country are 
 now ground into the dust by the taxes laid on 
 them for the benefit of manufacturers. High 
 nominal wages are reduced to low real wages by 
 taxes put upon articles of general use and con- 
 sumption. 
 
 Protectionists reply that the removal of exist- 
 ing duties will close the factories and drive the 
 operatives out to the fields to divide the wages 
 of farm laborers. Wages, they say, now kept 
 up by artificial diversification of industry, will 
 drop to some unknown level, while British
 
 Protective Tariffs. 35 
 
 traders engrossing our markets will revel in 
 unlimited profits drawn from our helpless people. 
 
 If it might be possible amid the thunder of 
 the captains and the shouting to gain a moment's 
 quiet and a clear view of the situation of things, 
 an unprejudiced observer might suggest to the 
 combatants some principles which might mitigate 
 the conflict and establish a modus vivendi at its 
 close. 
 
 The tariff question is not one of political 
 economy, as commonly understood and taught 
 in the schools. That science, as imported from 
 England and treated by American writers, dis- 
 cusses the economic functions and relations ot 
 individual men socially related. Laying down 
 a body of guiding postulates, such as self-inter- 
 est, economic freedom, the principle of parsi- 
 mony, this science proceeds to derive such con- 
 clusions as seem to be warranted by the canons 
 of deductive logic. No fault is to be found with 
 so noble and useful a science. The fault lies 
 with those teachers who fail to observe and to 
 teach that political economy does not cover the 
 whole field of economics. 
 
 Men can not exist as individuals, nor do they 
 now exist in mere social groups. The SOCIETAS of 
 the barbarian long since gave place to the ci VITAS 
 of the civilized man. The law of the land long 
 ago took the place of the local and uncertain 
 law of the clan or the tribe. The State has
 
 36 The National Revenues. 
 
 made government permanent, impartial, supreme, 
 both necessary and possible. Law has been 
 crystallized out of custom, concessions have 
 blossomed into rights, justice has replaced the 
 lex talionis, the government of the State is the 
 great agency of justice, the guarantor of rights, 
 the author of law. 
 
 Modern civilized men therefore do not live 
 but in States having each its ascertained bounda- 
 ries, its system of public justice, its armed force, 
 its official language, its traditions and history, 
 giving rise to a body of sentiments indicated by 
 the word PATRIOTISM. These great civic com- 
 munities have their own peculiar economic 
 interests as well as their own political institu- 
 tions. It is the economic relations of States 
 which the political economy of the schools has 
 belittled or altogether ignored. We must not 
 at this point, however, neglect to take into 
 account a respectable body of American writers 
 who, observing with impatience this narrowness 
 of the orthodox economists in ignoring the 
 State, have leapt to the opposite extreme and 
 denied the name of science to the traditional 
 political economy. Such is the ground taken in 
 a well-known text- book entitled " Social Science 
 and National Economy." There is no occasion to 
 go to such extremes. The comprehending truth 
 lies in the middle ground. There are two great 
 divisions of the economic field, the one to which
 
 Protective Tariffs. 37 
 
 the name Political Economy has by long usage 
 become attached, the other which is probably to 
 be known by the title National Economy. Under 
 this title of national economy may be assembled 
 a large mass of phenomena which are capable 
 not merely of enumeration, but of arrangement 
 into an orderly system of filiation. There is a 
 public economy of population, property, money 
 and banks, trade and transportation, labor, 
 health and morals, just as there is a private 
 economy of wealth, capital, division of labor, 
 rent, profit and value. 
 
 The tariff question is a question of national 
 economy. It is useless and impracticable to 
 object here with the old story of the French 
 merchants and their phrase, " talsser alter, lais- 
 ser passer." The government can not let alone. 
 The State has economic interests which must be 
 managed by the government as the agent of the 
 collective people. The moment the government 
 declares by statute what shall be tender in pay- 
 ment of debt, that moment she is stirring in 
 every family dinner pot. Taxation involves the 
 disclosure of every man's private affairs and 
 thrusts official hands into private pockets. While 
 the schools are faithfully inculcating "laisser 
 faire," the interference of government in finance, 
 education, railways, labor, has been steadily 
 increasing for a generation. On the postoffice, 
 the public school system, the powers reposed in
 
 38 The National Revenues. 
 
 boards of health, the State Socialists found their 
 expectations of government custody and man- 
 agement of all means of production, land, ma- 
 chines, raw materials. Government cannot let 
 alone, and the most troublesome problem of the 
 future economist is to place the proper limits to 
 public economy. 
 
 Further, the economic agency of government 
 becomes indispensable when the economic inter- 
 ests and enterprises of other states come into col- 
 lision with those of our own. The great civilized 
 states have not, according to a convenient fiction 
 of writers, been developed in different climatic 
 zones, thus ensuring a territorial division of 
 labor and an impossibility of competition in like 
 industries. Most civilized peoples both produce 
 and consume the same cereals, domestic animals, 
 fruits and fabrics; hence industrial and commer- 
 cial complications which the State cannot ignore. 
 States exist, furthermore, in many stages of 
 economic developement. The few nations which 
 have put steam and electricity into common use, 
 have placed themselves a century in advance of 
 others. Some peoples have voluntarily and 
 purposely put themselves under a course of in- 
 dustrial training and education, while others are 
 still content with accidental and fortuitous cul- 
 ture. There are nations which have provided 
 themselves with a machinery of banks and ex- 
 change rendering vast operations easy to them,
 
 Protective Tariffs. 39 
 
 but which are utterly beyond the power of 
 peoples not so furnished. A given state must, 
 then, regulate its economic affairs according to 
 its own economic status as compared with that of 
 its neighbors. Like a wise man, a state will not 
 suffer its whole wealth to be exhausted by for- 
 eigners because it is a good thing in general to 
 contribute to the needy. Each state must then 
 apply the general maxims of national economy 
 to its own exigencies and circumstances. 
 
 The tariff question as it is now before us is a 
 question of American public economy, and it is 
 a double question ; involving, (1) a public 
 policy of trade and industry, and (2) a ques- 
 tion of taxation. 
 
 It may be taken as axiomatic that as long as 
 nations continue to exist, they will provide for 
 themselves those things which are necessary to 
 national existence; such as arms and ammunition, 
 fortifications, ships of war, and all the supplies 
 needful for the support of navies and armies, 
 iron and steel, leather, cloth, etc., etc.; further, 
 each nation will of course, seek to be furnished 
 on its own ground with all things essential to the 
 life of its people, so that they may not be en- 
 dangered by hostile blockades and embargoes, or 
 the failure of harvests or stoppage of production 
 in other lands. To secure these ends, modern 
 governments in extreme cases enter themselves 
 on the field of production, and in their own
 
 40 The National Revenues. 
 
 shops and factories manufacture the weapons and 
 fabrics deemed to be essential. The German 
 empire establishes horse-farms to ensure the 
 supply of cavalry horses. In some cases, mon- 
 opolies have been granted to individuals as a 
 stimulus to the certain production of essential 
 articles. Governments also offer bounties for 
 the production of goods the manufacture of 
 which can not be expected to yield an average 
 rate of profit, such goods being regarded as es- 
 sential to the independence of the people, and 
 this brings in another consideration. Modern 
 states are not content merely to secure to them- 
 selves a military independence ; they aspire to 
 be industrially and commercially free. The 
 modern state is not merely a political state ; it 
 is an industrial state. No enlightened people 
 can be content to be in the rear of the general 
 line of industrial progress, diversifying its 
 employments, opening its mines and deposits, 
 extending its lines of communication, and enter- 
 ing the markets of the world with the finished 
 products of its own raw materials. Hamilton, 
 with his usual intuition, has suggested that a 
 people who neglect manufactures thereby fail to 
 avail themselves of the forces and properties of 
 nature. The generative power of nature ap- 
 pears, of course, in agriculture; but its scope is 
 limited, at least in the present state of that art, 
 while there is hardly any assignable limit to the
 
 Protective Tariffs. 41 
 
 amount of force which machines cannot educe 
 and convert into work. 
 
 The public policy of a modern state must 
 embrace the industrial interests of the people. 
 American public economy will provide not 
 merely for the military and industrial independ- 
 ence but for the general industrial advance of 
 the nation, to keep that abreast of the general 
 progress of other industrial states. 
 
 The possible means and Avays by which this 
 policy may be carried out are various, but in the 
 present article of our national development and 
 in the present political crisis there is but one 
 system which can demand attention. Here we 
 reach the other phase of the tariff question, 
 that of taxation. 
 
 We are in a certain historical situation. The 
 revolutionary government having no revenue 
 system, carried on its operations by means of 
 borrowed money and small and occasional con- 
 tributions by the states. The confederation was, 
 according to its articles, to receive "quotas" of 
 money from the several states, proportioned to 
 the extent of improved lands. This plan proved 
 unworkable, and when that unfortunate govern- 
 ment could no longer borrow of its creditors to 
 pay their interest, its fate was sealed. The Con- 
 federation Congress in April, 1783, proposed to 
 the states an amendment to the articles which 
 should empower the United States to raise
 
 42 The National Revenues. 
 
 revenue by duties on imports, that is to say, by 
 specific duties on liquors, teas, coffees, sugars 
 and a few other articles, and a "horizontal" ad 
 valorem duty on all other imported goods. 
 This amendment never received the approval of 
 the states so as to become a part of the constitu- 
 tion. 
 
 The new house of representatives was hardly 
 organized under the constitution of 1787, before 
 Madison brought in a bill to establish the pro- 
 posed tariff of 1783. The bill, considerably 
 amended, became a law July 4th, 1789. No 
 other course was at the time possible. The 
 treasury was empty, it could not pay the per 
 diem of the members of Congress. There was 
 no machinery for collecting revenue directly 
 from the people, and the people had not been 
 accustomed to taxation for that vague and 
 distant thing known as the United States Govern- 
 ment. The senators and representatives could 
 from the windows of their chambers see vessels 
 sailing up New York Bay laden with costly 
 freights from beyond seas. On these a few cus- 
 toms officials could at once levy the charges 
 which would pay their salaries and put in motion 
 all the springs of the new government. Under 
 the circumstances no other course was open to 
 the first Congress. Two years later Hamilton 
 at the request of Congress drew up his well 
 known "report on manufactures." The time,
 
 Protective Tariffs. 43 
 
 the place, the traditions of a former and the fash- 
 ion of his own age, conspired to give Hamilton's 
 treatise a force against which opposition was 
 impossible. Indeed even at this time, Hamilton 
 seems to have so covered the ground and ex- 
 hausted arguments as to leave no room for 
 novelty to his successors on his side of the ques- 
 tion. The tariff of 1Y92 conformed in essentials 
 to Hamilton's suggestions, and fixed the pro- 
 tective policy on the country for an indefinite 
 time. We are now nearing the close of a cen- 
 tury during which that policy has been steadily 
 maintained. No serious proposition has been 
 made to abandon the system of indirect taxation 
 for the support and uses of the general govern- 
 ment. It is American policy to raise moneys 
 by import duties so adjusted as to discriminate 
 favorably to American industry and to insure the 
 production, within the limits of our own territory, 
 of all the things needful to industrial independ- 
 ence and to the industrial advancement of the col- 
 lective people. In this historical situation there 
 is no room for the doctrinaire on either side of the 
 question. The national economist, in particular, 
 has no right to dogmatize. His business is to 
 deal with things as they are in his day, his max- 
 ims are always to be adjusted to the circum- 
 stances of his age, his practical measures should 
 be adapted to the situation of the hour. Be- 
 cause a certain industry has needed the fostering
 
 44 The National Revenues. 
 
 care of government in one decade it does not 
 follow that it should not at length go alone. 
 Because the country has grown steadily in 
 wealth and power under a protective policy, it 
 does not follow that protection has been the sole 
 cause of prosperity. Economists of all sorts 
 are constantly in danger of singling out some 
 part of a compound cause, and treating that ele- 
 ment as if it were the only efficient one, all 
 others being merely contributory. 
 
 If these prolegomena to the consideration of 
 the tariff question, now before the country, and 
 which every citizen has got to face on the 
 calends of November, shall assist somewhat 
 in simplifying and elucidating that question, I 
 shall be glad to have contributed them. 
 
 WILLIAM W. FOLWELL.
 
 SURPLUS FINANCIERING. 
 
 BY PROFESSOR HENRY C. ADAMS, OP THE UNIVERSITY OF 
 MICHIGAN. 
 
 Upon one point, at least, there can be no dif- 
 ference of opinion with regard to the present 
 financial situation of the United States. It is 
 universally agreed that the federal government 
 must spend, in some manner, all the moneys 
 collected in the form of taxes. This necessity 
 is imposed upon it by the fact that trade would 
 be impeded were any considerable part of the 
 accustomed amount of money withdrawn from 
 circulation. There is now about $1,600,000,000 
 of money in circulation. Should the revenue 
 laws remain unchanged, and no appropriations 
 more than ordinarily extravagant be made by 
 Congress at the present session, the surplus rev- 
 enue for the coming year will probably amount 
 to $125,000,000, or about one-twelfth of the 
 total circulation. Now it is mere confession of 
 ignorance to say that a contraction of currency 
 equal to one-twelfth of its amount within a year 
 can do no harm to trade. It would tend to 
 bring about a stringent money market, and 
 would probably precipitate a commercial crisis. 
 Or should these evils be obviated by extraordi- 
 45
 
 46 The National Revenues. 
 
 nary exertions on the part of the banks, it would 
 yet introduce into trade an element of uncertain- 
 ty, and rest like a dead weight upon all business 
 enterprises. 
 
 The fact thus disclosed, that the government 
 cannot hoard its surplus funds, suggests the 
 true statement of the financial problem. The 
 maintenance of surplus revenue means the con- 
 tinuance of surplus expenditures; and the ques- 
 tion at issue is : Shall Congress open up new 
 avenues for the disbursement of its excessive in- 
 come, or shall it reduce the income by reducing 
 taxes ? Turning our attention for the present to 
 the first alternative, there are three suggestions: 
 First, the money may be applied to continue the 
 extinction of the debt ; second, it may be ap- 
 plied to new and unusual appropriations ; third, 
 it may be disbursed to the states for the purpose 
 of reducing state taxes. 
 
 Can the surplus be judiciously used in pay- 
 ing the debt ? 
 
 Until within a few months, no embarrassment 
 has arisen on account of the surplus, because all 
 money not otherwise appropriated was easily re- 
 turned to circulation by applying it to the 
 redemption of the public debt. This was possi- 
 ble because a considerable portion of the debt 
 was redeemable at the pleasure of the govern- 
 ment, and on this account could be paid at par ;
 
 Surplus Financiering. 47 
 
 but since all matured debt has now been re- 
 deemed, if the government still desires to con- 
 tinue the expungement of its obligations, it will 
 be obliged to buy them in open market. No 
 objection can be urged against such a plan, pro- 
 vided speculative prices are not paid for bonds 
 purchased ; but speculative prices will undoubt- 
 edly be paid if the government relies upon this 
 avenue of expenditure for returning all surplus 
 revenue to circulation. Bondholders could ask 
 for no better chance to squeeze the Treasury. 
 The demand for bonds would be constant and 
 imperative, while their supply would be limited 
 and constantly decreasing. Under such con- 
 ditions a bond would stand at premium even 
 though it paid no interest whatever. We con- 
 clude, then, that purchase of bonds would be a 
 piece of extravagance. 
 
 It has been suggested that this difficulty could 
 be overcome by means of a refunding operation, 
 the object of which should be to purchase from 
 creditors the liberty of paying the principal of 
 the bonds before maturity and the accruing 
 interest before it becomes due. It is probable 
 the price demanded for such liberty would be 
 high, but it would surely amount to less than the 
 speculative premiums which the government 
 would be obliged to pay if it should adopt the 
 policy of redemption by purchase. The reason 
 for this conclusion is that the government can
 
 48 The National Revenues. 
 
 now get better terms as to the conditions of 
 future payment than if it wait until cornered on 
 the market. Still, a refunding operation would 
 not solve the question of surplus revenue. The 
 argument in its favor is that money will be 
 saved by means of it, not that it will provide an 
 avenue of unlimited expenditure. It is probable 
 that the right to appropriate more than $75,000,- 
 000 or $80,000,000 a year to the service of debt 
 could not be secured from creditors on advanta- 
 geous terms. But the expenditure for the debt 
 at the present time, if we include only accruing 
 interest and sinking fund dues, is $85,000,000. 
 We must, therefore, unless we are willing to 
 approve of recklessness and extravagance in the 
 continued payment of the debt, look in some 
 other direction for relief from surplus revenue.* 
 
 Shall the surplus be returned to circulation by 
 means of extraordinary expenditures ? 
 
 No one can for a moment doubt the ability of 
 Congress to get rid of the money. The pension 
 agents would gladly give suggestions. The 
 cigar makers' union have kindly expressed their 
 willingness to take several millions for the pur- 
 pose of establishing a co-operative manufactory 
 embracing all the cigar-makers in the United 
 States. Or, if really hard pressed, possibly the 
 
 *In the December (18S7) number of the forum, I endeavored to 
 explain tbe principle* on wlitcU a refunding operation might be carried 
 through.
 
 Surplus Financiering. 49 
 
 plan of a Michigan "man might commend itself, 
 that the Federal Government should build a 
 town hall in every town of over ten thousand 
 inhabitants, not because a hall is needed for any 
 federal purpose, but to be a silent witness to the 
 authority of the central government. These are 
 but samples of the many proposals which will 
 surely present themselves so long as money con- 
 tinues to trickle down the sides of an over-flow- 
 ing treasury. That the employment of the tax- 
 ing power for such ends is contrary to established 
 principles of government can not be called in 
 question. That a lavish and unnecessary expen- 
 diture of public funds is the first step to political 
 corruption is equally beyond controversy. Yet 
 who, knowing the workings of popular govern- 
 ment, can believe that Congress will have the 
 wisdom and stamina for withstanding popular 
 clamor, so long as it has at command the mate- 
 rial means of satisfying clamor. Surplus reve- 
 nue will inevitably become a corruption fund for 
 party purposes. 
 
 It is not, however, necessary to discuss this 
 question on the assumption that Congress will 
 make an unwise disposal of the surplus. There 
 are many ways in which the money might be 
 invested to the advantage of the public. The 
 Blair educational bill has much in its favor. A 
 comprehensive system of public forestry would 
 add to national wealth. It might be opportune 
 4
 
 50 The National Revenues. 
 
 to purchase the telegraph property. And yet 
 for Congress to take steps in any of these direc- 
 tions before it has passed laws reducing taxes, 
 would place popular government in America in 
 greater jeopardy than a corrupt use of public 
 funds. Mr. Sherman in his late manifesto is 
 chargeable with narrowness of view when he 
 says that the surplus is the occasion of no danger 
 because of the many ways in which the money 
 may be spent. He overlooks entirely the con- 
 stitutional bearings of the question. In theory, 
 government in this country finds the limits of its 
 authority in the grants of specific powers ; in 
 fact no limits can be placed upon the encroach- 
 ments of a government having control over sur- 
 plus funds. In theory, the guarantee of personal 
 liberty lies in the political responsibility of offi- 
 cers of state ; in fact, the guarantee amounts to 
 nothing, when the treasury is full and officers are 
 not dependent upon the continuous consent of 
 the people for the disbursement of funds. In 
 theory, the unity of this vast country is main- 
 tained by the observance of a just balance of 
 authority between the states and the federal 
 government ; in fact, that balance is seriously 
 threatened, if not already destroyed, by the 
 financial preponderance of the federal treasury 
 over the State treasuries. Such tendencies as 
 these are difficult to trace, but that they should 
 be ignored by the men who are asking to be
 
 Surplus Financiering. 51 
 
 entrusted with the political guidance of this 
 great country is beyond excuse. 
 
 Shall the surplus revenue be distributed to the 
 States ? 
 
 They who urge this plan hope it will commend 
 itself to the voters of the several States because 
 it promises reduction of State taxation. The 
 arguments against this scheme are not financial ; 
 they are political and constitutional. The con- 
 tinuous distribution of money by the federal 
 government would surely result in the absolute 
 subjection of the States to federal authority. It 
 is a scheme which looks toward imperialism, and 
 is, therefore, dangerous to republican govern- 
 ment. Clearness in accounts, simplicity in 
 methods of procedure, and definitely limited 
 powers, are essential to the success of popular 
 government. They are in large measure secured 
 by the maintenance of independent sources of 
 revenue, and it is now proposed to abandon them 
 for the uncertain benefits of a slight reduction in 
 local taxes. Political charlatans alone will reap 
 the advantages of so pernicious choice. Although 
 such a line of thought is too extended for com- 
 plete presentation in a short paper, I can not 
 forego this opportunity of calling attention to 
 one fact which seems to have been thus far over- 
 looked in the present controversy. They make 
 a mistaken appeal to history who urge the dis-
 
 52 The National Revenues. 
 
 tribution of the surplus in 1837 as a precedent 
 for the plan now before the country. For in the 
 first place the distribution of 1837 was a deposit 
 of federal funds with the States, thus evading 
 one of the constitutional objections which would 
 otherwise have proven fatal to it. But of more 
 importance than this, it was the deposit of money 
 which happened to be left over after paying the 
 public debt, and after a law reducing the revenue 
 that had been put into operation. It did not 
 contemplate that federal taxes should be made a 
 constant source of revenue to the States. Were 
 the present scheme of distribution brought for- 
 ward under the same conditions, that is to say, 
 should Congress first reduce federal revenue to 
 federal needs, and then propose laws for getting 
 rid in a judicious manner of funds which must 
 come in before the reduction of taxes become 
 effective, the criticisms which we have urged 
 would be set one side. The Blair bill might 
 then be considered in view of its relation to the 
 interests of education alone. Or money might 
 be given to the States for the purpose of estab- 
 lishing a general system of forestry. The finan- 
 cial transaction between the central government 
 and the States would not establish a permanent 
 relation between them, but be temporary in its 
 nature because the surplus itself would soon 
 pass away. Under such conditions the perni-
 
 Surplus Financiering. 53 
 
 cious constitutional tendencies of which we have 
 spoken would not show themselves. 
 
 The conclusion from the foregoing suggestions 
 is plain. It is not safe for the United States to 
 consider any question of expenditure whatever 
 until the laws pertaining to federal revenue are 
 radically modified. It is dangerous even to 
 enter upon a discussion of other questions until 
 this necessary step is taken. 
 
 Reduction of Revenue. 
 
 But how may the revenue be reduced ? Upon 
 this point I shall merely give iny own views 
 without discussion. In my opinion the first step 
 toward a reduction of the revenue should be the 
 extension of the free list until it includes all 
 crude materials for manufacture. This would 
 take away the necessity for protective duties on 
 many manufactured products, and would permit 
 mineral lands and lumber lands to fall to their 
 true commercial values independently of protec- 
 tive duties. The second step toward a reduction 
 of revenue should be the reduction of the tax on 
 whisky and tobacco until the rate imposed shall 
 stand considerably below the maximum revenue 
 rate. The reason for maintaining these taxes is 
 the general belief that the tax lessens the con- 
 sumption of the commodities named. I confess 
 myself to be a little skeptical respecting the 
 ability of Congress to influence greatly the
 
 54 The National Revenues. 
 
 morals of the people by means of fiscal ma- 
 chinery. At least the fiscal argument is strongly 
 in favor of reduction. A sound revenue system 
 should be elastic ; otherwise it can not be em- 
 ployed with advantage in times of emergency. 
 But no revenue system is elastic unless the rates 
 ordinarily charged are below the maximum reve- 
 nue rate. The machinery of internal revenue 
 should be maintained because its existence is 
 indispensable in time of war, but in ordinary 
 times it should be run at a low rate of speed or 
 its usefulness in an emergency will be greatly 
 impaired. It is strange that in the discussion ot 
 a financial question this most important financial 
 consideration is kept in the background. The 
 third step in the reduction of revenue should be 
 the gradual reduction of customs duties on man- 
 ufactured goods until they, too, shall stand 
 below the maximum revenue rate. The finan- 
 cial argument for this is the same as the argu- 
 ment just given. A sound fiscal system must be 
 elastic, and elasticity is impossible so long as 
 taxes are above the maximum revenue rate. 
 Protectionists urge that this step will destroy 
 American industry. If this be true, it of 
 course cannot be defended. But it is difficult 
 for me to understand how one can hold such an 
 opinion if he will read the list of manufacturing 
 industries given in the tenth census, and ask how 
 many of them would flourish in the face of for-
 
 Surplus Financiering. 55 
 
 sign competition, provided they had free access 
 to raw material. At least, such a study, and not 
 a theory, is the basis of my opinion. "It is a 
 condition which confronts us not a theory." 
 
 The two thoughts which appear to be most 
 prominent in the foregoing discussion are the 
 following : First, the present financial situation 
 is one that cannot continue without endangering 
 the permanency of the form of government in 
 which we profess to believe. The financial 
 question is at bottom a question of constitutional 
 tendencies. Second, in the reform of the reve- 
 nue laws we are in danger of losing sight of the 
 demands of a sound financial system. Congress 
 would make more rapid headway, and proceed 
 with greater safety to all interests concerned, if 
 it should give some little attention to the require- 
 ments of a sound fiscal system, and put more 
 confidence in the people to take care of the 
 industries and the morals of the country. 
 
 HENRY C. ADAMS.
 
 THE TARIFF AND TRUSTS EXPENDI- 
 TURES FOR INTERNAL IMPROVEMENTS. 
 
 BY PROFESSOR RICHARD T. ELY, OP THE JOHNS HOPKINS 
 
 UNIVERSITY. 
 
 I must frankly confess to you* that your cir- 
 cular letter is the most difficult letter to answer 
 which I ever received. Your questions are far- 
 reaching in their scope, and it would be neces- 
 sary to write a large book to give anything 
 approaching an adequate reply. It is undoubt- 
 edly a good thing to compare conclusions of 
 specialists, but to state conclusions without any 
 explanation of the methods whereby one arrives 
 at those conclusions is apt to lead to serious 
 misapprehension. 
 
 I must acknowledge that the changed circum- 
 stances of our time have driven me farther and 
 farther away from any affection which I ever 
 entertained for protectionism. The fact cannot 
 be disguised that our protective tariff has been 
 dreadfully abused. Its design was to shut ofl 
 foreign competition altogether or to weaken its 
 force, bat not to prevent competition among 
 domestic producers. Within a few years, how- 
 ever, home manufacturers, seeing foreign com- 
 
 *Dr. Ely's paper was written In the form of a letter to the editor. 
 56
 
 The Tariff and Trusts. 57- 
 
 petition excluded, have availed themselves of 
 this circumstance to form trusts and combina- 
 tions, whereby all competition has been excluded, 
 all producers have been placed at the mercy of a 
 ring, and those who have dared oppose them 
 have been crushed by a tyranny in comparison 
 with which the alleged tyranny of trades-unions 
 sinks into insignificance. While profits of em- 
 ployers in the ring have been raised by this 
 process enormously, workingmen, instead of 
 finding their w r ages increased, have been entirely 
 thrown out of employment, for when factories 
 and shops are closed by these combinations no 
 provision is ever made for the workingmen who 
 in them formerly gained a livelihood. To talk 
 about the benefits of protection to labor becomes 
 under such circumstances a hollow mockery ; 
 especially so since evidence is not wanting to 
 show that these huge monopolies propose to 
 turn their immense power against all combina- 
 tions of workingmen and crush them just as 
 they have the independent producers. The fact 
 is not to be gainsaid that trusts and combinations 
 among producers are socialistic in character. 
 They stand for the only real live and dangerous 
 socialism which to-day exists, and their spread 
 is greeted by scholarly socialists with unmingled 
 satisfaction. "What the socialists want is abso- 
 lute concentration concentration of all produc- 
 tion under a single authority. We may define
 
 58 The National Revenues. 
 
 socialism as an unlimited trust. Socialists be- 
 lieve that by spontaneous processes as seen in 
 modern combinations all production will some 
 day be concentrated in a single management, 
 when it will only be necessary to change the pur- 
 pose of the management to inaugurate the reign 
 of socialism. SOCIALISM I WILL DEFINE, THEN, AS 
 
 THE EXCLUSIVE MANAGEMENT OF ALL PRODUC- 
 TION AND DISTRIBUTION BY A SINGLE TRUST ON 
 
 BEHALF OF THE PEOPLE. Those who believe in 
 competitive methods, or who even believe as I 
 do. that the legitimate sphere of competition is 
 a very large one, including by far the greater 
 part of our industrial life, must look with alarm 
 upon the modern trust, and must favor the 
 removal of the protective tariff behind which it 
 has intrenched itself. 
 
 The argument for protection to young indus- 
 tries may, under certain circumstances of time 
 and place, have some force, and I am not pre- 
 pared to admit that in no country should I ever 
 favor protection. I do not call myself either a 
 protectionist or a free trader so far as theory 
 goes. I hardly think a universal law can in this 
 matter be laid down. In the United States, at 
 the present time, I am, so far as our own policy 
 is concerned, a free trader. I would not intro- 
 duce free trade to-day nor to-morrow; but with 
 adequate regard for vested interests, I would 
 gradually approach free trade. Is it not ridicu-
 
 The Tariff and Trusts. 59 
 
 lous to protect the strong against the weak? 
 Yet that is what we are doing. We are becom- 
 ing not merely the strongest but by far the 
 strongest industrial nation on the face of the 
 globe, and our industries need no protection. 
 
 Our farmers and our laborers gain no advant- 
 age whatever from protection. The market of 
 the farmer is restricted. He sends his wheat to 
 Liveipool, but in Liverpool he may not purchase 
 in exchange those things which he needs, for we 
 make it impossible by taxes on imported com- 
 modities. He must buy in New York and pay 
 larger prices to men who have no more affection 
 for him than his Liverpool customers. The 
 plea is urged that a diversified industry is needed. 
 No doubt the farmer is interested in a diversified 
 industry, but that Avill come of itself. We have 
 superior facilities for a vast number of indus- 
 tries, and I do not believe that any great industry 
 would be completely ruined should free trade be 
 introduced in the United States to-day. Many 
 engaged in the production of iron and steel 
 might be obliged to close their establishments, 
 but it would be found that the superior facilities 
 of some would enable them to continue. It is 
 asked, What would those do who would be 
 thrown out of work should we import things 
 now produced at home? Manifestly, it is impos- 
 sible to import commodities unless we export 
 commodities in return. Foreigners will not
 
 60 The National Revenues. 
 
 send us goods unless we give them goods in 
 exchange. Those who are manufacturing things 
 which, under a system of free trade, we would 
 import, would find an occupation in producing 
 goods for exportation. Free trade, or perhaps 
 J ought to say freer trade, would bring about a 
 better international division of labor. We 
 would produce those things for which we have 
 special gifts, as would foreign countries, and 
 thus the products of labor and capital would, to 
 the benefit of all, improve both quantitatively 
 and qualitatively. 
 
 If the advance towards free trade is made 
 without due regard to existing conditions, the 
 result will be the bankruptcy of many large 
 manufacturers; and it is true that you cannot 
 affect one industrial interest adversely without 
 touching all others. Our economic life is an or- 
 ganism, and every part of it is connected with 
 every other part. I have always favored the 
 proposition of Mr. Hugh McCulloch, our former 
 secretary of the treasury, that a commission of 
 impartial, fair-minded men, extremists neither 
 in the interests of free trade nor in the direction 
 of protection, be appointed to investigate the 
 condition of our industries, and on the basis of 
 their investigation to report a tariff bill. The 
 unsatisfactory experience of the country with 
 the tariff commissioners of 1882 proves nothing. 
 That commission was appointed, not to bring in
 
 Internal Improvements. 61 
 
 an important report, but a report in favor of 
 protection. The nature of its report was avow- 
 edly known from the start, and it was not based 
 on the results of investigation. It seems to me 
 that at the present time a more satisfactory 
 commission could be appointed. It ought to in- 
 clude both scholars and business men. A busi- 
 ness man like Hon. Abram S. Hewitt, and 
 scholars like Professors Taussig and E. J. James, 
 differing in views, yet both inclined to be fair- 
 minded, would be admirable members of a 
 tariff commission. 
 
 My general ideas in regard to tariff reform are 
 in favor of a simplification of administration by 
 a substitution of specific for ad valorem duties in 
 every practicable instance, and as large an ex- 
 tension of the free list as possible. Every time 
 an article is added to the free list one temptation 
 to political corruption and "government by 
 special interests " is removed. 
 
 I am in favor of reducing the debt by bond 
 purchases whenever favorable opportunity offers, 
 and also in favor of a protective expenditure of 
 the surplus. There is an opportunity for the ad- 
 vantageous expenditure of the existing surplus, 
 and the free traders do not do themselves credit 
 by their demagogical objections to every legiti- 
 mate plan for the use of the national surplus. 
 Their aim is, of course, to force the tariff ques- 
 tion on the country by the accumulation of a sur-
 
 62 The National Revenues. 
 
 plus, and they are too often willing to see a waste 
 of national resources rather than consent to the 
 wise expenditure of public money. I doubt, 
 however, whether they strengthen themselves 
 thereby. The practical outcome of this attitude 
 is after all not economy, but a wasteful and dis- 
 advantageous expenditure of money in ways 
 calculated to catch votes, as seen in most objec- 
 tionable pension bills. 
 
 The newspaper outcry about river and harbor 
 bills is largely to be explained in this way par- 
 tially also by the inspiration of railroad men, 
 who, above all things, do not want to see any 
 improvement in our natural and artificial water- 
 ways. 
 
 The amount of lying done about the character 
 of appropriations for the improvement of rivers 
 and harbors is something astounding. Conver- 
 sation with any intelligent and honest man who 
 knows anything about the internal improvements 
 going on under the supervision of the federal 
 government will show one that large appropria- 
 tions, larger than any we have had, are really 
 needed, will show one that money so spent would 
 yield enormous returns to the people of the 
 United States. My attention was first called to 
 the true nature of newspaper criticisms of river 
 and harbor bills by a United States engineer 
 who in character and intelligence ranks among 
 the highest in the service. His name is well
 
 Internal Improvements. 63 
 
 known, but it may be better, on account of his 
 official position, not to mention it in this place. 
 Since that time, all that I have observed has con- 
 firmed the statements of this engineer. A year 
 ago this last winter, I visited Charleston, S. C., 
 and Savannah, Ga., and found a considerable 
 portion of the appropriations for those import- 
 ant harbors wasted on account of their insuffi- 
 ciency. Let us suppose that $400,000 is needed 
 at once for the improvement of a harbor, and 
 $200,000 is appropriated. It will often be 
 necessary to suspend work until more is 
 appropriated, and in the meantime the sea will 
 destroy a part of what has been done. This is a 
 sample of the penny-wise, pound-foolish policy 
 of Congress. Our Baltimore appropriations are 
 quite insufficient. Although a believer in tariff 
 reform, I quite agree with these sensible remarks 
 quoted from the " Real Estate Record and Build- 
 ers Guide "of New York for March 31, 1888 : 
 '' Ours is an immense country, with innumerable 
 waterways and harbors, or lake and ocean fronts. 
 The growth of our enormous internal commerce 
 calls for the improvement of these waterways 
 and harbors, and the amount of work to be done 
 is naturally very great. The local government 
 engineers state officially that we ought to expend 
 one hundred and sixty millions per annum for 
 some years, in order to give the needed facilities 
 to the internal commerce of the country. Know-
 
 64 The National Revenues. 
 
 ing how impossible it would be to get Congress 
 to sanction so large a sum, the chief of the gov- 
 ernment engineers asks for only forty millions. 
 * * The House Committee has introduced a bill 
 asking for less than twenty millions. * * The 
 inadequacy of the proposed expenditures is 
 shown in the fact that the harbor of New York 
 gets only $200,000, when to deepen the channel 
 in the lower bay properly would cost nearly 
 $4,000,000. $150,000 is given to the Harlem 
 River improvement, when the total cost of the 
 work will be nearly $2,000,000. * * * Quite a 
 large sum is appropriated for the lower Missis- 
 sippi, not one tenth enough, however, to insure 
 against inundations due to any exceptional rise 
 in the river. * * If we are as niggardly in the 
 future as in the past, the recent appalling catas- 
 trophe due to the breaking of the banks of the 
 Yellow River in China will be repeated in our 
 Mississippi Valley. A large sum is also appro- 
 priated to the Sault Ste. Marie Ship Canal, 
 through which more tonnage will pass than 
 through the Suez Canal. The appropriations 
 should have been five millions for this work, in- 
 stead of less than one million. 
 
 "But the newspapers have commenced to clamor 
 against the new River and Harbor bill. It does 
 look so honest to object to the spending of money 
 by the government. A thievish pension bill gets 
 no such criticism, though it is money worse
 
 Internal Improvements. 65 
 
 than wasted. In the bill so unjustly vetoed by 
 President Arthur, there was an appropriation 
 for a locality called Cheesequakes, and how the 
 wits of the press did play upon that name to cast 
 odium upon the bill, of which nine-tenths of the 
 appropriation were for objects of undoubted 
 merit ! In the bill now before the House it is 
 proposed to deepen the Wing Wang River in 
 Oregon. What a chance is here for the news- 
 paper humorists ! It is rery probable that this 
 tremendous press opposition to waterway im- 
 provements is really inspired by the great rail- 
 way corporations, who naturally want to have 
 the whole carrying trade of the country at their 
 mercy. " 
 
 While some of the money appropriated may 
 be wasted perfection is not possible in human 
 affairs by far the greater portion of the money 
 is well spent, and it is to be hoped that we may 
 some day have a Congress with back-bone enough 
 to withstand newspaper clamor, and make ade- 
 quate appropriations for rivers and harbors and 
 defences of our sea coast cities; also for a few 
 great canals. 
 
 The clamor about public buildings is equally 
 senseless. Money worth to the United States is 
 less than three per cent per annum. Now, 
 wherever government spends $1,000 for rent, it 
 would save money to invest $25,000 in a build- 
 ing. Many cities have no federal building, and 
 
 5
 
 66 The National Revenues. 
 
 they could with advantage be supplied with one. 
 I would gladly see the amount of rent paid by 
 the government diminished, and then in time 
 of emergency we would derive advantage from 
 the decrease in regular, ordinary expenditures. 
 
 I would gladly see the property of existing 
 telegraph companies purchased by the federal 
 government. It is a disgrace that we alone of 
 civilized nations have no public telegraph service, 
 and that we are obliged to put up with our 
 present abominably inefficient and expensive 
 private monopoly. 
 
 Heartily as I am in favor of tariff reform, I 
 would gladly see the revenues remain as large as 
 at present, and a proper, that is to say, a pro- 
 ductive expenditure of revenues. Among these 
 expenditures, in addition to those named, I 
 would include some such plan of refunding the 
 debt as that so ably advocated by Professor 
 Henry C. Adams in his article in the "Forum" 
 for December, 1887". The main feature of the 
 article was the separation of interest from the 
 principal of debt, the capitalization of the 
 interest and its prepayment. The advantage to 
 be derived from this plan by the government, 
 and the inducement properly to be offered bond- 
 holders, are satisfactorily described in the article. 
 
 I am in favor of an extension of commercial 
 relations, and would gladly see a satisfactory 
 scheme for a zoll-verein or commercial union
 
 Internal Improvements. 67 
 
 for all of North and South America, devised and 
 put in execution. 
 
 The main features of an ideal system of 
 national revenues would, in my opinion, be 
 these : Taxes laid on a few imported commodi- 
 ties for the sake of revenue ; an internal reve- 
 nue system laying taxes on a few articles like 
 intoxicating beverages, and, possibly, tobacco ; 
 finally, some more elastic taxes which could 
 readily be raised or lowered according to the 
 needs of the federal treasury. Among our 
 " ideal " taxes, one, perhaps, on the gross reve- 
 nues of railroads engaged in inter-state com- 
 merce could be recommended. 
 
 The disadvantage of relying entirely on cus- 
 toms duties has been amply demonstrated by 
 American experience. When largest revenues 
 are needed, they yield least ; when least is 
 needed, they yield most. We have suffered 
 embarrassment and the loss of countless millions 
 by the failure in the past to maintain a satisfac- 
 tory scheme of internal revenue taxation, and it 
 is to be hoped that this mistake will not be 
 repeated. 
 
 I trust that this brief and inadequate sketch of 
 my ideas in regard to a few federal problems 
 may prove suggestive which is the most I hope 
 for. RICHARD T. ELY.
 
 SHALL THE INTERNAL REVENUE BE 
 RETAINED ? 
 
 BY PROFESSOR RICHMOND M. SMITH, OF COLUMBIA COL- 
 LEGE. 
 
 The existence of the present surplus and its 
 probable continuance bring up two questions 
 demanding solution in the present session of 
 Congress. The first is, what shall be done to get 
 rid of the accumulation of money in the federal 
 treasury , and the money which will accumulate 
 before any laws looking to the final redaction of 
 revenue can take effect ; and the second is in 
 what way revenue can be permanently reduced 
 so as to correspond with the demands of gov- 
 ernment. The first is a temporary difficulty and 
 can be met by temporary measures. The second 
 is much the more serious question, for it 
 threatens to involve the whole future financial 
 policy of the United States. I shall, therefore, 
 consider it first, and devote only a few words at 
 the close to the former. I shall also take it for 
 granted that there should be no consideration 
 paid to schemes for balancing accounts by 
 extravagant expenditures made for the purpose 
 of getting rid of the surplus, or to the absurd 
 proposal to raise protective duties to a point 
 where they would be prohibitive and there 
 
 68
 
 Shall Internal Revenue be Retained 9 69 
 
 would be no income. The permanent reduction 
 of taxation is the only way of bringing the 
 expenditures and the receipts of the government 
 into equilibrium This brings us at once to the 
 question whether this reduction shall take place 
 in the internal revenue or in the customs duties. 
 This question can best be approached by posing 
 the further question : Do we want to abandon 
 the present system of internal revenue on 
 whisky, beer, and tobacco ? They are articles 
 which are taxed the world over as high as it is 
 possible to tax them. They are recognized the 
 world over as luxuries which people are per- 
 fectly able to do without. They are consumed 
 in immense quantities, so that the revenue from 
 them is always large. At the same time they 
 possess in a remarkable degree the quality of 
 elasticity, that is, when people are poor they can 
 easily diminish their consumption of them, while 
 in good times they can increase the quantity or 
 the quality consumed. The burden of taxation 
 thus naturally and automatically adjusts itself to 
 the condition of the community. The burden 
 decreases when people are less able to pay, 
 while the revenue steadily increases with the 
 prosperity of the country and its growth in 
 wealth and population. The use of these arti- 
 cles is only slowly affected by changes in taste 
 and fashion, and thus there is no danger of the 
 revenue disappearing. In the universality of
 
 70 The National Revenues. 
 
 their consumption they resemble articles of neces- 
 sity, while in the possibility of the individual 
 doing without them they are luxuries. Other 
 articles which resemble them in the first respect, 
 like sugar, coffee, tea, and salt, are recognized 
 as necessaries of life among all civilized nations, 
 while other luxuries, like wine, laces, velvet, etc., 
 are not largely enough consumed to give a great 
 revenue and are subject to changes of taste and 
 fashion. 
 
 It would seem to me a serious financial mis- 
 take for the federal government to give up such 
 a source of revenue, which is large in itself, and 
 which will always be a sure means of income. 
 It is not well for the government to rely exclu- 
 sively on customs for its taxes. They depend 
 for their imposition too much on other consid- 
 erations, such as those of a protective system, 
 and for their yield on the condition of commerce 
 and the prosperity of trade. Many of them 
 impose a much greater burden upon the people 
 than they return to the treasury. Many of them 
 are most unequal in the way they rest on partic- 
 ular industries or particular classes. At any 
 rate it is utterly impossible in many cases to 
 determine what the exact burden is and where it 
 really rests. In the greater portion of our 
 present tariff we are absolutely "going it 
 blind" as far as the financial consequences of 
 the impositions are concerned. No human mind
 
 Shall Internal Revenue be Retained ? 71 
 
 can trace out the real effect of these customs 
 duties on the industry and the social develop- 
 ment of the people of the United States. This 
 is said neither from the standpoint of a free- 
 trader, nor of a protectionist, nor of a socialist. 
 The present tariff is so complex that no one can 
 tell how far it really aids the industries of the 
 country and how far it cripples them. No one 
 can tell how far it keeps up the wages of work- 
 ingmen and how far it throws the burden of 
 taxation on them. Is it not sufficient to raise 
 two-thirds of the national revenue by these 
 taxes, the burden of which and the incidence of 
 which are so uncertain ? Is it sound finance to 
 abandon an income of $100,000,000 raised by a 
 simple and easy tax on luxuries, the burden and 
 incidence of which we do know, and raise it by 
 taxes, the financial effects of which we do not 
 know? To abandon the internal revenue sys- 
 tem means that the present revenue from cus- 
 toms will be insufficient or barely sufficient to 
 meet the wants of the government in time of 
 peace. That means that any revision of the 
 present tariff will be practically impossible for a 
 long time to come, for no revision of the tariff is 
 possible except in the presence of a surplus reve- 
 nue or the means of providing a revenue in case 
 of a deficit. When the English revised their 
 tariff it was with the help of the income tax. 
 Our means of tiding over any deficiency follow-
 
 72 The National Revenues. 
 
 ing changes in the tariff is the internal revenue; 
 and once destroy the organization and it will 
 never be possible to restore it except in some 
 great crisis like a war. But he would be a bold 
 man who would affirm that the present tariff is 
 perfect even from the standpoint of protection 
 to home industries. He would be a still bolder 
 man who would affirm that the present tariff is 
 just in its burden on the poor man. And no 
 man would be found bold enough to affirm that 
 the present tariff has any claim to consideration 
 as a financial measure. Bat why abandon the 
 possibility of revision either from the standpoint 
 of a sound policy of encouragement to home 
 industry, or of a sound social policy of the 
 exemption of the poor from undue burdens, or 
 of a sound financial policy of making the taxes 
 as productive and as little burdensome as possi- 
 ble ? There is no danger of the overthrow of 
 the doctrine of protection in this country. The 
 democracy is too powerful and finds representa- 
 tion in the legislative body too easily not to be 
 sure to have all its wishes complied with the 
 moment they are expressed. Democracy, too, 
 always demands an immediate remedy for any 
 evil it may be suffering under. Our tendency is 
 and always will be to apply protection to any 
 industry the moment it seems to be languishing. 
 That has been the experience of France since 
 the establishment of the republic. But what we
 
 Shall Internal Revenue be Retained f 73 
 
 want and what democracy will want in the long 
 run is protection wisely applied. We do not 
 want protection for everybody and for every- 
 thing, for that means a burden on everybody and 
 on everything. We do not want protection 
 always because there has been protection once, 
 for that means that we are to pay no attention 
 to changes in industry and methods of produc 
 tion. In other words, even from the protec- 
 tionist standpoint, the tariff must be subject to 
 more or less constant revision. It is not neces- 
 sary to show that from the standpoint of social 
 burdens and of financial policy we should also 
 retain in our hands the power of revising our 
 customs duties when necessary. 
 
 It would also, in my opinion, be a serious 
 political blunder for the federal government to 
 abandon the internal revenue system. No one 
 can tell what the future financial demands of the 
 government are to be. It is always well to have 
 two strings to your bow. In case of failure of 
 the revenue from duties owing to a depression of 
 trade or interruption to commerce, the internal 
 revenue must make good the deficiency. In case 
 of some financial emergency, like a war, the in- 
 ternal revenue system is already established, the 
 people are accustomed to it, and it is easy to in- 
 crease the revenue by increasing the rate of taxa- 
 tion. In case it is abandoned the whole system 
 will have to be re-established, and this will be a
 
 74 The National Revenues. 
 
 matter of time and probably of more or less fric- 
 tion and opposition. Some of the states will doubt- 
 less have appropriated the taxes, and they will 
 have to be ousted, and the United States resume 
 the position which it ought never to have given 
 up. It is said that the internal revenue collector 
 is hateful, and that the man who represents 
 simply the fiscal power of a distant government 
 ought to be removed. I believe that is one 
 reason why he should be retained. The govern- 
 ment of the United States is the government of 
 the whole people, and there is no reason why its 
 officers should not be everywhere. The internal 
 revenue collector is no more hateful than the 
 custom house official, and if the frontier is to 
 have the'one why should not the interior have the 
 other ? The Secretary of the Treasury has said 
 that the two services could be combined so that 
 the expense would be no greater than is neces 
 sary for an efficient customs administration. It 
 would be foolish to abandon these articles to be 
 excised by the different states, for then we should 
 have different rates of taxation, different admin- 
 istrative systems, and infinitely more expense. 
 
 Some persons advocate retaining the internal 
 revenue tax on whiskey but giving it up at least 
 on tobacco. It is said that tobacco, if not a neces- 
 sary of life, is one of the comforts, and to the 
 men who use it it has become practically a ne- 
 cessity. The tax on domestic tobacco rests on
 
 Shall Internal Revenue be Retained ? 75 
 
 the poor and the men of moderate means, for 
 the rich use imported tobacco. To give up the 
 tax on tobacco would relieve the surplus to the 
 extent of thirty millions, which would leave 
 plenty of margin to reduce the customs. 
 
 I do not sympathize with this movement to 
 take off the tax on tobacco. It is an attack on 
 the internal revenue system, and when the tobac- 
 co tax is gone it will be easy to remove the ex- 
 cise on beer, and then on whiskey. I do not 
 believe that tobacco is a necessary of life in the 
 sense that sugar, tea, coffee and blankets are 
 necessaries of life. I think that if we are going 
 to help the poor man we had better give him 
 free sugar, salt, iron tools, and woollen clothing 
 for himself and his children. Would not the 
 states immediately tax the tobacco if it were 
 freed from federal taxation, so that the poor man 
 would still miss his cheap pipe ? The tax is not 
 a heavy one. By far the larger portion is paid 
 on manufactured tobacco, at the rate of eight 
 cents per pound, and on cigars at the rate of 
 three dollars per thousand. It is not a very 
 severe burden upon the laboring man to pay to 
 the government one half cent for each ounce of 
 tobacco that he smokes, and for the man of mod- 
 erate means to pay one-third of a cent for each 
 cigar. The number of adult males in the United 
 States is probably about fifteen millions, which 
 would make a tax of less than two dollars a head.
 
 76 The National Revenues. 
 
 We must also remember that this is a tax which 
 the laboring man pays as a rule only on his own 
 consumption, while the tax on sugar or on blan- 
 kets and woollens he pays on the consumption of 
 his whole family. If the tax is too heavy, reduce 
 the rate. Sweep away the petty license taxes 
 on the manufacturers, dealers and peddlers, and 
 make the tax simple and so that the price of the 
 article will be increased only by the amount of 
 the tax. I do not believe that any of the inter- 
 nal revenue taxes should be used for sumptuary 
 purposes. That should be left to the states to 
 regulate by the imposition of licenses or by pro- 
 hibitory laws. 
 
 If, now, the internal revenue is to be retained, 
 the reduction must occur in the customs duties. 
 It has been indicated above where this reduction 
 ought to take place. The sugar duties ought to 
 be entirely removed ; then the duties on raw 
 wool, and gradually those on woollen goods. 
 Then ought to come the duties on salt, lumber, 
 and other raw materials. At the same time we 
 ought to put on the free list all articles the du- 
 ties on which are not protective, and the removal 
 of which would not affect appreciably the pro- 
 tective system. The sugar duties alone would 
 relieve us of fifty millions, and should be entirely 
 removed ; for a simple reduction in the rate 
 would not necessarily reduce the revenue in the 
 same proportion.
 
 Shall Internal Revenue be Retained ? 11 
 
 In regard to the question of what shall be done 
 to get rid of the surplus which has already accu- 
 mulated, and which will accumulate before the 
 new tax laws can go into effect, I see no objec- 
 tion to the plan of Mr. John Jay Knox to anti- 
 cipate the payment of a portion of the interest on 
 the bonds, and to substitute two and one-half 
 per cent bonds for the present four and four and 
 a half per cents. 
 
 RICHMOND M. SMITH.
 
 A DEFENSE OF THE PROTECTIVE POLICY. 
 
 BY PROFESSOR ROBERT ELLIS THOMPSON, OF THE UNIVER- 
 SITY OF PENNSYLVANIA. 
 
 My views on the duty of Congress in the mat- 
 ter of national taxation and revenue are based 
 upon a study of the fiscal history of our govern- 
 ment, carried on for more than fifteen years in 
 the discharge of the duties of my professorship. 
 
 In 1787-89 the states surrendered to the nation 
 the right to impose duties on imports and ex- 
 ports. They did so in compliance with the 
 necessities of the country at that time. They did 
 not suppose that they also were giving up the 
 other great form of indirect taxation excises 
 upon the manufacture and consumption of certain 
 commodities. They have found by experience 
 that this also was given up at that time, and 
 that nobody but the national government can 
 levy such taxes, except in the form of licenses to 
 carry on certain kinds of business. As these 
 licenses bring in but a small revenue, the states 
 and the local governments inside the states have 
 to provide for their needs by direct taxes on 
 houses, land, incomes, and personal property. 
 The consequence is that their revenues are hard 
 to collect and the influence of the tax-payer 
 78
 
 Defense of Protective Policy. 79 
 
 keeps the tax-rate down to the lowest figure pos- 
 sible. 
 
 In 1T8Y-89 there was also a transfer of certain 
 duties and their expenses from the states to the 
 nation. But the spirit of colonial jealousy, 
 which still prevailed at the formation of our gov- 
 ernment, made the transfer as small as possible. 
 When we compare the American with any other 
 system of government, we find our national gov- 
 ernment has less to do, and the local governments 
 it includes, has more, than under any other 
 fiscal system. The states gave up all the easy 
 and ample sources of revenue, and yet retained 
 nearly all the expensive functions of administra- 
 tion. From this, two bad consequences have 
 followed : 
 
 1. The work left to the states has been done 
 very badly. The tax-rate has been low in most 
 of them, and kept low to attract capital and in- 
 dustry. In a few, as for instance Massachusetts, 
 it has been very high, and industries not specially 
 favored by local circumstances have been driven 
 from the state. In Boston, nearly everything 
 you see bears the mark of some town in the 
 Middle States as the place where it was produced. 
 In the average American state the roads are dis- 
 graceful to our civilization, the schools starved, 
 illiteracy on the increase. And many have been 
 tempted by poverty to the partial or complete 
 repudiation of their debts.
 
 80 The National Revenues. 
 
 2. A surplus of national revenue has been a 
 constantly recurring fact in our fiscal history. 
 Hamilton forestalled its early appearance by the 
 assumption of the debts of the states, soon after 
 the government was set going. Jefferson noti- 
 fied Congress of its approach in 1806, protested 
 against any reduction of the tariff to get rid of it, 
 and proposed rather to amend the Constitution 
 so as to transfer more duties and expenses to the 
 national government. The war of 1812 post- 
 poned the appearance of a surplus until Jack- 
 son's time. But he foresaw it, and in his first 
 message to Congress, in 1829, he advised that 
 the surplus be distributed among the states. 
 This was actually done in 1836, but the tariff of 
 1835, and its consequence, the panic of 1837, re- 
 moved the need of it by reducing the revenues 
 of the government below its expenses. But dis- 
 tribution had worked so well that the Whigs, in 
 1842, tried to make it a permanent feature of 
 our policy, and were prevented by the veto of 
 President Tyler. The Democrats came back to 
 power, and their tariff legislation and fiscal mis- 
 management staved off a surplus so well, that 
 when the war for the Union broke out the 
 country owed a considerable debt, and was pay- 
 ing 6 and 7 per cent interest on much of it. The 
 war, and the debt thus incurred, absorbed all the 
 national revenue until last year, and will again 
 absorb it after 1891.
 
 Defense of Protective Policy. 81 
 
 The present situation is not exactly that of 
 1836. Then the national payment of debt had 
 come to an end. Now we face an interval of 
 only three years in which it must be suspended. 
 Shall we destroy the debt paying power of the 
 national government during those three years, 
 with the certainty of finding great difficulty in 
 restoring it ? All proposals for a wholesale re- 
 duction of revenue are proposals to destroy it. 
 
 It therefore seems best to me to reduce no 
 revenue but that from the tax on alcohol used in 
 the arts, and the duty on unrefined sugar, and 
 the latter only after it has been ascertained that 
 we cannot make sugar from sorghum enough 
 to meet our needs. That delay we owe, not to 
 the sugar planters, but to the Western farmer. 
 I think whiskey and tobacco both are good things 
 to tax. My experience as an educator convinces 
 me that tobacco is doing nearly as much harm to 
 the rising generation as is alcohol to persons 
 of mature years. 
 
 Mr. Cleveland has proposed to reduce the 
 revenue by reduction of the rates of duty im- 
 posed by the tariff. To this there are several 
 weighty objections : 
 
 1. It would be quite impossible to effect any 
 such reduction without patting duties down to a 
 free trade level, and robbing the tariff entirely 
 of its productive character. Very high duties 
 might be reduced to a strictly protective level, 
 6
 
 82 The National Revenues. 
 
 with the result of reducing the revenue. But 
 since the revision of 1883, there are few if any 
 such duties in the tariff. An}' further reduction 
 would tend to greatly increase imports, and 
 would thus increase the revenue, unless the duties 
 are made very low or the free lists greatly in- 
 creased. The bill proposed by Mr. Mills would 
 remit some $22,000,000, by transfers, mostly ob- 
 jectionable, to the free list. But almost the 
 whole -of this reduction would be swallowed up 
 in the increase of revenue which this reduction 
 on other articles would cause, by increasing im- 
 portations. Indeed, the most effective way to 
 reduce the revenue from the tariff, would be to 
 raise the duties on those articles which we can 
 produce at home, but do not, for want of proper 
 protection. Such are tin-plates, worsted and 
 woollen goods, the finer cotton fabrics, iron for 
 structural purposes, and many others. A high 
 duty on these would produce less revenue by 
 diminishing imports. 
 
 (2) There is nothing in the relation of the 
 present tariff to the needs of producers or of 
 consumers, or to the industrial situation gener- 
 ally, which calls for any general reduction of its 
 duties. The producers are favored by it to such 
 an extent that our national wealth is growing 
 more rapidly than ever before. In the long pe- 
 riod, from 1607 to 1850, the total of accumulation 
 was only fourteen billions of dollars. In the
 
 Defense of Protective Policy. 83 
 
 two decades, 1860-1880, we added to this thirty 
 billions, making a total of forty-four billions in 
 1880. We already exceed England in the aggre- 
 gate of wealth, and by 1890 it probably will be 
 found that the average share of Avealth will.be 
 greater in America. At the same the more even 
 distribution of wealth has gone forward. Imagi- 
 nation fastens itself upon the great fortunes 
 of the few. In no other wealthy country, 
 however, is so small a part of the aggregate 
 gathered into what are called " fortunes." The 
 $780,000,000 in American savings banks is only 
 a fraction of the total accumulation of the 
 working classes. In our own city very little 
 is hoarded in that way, most of the savings of 
 the wage-earners being invested in real estate 
 through our building associations. Neither can 
 it be said with truth that consumers are oppressed 
 by the tariff. There is not an article of neces- 
 sity or comfort, whose importation is restricted 
 by the tariff, which is not greatly cheapened 
 since I first saw America in 1857, when the 
 country was enjoying the "blessings" of free 
 trade. Mr. Edward Atkinson reports a fall of 
 from 26 to 46 per cent, along the whole line of 
 necessary articles since 1861, while the yearly 
 wages of a skilled mechanic have risen from 
 $468 to $720 ; and Mr. Atkinson is a freetrader. 
 By enlarging the basis of supply we have put an 
 end to foreign monopolies of our market. By
 
 84 The National Revenues. 
 
 diverting the dormant capital and energies of 
 the nation into manufacturing industries, we 
 have established a home competition which has 
 brought prices to a normal level. Even the 
 consumer who produces nothing and has nothing 
 to sell will find that his money goes farther than 
 it did thirty years ago. But the average Ameri- 
 can is a consumer who also produces, and who, 
 therefore, is interested not only in the price of 
 what he has to buy, but also in the price of 
 what he has to sell. Practically, he buys by 
 exchanging his commodity for others which he 
 needs. And this sort of trade is always most 
 favorable when he can effect such an exchange 
 with his own neighbors and thus save the cost of 
 transportation. Especially the producer of food 
 and of raw materials finds the relation of prices 
 most in his favor when he is located near to the 
 place where these are converted into manu- 
 factured articles. The object of protection is to 
 bring the artisan and the manufacturer into 
 neighborhood with the farmer. The stimulus 
 given to the growth of agriculture by the home- 
 stead law has prevented this being attained as 
 yet. But we are coming fast toward it. Free 
 trade would check the process. 
 
 (3.) The great immigration to the United 
 States, especially from free trade countries like 
 Ireland and Norway, shows that protection has 
 helped to make America more attractive. The
 
 Defense of Protective Policy. 85 
 
 cheapness of everything in money, which is the 
 free trade idol, prevails in these countries to the 
 utmost. Their people fly from this cheapness to 
 a land where the relation of prices is favorable 
 to the producing classes. An Irishman was 
 heard complaining that he could buy as much 
 for a shilling at home as for a dollar in America. 
 "Why didn't you stay there?" he was asked. 
 " Bedad, I couldn't get the shillin'," was his 
 candid answer. His labor, the one commodity 
 he had to sell, would not bring him even the 
 shilling in a country whose industries have been 
 desolated, all but annihilated, by English com- 
 petition. But he could get the dollar in a coun- 
 try which takes care of its industrial interests. 
 That is why 8,620,664 people sought a new 
 home in America during the years 1861-1886, 
 mostly from free trade countries. And yet 
 many of them are seeking to overthrow by their 
 votes the very policy which has made America 
 desirable to them. 
 
 ROBERT ELLIS THOMPSON.
 
 THE READJUSTMENT OF THE REVENUES. 
 
 BY PROFESSOR EDWIN R. A. SELIGMAN, OP COLUMBIA 
 COLLEGE. 
 
 The one great danger which menaces the 
 financial equilibrium and thus the commercial 
 prosperity of the country, is the existence of the 
 surplus. No words are too strong to set forth 
 its demoralizing effects, or the vicious and un- 
 scientific doctrines of which it is the result. In 
 any discussion of the situation from the stand- 
 point of the science of finance, the necessity of 
 curtailing the surplus must be taken for granted. 
 Only on this assumption can any intelligent 
 propositions be advanced. 
 
 The question thus before the country is pri- 
 marily a question of taxation. The necessity of 
 cutting off some of the objects of taxation being 
 granted, the problem is to ascertain from a 
 broad standpoint what are the most fitting 
 sources of national revenue. It would be easy to 
 show that our American system of taxation is wo- 
 fully out of date. There is no civilized country 
 in the world with a greater actual (though 
 not ostensible) inequality in its general tax sys- 
 teman inequality which is not universally per- 
 ceived simply because of the small proportion 
 which our direct taxes bear to the income of the 
 
 86
 
 Readjustment of Revenues. 87 
 
 people. In a well digested system the national 
 taxation should be so arranged as to correct in 
 some measure the apparent inequalities of our 
 state and local taxation. But it would be going 
 too far out of the way in this place to show in 
 what these inequalities of local taxation consist, 
 and in what lines a reform should take place. 
 We must confine ourselves to the national system 
 and to suggestions for its improvement. 
 
 Let us grant that indirect taxes are most suit- 
 able for the general government. Ought we 
 now to curtail the import duties or the internal 
 revenue ? The answer is unfortunately not one 
 that can be given solely by the science of finance. 
 From the standpoint of finance the customs 
 tariff would be simply a tariff for revenue, and 
 its provisions could be so arranged as to produce 
 the greatest revenue with the smallest burdens. 
 But ever since the beginning of our government 
 the revenue feature of the tariff has been 
 inextricably intertwined with the industrial or 
 protective feature. It has been and will be for 
 many years impossible to divorce these two con- 
 siderations. And it is doubtful whether they 
 ought to be entirely divorced. The doctrine of 
 free trade, even in the sense of tariff for revenue 
 only, can no longer claim absolute and unswerv- 
 ing allegiance from the advocates of historical 
 economics. The sway of the Manchester school 
 is gone, never to return. Sound economic doc-
 
 88 The National Revenues. 
 
 trine does indeed regard the freest trade as 
 the goal, the aim ; it looks upon protection as 
 permissible only so far as it may eventually lead 
 to free trade. A protection which does not pro- 
 tect, and which will not in a fairly measureable 
 period render itself unnecessary, is a fraud and 
 a delusion. Just as the only justification of 
 state interference in general is the educa- 
 tion of the citizens to liberty, so the only 
 national plea for protection is the expectation 
 that it will make free trade possible. That 
 this expectation has frequently failed of realiza- 
 tion is clear to any student of our tariff history. 
 But it is not permissible to claim with the or- 
 thodox free traders that this expectation can 
 never in any particular case be realized. 
 
 While it may therefore be freely confessed 
 that many of the protectionist's arguments are 
 unsound, and that our present tariff may fairly 
 lay claim in some respects to the classic term 
 " tariff of abominations," it would be highly in- 
 judicious to demand a sweeping reform in the 
 sense of tariff for revenue alone. We can not 
 make tabula rasa of all our protective duties. 
 The most feasible plan seems to be to abolish 
 or diminish the duties on raw materials as far as 
 possible, and on those commodities in which ex- 
 perience and study have disclosed an incapacity 
 to be protected or "nurtured" into vigorous 
 life. To protect simply for the sake of main-
 
 Readjustment of Eevenues. 89 
 
 taining an otherwise unsuitable industry is, with 
 rare exceptions, to impose a burden on the pub- 
 lic without obtaining any compensating advan- 
 tages in the end. 
 
 A horizontal reduction of import duties, such 
 as is meant by " tariff for revenue " alone, and 
 which would imply in our present situation a 
 complete retention or perhaps even an increase 
 of the internal revenue taxes, seems therefore 
 not to recommend itself. But does it follow, 
 on the other hand, as is frequently claimed, that 
 the whole internal revenue system should be 
 abolished and entire reliance be placed on cus- 
 toms duties ? To this proposition the science of 
 finance can give a categorical answer. 
 
 Indirect taxes were in their origin indeed im- 
 posts or impositions, rather than taxes. The ex- 
 cises were at first entirely arbitrary, and sinned 
 against the fundamental principles of equality 
 and universality of taxation. Even at the for- 
 mation of the present government, the popular 
 feeling against excises was exceedingly strong. 
 They were declared by many unworthy of free 
 citizens. But at present we must regard the 
 matter from a wider point of view. Reliance 
 on any one single form of taxation has become 
 an impossibility in our highly complex civiliza- 
 tion. The inequality and inquisitorial character 
 of our excises are to-day certainly no greater 
 than in the case of our chief direct taxes. But,
 
 90 The National Revenues. 
 
 above all, attention must be given to this one 
 controlling consideration. A fundamental de- 
 mand of a sound system is elasticity of revenue. 
 Such elasticity can be obtained only by a gen- 
 eral income or property tax, or by a well con- 
 sidered excise system. But revenue from 
 customs duties is essentially inelastic. As a 
 general income or property tax seems out of the 
 question for the national government (although 
 from the standpoint of pure finance its expedi- 
 ency might at least be discussed) it follows that 
 a retention of the internal revenue is necessary, 
 even if only in part. To completely abandon 
 all the internal taxes, with the entire machinery 
 of assessment and collection, would be a great 
 mistake. To-day we have a surplus ; in a few 
 years, whether owing to some particular exi- 
 gency or not, we may have a deficit. To again 
 call into being the whole system of internal 
 taxes, as we did in the war of 1812 and during 
 the rebellion, would be as it was then, a slow 
 and laborious undertaking. But with the ma- 
 chinery and the system already existing, it would 
 be easy to engraft on the existing plan the new 
 additions which might become necessary. 
 
 Looked at from the broadest possible stand- 
 point, the best and most elastic system would be 
 a form of income tax. I know of the wide- 
 spread opposition to this tax in the United 
 States. But if its history will ever be impar-
 
 Readjustment of Revenues. 91 
 
 tially written, it will be seen that the outcry was 
 in u great measure a groundless one. A care- 
 fully devised general income tax like that in 
 Great Britain or on the continent could attain 
 two results. It could as a supplementary tax 
 most surely correct the inequalities of our State 
 and local systems, and it would be far more 
 elastic than any other system. We would not 
 then be chronically troubled with the danger of 
 surplus and of deficit financiering. But in our 
 actual situation, where there is no proposition 
 from any side for a national income tax, and 
 where the chief question is the abolition or 
 retention of our internal taxes, the answer given 
 by the science of finance is sufficiently plain: 
 Retain in part at least the internal revenue. 
 
 The proposition to abolish both the whiskey 
 aud the tobacco taxes may hence be brushed 
 aside as unworthy of acceptance. As to the 
 choice between the tobacco tax and customs 
 duties, it is perhaps difficult to give a definite 
 answer. Certain portions of the tariff should 
 at all events be immediately abrogated. Taxes 
 on raw materials like that on wool have at 
 present no adequate justification. What the 
 wool grower gains the woollen manufacturer 
 loses, and the public at large certainly derive no 
 compensating advantages from the increased 
 price. The same is true of many other raw 
 materials. No consideration except the vague
 
 92 The National Revenues. 
 
 sense of property in vested interests can right- 
 fully demand the further retention of these 
 taxes. The hollovvness of the pauper labor 
 argument need, of course, not be exposed to 
 students of political economy- But the absurdity 
 of a system which attempts with one hand to 
 bolster up our manufacturing industries, and 
 with the other to handicap them by increasing 
 the prime cost, must become painfully apparent 
 to all logical minds. The first condition of suc- 
 cessful competition with foreign products is 
 liberation of the raw materials. 
 
 To discuss the separate points further than 
 this would be difficult in the present short paper. 
 It would be necessary to call attention to many 
 other considerations, such as regard for the 
 interests of the poor, choice of those commodi- 
 ties whose supply is least fluctuating, and the 
 selection of luxuries as pre-eminently fit objects 
 of taxation. But a tariff arranged on truly 
 scientific principles can be attained only when 
 based on financial and not on protective consid- 
 erations. The complexity of the problem arises 
 chiefly from the fact that a compromise is neces- 
 sary between the tariff for revenue and the tariff 
 for protection. EDWIN R. A. SELIGMAN.
 
 THE THEORY AND PRACTICE OF PRO- 
 TECTION. 
 
 BY PROFESSOR JESSE MACY, OF IOWA COLLEGE. 
 
 The system which will in the end best conduce 
 to the protection and upbuilding of American 
 industries is to be found through a low rate of 
 taxation. The United States has enjoyed an 
 advantage over competing nations of the old 
 world because, notwithstanding the cost of the 
 civil war and the extinction of a large portion 
 of the national debt, the rate of taxation has 
 been comparatively low. When the civil war 
 was ended the armies of the two sections were 
 added at once to the productive energies of the 
 country. Had we kept these armies in the field, 
 and had we called into existence a navy of cor- 
 responding dimensions, our national debt could 
 not so easily have been paid, and all the produc- 
 tive industries of the country would have been 
 crippled by excessive taxation. With the final 
 disappearance of the national debt and a corre- 
 sponding relief from the burdens of taxation 
 American industries will be still more favored. 
 Every extravagant or unnecessary expenditure 
 is an injury to the prosperity of the people. No 
 form of taxation can be other than a burden, and 
 as such it cripples the industries of the country. 
 93
 
 94 The National Revenues. 
 
 The people of the United States believe most 
 thoroughly in a policy of encouragement to 
 home industries. Often the citizens of a town 
 pay large sums of money to establish in their 
 midst a new wealth-producing industry. Or, 
 they exempt for a term of years from the bur- 
 dens of local taxation new manufactories. This 
 may often be a wise policy. An injury for the 
 time is incurred by the older industries, but in 
 the end a helpful burden-sharer is secured. As 
 with a town or neighborhood, so with the nation 
 at large ; certain great industries may be intro- 
 duced and permanently established by burdening 
 for a term of years the industries already estab- 
 lished. This may be done through a protective 
 tariff. Such a tariff is for the time being a bur- 
 den and an injury to the older industries already 
 established, but in the end this injury may be 
 more than repaired by the advantages arising 
 from the new industry. 
 
 To apply to our existing system of taxation 
 the teachings of political economy, it is neces- 
 sary to understand clearly certain particulars in 
 this teaching. Not every doctrine which has 
 borne the name of protection has received sup- 
 port from recognized economists. Henry C. 
 Carey has perhaps done more than any other 
 writer to commend to Americans a doctrine of 
 protection, and he taught most explicitly that a 
 protective tariff could not properly be relied
 
 Theory and Practice of Protection. 95 
 
 upon for the revenues of the government. It is, 
 he maintained, a temporary expedient to attain a 
 definite object, and when that object is attained 
 the tax should cease. The object of protection, 
 as defined by Carey, was first to diversify 
 American industries and then to establish free 
 trade with all the world. The statesmen and 
 economists who first taught a doctrine of pro- 
 tection did not teach that a permanent burden 
 should be laid upon the many industries for the 
 benefit of a few. They taught also that one 
 object of protection was to make commodities 
 cheaper. They admitted that for a time the 
 particular commodity favored by the protective 
 tariff would be made dearer, and that those 
 buying the dear commodity are thus injured. 
 But, when the new industry has been secured, 
 the commodity would be cheaper than it would 
 otherwise be, and thus the injury would be 
 repaired. The original protectionists were not 
 opposed to a policy of free trade. Carey com- 
 plained that the so-called free traders had filched 
 the name which more properly belonged to his 
 school. He looked forward to the time when 
 free trade should be established upon an endur- 
 ing basis. The free trader maintained that all 
 should have the right to buy in the cheapest and 
 sell in the dearest market. Protectionists admit- 
 ted that this is true, but claimed that a commu- 
 nity or a nation should also have the right to
 
 96 The National Revenues. 
 
 buy anything they pleased, included a new 
 wealth-producing industry. The doctrine of 
 protection as thus stated is not in conflict with 
 the doctrine of free trade, but is a rather more 
 comprehensive statement of the doctrine. 
 
 John Stuart Mill is not ordinarily classified as 
 a protectionist, yet in one famous paragraph he 
 entirely justifies on scientific grounds the theory 
 that, in a new country, for the attainment of a 
 new industry, a temporary protective tariff may 
 be imposed. Professor Sidgewick, of Cambridge, 
 England, in a more recent work on Political 
 Economy, maintains that on pure theoretical 
 grounds the protectionists have an advantage 
 over so-called free traders; that a theory of pro- 
 tection may be maintained. The difficulty with 
 protection is not so much in the theory as in the 
 practice. It is difficult to forsee just what indus- 
 tries may be introduced and in a reasonable time 
 become self supporting. Mistakes may be made 
 in the selection of the industries to be favored 
 by a protective tariff. By mistakes in this re- 
 gard a nation may have fastened upon the people 
 a group of exotic industries which tend to per- 
 manently injure all others. Professor Sidgewick 
 says that because of the practical difficulties 
 which arise in working out a policy of protection 
 it may in the end be wiser for statesmen to ad- 
 here to the narrower and less scientific theory of 
 free trade. The strict free trade theory would
 
 Theory and Practice of Protection. 97 
 
 require that a duty should be collected only on 
 commodities not produced in the country ; or, 
 if a tax is collected on an import which is pro- 
 duced in the country, an excise equal to the duty 
 should also be collected from the domestic pro- 
 duct. Thus a duty upon spices or coffee is not 
 inconsistent with the free trade theory. Nor is 
 a duty on tobacco, if the duty is not more than 
 the excise on tobacco. 
 
 If we examine our actual tariff list we find 
 that it is not consistent with any theory of taxa- 
 tion that has ever been taught. Some items in 
 the list are not inconsistent with the theory of 
 free trade. Other items were, at least originally, 
 justified by the doctrine of protection as set forth 
 by standard authorities, while some of the items 
 are not and never were justified by any rational 
 theory of taxation. As an illustration of the 
 latter class, I would mention the duty on timber 
 and lumber. The changing of wooded lands 
 into barren wastes is not a wealth-producing in- 
 dustry. The government has expended large 
 sums of money to preserve forests, while at the 
 same time it has maintained a tax which has 
 led directly to a wasteful destruction of most 
 valuable forests. Such a tax is not a protective 
 tariff, it is a destructive tariff. Besides the 
 destruction of wealth which has been caused 
 by the duty on timber, every wealth-producing 
 industry in the country has been permanently 
 7
 
 98 The National Revenues. 
 
 injured. Timber and lumber have been made 
 dear, and for the injury thus inflicted there is 
 no compensation. 
 
 The duty upon wool is a tax not justified by a 
 rational doctrine of protection. The majority 
 of farmers are consumers and not producers of 
 wool. It is not fair that these should be 
 burdened for the benefit of the few. Common 
 woollen goods should be furnished to the masses 
 of the people as cheaply as they can be made. 
 Our woollen manufactories should be permitted 
 freely to purchase their materials in all parts of 
 the world. They will then be able to compete 
 with others in the sale of common woollen goods. 
 A permanent duty may properly be laid upon 
 some of the finer grades of cloth. This may be 
 justified on the ground of luxury. The burden 
 will fall chiefly upon those best able to bear it, 
 and our own manufacturers will be slightly fa- 
 vored and encouraged in the production of 
 clothes of the highest grades. A similar policy 
 should hold in dealing with iron and all other 
 materials. The burden should be removed first 
 from the crude forms and those most widely 
 used. This will serve as a direct stimulus to 
 the great industries not favored by a monopoly 
 tariff. 
 
 In dealing with our actual list it may be found 
 as a matter of experience that we have some 
 costly and independent industries called into ex-
 
 Theory and Practice of Protection. 99 
 
 istence by a mistaken tariff. It would not be 
 just or right now to deal with our tariff 
 quite as if these industries did not exist. It 
 may be wise to continue to support some of 
 them for a good many years, rather than pursue 
 an alternative policy. Yet such industries 
 should hold a language and decorum properly 
 befitting their condition. The revision of our 
 tariff should proceed with a firm and steady 
 hand until by actual experiment the really 
 "pauper" industries are discovered. It will be 
 impossible to state in advance who are paupers 
 and who are not. Many may think themselves 
 paupers who would find through the relief from 
 present burdens a prosperity never before 
 realized. J. MACY.
 
 THE CERTAINTIES OF THE TARIFF 
 QUESTION. 
 
 BY PROFESSOR JOHN B. CLARK, OP SMITH COLLEGE. 
 
 A hundred years of discussion concerning pro- 
 tective tariffs have not gone for nothing. Some 
 things are settled. They may be disputed by 
 the unintelligent ; but men of discernment who 
 have given attention to the subject are agreed 
 concerning them. These points of agreement do 
 not decide the entire question ; it is possible to 
 admit them and to continue a protectionist, a 
 free trader, or a conservative revenue reformer. 
 It is possible for a man belonging to either of these 
 three classes to give a reason for his faith; but 
 it must be a different reason from that which 
 would have served the purpose twenty-five years 
 ago. A discussion of the tariff may with ad- 
 vantage begin by a statement of these incon- 
 trovertible points. 
 
 1. A protective duty cannot raise wages in 
 the protected industry as compared with the 
 standard prevailing in other occupations. Spin- 
 ners of silk do not get more per day than 
 spinners of cotton, by reason of the high duty 
 on silk thread; nor would they do so if the duty 
 on silk were quadrupled. If a tariff raises 
 wages at all it must accomplish it by increasing 
 
 100
 
 Certainties of the Tariff Question. 101 
 
 the general reward of labor. It must raise 
 wages in agriculture, in transportation, and in 
 commerce, as well as in manufactures. 
 
 2. Real wages are to be estimated, not in 
 money, but in commodities. To give a work- 
 man ten per cent, more in money than he for- 
 merly received, and to raise by fifteen per cent 
 the prices of the articles he must buy, would be 
 to lower his wages. It follows from these two 
 principles that no tariff can raise the wages of 
 any workman except by increasing the real re- 
 ward of all workmen. If it is to benefit a shoe 
 laster or an iron molder it must at the same time 
 give to the plowman on the Dakota farm and to 
 the cow-boy on the Montana ranch more com- 
 modities for a day's labor. 
 
 3. Wages are gauged in amount by the pro- 
 ductiveness of industry. When land can be had 
 for the asking, wages are what a man can get by 
 cultivating it ; and if the land is both fertile and 
 accessible, wages are high. Manufacturers 
 must pay enough to induce their men to keep 
 out of agricultural life. They can afford to pay 
 this amount if their business creates as large a 
 product as could be created by the same expen- 
 diture of labor and capital upon the soil. If 
 the product of the business is smaller it cannot 
 survive. Natural selection insures, in a new 
 country, the survival of the most productive 
 industries. 
 
 n-f Southern California
 
 102 The National Revenues. 
 
 4. High wages, caused by the great produc- 
 tiveness of labor applied to land, are the primary 
 fact in the history of American industry. Be- 
 fore the war of 1812, and the imposition of 
 the tariff of 1816, only those industries could 
 subsist that could afford to pay the high wages 
 obtainable in agriculture. These were the indus- 
 tries that created the largest real product. Pro- 
 tection diverts labor to less productive occupa- 
 tions. 
 
 (5) A tariff that "protects" anything does 
 so by taxing the more productive industries in 
 order to sustain the less productive. A protec- 
 tive duty on woolen goods does not enable a 
 day's labor in a mill to create a particle more of 
 cloth than it would have created before ; but it 
 causes a day's labor on the farm to purchase a 
 smaller amount of cloth than it would otherwise 
 have done. A tariff on manufactured articles 
 lessens the economic product of agriculture ; it 
 gives a bushel of wheat a smaller purchasing 
 power. It leaves to the farmer a smaller wage- 
 paying power. As agricultural wages set the 
 standard to which the returns of all labor con- 
 form, the protective duties lower that general 
 standard. Labor in the mill must henceforth be 
 paid at the rate that now prevails on the farm. 
 That, however, is a reduced rate ; protection has 
 lessened the reward of labor even in the pro- 
 tected industry.
 
 Certainties of the Tariff Question. 103 
 
 (6) It follows that protection necessarily 
 inflicts an economic loss on the country that 
 resorts to it, by diverting labor and capital from 
 industries that create a large real product to 
 those that create a smaller one. It lessens 
 general wages by lowering the standard to which 
 they must conform. It makes the country 
 poorer, and inflicts the loss largely on the poorer 
 class within the country. 
 
 Do these points, if conceded, decide the tariff 
 question as now presented in the United States ? 
 Not at all. We have to deal with an existing 
 tariff, and we know perfectly well that we shall 
 not, in fact, so deal with it as to crush an exist- 
 ing industry. A business that needs protection 
 will continue to have it, whatever may be the 
 effects upon the country at large. Moreover, it 
 is not certain that the loss entailed by protection 
 will prove permanent. The "infant industry" 
 argument has some basis in fact and reason ; and 
 recent experience enables us to so supplement it 
 as to add to the certainties of the tariff question 
 a point that somewhat favors the protective side, 
 and that serves to reconcile us to the impossi- 
 bility of any radical changes in our present 
 system. 
 
 Only unproductive industries need protection; 
 and this unproductiveness may diminish with 
 time. The processes may be learned, a market
 
 104 The National Revenues. 
 
 for the goods may be secured, and new ma- 
 chinery may be invented. The infant may actu- 
 ally grow. But the question that decides the 
 capacity of an industry to survive is its relative, 
 not its absolute, productiveness. It needs only 
 to be as productive as agriculture in order to be 
 able to pay equally high wages and to stand 
 unprotected on its feet. What if agriculture 
 itself becomes less productive with time ? Is it 
 not clear that industries that formerly could not 
 subsist may then do so? 
 
 The history of the United States presents two 
 striking facts; and to place them in juxtaposi- 
 tion is all that I need farther to attempt. In- 
 fant agriculture has been abnormally productive. 
 It has not been land culture, in any true sense, 
 but land spoliation. It has been a wresting 
 from the soil of its original endowment of fer- 
 tility. It has been an exporting of the better 
 elements of our soil in the ships that have 
 carried wheat and flour to Liverpool. Infant 
 manufactures have been abnormally unproduct- 
 ive. They have incurred the initial losses inci- 
 dent to experimentation, to imperfect work and 
 lack of established markets. Time makes them 
 more productive. Time makes agriculture less 
 productive, and lessens the standard of profit- 
 ableness that an industry must attain in order 
 to subsist without protection. Many particular 
 duties are tending to become unnecessary; the
 
 Certainties of the Tariff Question. 105 
 
 industries that they protect are advancing 
 toward a point where they can subsist without 
 them. When that point is reached the Ameri- 
 can manufacturer can supply the home demand, 
 and without farther lowering his price can hold 
 his market against the foreign competitor. The 
 duty that has protected him will become inop- 
 erative. 
 
 It is among the certainties of the subject that 
 duties on raw materials tend to prevent manu- 
 factures from attaining the point of independ- 
 ence. They are wholly irrational. Their 
 origin is political, not economic. They grow 
 out of the scramble that takes place in the lob- 
 bies of Congress for sops for many constituen- 
 cies. A vote-catching policy on the part of men 
 and parties may save some of them for a time; 
 in reason they are already condemned, and by 
 the test of farther experience they are destined 
 to be more emphatically condemned. 
 
 JOHN B. CLARK.
 
 TAXATION AND APPROPRIATION. 
 
 BY PROFESSOR WOODROW WILSON, OF BRYN MAWR 
 COLLEGE. 
 
 Probably a very considerable majority of the 
 thinking people of the country are of the opin- 
 ion that some sort of revision of our present 
 tariff laws ought to be undertaken. Those laws 
 were passed under very exceptional circum- 
 stances; they are full of complexities and absurd- 
 ities of the most irritating and unnecessary 
 sort ; and they yield -a revenue greatly in excess 
 of the needs of the government, as well as at 
 some points altogether unnecessary for purposes 
 of protection. So ripe are they for alteration, 
 indeed, that probably the more far-sighted even 
 among those who are most benefited by them 
 would prefer to endure considerable reductions 
 of their present advantages if only the changes 
 made gave promise of permanency of policy 
 rather than continue to undergo the constant 
 alarms of legislative tinkering with which a 
 perpetuation of the anomalies and extrava- 
 gances of the existing system is sure to vex 
 them. The question is, What sort of a re- 
 vision; on what lines and for what purposes? 
 
 No discussion of the interior defects of our 
 present tariff laws would be adequate which did 
 
 106
 
 Taxation and Appropriation. 107 
 
 not go into their details ; and probably very few 
 besides treasury experts could handle those de- 
 tails with any confidence. For those who look 
 at the tariff from the outside, in its general fea- 
 tures and in its bearings upon the general ques- 
 tions of federal finance, interest centres in the 
 three facts of a protective policy, an enormous 
 surplus, and a choice between license taxes on 
 whiskey and tobacco and import duties as sources 
 of revenue. At heart the tariff question is a ques- 
 tion of taxation, and such a question of taxation as 
 carries with it some of the most momentous 
 questions of government. The existence of a 
 revenue greatly in excess of the needs of the 
 government is generally looked at almost exclu- 
 sively in the light of its influence on Congress ; 
 a more suggestive view of it may be had if it be 
 considered in its effects upon the political habits 
 of the people at large. Of course, with unlimited 
 sums of money awaiting its vote, Congress will 
 be constantly under an almost irresistible tempt- 
 ation to spendthrift habits of appropriation. It 
 may be expected to look about diligently for 
 thorough means of spending the immense income 
 at its disposal. It is even under a sort of finan- 
 cial constraint to spend. Not to spend is to 
 allow money to be piled up in the treasury ; and 
 no extravagance can be worse in its financial 
 results than that. The whole case is bad enough;
 
 108 The National Revenues. 
 
 but apparently betterment is past praying for so 
 long as the surplus exists. 
 
 Look now at the other side of the picture, the 
 relations of the people to their government. 
 Money is being spent without new taxation ; and 
 appropriation without accompanying taxation is 
 as bad as taxation without representation. The 
 people do not feel, any more than Congress feels, 
 that the money expended so lavishly is being 
 extracted from the pockets of commerce and the 
 professions. It was, so to say, extracted a long 
 time ago, when the tariff laws were enacted. 
 The policy of protection is neither here nor 
 there, when the matter is looked at from this 
 point of view. That policy was fixed upon long 
 ago ; so far as present legislation is concerned 
 taxation is based upon no policy at all there is 
 no taxation. Congress and the people are 
 accepting a fact ; they are not choosing a course 
 of action. 
 
 In order to the preservation of political health 
 under a popular constitution, taxation and appro- 
 priation must go hand in hand. There is as 
 much need, and the same need, that taxation 
 should be annually renewed, annually re-origin- 
 ated, as that appropriations should be annually 
 renewed and re-originated. If protection be 
 considered a legitimate object of taxation, it 
 may annually be declared so, just as taxation to 
 meet the running expenses of the government is;
 
 Taxation and Appropriation. 109 
 
 and it ought, if sound political views are to pre- 
 vail, to be thus annually voted an object of taxa- 
 tion. The destination of the revenue so raised 
 ought also to be every year determined ; the 
 revenue, over and above government expenses, 
 ought to be applied to some particular object 
 every year, to the last dollar that it is safe to 
 promise in advance of the verification of calcu- 
 lations. Nobody claims that protection is equally 
 desirable and beneficial at all times for all coun- 
 tries, as the payment of debts and their interest 
 is. The conditions of the trade and industry of 
 a country change from decade to decade, and 
 even from year to year, and tariffs ought to be 
 sensitive to such changes. If the tariff be the 
 embodiment of a just policy, as it is, untouched 
 and inflexible from year to year, how much 
 more just might it be made by careful modifica- 
 tions periodically undertaken! 
 
 At any rate, the people ought to be made to 
 feel their fiscal policy all the timej otherwise 
 they will never give regular or adequate head to 
 it. And there would seem to be no room for 
 doubt that the country feels the whiskey and to- 
 bacco license tax much more than it feels the 
 duties on imports. It shows consciousness of the 
 one, habitual unconsciousness of the other. 
 These license taxes, then, are the best indirect 
 taxes that can be laid, for a double reason: they 
 are taxes which the people or at any rate a
 
 110 The National Revenues. 
 
 very talkative and imperative part of the people 
 feel that they are paying; and they fall upon 
 articles of luxury, not upon articles of necessity. 
 An ideal financial policy is easy enough to de- 
 scribe and wish for; it has hitherto in the world's 
 experience proved a very difficult thing to attain 
 to. Such a policy would have, to suit the 
 United States at present, one special feature: it 
 would not hasten the payment of the national 
 debt, because haste in that direction under exist- 
 ing circumstances would involve more inconven- 
 iences, both financial and political, than ad- 
 vantages of any sort. Such a policy an ideal 
 financial policy would include for every state 
 the joining hand to hand of appropriation and 
 taxation; would make them inseparable parts of 
 one and the same policy. Whatever may be 
 taken as the ground and measure of taxation 
 whether the expenses of the government plus 
 protection, or the expenses of the government 
 only that ought also to be made the ground 
 and measure of appropriation. No nation, if it 
 is to retain the acute sense of responsibility 
 which ought always to accompany the exercise 
 of the financial functions of the body politic, 
 ought ever to have a policy of taxation without 
 having a policy of appropriation of exactly the 
 same proportions; or ought ever to let the two 
 policies lose their proper sequence, which is, ap- 
 propriation first, taxation afterwards; or ought
 
 Taxation and Appropriation. Ill 
 
 ever to decide on taxation for a longer period 
 than that for which it votes appropriations. 
 The only way to bring Congress to sober and 
 conscientious ways of spending money is to insist 
 that it assume the responsibility of raising, by 
 its own distinctly adopted plans, the money 
 which it spends; and the only way in which to 
 interest public opinion in every spending vote is 
 to put a taxing vote alongside of it. If, there- 
 fore, the financial policy of the country is to be 
 really and effectually reformed, Congress must 
 not be allowed to stop at recasting in some way 
 the present tariff ; it must be forced by a steady 
 public opinion to marry the two sides of its fis- 
 cal policy, to tax as openly and as often as it 
 spends. 
 
 There is another, an administrative, side to 
 the subject. We can never tell whether or no 
 we have an economical administration until 
 appropriation and taxation be brought within 
 sight of one another. There can be no 
 standard of expense while there is no stand- 
 ard of revenue. Economy can be nothing but 
 a matter of mere good conscience among the 
 heads of departments so long as there is no 
 question at all of having to ask the people for 
 money. It will become a matter of careful and 
 watchful policy only when it involves calling on 
 the stockholders for fresh subscriptions. 
 
 WOODKOW WILSON.
 
 EQUALITY IN TAXATION. COMMERCIAL 
 UNION WITH CANADA. 
 
 BY PROFESSOR ANSON D. MORSE, OP AMHERST COLLEGE. 
 
 1. " It being generally conceded that Con- 
 gress must cut off so-me existing sources of revenue, 
 * * * in what way should the reductions be made 
 and upon what governing considerations ? " 
 
 The " governing consideration " should be, I 
 think, to bring the national revenue system into 
 accord with the maxim that "the subjects of 
 every state ought to contribute towards the sup- 
 port of the government as nearly as possible in 
 proportion to their respective abilities." 
 
 By far the larger part of the national revenue 
 is raised on articles in common use, such as sugar, 
 rice, fruits, and the products of wool, or on ar- 
 ticles like tobacco, beer, and whiskey, the use of 
 which is more common among the poor than the 
 rich. 
 
 Is this inequality a hardship ? Conclusions 
 based on^- capita apportionments are mislead- 
 ing, for the proper unit on which to base calcu- 
 lations is not the individual but the family. It 
 is those wage earners who provide for large 
 families on whom the burden of these taxes, 
 whatever it maybe, must rest most heavily ; and
 
 Equality in Taxation. 113 
 
 it is towards this class in particular that public 
 policy ought to be not only just, but humanely 
 considerate. Perhaps the fairest way of deter- 
 mining the question is to find out how the ex- 
 penditures of the poor are affected by the taxes 
 on some articles of common use. According to 
 the American standard of living, sugar is one of 
 the "necessaries." In well-to do families its 
 cost considerably exceeds that of flour. It is, in 
 fact, one of the heavy items of family expendi- 
 ture. In order to have a basis of fact for con- 
 clusions, I have ascertained the outlay for sugar 
 made by five families of the town in which I 
 live : 
 
 1. Six persons $47.00 
 
 2. Four " 21.00 
 
 3. Six " - 17.50 
 
 4. Four " 27.00 
 
 5. Five " - 26.00 
 
 All these own comfortable homes, but derive 
 their support in the main from wages. All are 
 thrifty, and ambitious to educate their children, 
 land 2 are the families of skilled laborers; 3, 4and 
 5 of unskilled, whose highest wages are $1.50 per 
 diem. Except in the case of (1) the expenditure 
 is considerably less than in families of like 
 numbers but of larger means If we estimate 
 that portion of the price of sugar due to the 
 tax at forty per cent :
 
 114 The National Revenues. 
 
 (1) pays $18.80 
 
 (2) " - 8.40 
 
 (3) " 7.00 
 
 (4) " - 10.80 
 
 (5) " 10.40 
 
 The average is $11.08, an amount which fami- 
 lies dependent on wages must feel as a serious 
 addition to their necessary expenditures. The 
 share of state, county, and town taxes of 
 
 (1) is - - $12.83 
 
 (2) " 15.24 
 
 (3) " - -r.rr 
 
 (4) " 9.65 
 
 (5) " 12.64 
 
 In two cases the sugar tax exceeds all these 
 other taxes. The average is $11.82, or .74 
 greater than the average sugar tax. It is evi- 
 dent that in the case of larger and less thrifty 
 families, which do not own their homes, the 
 sugar tax must considerably exceed what is 
 assessed by state, county, and town. The only 
 risk of error in the above calculations lies in the 
 assumption of forty per cent as the portion of 
 the price due to national taxation. The figures 
 can easily be corrected if that estimate should 
 prove either too high or too low. 
 
 The enhanced cost of the products of wool 
 must also be a heavy burden to the poor. Ow- 
 ing to the nature of our climate, these products
 
 Equality in Taxation. 115 
 
 must always constitute one of the largest items 
 of necessary expenditure. A family may, with 
 out injury to health, economize closely in the 
 use of sugar, but to do so in the case of woolens 
 would not only sacrifice comfort but endanger 
 health. Moreover, it is the extremely poor 
 whose dependence upon them is greatest. Their 
 very poverty deprives them of other defences 
 against the cold, such as well constructed houses, 
 abundance of fuel, and nutritious food. It would 
 seem as if humanity as well as justice requires 
 the abolition of all taxes which increase the cost 
 of the products of wool and of articles of food 
 in common use. 
 
 But it is objected that to abolish the duties on 
 sugar, wools, and woollens, is to deprive important 
 industries of needed protection. Mr. Sherman 
 has suggested a reduction of the duty on sugar 
 and an equivalent bounty to the American pro- 
 ducer. Why not abolish the duty altogether 
 and give u bounty large enough to give the re- 
 quisite encouragement? This would enable the 
 consumer to obtain sugar at the lowest natural 
 cost, and the producers, both employers and em- 
 ployed, to continue their production on the same 
 terms as before. If the fund for the payment 
 of the bounties should be raised so that the 
 taxed should pay in proportion to their respect- 
 ive abilities, the chief reproach of the protective 
 system, namely, the inequality of its burdens,
 
 116 The National Revenues. 
 
 would be done away. Why not extend the 
 plan so as to include rice, fruit, fish, wool and 
 woollens, and, indeed, all commodities in com- 
 mon use? Why not extend it to all industries 
 that deserve protection? 
 
 It is true that the cost of protection would in 
 this way be revealed. But why not reveal it? 
 The people pay for it why not let them know 
 how much they pay? The people submit will- 
 ingly enough to justly levied taxation for justifi- 
 able objects. The foremost advocates of pro- 
 tection allege that it is a national system estab- 
 lished for the promotion of the welfare, not of a 
 particular interest, class, or locality, but of the 
 nation as a whole. But if the national good re- 
 quires that a given industry or set of industries 
 receive public aid, then every citizen should 
 contribute to this, not in proportion to his 
 wants, but in proportion to his means. In so 
 doing, he would not suffer injustice, and his 
 course as a citizen would be more intelligent 
 and patriotic than under a system which takes 
 his property by stealth, and apportions what it 
 levies in a grossly unequal way. 
 
 To oppose bounties as a method of encourage- 
 ing home industries would seem to imply dis- 
 trust either of the protective system or of the 
 people. To contend that the laborer is the one 
 chiefly benefited by protection, and that he there- 
 fore should pay the larger part of its cost, is,
 
 Equality in Taxation. 11? 
 
 even if the premise be admitted, as irrational as 
 it would be for Massachusetts to say that be- 
 cause the very poor receive the benefit of the 
 public charities, they must bear the cost. 
 
 Direct taxes justly apportioned should take 
 the place of the existing unequal indirect ones. 
 A distinguished advocate of protection has re- 
 cently said, "The genius of our scheme of gene- 
 ral government and the spirit of our people are 
 hostile to direct taxation for national affairs. 
 The federal tax-gatherer has always provoked 
 friction and lawlessness." This I believe is al- 
 together erroneous. The federal tax-gatherer 
 has never provoked lawlessness except when col- 
 lecting excise duties, which are forms of indi- 
 rect taxation. The system of indirect taxation 
 has continued so long partly because inherited, 
 and partly because the people have not yet be- 
 come conscious of its injustice. 
 
 In regard to the taxes on whiskey, malt 
 liquors, and tobacco, the case is more complex. 
 The inequality is even greater than in the pre- 
 vious cases; but as offset to this, it is claimed that 
 these commodities are injurious and that the 
 taxes lessen the consumption. It seems neces- 
 sary to concede that the commodities in question 
 are injurious. But do the national taxes add 
 enough to their cost to sensibly lessen their use ? 
 It is, of course, conceivable that much higher 
 rates would do so: but the question relates to
 
 118 The National Revenues. 
 
 present rates, the original design of which was 
 revenue and not decrease of consumption. In 
 answering the question, it is necessary to remem- 
 ber that the appetites for tobacco and liquors are 
 usually formed under circumstances which are 
 unfavorable to the exercise of prudential motives, 
 and that these appetites, after becoming estab- 
 lished, are almost as imperious, in many cases 
 are even more imperious, than the natural appe- 
 tites. If, notwithstanding the considerations 
 just mentioned, it should still seem clear that 
 these taxes do lessen the consumption of these 
 injurious commodities, the further question 
 would arise whether the good thus obtained com- 
 pensates for the unavoidable and very consider- 
 able evils incident to the inequality of this 
 species of taxation. It cannot be denied that 
 these taxes do increase the poverty of the poor- 
 est classes, and that the consequent increase of 
 suffering is borne not so much by the tax- 
 payer in person as by his family. His self-indul- 
 gence may not be checked, but the share of his 
 wife and children in the comforts and "higher 
 goods " of life must thereby be lessened materi- 
 ally. The natural conclusion in respect to each 
 of these taxes is that unless it can be shown to 
 diminish in a considerable degree the use of the 
 commodity to which it relates, it should, be- 
 cause of its inherent injustice, be altogether 
 abolished.
 
 Commercial Union With Canada. 119 
 
 Some of the friends of free trade or of tariff 
 reform are inclined to retain the taxes just con- 
 sidered, as a leverage by which to overthrow 
 the protective system. On the other hand, many 
 of the friends of protection, while upholding 
 these taxes, are willing to sacrifice one or all of 
 them in order to strengthen their favorite system. 
 It would seem as if each species of taxation 
 should stand or fall on its ownmerits. A settle- 
 ment reached in any other way can be neither 
 just nor satisfactory. 
 
 II. 
 
 " In a policy for the more immediate future 
 should we contemplate the special encouragement 
 of trade with Canada /" 
 
 If tariff obstructions were removed, Canada 
 would furnish a better market for our manufact- 
 ures than is now the case. Her products would 
 sensibly lessen the cost of lumber and of some 
 articles of food in the United States, and 
 would check the too rapid destruction of our 
 forests. It would also open to the northern sec- 
 tions of New York, Vermont, and New Hamp- 
 shire, the markets of the Canadian cities. 
 
 If a line were drawn from Portland, Me., to 
 some point in the northwest corner of Washing- 
 ton Territory, keeping just far enough south of 
 the Canadian boundary to include a population 
 equal to that of the Dominion and Newfound-
 
 120 The National Revenues. 
 
 land, and we should then ask ourselves whether 
 it would promote the economic welfare of the 
 people of this narrow but immensely extended 
 belt, or of the people of the main division of 
 the United States, to set up custom house bar- 
 riers between them, very few would maintain the 
 affirmative. It is clear enough that certain 
 impoverishing influences would begin to operate. 
 The people of each section in buying and sell- 
 ing would find themselves excluded from the 
 best markets. Rochester and Buffalo would 
 have to deal with Portland instead of New York. 
 In order to create home markets and diversify 
 industries in the northern sections heavy taxes 
 in the form of protective duties would be laid, 
 and these would divert labor and capital to rela- 
 tively unprofitable employments. Probably 
 most will agree that in the case supposed, protec- 
 tion (looking solely at its economic results) 
 would hurt the larger section and cripple the 
 smaller. But in what essential respect does this 
 case differ from that between Canada and the 
 United States ? If our revolutionary ancestors 
 had succeeded in their efforts to induce Canada 
 to make common cause with the thirteen colo- 
 nies, or if the hopes of annexing Canada by 
 conquest entertained by many Americans in 
 1812 had been realized, we would now be 
 approving free trade between the provinces and
 
 Commercial Union With Canada. 121 
 
 the United States, as we do approve it between 
 New York and New England. 
 
 But the political side of our relation to Canada 
 is more important than the commercial. There 
 are strong grounds for the view that Canadians 
 and Americans should come into political unity. 
 The British Canadians are our near kinsmen. 
 In character and institutions they and we are 
 essentially one. The differences between them 
 and us are of degree they being the more con- 
 servative; or else they are artificial, based on 
 jealousies and contentions which ought never to 
 have arisen. 
 
 In looking at a map of North America it is 
 difficult to believe that the entire population of 
 the Dominion, together with Newfoundland, 
 does not exceed that of the State of New York. 
 For a long time to come, inhabited Canada 
 must consist of a narrow immensely extended 
 border-land a situation highly unfavorable to 
 real economic and political independence. The 
 natural markets of the Canadians are in the 
 United States, and the traffic of Canada should 
 move on lines running more nearly north and 
 south than east and west. The attempt to re- 
 verse this natural order explains the unfortunate 
 financial condition of Canada. Moreover, the 
 British Canadians are not solving the French 
 problem. The province of Quebec breaks British 
 Canada in two, and in the race contest within
 
 122 The National Revenues. 
 
 the province the French more than hold their 
 own. Indeed, it is clear that New England is 
 doing more than British Canada to Anglo Ameri- 
 canize the Canadian French. 
 
 What useful or honorable thing can be named 
 that Canada cannot better accomplish in full 
 union with the United States, than in trying to 
 maintain an independent career? There is noth- 
 ing desirable signified by the term Canadian that 
 is not also signified by the term American, and 
 the latter has a certain additional significance 
 which our neighbors need greatly to appropriate. 
 Outside of the American Union, Canada must 
 remain essentially provincial. Many of her 
 more enterprising and ambitious inhabitants will 
 be drawn to the United States, and among these 
 some of her most gifted sons. 
 
 To the United States, union with Canada is in 
 every way desirable; the advantages in a military 
 and commercial point of view are sufficiently 
 obvious. Moreover, the conservatism of the 
 Canadians would be an element of strength in 
 the national life. 
 
 But what commercial policy is most likely to 
 secure union? Restrictions might be effective if 
 economic considerations alone determined the 
 political conduct of peoples. But they do not. 
 Least of all do they in the case of a high- 
 minded and spirited people. The relation be- 
 tween Canada and the United States is in many
 
 Commercial Union With Canada. 123 
 
 respects analogous to that which used to subsist 
 between England and Scotland. But it should 
 be remembered that all efforts on the part of 
 England to coerce Scotland served only to defer 
 union and make it more difficult. If union with 
 Canada ever comes, it should be in obedience to 
 her wish as well as ours. The readiest way to 
 create such a wish is to pursue a policy which 
 recognizes the essential oneness of the two peo- 
 ples. But even if we should not desire union, 
 our true policy is not to drain but to develop 
 Canada. 
 
 ANSON D. MORSE.
 
 A GENERAL VIEW. 
 
 BY CHANCELLOR IRVING J. MANATT, OF THE UNIVERSITY 
 OF NEBRASKA. 
 
 I have no claim to speak as a specialist on the 
 difficult problems of taxation, bat as you ask for 
 conclusions rather than arguments, here are 
 mine : 
 
 1. The surplus should be reduced by a 
 thorough revision of the tariff, with constant ref- 
 erence to the sparing of the weak rather than the 
 strengthening of the strong. Such revision can 
 only be worked out by men who have mastered 
 the complicated calculus of good and evil pre- 
 sented in the tariff as it is, and whose view com- 
 mands the whole field of industry and commerce, 
 not only at home but the world over. The 
 very difficulty of the task commends free trade 
 to many as the only easy way out. But an 
 abandonment of the protective principles off- 
 hand and outright would probably cause greater 
 evils than it would cure. 
 
 2. The only wise method with the public 
 debt is the method of extinction. A national 
 debt is a servitude on every tax-payer ; every 
 argument against getting on a shopkeeper's 
 books, or mortgaging a farm, is as valid for the 
 
 124
 
 A General View. 125 
 
 state as for the individual. Provision for a more 
 rapid payment of the debt, as clearly demanded 
 by public policy, will at the same time assist in 
 settling the surplus question. In this connection 
 the redemption of the greenback, as urged by 
 Secretary Manning, is well worth considering. 
 
 3. Close commercial relations among all the 
 American states are eminently desirable. This 
 continent can take care of itself at a pinch, and, 
 for the present at least, feed the world. Canada 
 and Mexico are already linked with us by great 
 railway systems; the South American states we 
 ought to bind to us by a strong merchant marine. 
 Subsidies are odious; but if there is no other 
 way to repair the ruin wrought upon our mari 
 time commerce during the war, and not half 
 paid for, in any far-reaching view of the matter, 
 by the bagetelle awarded at Geneva, the end may 
 justify even such means. A general reciprocity 
 arrangement, including at least all the independ- 
 ent American states, is to be desired, both as an 
 end in itself and as one in the long series of ex- 
 periments which must go before any radical 
 treatment of our revenue system. 
 
 4. Protection must ultimately give way to 
 free trade and the millennium. 
 
 IRVING J. MANATT.
 
 STEAMSHIP SUBSIDIES AS A MEANS OF 
 REDUCING THE SURPLUS. 
 
 BY PKOFESSOR ARTIIUU T. HADLEY, OF YALE COLLEGE. 
 
 The United States has in two instances tried 
 the policy of steamship subsidies on a large 
 scale : with the Collins Line in 1850-1858, and 
 with the Pacific Mail in 1865-1875. In neither 
 case was the result satisfactory. 
 
 The subsidy to the Collins Line was in large 
 measure due to the efforts of Mr. King, of 
 Georgia, for some time chairman of the House 
 Committee on Naval Affairs. As early as 1841. 
 only two years after the first contract of the 
 English government with Samuel Cunard, he 
 urged the United States to follow the example of 
 England. The first act of Congress on the sub- 
 ject was passed in 1845 ; the amounts devoted to 
 the payment of steamship lines were gradually 
 increased until 1852, when they amounted to 
 nearly $2,000,000 annually. At the close of 
 that year there were American steamship lines 
 running from New York to Liverpool, Havre, 
 and Bremen ; also from various American ports 
 to the West Indies and the Isthmus of Panama, 
 with connections thence to Oregon. 
 
 Much the most important of these enterprises 
 126
 
 Steamship Subsidies. 127 
 
 was the Collins Line, which made fortnightly 
 trips from New York to Liverpool, for which it 
 received a subsidy of $858,000. The history of 
 this line is an instructive one, because it shows 
 clearly the dangers of the subsidy system even 
 under the most favorable circumstances. The 
 boats were designed, built and managed by 
 thoroughly competent men. They were the 
 finest specimens of steamship construction then 
 existing ; they were probably the best sea-going 
 wooden steamships which have ever been built. 
 They were much more comfortable and much 
 faster than the English boats with which they 
 came into competition ; and though the Cunard 
 line was forced by the influence of their Ameri- 
 can rivals to build newer and better boats than 
 they had before, they were far from equalling 
 the Collins Line in speed or comfort. Nor was 
 the American Line dishonestly managed. Mr. 
 Collins was largely influenced by patriotic 
 motives. So far from making any money out of 
 his connection with this enterprise, it ultimately 
 caused his financial ruin. 
 
 But the fact that there was no intentional dis- 
 honesty makes the absence of good economy all 
 the more apparent. The managers believed that 
 they had the public treasury to fall back upon. 
 They indulged in all sorts of expenditures, 
 necessary and unnecessary. Changes were made 
 while the vessels were in process of construction
 
 128 The National Revenues. 
 
 which greatly increased their cost, in many cases 
 without corresponding advantage. The capital 
 stock was insufficient. The company was heavily 
 in debt from the first. The care in management, 
 which was the only thing that could have enabled 
 them to carry this load of debt, was altogether 
 wanting. If any one desired an illustration of 
 the danger of paralyzing individual thrift by 
 government aid, he could hardly find a better 
 one than the early history of the Collins Line. 
 Under such circumstances the apparent pros 
 perity of the business could not last long. The 
 rage for making fast passages rather than safe 
 ones occasioned the loss of two steamers ; a 
 change of feeling in Congress caused the subsidy 
 to be withdrawn, and the company was found to 
 have nothing left to stand on. 
 
 The Pacific Mail had a much longer life ; but 
 its history was in many respects worse than that 
 of the Collins Line. It was less harmed by the 
 discontinuance of the earlier subsidies in 1858 
 than by the renewal of the polic}' in 1865. The 
 $500,000 a year which was paid them for their 
 China service by the contract of 1865 proved 
 but a poor compensation for the unsound meth- 
 ods which were introduced into the management 
 in part, apparently, as the result of that con- 
 tract. Up to 1865 the Pacific Mail had been a 
 sound concern. Its shares stood above par. 
 After that it fell into the hands of speculators ;
 
 Steamship Subsidies. 129 
 
 it lost nine vessels in as many years ; its shares 
 dropped below 40. An additional subsidy of 
 another half million was voted in 1872. But 
 the company was unable to get the new vessels 
 ready for service within the time stipulated ; and 
 while the government was hesitating what to do, 
 a series of disclosures showed that the contract 
 of 1872 had been obtained by wholesale corrup- 
 tion. Public opinion was strongly aroused 
 against the system. The contracts of 1865 were 
 allowed to expire and were not renewed. It 
 was felt that the trade which had been encour- 
 aged had not been that of merchants in China, 
 but of speculators and lobbyists at home. 
 
 Such facts as these furnish a strong argument 
 against the attempt to build up an American 
 steam marine by means of subsidies. But there 
 are special circumstances which render the lesson 
 doubly important at the present time. 
 
 In the first place, the difficulties of building up 
 an American carrying trade in this manner to- 
 day are exceptionally great. The cost of ships 
 in America is greater than it is elsewhere. No 
 foreign built ship is allowed to carry the Ameri- 
 can flag. Our ship-owners are thus compelled to 
 buy in a dear market, and then compete on even 
 terms with those whose plant is cheaper. But this 
 is not all. Even if we were allowed, by a change 
 in the navigation laws, to buy our ships wherever 
 we pleased, we should not be on an equality 
 
 9
 
 130 The National Revenues. 
 
 with our competitors in this matter. In order 
 that American capital may be attracted into the 
 foreign carrying trade, it is necessary that the 
 rate of interest obtainable in that business should 
 be about as high as that which can be had in 
 other lines of business which offer chances for 
 investment. That is not the case at the present 
 time. Shipping profits have been cut down by 
 large investments of European capital, artifi- 
 cially stimulated by subsidies. They have been 
 so much cut down that there has been for two 
 or three years practically no money to be made 
 in the business. 
 
 If the current rate of interest in France on 
 business ventures of a certain class is 5 per cent, 
 and in America 7 per cent, America cannot 
 compete with France on equal terms in that 
 business, unless she has a special advantage in 
 the conduct of the business equal to 2 per cent 
 on the invested capital. Forty years ago we 
 had such an advantage, on account of our 
 superior facilities for building ships and superior 
 skill in sailing them. To-day both of those ad- 
 vantages have been neutralized. Iron has been 
 substituted for wood, steam for sail. Nothing 
 short of a subsidy equal to the difference in cur- 
 rent rates of profit in the two countries would 
 put us on an equality in this matter ; and that 
 would only do it in case France gave no subsidies 
 at all. But France does give subsidies, on a
 
 Steamship Subsidies. 131 
 
 very large scale; so large as to have stimulated 
 an overproduction of French ships, which has 
 done the French nation much more harm than 
 good. To accomplish anything effective, we 
 should have to counterbalance the difference in 
 the rate of profit, and the French subsidies put 
 together. Were this done, we should doubtless 
 have a great many foreign steamship lines of our 
 own ; but they would be running for the sub- 
 sidy rather than for the trade. 
 
 There is a tradition that " trade follows the 
 flag " ; that where our ships run we shall devel- 
 op a trade. This may have been true before 
 the invention of the telegraph, when the cargo 
 was so often a matter of private enterprise on 
 the part of the ship-owner. But there can be no 
 doubt that it is ever}' day less and less true; and 
 it is probably farthest from the truth on 
 those lines of communication where subsidized 
 steamships would be likely to run. The notion 
 that such lines would act as drummers for New 
 York houses has very little basis in fact. 
 
 If, under this condition of things, we are 
 asked to grant steamship subsidies as a patriotic 
 way of getting rid of the surplus, the presump- 
 tion is strongly against the wisdom of any such 
 policy. In all the affairs of life, whether pub- 
 lic or private, it is a dangerous thing to spend 
 money simply because you have it. It is almost 
 certain that such money will be unwisely spent.
 
 132 The National Revenues. 
 
 This is conspicuously true of Government ex- 
 penditures. The really wise ones have not been 
 made where an overflowing public treasury was 
 used to help individual enterprise, but where 
 some specific need was felt, and the government 
 set about to have that need met in the most effi- 
 cient way. 
 
 England has at times given large steamship 
 subsidies, but she has done it on business prin- 
 ciples. It Avas a political necessity for her to 
 have communication with her colonies, and to 
 have steamships which could furnish her with a 
 naval reserve, and a transport service in case of 
 war. In order to do this she had to pay for it. 
 She tried to pay as little as she could for the ser- 
 vice rendered; but she could not, without politi- 
 cal suicide, dispense with such service. She 
 hud the same reasons for subsidizing steamships 
 that we have for maintaining postal communica- 
 tion on lines which do not pay. It was the same 
 reason which has led Germany and Russia to 
 build military railroads, or which led us to grant 
 liberal aid to the Union Pacific in 1862 and 1864. 
 In all these cases, it was a matter of business 
 for the government to secure its end. The fact 
 that the returns could not all be measured in 
 dollars and cents did not prevent its being sound 
 business policy. In fact, it furnished a strong 
 reason why the government might properly 
 make the expenditure, because there was an
 
 Steamship Subsidies. 133 
 
 advantage to be gained of which individual 
 enterprise could not reap the benefit. 
 
 But where subsidies have been given, as has 
 been recently the case in France, or as was done 
 in America in the instances already described, 
 as a means of encouraging private commercial 
 enterprise, it has not proved good business 
 policy. It has caused waste instead of economy, 
 loss rather than gain; it has not proved a source 
 of naval strength or commercial prosperity for 
 the nation which has adopted it. It has turned 
 out to be simply an inducement to extravagance. 
 
 It is undoubtedly desirable to reduce the treas- 
 ury surplus; but why? Just because it offers a 
 temptation to extravagant uses of the money. 
 To make the existence of such a surplus a justi- 
 fication for subsidies is simply to court the evil 
 of which we are afraid. If we spend our money 
 recklessly, we shall not have so much left to 
 spend, and in that way the immediate danger 
 may be diminished; but meantime we shall have 
 done the very harm which we wished to avoid. 
 More than this, we shall have laid the founda- 
 tion for future evil of the same sort; for any 
 such lavish expenditure of money conceals the 
 need of wise measures to prevent its accumula- 
 tion. 
 
 The existence of a surplus creates a presump- 
 tion that if subsidies are granted at all they 
 will be granted unwisely. If the surplus is
 
 134 The National Revenues. 
 
 made an avowed reason for granting them, this 
 presumption becomes overwhelming. If the 
 policy should be adopted under the influence of 
 such arguments, we must be prepared to see it 
 at its worst. 
 
 ARTHUR T. HADLEY.
 
 THE IMMEDIATE TASK. PROTECTION 
 AND AMERICAN AGRICULTURE. 
 
 BY PRESIDENT FRANCIS A. WALKER, OP THE MASSACHU- 
 SETTS INSTITUTE OF TECHNOLOGY. 
 
 THE IMMEDIATE TASK. 
 
 Many of those with whom the writer has been 
 accustomed to act or to sympathise, on the ques- 
 tion of tariff duties, have seemed disposed, during 
 the past few months, both before the meeting of 
 Congress and since the session began, to regard 
 the existence of the surplus as a weapon properly 
 to be used in compelling a revision of the tariff; 
 if not a general reduction of duties, then the 
 placing upon the free list of certain articles, 
 e.g., wool, lumber, salt, coal, iron, etc., which are 
 peculiarly obnoxious as the subjects of " protec- 
 tive " legislation. These persons have held, not 
 only that the existence of a large excess of rev- 
 enue above the legitimate wants of the govern- 
 ment, and even above its capacity for wanton and 
 wasteful expenditure, must give great logical force 
 to the demands for tariff reduction, but also that 
 the apprehensions felt regarding the industrial 
 and financial effects of largely and rapidly in- 
 creasing the funds in the treasury must bring a 
 strong moral and political pressure upon Con- 
 gress, making it easier to carry the desired 
 J35
 
 136 The National Revenues. 
 
 scheme of tariff revision and reduction than if 
 such a financial situation did not exist ; perhaps 
 making it possible to do this where it would have 
 been impossible otherwise, in the nearly equal 
 division of Congress on the tariff, and the 
 thorough demoralization of both parties regard- 
 ing this issue. 
 
 I even think that some of these persons have 
 regarded the occurrence of this overwhelming 
 reason for tariff reform as almost " providential " 
 in securing a degree of public attention to the 
 subject, and imparting an urgency to the parlia- 
 mentary discussion of it, far in advance of 
 what has hitherto been or would otherwise be. 
 
 I confess that while entertaining no distrust 
 of the disinterested and patriotic purposes of 
 these gentlemen, it has seemed and still seems 
 to me untimely and dangerous to use the sur- 
 plus as a means of getting leverage for the re- 
 form of the tariff. The surplus is so prolific a 
 source of political corruption, its existence and 
 rapid increase constitute so grave a menace to 
 our industrial and financial integrity, as to make 
 it the first duty of all Congressmen, whether 
 democrats or republicans, whether protectionists 
 or free traders, to join together, as against a 
 common enemy, to put together immediately 
 some bill for greatly reducing the revenue, 
 alike without sacrificing their individual convic- 
 tions on the general question, and without seeking
 
 Protection and American Agriculture. 137 
 
 through such legislation to obtain any advan- 
 tage for their respective party with reference to 
 the struggle still to come over the tariff. 
 
 It has seemed to me that patriotic men, of 
 both parties, might have come together in De- 
 cember, or might come together now, and in a 
 week, nay, in a single day, make up a measure 
 which would strike off eighty or a hundred mil- 
 lions of unnecessary revenue, without raising 
 any difficult question weakening the position of 
 cither party on the main issue, or alienating 
 enough votes to sustain a demand for the yeas 
 and nays. 
 
 PROTECTION AND AMERICAN AGRICULTURE.* 
 
 The question of Protection, as against Free- 
 dom of Production not, as it is commonly 
 stated, against Freedom of Trade is rarely dis- 
 cussed, on both sides, upon purely economic 
 principles; perhaps has never been, in an actual 
 instance, decided without the intermixture of 
 political or social considerations. 
 
 The arguments of those who have favored the 
 policy of so far limiting the territorial division 
 of labor as to constitute industrial entities cor- 
 responding to existing political entities (which I 
 take to be the real intent of what is called pro- 
 
 * By permission of Gen. "Walker this discussion of the relation of the 
 protective system to American agriculture la reprinted from the revised 
 edition of hf s "Political Economy " (Vow York, 1887).
 
 138 The National Revenues, 
 
 tection), have been of every degree of vague- 
 ness; but it seems to me that the confusion of 
 the public mind need not have existed, at least 
 to so great an extent, had not the professional 
 economists taken an unjustifiable lofty attitude 
 on this subject, practically refusing to argue the 
 question at all as one of national expediency, 
 contenting themselves with occupying the high 
 ground of Laissez Faire. 
 
 Now, that doctrine, although established by 
 the older economists to their own satisfaction, 
 as containing a principle of universal applica- 
 tion, and thus deemed by them a conclusive ans- 
 wer to all arguments especially directed to 
 justify restrictions upon international trade, has 
 never been accepted, in the fulness of signifi- 
 cance by them given it, throughout any wide 
 constituency, nor by any large proportion of the 
 educated classes, not even generally by publi- 
 cists, or statesmen, or men of affairs. 
 
 Thus, when factory legislation was first pro- 
 posed in England, nearly the whole body of pro- 
 fessional economists opposed any interference 
 with the freedom of contract respecting labor. 
 They asserted the entire competence of the 
 laboring classes to protect their own interests. 
 They declared that interference on behalf of the 
 laboring classes could only be mischievous in the 
 long run to the laborers themselves. They put 
 themselves on record in the most formal manner
 
 Protection and American Agriculture. 139 
 
 against all measures of restriction upon factory 
 and workshop labor. They cast in their lot with 
 the opposition to this class of legislation, and 
 staked the reputation and influence of political 
 economy upon their being right in this matter. 
 
 Had they won upon that issue, had the 
 results of the factory acts been proved deleteri- 
 ous to the interests of the working classes them- 
 selves, or even to the industrial power of the 
 kingdom, it would have been a rare triumph for 
 the economists, and their influence would have 
 been greatly strengthened. But it did not turn 
 out so. Although in the first instance, that of 
 the act of 1802, Sir Robert Peel, the elder, had 
 been so solicitous not to violate the principle of 
 the self-sufficiency of labor that he made the bill 
 apply only to apprentices, the wards of the 
 State, the political rightfulness and the economic 
 expediency of regulating the contract for labor 
 so grew upon the public mind of England that 
 act after act extended the supervision of the State 
 over factory and workshop, until the policy of 
 restriction had vindicated itself to the complete 
 satisfaction of the working classes, even, in the 
 main, of the master class themselves, and of the 
 statesmen of the kingdom and publicists almost 
 without exception. 
 
 The fact that in the controversy over the fac- 
 tory acts the economists of the laissez-faire 
 school are proved to have been in the wrong,
 
 140 The National Revenues. 
 
 does not show, or go to show, that they were 
 wrong in their opposition to laws in restraint of 
 international commerce. It does not even create 
 a presumption to that efiect. 
 
 Although the necessity of making exceptions 
 to the rule of freedom of individual action has 
 been established as completely in respect to 
 industry as in respect to politics, freedom of 
 action is yet so far the condition of health and 
 power and growth in the field alike of politics 
 and of industry, that those who propose to make 
 exceptions in either are bound to show cause for 
 every such exception. A heavy burden of proof 
 rests upon them. Their case is to be made, and 
 made against a powerful presumption in favor of 
 liberty, as that condition which hath the promise 
 not only of that which now is, but, in a higher 
 degree, of that which is to come. There is not, 
 and there can never be, any positive virtue in 
 restraint. Its only office for good is to prevent 
 waste and save the misdirection of energy. 
 There is no life in it, and no force can come 
 out of it. 
 
 That which is called "protection" operates 
 only by restraint ; it has and can have neither 
 creative power nor healing efficacy. All the 
 energy that is to produce wealth exists before it 
 and without respect to it ; and just to the extent 
 to which protection operates at all, it operates 
 by impairing that energy and reducing the sum
 
 Protection and American Agriculture. 141 
 
 of wealth that might be produced if protection 
 did not exist. 
 
 I say, that might be produced, not that would 
 be produced. The latter point may fairly be 
 disputed between the free trader, who should 
 rather be called the free producer, and the advo- 
 cate of the system of restricted production. The 
 force of the steam at the piston-head is less than 
 the force of the steam in the boiler, less by all 
 that is necessary to conduct it thither from the 
 boiler; yet it is the force of the steam at the 
 piston-head, and not where it is generated, which 
 moves the wheels of the engine. The harness 
 hampers the movements of the horse ; but it is 
 the harnessed horse that draws the load. Disci- 
 pline operates directly to reduce the sum of the 
 impulses by which soldiers are actuated, and by 
 consequence to reduce their individual energy ; 
 but a disciplined army will defeat a mob of many 
 times its own numbers. 
 
 If the protectionist can show that restraints 
 imposed by law upon the industrial action of hu? 
 countrymen, or the men of any country he 
 chooses to take for the purposes of the debate, 
 have the effect, not, indeed, to generate produc 
 tive force, but to direct the productive force 
 generated by human wants setting in motion 
 human labor, with a better actual result than 
 under the rule of freedom, he will make his 
 case. But this is to be proved, not taken for
 
 142 The National Revenues. 
 
 granted ; and it is to be proved only by sound 
 and serious argument, not by strenuous assertion 
 
 and senseless clamor. 
 
 ******** 
 
 It will readily appear that the protectionist 
 writers have a difficult task in establishing the 
 necessity of drawing the lines of industrial cir- 
 cumvallation along the boundaries of empire. 
 
 Take the United States for example. Here are 
 thirty-eight states, trading among themselves 
 with the utmost activity, the exchange of com- 
 modities and services being as free as the move- 
 ments of the air ; and in this freedom all good 
 citizens rejoice ; but this condition of things is 
 made, by the doctrine under examination, to be 
 dependent entirely upon the political relations 
 of these states. Were they under different 
 governments, the exchange of commodities and 
 services which now promotes the general wealth 
 and the general welfare would be fraught with 
 mischief and possible ruin. 
 
 It is, of course, possible that some new analy- 
 sis of the conditions of production may yet dis- 
 close the law which thus makes trade within the 
 limits of sovereignty beneficial, and trade across 
 the boundaries of separate states deleterious to 
 one or both parties; but thus far, assertion 
 coupled with vituperation has taken the place of 
 the analysis required. 
 
 In the Old World, the argument for protection
 
 Protection and American Agriculture. 143 
 
 is based on the importance of protecting the in- 
 dustrially weak against the industrially strong ; 
 and I am not certain that something might not 
 be said for this. Russia strives to protect her 
 labor against the better paid labor of Germany; 
 Germany, in turn, strives to protect her labor 
 against the vastly better paid labor of England. 
 Among all fully settled countries, the rule, with- 
 out exception so far as I am aware, is that that 
 country in which the higher wages are paid 
 offers its products at lower prices than the com- 
 peting products of countries where the lower 
 wages are paid 
 
 In the United States, however, the argument 
 for protection has based itself on the assumed 
 necessity of protecting the strong against the 
 weak. In Australia and Canada it is the same. 
 It is alleged to be necessary to the maintenance 
 of the high wages prevailing in these countries, 
 that the products of the "pauper labor of 
 Europe" shall not be sold freely in their 
 markets. 
 
 Why is it that the plea of those who desire to 
 check the extension of the division of labor on 
 the lines of nationality, suddenly changes as they 
 pass from old and fully settled countries to 
 countries but recently, and perhaps still but par- 
 tially, occupied and cultivated ? 
 
 The explanation is found in the fact that the 
 populations of what we call "new countries,"
 
 144 The National Revenues. 
 
 that is, countries where an inadequate popula- 
 tion is applying progressively to fresh fields ad- 
 vanced methods and machinery, possess an 
 immense advantage in the conditions of living 
 over the populations of " old countries," where 
 the land has long been fully occupied, where the 
 capabilities of the soil, even on fields of small 
 natural productiveness, are heavily taxed to fur- 
 nish subsistence to the inhabitants, and where 
 systematic, continuous manuring has to be prac- 
 ticed in order to keep the land in condition. 
 
 The enormous profit of cultivating the virgin 
 soil without the need of artificial fertilization, 
 and the abundance of food and other necessaries 
 of life enjoyed by the agricultural class, have 
 tended continually to disparage the mechanical 
 industries in the eyes alike of the American 
 capitalist and of the American laborer. 
 
 It has been the competition of the farm with 
 the shop which has, from the first, most effectu 
 ally retarded the growth of manufactures in the 
 United States. A population which is privi- 
 eleged to live upon a virgin soil, cultivating only 
 the choicest fields, and cropping these through a 
 succession of years without returning anything 
 to the land, can live in plenty. If that popula- 
 tion possess the added advantage of great skill 
 in the use of tools, and great adroitness in meet- 
 ing the large and the little exigencies of the occu- 
 pation and the cultivation of the soil, the fruits of
 
 Protection and American Agriculture. 145 
 
 agriculture will still further be greatly increased. 
 The dietary of an American farmer, cultivating 
 his own land with the aid of his growing sons, 
 would amaze a peasant from any portion of 
 Europe. An abundance of nutritious food is and 
 has been ever since the Revolutionary period, 
 the sure condition of the life of the agriculturist 
 in the United States. It was not with our 
 fathers, even in New England, a struggle for 
 the necessaries of life, but for social decencies 
 and what, in any old country, would have been 
 called luxuries. 
 
 Now, the mode of living on the part of the 
 agricultural population has necessarily set a 
 minimum standard of wages for mechanical 
 labor. With an abundance of cheap land, with 
 a population facile to the last degree in making 
 change of avocation and of residence, few able- 
 bodied men are likely to be drawn into factories 
 and shops on terms which imply a meaner sub- 
 sistence than that secured in the cultivation of 
 the soil. 
 
 There are certain classes of mechanical pur- 
 suits, however, which by their nature secure to 
 those who follow them a minimum remuneration 
 fully up to the standard of the agricultural 
 wages of the region. Such, for instance, are the 
 trades of carpenter, blacksmith, and mason, in 
 which the work is of a kind which can only be 
 done upon the spot. The house cannot be
 
 146 The National Revenues. 
 
 built abroad and imported for the farmer's use ; 
 the wagon must be mended near the place where 
 it broke down ; the horse must be shod, the 
 tools sharpened by the artisans of the neighbor- 
 hood. If, then, the farmer will have such 
 services performed, he must admit those who 
 perform them to share his own abundance ; he 
 must pay Avages or prices which will attract 
 men, and those by necessity men exceptionally 
 intelligent and skilful, into those trades. Hence, 
 we find the mason, the blacksmith, the plumber, 
 the carpenter, the house-painter, the cobbler, in 
 every part of the United States, receiving wages 
 which bear no relation whatever to the wages 
 paid for the same class of services in other 
 countries, but which stand in a very exact rela- 
 tion to the rewards of agricultural labor here. 
 
 Nor has it ever been found necessary to encour- 
 age or stimulate these trades for the good of the 
 country. What statesman ever introduced into 
 Congress a bill intended to increase the number 
 of carpenters or blacksmiths, or to enhance 
 their wages ? 
 
 But, again, there are certain classes of services 
 of a personal or professional nature, which have 
 also secured for those rendering them a partici- 
 pation in the abundance enjoyed by the tillers of 
 the soil in the same region. The remuneration 
 received by the members of these classes, 
 whether called the wages of domestic servants
 
 Protection and American Agriculture. 147 
 
 or the fees of physicians and lawyers, or the 
 salaries of schoolmasters and clergymen, or the 
 profits of retail trade, has been out of all relation 
 to the remuneration of similar services in other 
 countries, and has amounted to just what I have 
 termed it, a participation in the abundance 
 enjoyed by the agricultural population. Since 
 these services could only be performed upon the 
 spot, the agriculturists have been obliged, if 
 they would have the services rendered, to pay 
 for them, out of the large surplus of their own 
 produce, at least enough to make these profes- 
 sions and avocations equally desirable with their 
 own, uncertainty of result, loss of time in prep- 
 aration, expense of education and training, 
 healthfulness and agreeableness of work, etc., 
 being taken into account ; and since the agricul- 
 tural classes have desired that these services 
 should be performed, and have been willing to 
 pay for them on the scale indicated, there has 
 never been any call for Congressional action to 
 secure the requisite number of lawyers, physi- 
 cians, clergymen, schoolmasters, domestic serv- 
 ants, or retail tradesmen. 
 
 But now we note that there are still other 
 important classes of services to be rendered, 
 respecting which the rule changes. The remu- 
 neration of the persons rendering these services 
 no longer has reference to the abundance of 
 agricultural production in the several sections of
 
 148 The National Revenues. 
 
 the United States ; is no longer irrespective of 
 the remuneration of similar classes elsewhere. 
 These persons are not, necessarily, admitted to 
 a participation in the fruits of American agri- 
 culture. 
 
 The services referred to are such as can be 
 performed without respect to the location of the 
 consumer of the product. They are nearly 
 identical with what we call in the technical sense 
 of the term, manufactures. 
 
 Whenever the American farmer wants a pane 
 of glass set, or a pair of boots mended, or a 
 horse shod, he must pay some one, his neighbor, 
 enough for doing the job to keep him in his 
 trade, and to keep him out of agriculture, in the 
 face of the great advantages of tilling the soil, 
 in New York, or Ohio, or Dakota, or wherever 
 else the farmer in question may live ; but how 
 much he shall pay the man who makes the pane 
 of glass or the pair of boots or the set of horse- 
 shoes, will depend upon the advantages of tilling 
 the soil, not where he himself lives, but where 
 the maker of the horse-shoes, the boots, or the 
 glass may live. 
 
 If he will have the work done he must pay 
 some one, somewhere, enough to keep him in his 
 trade and out of agriculture; but not necessarily 
 out of New York agriculture, or Ohio agricul- 
 ture, or Dakota agriculture ; but perhaps out of 
 English agriculture, or French agriculture, or
 
 Protection and American Agriculture. 149 
 
 Norwegian agriculture, under the requirements 
 of constant fertilization, deep ploughing and 
 thorough drainage, and subject to that stringent 
 necessity which economists express by the term 
 " the law of Diminishing Returns." 
 
 Now, to offset and overcome the inducements 
 to engage in agriculture, even in Merry Eng- 
 land, is a different thing, a very different thing, 
 from keeping a man in his trade and out of agri- 
 culture in the United States. 
 
 The American agriculturist, having large 
 quantities of grain and meat, of cotton and tobac- 
 co left on his hands, after providing ample sub- 
 sistence for his family, and even after hiring the 
 carpenter, mason, and blacksmith, the school- 
 master, lawyer, and doctor, for as much time as 
 he requires their respective services, and still fur- 
 ther, after putting a good deal into farm imple- 
 ments and increase of stock, is desirous of 
 obtaining with the remainder sundry articles 
 more or less necessary to health, comfort, and 
 decency. To him it makes no difference whether 
 the articles he requires are made on one side of 
 the Atlantic or on the other ; but it makes a 
 great difference what he is obliged to pay for 
 them ; how much of his surplus grain and meat, 
 tobacco and cotton, must go to secure a certain 
 definite satisfaction of his urgent and oft-recur- 
 ring wants. If he must needs pay some one to 
 stay out of American agriculture and do this
 
 150 TJie National Revenues. 
 
 work, his surplus will not go so far as if he were 
 allowed to pay some one to stay out of English 
 agriculture to do it. 
 
 But here the state enters and declares that it 
 is socially or politically necessary that these 
 articles, these nails, these horse-shoes, this cotton 
 or woollen cloth, or what not, shall be made on 
 this side of the Atlantic. That necessity the 
 agriculturist, as consumer, cannot be expected to 
 feel; he does not care where the things were 
 made; he only wants them to use. He does not 
 care who makes them ; he does not even care 
 whether they are made at all ; they would 
 answer his purpose just as well were they the 
 gratuitous gifts of nature, spontaneous fruits 
 of the soil, or the sea, or the sky. What- 
 ever his own economic theories may be, he 
 will, as purchaser, every time select the cheap- 
 est article which will precisely answer his 
 need. He will not, of his own motion, pay 
 more for an article because it is made on his 
 side of the Atlantic than he could get an 
 equally good article for, bearing the brand of 
 Sheffield or Birmingham or Manchester. But if 
 the state says he must, he must ; and conse- 
 quently the American maker of this article is by 
 force of law admitted to a participation in the 
 abundance enjoyed by the American agricultural 
 class. The tiller of the soil is now compelled, 
 by the ordinance of the state, to share his bread
 
 Protection and American Agriculture. 151 
 
 and meal with the maker of nails or horse-shoes, 
 of cotton or of woollen cloth, just as he was be- 
 fore compelled by the ordinance of Nature to 
 share his bread and meat with the blacksmith, 
 carpenter and mason, the schoolmaster, lawyer 
 and doctor. 
 
 It is perfectly true, therefore, as the protec- 
 tionist asserts, that a tariff of customs duties 
 upon foreign goods imported into new countries 
 tends to create and maintain high rates of wages 
 in the factory industries. But for protective 
 duties, those articles which, in their nature, can 
 be readily and cheaply transported will be pro- 
 duced predominantly in countries where the mini- 
 mum standard of mechanical wages is set by 
 agricultural conditions far less favorable than 
 those which obtain in the United States and 
 Canada, or in Australia. 
 
 But while the law thus can and does create 
 high rates of wages in factory industries, it does 
 not and it cannot create the wealth out of which 
 that excess of manufacturing wages over those of 
 older countries is paid. That wealth is created 
 by the labor and capital employed in the cultiva- 
 tion of the soil. 
 
 FRANCIS A. WALKER.
 
 THE TARIFF AND THE WESTERN 
 FARMER. 
 
 BY PROFESSOR JAMES H. CANFIELD, OP THE UNIVERSITY 
 OP KANSAS 
 
 I am asked to express in, say, two thousand 
 words, nay opinion of the relations of the pro- 
 tective system to Western development and to the 
 agricultural interests of these Missouri Valley 
 States. That means, necessarily, more assertion 
 than carefully developed argument ; an abrupt 
 statement, so compressed as to be exceedingly 
 liable to misconception. In spite of this, I 
 cheerfully comply with the request and cast in 
 my mite. Let it be accepted as coming not 
 from an "economist," but from one whose ten 
 years in the business world brought him into 
 close contact with practical affairs in the West, 
 thus presenting the opportunities for observation 
 under which this judgment was formed. 
 
 The general effect of the protective system on 
 Western development and upon our agricultural 
 interests is detrimental and repressive. We are 
 handicapped at the beginning of the race, and 
 heavy weighted clear through to the end. That 
 we have made rapid advancement goes without 
 saying ; we simply cannot help this, with the 
 constant influx of fresh blood, much of it the 
 152
 
 The Tariff and the Western Farmer. 153 
 
 best that the country affords. That the tariff 
 tax has been our only enemy is not true; we 
 have all the failings and shortcomings of man- 
 kind, and must make the usual struggle against 
 nature both within and without ourselves. But 
 at every step we have been obliged to overcome 
 tariff obstacles ; and some of these have been so 
 great as to prove insurmountable to the weaker 
 folk who have tried to "grow up with the 
 country," and have painfully failed. 
 
 Take Kansas as a fairly typical state. It has 
 just completed the first quarter century of its 
 existence. During the four years of civil strife 
 it was subjected to all the terrible waste and 
 strain of border war. Since peace came, it has 
 been compelled to wrestle with grasshoppers and 
 with drouth. Its water supply is small, and its 
 timber very inadequate. It is at a great dis- 
 tance from those central markets, those points of 
 storage, where the prices of most of its exports 
 are determined. Rival Western States have left 
 no stone unturned to direct from it both popula- 
 tion and capital. It has a fine climate, a won- 
 derfully fertile soil, and a commanding geo- 
 graphical position. Consider very briefly what 
 was needed that it might most readily and surely 
 rise in material well-being and in influence and 
 power. 
 
 First, we needed cheap lumber to make shel- 
 ter for man and beast. But the tariff on lumber
 
 154 The National Revenues. 
 
 has beyond question proved a most burdensome 
 tax ; the amount, by most careful calculation, 
 reaching not less than a half million of dollars 
 per annum for each of the last five years, and 
 only less in previous years in proportion to the 
 population. So clearly has this been seen that 
 our Legislature, though strongly partisan, a few 
 years ago by a joint resolution asked that lumber 
 be put on the free list. The tribute which we 
 pay is not only expensive, but it is absurd, 
 because it cannot by any stretch of language be 
 said to "build up an industry ;" it is inconsist- 
 ent, because it puts a premium on the destruc- 
 tion of the forests which we are offering boun- 
 ties to preserve ; and it is dangerous, because 
 the deforestation of this country is bringing 
 with it disease and storm and ruin. 
 
 Iron has become a necessity. Its manifold 
 uses mark the advance of civilization. But 
 wherever we have touched it, and we have 
 touched it a thousand times each day, we found 
 not the mark of the customs officer, we could 
 bear that cheerfully ! but the brand of the 
 Pennsylvanian. That was hard ! 
 
 We needed cheap methods of transportation. 
 But up to 1883 we had paid ten millions of dol- 
 lars more than we ought, more than was neces- 
 sary, for the track then laid within the state ; or 
 we were trying to sustain passenger and freight 
 rates that would pay running expenses and
 
 The Tariff and the Western Farmer. 155 
 
 interest and profits on that plant. Since that 
 year we have increased our mileage marvellously, 
 at an extra and useless cost of not less than 
 fifteen hundred dollars per mile. And what is 
 true of our internal system is also true of every 
 mile of the hundreds outside of the State which 
 must be traversed in order to reach our leading 
 markets or to return home. 
 
 We needed good agricultural implements, at 
 the lowest possible prices. But one firm alone, 
 in Wisconsin, manufacturing largely for the 
 Western trade, paid in a single year more than 
 thirty thousand dollars increased price (tariff 
 tax) on the iron and steel which it used. Of 
 course, Western farmers paid it back, and with 
 interest. Tn the course of time we erected flour 
 and feed and grist mills, engaged in printing and 
 book-binding, began to make our own furniture, 
 went from wagon-making to building carriages, 
 began to turn our straw into coarse paper, estab- 
 lished little sorghum mills at occasional four- 
 corners, a few cities were lighted with gas, one 
 stove foundry came into successful operation; 
 we fenced in the prairies with wire; we marked 
 the resting places of the dead with marble. But 
 the tax kept pace with us ; and in all these, in 
 raw materials and in machinery and in added 
 cost of transportation, we bore at least a double 
 tax. 
 
 We needed foundries and machine shops and
 
 156 The National Revenues. 
 
 repair shops, and we even ventured to erect a 
 few woollen mills. But these use iron and steel 
 in machinery, pay for iron and steel in transpor- 
 tation rates, and in these and in the added cost 
 of raw material pay a triple tax. 
 
 As in all new communities, we were forced to 
 content ourselves with "domestic manufactures," 
 and so were obliged to take the coarser and more 
 imperfect fabrics ; thus again bearing the double 
 tax of inferior quality and superior price. 
 
 Nor could we learn that a dollar of all this 
 went into the treasury of the national govern- 
 ment. We were working hard ; carrying the 
 exceptional burdens inseparable from opening 
 and improving a new country ; needing help as 
 much as Chicago did after the great fire, when 
 the government remitted duties on all materials 
 used in rebuilding except lumber ; trying 
 to get houses, and food, and clothing, and 
 schools, and churches, and books, and journeys, 
 and all the thousand-and one things that fill life 
 with enjoyment and contentment ; and possibly 
 hoping to put by a little something for that 
 inevitable "rainy day." We were taking our 
 grain and cattle and hogs, and all that we raised, 
 into the world's market, and selling it for what- 
 ever the world would give ; and always going 
 home with the price in our hands to buy in a 
 market where the unseen tax collector determined 
 the price. While carrying all the load of im-
 
 The Tariff and the Western Farmer. 157 
 
 provement and development, we were paying to 
 the hidden guardian of the " American system " 
 more than the total of all local taxes. 
 
 We were told that the money thus exacted 
 was for the betterment of the Eastern laborers. 
 Out of our necessities we have placed something 
 more than twelve dollars per capita (on our en- 
 tire population) in local manufactures, none of 
 which can by any pretext be said to be protected. 
 These had come naturally, freely, without 
 wrangling, without legislative action better 
 still, without legislative corruption. We simply 
 followed the injunction of common sense: " Seek 
 first that which you are fitted to do, and diver- 
 sity of industries will be added unto you in due 
 season. " When comparisons are instituted we 
 find that of the whole number of our laborers in 
 manufactures, ninety-two and one half per cent 
 are men, four and a half per cent are children, 
 and only three per cent are women. This means 
 that our Avives and mothers are in their homes, 
 and that our children are in the schools. But in 
 Massachusetts, which we have been taxed to 
 support, only some sixty-five per cent, of such 
 laborers are men ; while Pennsylvania has thirty 
 thousand children engaged in most constant and 
 wearying toil. Moreover, it appears that Mas- 
 sachusetts pays but thirty-three dollars per an- 
 num (average wages) more than we do; and Penn- 
 sylvania, where night gangs and seven-day men
 
 158 The National Revenues. 
 
 abound, pays but fifteen dollars more. These 
 differences seem but small results from such a 
 constant drain as is made on the agricultural dis 
 triets of the West. Further, the census tells us 
 that the average wages in the eight leading 
 "protected" industries iron, steel, woollens, 
 cottons, glass, silks, pottery, and carpets is 
 actually five dollars less per annum than the 
 average wages in Kansas non-protected work ; 
 less, too, than can be earned by any farm hand 
 in this state. 
 
 We used to be told that the industries which 
 we were required to support were making low 
 prices possible where otherwise there would be 
 no competition, and we would be entirely at the 
 mercy of "the foreigner." For a time we be- 
 lieved that, and even now recognize that there 
 may be an atom of truth in the statement. But 
 we now know that the expense has far exceeded 
 the benefit ; that competition between these 
 ' ' foreigners " has forced down prices abroad ; 
 that if our own prices have fallen it has simply 
 been because the " foreigners" led in the decline 
 and we were obliged to follow; that the law that 
 has governed wheat has had its effect on iron and 
 steel in spite of the protective wall ; and that 
 " trusts " and " syndicates " and all manner of 
 nefarious combinations have been possible in 
 this country, where they would never have been 
 known had our ports been open.
 
 The Tariff and the Western Farmer. 159 
 
 As to the " home market" it has never come. 
 A continually increasing per cent of our 
 cereals has been shipped abroad, and the surplus 
 has determined the price. And even the cry of 
 "pauper labor " loses its force when we look 
 eastward and see that even in pauper labor we 
 can at last compete with the world. 
 
 And in the face of all this the Missouri Valley 
 has prospered ? In a certain way, yes. I do 
 not think we have created much yet, not as much 
 by a great deal as we should have done under 
 freedom. There has been a vast shifting of 
 population towards the center of the Union. 
 Nearly all these people have brought money 
 with them, and have expended it here. Eastern 
 capital has flooded the state through the loan 
 offices, and in this way most of the permanent 
 improvements have been made. The increased 
 population has caused a rise in land values. By 
 this increase in values in the great majority of 
 cases, by actual transfer and by voluntary ex- 
 patriation land mortgages have been paid. 
 But they still lie like a cloud over the land. 
 Cities have been built ; partly a natural growth 
 and partly artificial. But municipal indebted- 
 ness has grown faster than the cities. With the 
 trading class, whose taxes on the whole diffuse 
 themselves most readily, there has been advance- 
 ment. But the great mass of our population is 
 still rural ; and shut our eyes to the facts as we
 
 160 The National Revenues. 
 
 may, is in a depressed and deplorable condition. 
 The most powerful and immediate cause, though 
 not the only cause of this, I have endeavored to 
 set forth in these hasty lines. 
 
 All observation and testimony tend to prove 
 that the general conclusion reached is no less 
 applicable to other great agricultural communi- 
 ties of the West. 
 
 JAMES H. CANFIELD.
 
 INTERNAL TAXATION AND A REVENUE 
 TARIFF. 
 
 BY PROFESSOR ARTHUR YAGBB, OP THE GEORGETOWN 
 (KY.) COLLEGE. 
 
 In this matter of financial policy, the American 
 Kepublic has at last come to the parting of the 
 ways. The vague generalities and straddling 
 duplicities of party platforms and the temporary 
 expedients and procrastinations of recent Con- 
 gresses will no longer suffice. A gigantic sur- 
 plus, menacing the equipoise of our whole indus- 
 trial system, imperiously demands a readjustment 
 of our national finances. 
 
 That this state of affairs should have been 
 allowed to come upon us is itself a political out- 
 rage scarcely paralleled in the history of free 
 peoples ; and it constitutes a curious commentary 
 on the improvidence and helplessness of the 
 partisan politics of the present day. 
 
 But the issue before the present Congress is a 
 much broader one than the mere reduction of 
 the revenues and consequent obviation of a sur- 
 plus. The time has come for such a thorough 
 readjustment of the whole scheme of national 
 finance as will make the recurrence of surplus 
 revenues impossible, and will settle our future 
 u 161
 
 162 The National Revenues. 
 
 financial policy upon some broad and permanent 
 lines. 
 
 Our great commercial interests demand this, 
 and our national legislature cannot discharge its 
 duty without contributing something toward 
 these great ends. 
 
 To accomplish these ends satisfactorily it 
 seems to me necessary for us to choose one of 
 two possible courses of action : In the first place 
 we may abolish the internal revenue and the 
 non-protective features of the tariff, and thus 
 commit ourselves wholly and permanently to the 
 policy of protection. Secondly, we may retain 
 the internal revenue and accomplish the neces- 
 sary reduction by such a change in the rates of 
 duties as will gradually bring them to the reve- 
 nue basis. The issue presented by the present 
 situation clearly involves, in my opinion, the 
 unreserved acceptance or the definite abandon- 
 ment of the protective principle. 
 
 It is to be hoped that the issue will be honestly 
 and candidly accepted by the political parties 
 of the day. The President has set a noble 
 example of statesmanlike courage and candor, 
 which, if followed by the rest of our political 
 leaders, will give us for once a political combat 
 to be fought on the field of ideas and principles. 
 
 There are several important reasons why we 
 should retain our internal revenue. 
 
 In the first place, these taxes are laid upon
 
 Internal Taxation. 163 
 
 articles which have been recognized by all nations 
 and in all times as fit subjects of taxation. One 
 of the earliest taxes imposed by the American 
 government was a tax upon spirits. 
 
 The revenue collected from this source is paid 
 by the consumers of articles which are not only 
 not necessaries of life, but which are in many 
 cases positively injurious to the health of those 
 using them. The tax is therefore in the nature 
 of a voluntary contribution to the government. 
 
 Moreover, by the abolition of the internal 
 revenue we would confine ourselves almost 
 entirely to one source of revenue, and that source 
 one which, being dependent upon the volume of 
 foreign commerce, might easily be cut off by 
 war or other international complication. All 
 governments should have diversified sources of 
 revenue. No civilized country of modern times, 
 save our own, has ever been guilty of the insane 
 folly of relying wholly upon taxes on imports. 
 Whenever we have done so, it has cost us dear. 
 The war of 1812 and the civil war each brought 
 the government to the verge of bankruptcy, 
 because at the breaking out of hostilities in each 
 case we were depending entirely upon tarifi 
 duties as a source of revenue. 
 
 The reduction of revenues must, therefore, 
 come from changes in the tariff; and, for myself, 
 I am firmly convinced that the time has come for 
 us to begin to abandon the policy of protection.
 
 164 The National Revenues. 
 
 In order to reach this conclusion it is not neces- 
 sary to enter into a scientific discussion of the 
 relative merits of free trade and protection as 
 economic theories. 
 
 There is no doubt much of extravagant asser- 
 tion and dogmatic denial on both sides. We 
 may be permitted to hesitate to accept the 
 sweeping claims made by enthusiastic adherents 
 of both schools of political economy. On this 
 point suffice it to say that the American Republic 
 has for a hundred years enjoyed an uninterrupted 
 and most remarkable course of industrial devel- 
 opment ; that in this hundred years we have 
 been part of the time under a protective tariff, 
 and part of the time under a tariff for revenue 
 only ; and that it is still an open question as to 
 which of these epochs have been most pros- 
 perous. 
 
 To the average American mind, this plain 
 statement of fact will appear fatal to most of the 
 wild claims of extreme theorists on both sides. 
 
 But apart from the distinctions of economic 
 theories, there are many practical reasons why 
 we should, as soon as possible, lay aside the pro- 
 tective principle. In the first place, a protective 
 tariff brings about an artificial state of things 
 highly dangerous to the commercial stability of 
 the country and corrupting to legislation. To 
 one familiar with the gusts and passions of pop- 
 ular government, there is something awful in
 
 Internal Taxation. 165 
 
 the spectacle of those great masses of capital 
 engaged in manufacturing enterprises which 
 seem to depend for their existence and pros- 
 perity upon an act of Congress. And the pow- 
 erful and persistent influence brought to bear 
 upon each successive Congress by these great 
 protected interests is a serious menace to the 
 cause of good government. 
 
 A protective tariff is, moreover, contrary to 
 our distinctively American polity. Protection 
 means restriction, and the political ideas of 
 America have been from the beginning set to the 
 march of unlimited freedom both of person and 
 contract, of speech and trade, within and without 
 our national boundaries. Our protective tariffs 
 constitute the only important exception to this 
 general policy. It is doubtless due in part to 
 this national feeling that not one of our pro- 
 tective tariffs has ever been adopted as an origi- 
 nal proposition and on its merits. The short- 
 lived and unimportant tariff of 18i2 constitutes 
 only an apparent exception to this important 
 statement. Speaking "bye and large," we 
 have lived under only two epochs of genuine 
 protection, namely 1816-1833 and 1861-1888. 
 In both cases the protective principle was 
 adopted in response to the demands of manu- 
 facturing interests that had grown up out of the 
 confusion and disturbance of war, and in both
 
 166 The National Revenues. 
 
 cases that principle was perpetuated in part 
 through the same powerful influence. 
 
 Lastly, a policy of protection cannot in this 
 country be a stable policy. A glance at the his- 
 tory of protection in America will reveal the 
 fact that this policy always encounters from the 
 first serious and wide-spread opposition ; that 
 the opposition always leads to agitation for tariff 
 reform which grows in violence and volume, 
 causing great disturbance to the immense busi- 
 ness interests involved ; and that finally, in spite 
 of the advantage of position, of vested interests, 
 and money, the protectionists are defeated. 
 
 In short, an attentive study of our political 
 history will show that protective tariffs have 
 been begotten of war and disaster ; that they 
 have been perpetuated by persistent and power- 
 ful pleas for the protection of vested interests ; 
 and that finally, after some twenty years of con- 
 stant agitation, they have been overthrown. 
 
 The tariff of 1861 seems to be following the 
 appointed course ; and if so, the time for its 
 downfall has arrived. 
 
 ARTHUR YAGER.
 
 A PLAN OF TARIFF REDUCTION. 
 
 BY PROFESSOB EDWARD W. BEMIS, OP THE VANDER- 
 BILT UNIVERSITY. 
 
 A few things may be taken for granted. 
 First, that the revenue should be reduced from 
 $50,000,000 to $75,000,000. There would still 
 be enough left for such a plan of refunding as 
 Prof. Henry C. Adams advocated in the "Forum" 
 for December, 1887, since the surplus this year 
 is estimated at $113,000,000 by the Secretary of 
 the Treasury. Enough would also be left for 
 the purchase of the Western Union Telegraph 
 system, which, in the writer's opinion, ought to 
 be at once undertaken; and for such public 
 buildings, internal improvements, and fortifica- 
 tions, as a wise regard for the public interest may 
 recommend. 
 
 In the second place, this reduction must come 
 in the internal revenue, which yielded in 1886-7 
 $30,108,067.13 from tobacco and $87, 751, 509. 20 
 from liquors; or it must come in the tariff, which 
 yielded $217,286,893.13 ; or partly in both. 
 
 Finally it should be distinctly understood that 
 the advocate of a reduction at present in the 
 tariff is not obliged to reject the great protection- 
 ist argument stated by Mill, and best elaborated 
 by List in his National Economy, and Sidgwick 
 167
 
 168 The National Revenues. 
 
 in his Political Economy, relative to the wisdom 
 of temporary protection to infant industries. 
 The question is not one of immediate removal 
 of all customs duties, which even the most pro- 
 nounced free trader would deprecate as too 
 much of a cold bath to be ventured at once ; 
 neither is it a question, such as confronted 
 Hamilton, of formulating at the very beginning 
 of a nation's development its economic policy. 
 
 Considering, therefore, only the issue now be- 
 fore the country, it seems to me clear that the 
 reduction should be almost entirely in the tariff. 
 There are at least two weighty reasons for leav- 
 ing the internal revenue as it is. It is a tax on 
 luxuries ; and it may fairly be said in the case of 
 liquor, and even in considerable measure of 
 tobacco, to be a tax on vices. Such heightening 
 of the price through taxation as will serve to re- 
 strict their use, must meet the approval of all 
 moralists. A tax on luxuries is advocated by 
 economists as the most in harmony with the ac- 
 cepted canon of taxation that it should be pro- 
 portionate to ability to pay. 
 
 The second and less familiar but none the 
 less important reason for retaining the tax on 
 both liquor and tobacco, is the great wisdom and 
 almost necessity of having in our hands a ma- 
 chinery for revenue which we can depend upon 
 and make more effective when some crisis, such 
 as foreign war, shall require a sudden increase of
 
 A Plan of Tariff Reduction. 169 
 
 revenue. Customs duties, from the injury to 
 commerce by war, always decrease and almost 
 cease when most needed, as during our civil 
 war, when our commerce and imports were far 
 less affected than would happen in war with 
 foreign countries, such as may overtake us when 
 we least expect it. 
 
 Prof. Henry C. Adams has clearly shown, in his 
 invaluable work on Public Debts, the great 
 losses and national danger in the wars of 1812 
 and 1861 from the lack at the start of an effi- 
 cient internal revenue system. 
 
 Such being the reasons for retaining the inter- 
 nal revenue, how is it with the tariff ? It here 
 becomes necessary to develope some theory as 
 to the reasons for protection. I will in this 
 article admit that there may be force in some 
 protectionist arguments, and will endeavor to 
 consider the subject in a judicial spirit. 
 
 I believe that the results of protection are 
 very different when applied to so-called raw 
 materials, like the products of the mine and the 
 forest, from what they are when applied to those 
 industries we call manufactures, which make use 
 of such forms of division of labor as lead to 
 the collection of thousands in small areas. 
 Work in producing raw materials, save in 
 mining, is extensive, in manufactures it is inten- 
 sive. One scatters men apart from each other 
 and prevents the stimulus of social contact; the
 
 170 The National Revenues. 
 
 other collects men in closely settled communities. 
 The first requires much capital and skill in or- 
 ganization and management ; the latter requires 
 far less of both. Of course some capital and 
 agricultural skill is important on a farm, but no 
 one would compare it with that needed in 
 the management of a large cotton mill or iron 
 foundry. 
 
 Now it seems to me that protection cannot for 
 any length of time help the wage earner in 
 either kind of labor. The increasing and 
 already great mobility of labor is fast producing 
 equality of compensation for the same service in 
 the United States and Western Europe. It is no 
 idle assertion, made for the sake of carrying a 
 point, when I say that reliable statistics show 
 that already wages in many industries, even of 
 those where we have a tariff, are as high by the 
 piece in England and Germany as here. 
 
 It is not denied that a tariff, by its stimulus to 
 an industry, may attract workmen to it and very 
 likely lead to an increased influx from Europe. 
 But what is the gain thereby to the wage- 
 earner ? We are fast seeing the folly of Joseph 
 Cook's desire to see our population numbered by 
 the hundred millions, and are realizing that in 
 happiness, as in land, we may reach a point of 
 diminishing returns, and find that there is more 
 comfort and civilization possible with one hun-
 
 A Plan of Tariff Reduction. 171 
 
 dred millions or less, than with live times the 
 number. 
 
 But I agreed to admit, as I honestly can, some 
 force to protectionist arguments. A protective 
 tariff does undoubtedly stimulate the industries 
 protected, though it may not for any length of 
 time directly raise the wages of the laborers in 
 them. The simple question is this : Are there 
 any great advantages that may come to the 
 country as a whole from thus stimulating special 
 industries ? Here we see the importance of the 
 distinction between raw materials and manufac- 
 tures. Without here claiming that a tariff is the 
 best way of stimulating an industoy, it seems to 
 me clear that, if we admit the wisdom of pro- 
 tection at all, there are reasons for protecting 
 manufactures which do not exist for protecting 
 workers in raw material ; or if we reject the en- 
 tire protectionist scheme, but yet admit, as all 
 do, the impolicy of removing all the tariff at 
 once, we are aided by the above distinction in 
 deciding where reduction can best begin. 
 
 The strongest argument for protection, as 
 Sidgwick puts it, is the need of aid to infant 
 industries for which one country is naturally as 
 well fitted as another, but which require large 
 capital and great experience in the manager, and 
 consequently may be swamped at the outset by 
 the cut-rate competition of established firms in 
 other countries. A case in point is that of Mr.
 
 172 The National Revenues. 
 
 Williston, at Easthampton, Mass., years ago, 
 who secured a patent by which he could manu- 
 facture thread cheaper than Coates in Great 
 Britain, but was compelled to desist by their 
 selling far below cost, until his smaller capital 
 was in danger of total loss. 
 
 But this argument applies solely to manufac- 
 tures and mining, since, as was shown, in these 
 only is large capital and great managerial skill 
 required. 
 
 Another great reason for desiring protection 
 has usually been given as the intenser social and 
 mental activity, the quickened life which comes to 
 a community from a diversified industry, and par- 
 ticularly from manufactures. As we have seen, 
 manufactures alone can produce this, since they 
 alone concentrate peoples in cities and large vil- 
 lages where this mental stimulus leading to in- 
 vention and quickened social life is most seen. 
 Gunton, in his interesting work, " Wealth and 
 Progress," shows the close connection between 
 social wants and wages, and maintains, in oppo- 
 sition to Henry George, that not only nominal 
 but real wages are highest in cities where rents 
 are high and the social desires and demands 
 greatest. 
 
 All these are strong reasons for preferring 
 protection to manufactures rather than to raw 
 material, and, in the writer's opinion, sufficient 
 to induce even a moderate protectionist to favor
 
 A Plan of Tariff Reduction. 173 
 
 reduction in the tariff on raw material rather 
 than in the internal revenue. Many will prefer, 
 as a national ideal, to see a large though scat- 
 tered farming community rather than the rapid 
 growth of cities ; but evidently a change of this 
 kind could be as much effected by tariff reduc- 
 tion, provided only duties on manufactures as 
 well as on raw material were lowered, as by 
 leaving the customs duties as they are and re- 
 ducing the tax on liquor and tobacco. 
 
 If the above reasoning is accepted, we should 
 naturally take off in whole or in part the follow- 
 ing customs duties. Only the most important 
 are selected, and the revenue for 1887 given : 
 
 Wool $6,390,055 
 
 Seeds.. 172,438 
 
 Flax, Hemp and Jute 1,930,340 
 
 Bristles 174,424 
 
 Hops 1,329,500 9,996,757 
 
 Animals $933,013 
 
 Breadstuffs 1,075,811 
 
 Chicory 106,672 
 
 Fish 611,938 
 
 Fruits and Nuts 4,214,779 
 
 Hay 157,445 
 
 Oils, Olive and other salad 163,648 
 
 Meat and Dairy products.. 430,007 
 
 Rice 971,455 
 
 Salt 676,866 
 
 Spices. 66,271 
 
 Molasses 1,496,863 
 
 Sugar 56,507,496 
 
 Potatoes 214,638 
 
 Other vegetables 332,872 
 
 Miscellaneous food products 38, 560 67,998,334 
 
 Hides and Skins 1,329,506 
 
 Wood, sawed 994,726 
 
 Art Works 577,772 2,902,004 
 
 $80,897,095
 
 174 The National Revenues. 
 
 If we add the duty on coal and coke of 
 $683,728, which the arbitrary methods of the 
 anthracite coal monopoly would justify, as also 
 the resulting benefit to manufactures, we should 
 have $81,580,823 as the duty on the leading raw 
 materials. 
 
 If reductions, however, are made in raw 
 materials, corresponding reductions at least 
 would have to be made in duties on completed 
 products, like clothing, into which any of these 
 entered as raw material, so that a reduction of 
 probably over $40,000,000 more could here be 
 made without loss to the manufacturer. But 
 $70,000,000 is the utmost advisable reduction of 
 the national revenue at present. Consequently 
 a considerable protection could still be given to 
 many of the articles just mentioned. 
 
 In order not to precipitate sudden disaster and 
 ruin upon the Louisiana sugar planters, it might 
 be well to adopt the suggestion of Senator 
 Dawes, and, taking off $30,000,000 to $40,000,000 
 from our sugar duties, pay a bounty to the 
 sugar planters for a few years. 
 
 In view of the recent report of the U. S. For- 
 estry Commission, showing the rapid cutting of 
 our forests, and the climatic and other advan- 
 tages of preserving them, the necessity of repeal- 
 ing the duty on lumber is especially evident, in 
 order to save in some measure our own timber 
 by using the stores in Canada. The duty on art
 
 A Plan of Tariff Reduction. 175 
 
 works and books should be removed in the in- 
 terest of education and civilization. 
 
 Such are some of the features of the present 
 problem of revenue reduction as they appear to 
 the writer. I regret that I cannot elaborate 
 them more fully. 
 
 EDWARD W. BEMIS.
 
 WAGES AND THE TARIFF. 
 
 BY PROFESSOR J. LAURENCE LAUGHLIN, OP HARVARD 
 UNIVERSITY. 
 
 The assertion that the tariff that is, a tax on 
 imported goods governs the rate of wages, 
 is made with such persistence that in the 
 interest of sound economic teaching it deserves 
 a candid examination. That a tax which is a 
 subtraction from the wealth of the country 
 should result in an addition to it, is an obvious 
 contradiction. As generally stated, it is said 
 that the employment of laborers depends upon 
 the existence of the tariff ; for without the tariff, 
 it is urged, manufacturing would cease to exist, 
 and consequently laborers would be thrown 
 out of employment. A picture is given of the 
 distress and misery which would follow the stop- 
 page of great factories, now employing thou- 
 sands of operatives, and it is asked where these 
 men and women can find a place to work. The 
 investment of capital in manufactures, they go 
 on to say, increases the demand for laborers, 
 and consequently wages are kept at a higher 
 level in the United States than in England, 
 where there is no protective tariff. Wages in 
 the United States, moreover, are stated to have 
 176
 
 Wages and the Tariff. Ill 
 
 been very low at the beginning ot the century, 
 but to have risen since, because of the passage of 
 tariff acts ; and now it is claimed that if the 
 duties were reduced the wages of American 
 workingmen would be lowered to the level of the 
 "pauper labor" of Europe. In looking at this 
 matter, it will be well to see whether the glib 
 orators who masquerade as "practical men" 
 have taken into account all the facts of the case, 
 or whether very important facts are constantly 
 overlooked. 
 
 We may start out with the accepted fact that 
 wages are generally (although not always) higher 
 in the United States than in Europe. In no 
 other group of industries in this country is the 
 high rate of wages more marked than in what 
 are known as the extractive (not solely "agri- 
 cultural") industries, such as farming, stock- 
 raising, lumbering, oil-producing, and the grow- 
 ing of tobacco, cotton, and hemp. From these 
 come the products which, because of their 
 low relative prices, are exported to foreign 
 countries in enormous quantities. These arti- 
 cles head the list of our exports. The prices of 
 our extractive industries are, in general, so low 
 that we can sell in open competition with the 
 whole world. But note the conclusion from 
 this. These are the very industries in which 
 wages are noticeably high ; in other words, the 
 very industries of the United States in which
 
 178 The National Revenues. 
 
 wages are admittedly highest as in the West 
 are exactly those in which prices are low and 
 which export the largest quantities of goods 
 abroad. Here is a fact which practical men run 
 against every day of their lives, and yet it is 
 constantly ignored by the doctrinnaire politicians. 
 It is not necessary to go further, and show that 
 in a cotton mill the highest paid labor produces 
 the goods which can be sold at the lowest price 
 per yard. It is unnecessary to go further in 
 illustration of the truth that high wages do not 
 accompany high prices as cause and effect. On 
 the contrary, efficient and well-paid labor enables 
 the employer to sell his goods at a low price. It 
 is not high wages, then, which prevents us from 
 competing in foreign countries, for we already 
 do it. 
 
 Another fact one which is patent to every- 
 one is these industries which can export goods 
 abroad get no addition to the prices of their arti- 
 cles by the imposition of duties on imports into 
 the United States. In other words, our tariff can- 
 not raise the price of wheat or corn sold to Ger- 
 many.* If the duties have no effect to raise the 
 price, then, on anything by which wages are af- 
 fected by the prices of goods, wages in the extract- 
 
 *I will not here go Into the discussion of .nternational value, which Is 
 more or less abstruse. It Is true that our tariff, by Jin posing a barrier to 
 imports, might change the equation of International demand unfavorably 
 to the foreigner ; but this can be again equalized by retaliation on the 
 part of the foreigner. Although, even If ;he foreigner did not retaliate, 
 it is not likely that his demand for our products would remain the same, 
 after we disturbed the equilibrium by imposing a tariff here.
 
 Wages and the Tariff. 179 
 
 ive industries are wholly unaffected by the tariff. 
 Or on any theory by which wages are governed by 
 the amount of capital offered to workingmen 
 i.e., the chances for employment presented to 
 them by men who are able to hire them it can- 
 not be said that wages are regulated by the 
 tariff. It would be absurd to argue this point, 
 if it did not offer a stumbling-block to many 
 honest minds ; chiefly because many persons do 
 not consider that a tariff is a tax,* a subtraction, 
 not an addition, to the wealth or capital of a 
 country. On no possible grounds, then, can it 
 be said that in the extractive industries at least 
 high wages are maintained by a protective tariff. 
 We find a great class of our industries wholly un- 
 influenced by t the tariff as regards the prices at 
 which their products are sold abroad; and yet we 
 find that wages in these industries are not only 
 as high as (and even higher than) in manufactures, 
 but are also very much higher than in the cor- 
 responding industries in Europe. The " pauper 
 labor " of Europe has not ruined our farmers, 
 nor their ability to pay high wages, and yet they 
 send their products all over Europe. Even the 
 seven-cent-per-day laborer of India produces no 
 effect on the wages of our agricultural laborers. 
 Now if the tariff cannot be the cause of high 
 wages in the extractive industries, then the gen- 
 
 Mt derived Its name from the island of Tarlf a, an Island at the entrance 
 of the Mediterranean, on which lived the robbers who exacted toll from 
 ships going through the Straits of Gibraltar.
 
 180 The National Revenues. 
 
 eral proposition that the tariff causes high wages 
 falls to the ground ; for if it does not cause high 
 wages in some industries, why should it in 
 others ? If the tariff cannot be the cause of high 
 wages in our extractive industries, there is no 
 reason whatever to suppose that the tariff causes 
 the high wages now paid in any other industries, 
 including manufactures. 
 
 It is asserted, however, that the existence of 
 certain protected manufactures gives a demand 
 for labor which keeps up the level of wages to 
 a point higher than would be the case if these 
 manufactures ceased to exist. That is, that the 
 level of wages in the United States is fixed by 
 the rates paid by manufacturers, while the farm- 
 ers and other employers must adopt the level 
 fixed for them by protected manufacturers. It is 
 claimed that the protected industries of the 
 United States employ so much labor that their 
 rate of wages must necessarily be paid by any 
 other industry which hires labor. Now nothing 
 can be further from the truth than this. It is an 
 error based on a simple omission to consider the 
 facts as they stand on record. The relative 
 numbers of men and women employed in indus- 
 tries not affected by the tariff and those in indus- 
 tries affected by the tariff, is altogether mis- 
 stated ; and yet the facts are easy of access. 
 
 According to the census of 1880 the total 
 number of persons engaged in gainful occupa-
 
 Wages and the Tariff. 181 
 
 tions in the United States was 17,392,099, 
 divided as follows : 
 
 (1) Agriculture 7,670,493 
 
 (2) Professional and Personal 4,074,238 
 
 (3) Trade and Transportation 1,810,256 
 
 (4) Manufactures, Mechanics and 
 
 Mining 3,837.112 
 
 Now of these persons how many are unaffected 
 by foreign competition, and so are not recipients 
 of any gain in the prices of their products 
 arising from the imposition of customs duties ? 
 We may subtract* from the first lass all the 
 agricultural population of Maine, New Hamp- 
 shire, Vermont, and one-half of that of New 
 York, as possibly affected by Canadian competi- 
 tion, leaving 7,299,842 persons in class (1) not 
 subject to foreign competition. Persons in the 
 next two classes (2) and (3) are unaffected by 
 foreign competition, because a competitor must 
 necessarily reside in the country where the work 
 is done or the service is rendered. So 5,884,494 
 more persons are not subject to foreign compe- 
 tition. Nor are all of class (4) affected by foreign 
 competition. The census included in this class a 
 large number of laborers whose industries do not 
 feel the effect of foreign competition. To avoid 
 cavil, I print the list herewith : 
 
 Agricultural implements 4, 891 
 
 Bakers 41,309 
 
 Blacksmiths 172,726 
 
 See Report of the Secretary of the Treasury, 1886, Appendix D ; and 
 LaugUlinV'MIH," pp. 618-20.
 
 182 The National Revenues. 
 
 Bleachers, dyers and scourers 8,222 
 
 Blind, door and sash 4,946 
 
 Boatmakers.- 2,063 
 
 Boot and shoemakers 194,079 
 
 Bottlers and mineral waters 2, 081 
 
 Box-factory operatives 15,762 
 
 Brass founders 11,568 
 
 Brewers and malsters 16,278 
 
 Brick and tile 36,052 
 
 Bridge builders and contractors 2, 587 
 
 Builders and contractors 10,804 
 
 Butchers 76,241 
 
 Cabinet-makers 60,654 
 
 Car-makers 4,708 
 
 Carpenters and joiners 373, 143 
 
 Carriage and wagons. 49,881 
 
 Charcoal and lime burners 5,851 
 
 Clerks and bookkeepers in manufacturing 
 
 establishments 10,114 
 
 Clocks and repairing 4,354 
 
 Coopers 49,138 
 
 Distillers and rectifiers 3,245 
 
 Engineers and firemen 79,628 
 
 Fertilizers 1,383 
 
 Fishermen and oystermen 41,352 
 
 Gas works 4,695 
 
 Gilders 1,763 
 
 Gun and locksmiths 10,572 
 
 Hair-cleaners, etc 1,965 
 
 Harness and saddle makers 39,960 
 
 Jewellers 28,405 
 
 Leather, etc (not case and pocket book- 
 makers) 29,842 
 
 Machinists 101,130 
 
 Marble and stone-cutters 32,842 
 
 Masons 102,473 
 
 Meat-preserving and packers 6,296 
 
 Millers 53,440 
 
 Milliners, dress-makers, etc .285,401 
 
 Mirror and picture-frame? 2,503 
 
 Oil-mill, refinery and wells 11,269 
 
 Organ-makers 2,437 
 
 Paintersand varnishers 128,556 
 
 Paper hangers 5,013 
 
 Photographers 9,990 
 
 Pianofortes 5,413 
 
 Plasterers 22,083
 
 A Plan of Tariff Reduction. 183 
 
 Plumbers and gas-fitters 19,383 
 
 Printers, etc 72,726 
 
 Pump-makers 1,366 
 
 Quarrymen 15, 169 
 
 Quartz and stamp mill 1,449 , 
 
 Rag-pickers 2,206 
 
 Railroad builders 1,206 
 
 Roofers and slaters 4,026 
 
 Sail and awning.. 2,950 
 
 Sawyers 5,195 
 
 Sewing-machines.. 2,725 
 
 Sewing-machine operators.. .. 7,505 
 
 Shingle and lath 5,166 
 
 Shirt, collar and cuffs 11,823 
 
 Starch _ 1,885 
 
 Stave shook and heading 4,061 
 
 Stove, furnace and grate 3,341 
 
 Tailors 42,818 
 
 Tobacco factory 20,446 
 
 Upholsterers 10,443 
 
 Wheelwrights. 15,592 
 
 Wood-choppers 12,731 
 
 Wood turners 12,954 
 
 2,216,848 
 
 In class (4) at least 1,922,672 are not exposed 
 to foreign competition; or in all the four classes a 
 total of no less than 15,401,184 persons, whose 
 wages can in no wise be said to be maintained 
 by a tariff which shuts out foreign competition. 
 There remain, then, only 1,990,915 laborers 
 whose occupations can be said to be protected 
 from foreign competition by a tariff. Moreover, 
 in other industries included in class (4) but 
 omitted in the above list, it is estimated that 
 from 260,000 to 456,000 persons are not afiected 
 by foreign competition;* but it is unnecessary 
 to include these in our estimate, in order to show 
 
 tteport Secretary Treasury, ibid.
 
 184 The National Revenues. 
 
 clearly that persons engaged in the extractive 
 and other industries, uninfluenced by foreign 
 competition, far outnumber those affected by 
 foreign competition. It is well within the truth 
 to say that nine-tenths of the persons to whom 
 wages are paid in the United States are engaged 
 in occupations which get no protection from for- 
 eign competition. Consequently the rate of 
 wages paid to these 15,401,184 laborers cannot 
 be fixed or maintained by the tariff, but the rate 
 must be due to conditions existing in this highly 
 productive country of ours, which are wholly 
 independent of the tariff. It cannot be said for 
 a moment that the wages paid to 1,990,915 per- 
 sons fix the rate paid to 15,401,184 persons ; for 
 it is exactly the reverse. It is never solemnly 
 asserted that the tail wags the dog. 
 
 Another fact of great importance is also over- 
 looked in this discussion. Wages are said to have 
 been raised in the United States by protective 
 tariffs, and to be kept high by the same agency; 
 and if the tariff were reduced it is urged that 
 wages would fall. Now how can this wholly 
 illogical assertion be held to in theface of the fact 
 that in free-trade England wages are higher than 
 in protected France and Germany ? And there 
 is rib dispute whatever about this fact, English 
 laborers are much better paid, clothed, and 
 housed, than laborers on the continent. Why 
 does not protection in France raise wages? and
 
 Wd(jes and the Tariff. 185 
 
 why docs not free trade in England lower 
 wages ? Protection in France and Germany does 
 not begin to produce a high level of wages. 
 Then why should it be said to do it in the United 
 States ? Does this not lead us to reflect that the 
 high wages in our country and the low wages in 
 Europe must be due to things other than the 
 tariff ? To claim that the tariff does one thing 
 in the United States, and exactly the reverse in 
 Europe, is evidently the resort of a man who 
 will resort to any subterfuge to carry his point : 
 he is not searching for the truth. To 
 reason that a tariff (which is taxation) can 
 have caused the industrial progress of the 
 United States is to overlook the thousand things 
 which have affected the production of wealth in 
 this country : our wonderfully rich natural re- 
 sources ; the high civilization of our population 
 from the start in a new country ; the energy, in- 
 telligence, ingenuity, and power of invention of 
 American laborers ; the stimulating forces of 
 our democratic institutions ; and the enormous 
 growth of capital, which has outstripped even 
 the growth of population. 
 
 Moreover, those who maintain that the tariff 
 raises wages are utterly inconsistent. They ask 
 Congress to put on a tariff to compensate them 
 for the high rate of American wages to equalize 
 the conditions of labor in Europe and America. 
 It is an absurdity. They impale themselves on
 
 186 
 
 The National Revenues. 
 
 the horns of an obvious dilemma. If the tariff 
 raises wages, then every tariff-act places (accord- 
 ing to their way of thinking) the American 
 emplo} r er, relatively to the foreigner, at a disad- 
 vantage due to this act. Consequently if Con- 
 gress should take these people at their word, 
 they ought to save them from higher wages by 
 never granting tariff legislation ; for they say 
 the tariff raises wages. And then because 
 American wages are high, they ask for protec- 
 tion from the foreigner ! It is utterly inconsist- 
 ent. 
 
 It must be evident that the high rate of wages 
 in the United States is due to causes lying out- 
 side of the tariff. The great number of laborers 
 employed in occupations not affected by the tariff 
 furnish the main part of the supply of labor, 
 and the relation of this number to 
 capital offered for employment, to 
 gether with the productiveness of 
 our industries, fixes the general rate 
 of wages. Moreover, these are the 
 industries which are most productive; 
 for, by the mere fact of needing pro- 
 tection, other industries give a proof 
 that they are less productive. In 
 B D, the more productive indus- 
 tries, of course, the product to be 
 divided is larger than in A C, the 
 less productive industries. And, if 
 
 c
 
 Wages and the Tariff. 187 
 
 the majority of industries are like B D, the 
 general level of wages and interest will be 
 high. Therefore, when men want to take up 
 industries like A C, they find that they can- 
 not pay the same wages as in B D, and yet 
 get as high a return for capital as is com- 
 mon in B D. They say that the high rate of 
 wages prevents them from competing with for- 
 eigners, when, in reality, it is the low pro- 
 ductiveness of their industry which, not yield- 
 ing enough to pay both wages and "profits" 
 as high as in BD, causes them to call on the 
 state for "protection." Then, what is really 
 done is to raise the value of the product 
 A C to a higher level, X Y, by taking D Y from 
 B D and giving it to AC; that is, protection 
 takes from the more productive and adds to the 
 less productive industries. This is done by 
 allowing A C to sell its product at a price as 
 high as that of the foreign goods, plus the duty; 
 or the price of goods in A C is raised relatively 
 to those in B D, which means that the goods of 
 A C exchange for more of the goods of B D ; 
 or, vice versa, that more of the goods of B D 
 are given for the goods of A C than before ; so 
 that a part of B D goes to A C because of the 
 tariff. Then, with this addition taken from B 
 D, A C is able to pay the same wages and 
 interest as B D, while B D must pay less in 
 wages and interest than without protection.
 
 188 The National Revenues. 
 
 Instead of laborers being protected by the tariff, 
 it is claimed that by the tariff the articles of 
 common use, such as coats, hats, blankets, 
 woollen goods, and shoes, are increased in price 
 by the tariff, and the workingman must pay this 
 increased price just because the manufacturer 
 does not want to change his business. If the 
 duties on wool and woollen goods were abolished, 
 every man could get his clothing at about one- 
 half the present price. Without protection, not 
 only would wages be larger, but the articles he 
 buys would be cheaper. 
 
 J. LAUBENCE LAUGHJJN.
 
 THE SCIENTIFIC BASIS OF TARIFF 
 LEGISLATION.* 
 
 BY HON. CARROLL D. WRIGHT, UNITED STATES COMMIS- 
 SIONER OP LABOR. 
 
 In a commercial sense there are two great 
 parties in this country, the free traders and the 
 protectionists. The two great political parties 
 have not, in recent years, drawn their lines dis- 
 tinctively on the issue of free trade and protec- 
 tion, because the two great commercial parties 
 furnish a large portion of the members of the 
 two great political parties, and so interchangea- 
 ble and so thoroughly interwoven are the com- 
 mercial elements with the political elements, 
 that such a division is not likely to occur until 
 one or the other system of commerce, or of 
 
 *NOTK. Col. Wright was requested to furnish for this collection a 
 paper discussing the bearings of the protective system upon the condi- 
 tion of American worklngmen and the extent to which this considera- 
 tion should have weight In the revision of our revenue system. He 
 replied that there was not, to his mind, a line of facts In existence which 
 would enable one Intelligently to discuss that question. Furthermore, 
 he was, very properly, not willing to say anything publicly relating to 
 the tariff which would seem In any way to anticipate conclusions that 
 might be deduclble from the Labor Bureau's future Investigation of the 
 cost of production or that might be In any quarter prejudicial to the 
 report on that subject. In lieu, therefore, of the paper asked for, Col. 
 Wright gave permission to use an address made by him a few years ago 
 on the scientific basis of tariff legislation. It Is bo thoroughly pertinent 
 to the current discussion that it is reprinted here in full. The address 
 was originally read before the American Social Science Association, at 
 Saratoga, September 10, 1884. [EDR-] 
 189
 
 190 The National Revenues. 
 
 trade, can be demonstrated beyond a doubt as 
 the best system or policy for this country to 
 adopt. This condition exists because the discus- 
 sion of the tariff is still carried on within the 
 realms of theory, neither party being able to 
 demonstrate the correctness of its theory when 
 reduced to practice. Of course, all true theo- 
 ries must be true in practice in the long run, but 
 the difficulty is that some conditions essential to 
 the perfect working out of the theory do not 
 exist when the principles of the theory come to 
 be applied. This is very clearly illustrated in 
 one of the great fundamental features of the tariff 
 discussion. 
 
 There are in this country 90,000 operatives 
 engaged in the manufacture of woollens; it is 
 true, theoretically, that if woollen goods can be 
 manufactured cheaper by English, French, Ger- 
 man, or other operatives, than by the American, 
 the American consumer is entitled to the benefit 
 of such cheaper manufacture, and that the 90,000 
 woollen operatives should therefore vacate their 
 trade, and seek some other occupation, and let 
 the manufacture of woollens take place where it 
 can be done on the cheapest basis. This, theo- 
 retically, is the true doctrine without doubt, but, 
 in order to have it work practically, we must, in 
 the first place, secure the perfect mobility of 
 labor, and until such mobility can be secured, 
 the theory, however fine, or however true, can-
 
 Scientific Basis of Tariff Legislation. 191 
 
 not find a practical application, because, as the 
 conditions of industry now exist, such a number 
 of operatives could not successfully seek other 
 employment. This immobility of labor does not 
 antagonize the theory at all, even in practice, 
 for, theoretically, the 90,000 woollen operatives 
 would, in the long run, either find something 
 else to do, or live a miserable existence until 
 they needed nothing more to do. So, the theo- 
 ries of the free trader and of the protectionist, 
 as illustrated by this one instance, cannot be so 
 clearly demonstrated to the common mind as to 
 make the tariff question as yet a clearly defined 
 political issue. 
 
 The discussion is still further involved, and, to 
 a great extent, by the want of illustration, that 
 is, of sufficient data, whereby either theory can 
 be clearly demonstrated ; the advocates of the 
 two great systems depend so largely upon asser- 
 tion and assumption, and so little upon actual 
 facts, that the common verdict, reached by the 
 majority of the people, is that the tariff is a 
 muddle, and even enlightened men, who have 
 not made a special study of the question, do not 
 hesitate to say that they do not understand what 
 it means. 
 
 The advocates of each great commercial sys- 
 tem bring to their advocacy great learning and 
 great intelligence, and, we are bound to say 
 when we look at the character of the advocates,
 
 192 The National Revenues. 
 
 thorough integrity; and we must also assume 
 that each party, as represented by its members, 
 is seeking only the good of the whole country; 
 and yet sometimes, the asperity of the discus 
 sion, and it is too often so, would indicate that 
 each thinks the other party is seeking only the 
 destruction of the industries of the nation. 
 Honest men honestly believe in the correctness 
 of the positions they assume with reference to 
 this great question, for this question is either a 
 vital one, or it is not; the tariff either has a 
 great influence on the prosperity of the masses 
 of a country, or it has not ; the welfare and the 
 happiness of the wage receivers are enhanced by 
 the existing policy, or they are not ; the indus- 
 tries of a country are either built up, or re- 
 stricted in their building up, by the influence of 
 tariff legislation ; the people are robbed, or they 
 are not robbed, through import duties ; they are 
 swindled as consumers, or they are not, through 
 the influence of these duties ; and taking these 
 questions as fundamental in the tariff discussion 
 the tariff question does become a vital one, and 
 if it is a vital question now, it has been a vital 
 question in the past, and must be so until it is 
 settled ; and yet with these vital elements there 
 are two sides, each of which is hotly fought. 
 And this hot contest, it would seem to an ordi- 
 nary observer, should have been productive of
 
 Scientific Basis of Tariff Legislation. 193 
 
 sufficient intelligent data, on which legislation 
 could be correctly based, long ere this. 
 
 A very brief and casual study of tariff legis- 
 lation in the United States, proves to any one 
 that it has not been carried through on any 
 clearly defined basis, or on a sufficiently clearly 
 defined basis to admit of saying that the tariffs 
 of the past have been constructed on scientific 
 groundwork. 
 
 It is not my purpose in this paper to discuss 
 the merits or the demerits of either of the great 
 commercial systems. With the exception of 
 England, the protective principle is adopted in 
 nearly all great producing countries, I mean 
 those countries which are engaged in manufact- 
 ures. In the United States, the free trade party 
 finds its warmest adherents among the econo- 
 mists, students, and those generally who seek 
 the practical application of theoretical systems, 
 and among the great importers. On the other 
 hand, the protectionist party finds its most act- 
 ive adherents among the producers themselves, 
 including the manufacturers and the people they 
 employ, and the producers of raw materials. 
 Here then we have two well defined parties, the 
 theorists on the one side, and the business men, 
 or those who must apply principles practically, 
 on the other side. The merits and the demerits 
 of the two great systems are so often and so 
 forcibly set forth by the respective advocates, 
 13
 
 194 The National Revenues, 
 
 that no necessity exists for their discussion at 
 the present time. So far as the motive of this 
 paper is concerned then, the rights and the 
 wrongs of the question are not to be considered, 
 but taking the system which exists as one likely 
 to exist for some years at least, the first duty 
 we have in the premises, it seems to me, is, to 
 make our legislation depend upon clearly de- 
 fined bases, and not upon haphazard statements, 
 and not upon the representations of self interest 
 alone 
 
 I presume it is perfectly true that when the 
 tariff acts of the past have been constructed, 
 manufacturers made such representations to the 
 proper congressional committee as in their judg- 
 ment would indicate for the industries involved 
 the true basis for the establishment of rates. 
 But they could have only the crudest facts on 
 which to base such a judgment; the best part of 
 it was their knowledge of the markets of the 
 world, and of the cost of manufacture, as ob- 
 tained from very crude data, and the cost of im- 
 portation, that is, of freight, but they had no 
 well established data on which to make their 
 recommendations to Congress, and so our tariff 
 acts represent a wide range of judgment, re- 
 sulting in a Avide range of rates of duty, any 
 attempt to readjust which, has only resulted in 
 more and greater discrepancies in the range. 
 
 My purpose then, is to show:
 
 Scientific Basis of Tariff Legislation. 195 
 
 1st. What I mean by a scientific basis for 
 tariff legislation. 
 
 2nd. The necessity for such basis. 
 
 3rd. How can such a basis be secured? 
 
 And 4th. What would be the results of legis- 
 lation based upon such a basis? 
 
 The first point, what is a scientific basis, is 
 very briefly answered. 
 
 The basis which shall enable legislation to be 
 clearly defined, and Justin its operation in every 
 particular, if any legislation is to be had at all, 
 may properly be called a scientific basis. 
 
 When facts can be classified in such a way as 
 to show their truth, which truth can be uni- 
 formly applied, you have reduced the matter to 
 a science, which is, to quote Worcester, "the 
 knowledge of many methodically digested and 
 arranged so as to become attainable by one." It 
 is knowledge certain and evident in itself. A 
 classification of the facts which bear upon a 
 tariff and by which certain absolute positions as 
 to rates become established, would constitute a 
 scientific basis, as the term is used in this paper, 
 and such classification should be the result of 
 such a wide collection of individual facts as to 
 leave no doubt in the mind of any man, whether 
 free trader or protectionist, of the position to be 
 attained relative to each great industry. I am, 
 however, well aware that such a basis, even 
 when reached, would be to some extent a tern-
 
 196 The National Revenues. 
 
 porary one, but I am also convinced that the 
 temporary features of such a basis would relate 
 only to degree and not to the fundamental value 
 of the basis itself, that is to say, the changes in 
 industrial conditions are as a rule so slight, that 
 the variation in the basis scientifically reached 
 would not invalidate its usefulness to any great 
 extent for just legislation. Great industrial dis- 
 asters, from whatever cause, might result in the 
 radical disturbance of some of the compositions 
 determined by a scientific classification of data, 
 but were such the case, the same methods which 
 secured the original basis would secure its scien- 
 tific readjustment, so that the criticism which 
 might perhaps properly be made upon the basis 
 which I shall indicate, has not deterred me from 
 prosecuting my study. 
 
 Second. Is there any necessity for a basis 
 such as that indicated ? To my own mind there is, 
 and I come to this conclusion from the character 
 of the discussion bet ween the two great commer- 
 cial parties, and from my own observations ex- 
 tending over a number of years. 
 
 A recital of some of the leading points made 
 by the advocates of each great system Avould in- 
 dicate the necessity of some basis even for dis- 
 cussion, whether we have a basis for legislation 
 or not- One following the discussions will no- 
 tice that American free traders allege that pro- 
 tection is the cause of the frequent recurrence of
 
 Scientific Basis of Tariff Legislation. 197 
 
 labor difficulties in this country, while English 
 free traders allege that our protective policy 
 causes English labor difficulties. Again, English 
 manufacturers have in many instances said to me, 
 when asking the cause of the silent looms and 
 machines in their works, that they are rendered 
 silent by our protective policy ; at the same 
 time, in argument, they have always claimed 
 that the application of their national policy 
 in America would secure a far greater in- 
 dustrial prosperity in this country than has yet 
 been witnessed. Again, it is claimed by the 
 advocates of free trade that the wonderful indus- 
 trial prosperity which has blessed the English 
 people is due entirely to their policy of free 
 trade, while all protectionists claim that the won- 
 derful industrial prosperity which has blessed 
 the people of the United States Is due entirely to 
 protection. 
 
 Two or three illustrations of these adverse 
 claims may be necessary. 
 
 John Bright, who certainly is an ardent free 
 trader, in his well known speech at Birmingham 
 in June, 1883, on the presentation to him of an 
 address and plate, at the Bright celebration, 
 made a very careful review of the industrial con- 
 dition of England now, as compared with what 
 it was before the adoption of free trade. He 
 showed by facts and figures which cannot be dis- 
 puted, that wages were higher, that the condition
 
 198 The National Revenues. 
 
 of the workingman is better, and that the pro- 
 gress of the country during the period stated 
 had been wonderful indeed, all of which, he 
 claimed, was due to the adoption of the principle 
 of free trade. If you should turn from Mr. 
 Bright's speech to the multitude of speeches in 
 favor of protection made in the United States 
 Congress during the last session, during the de- 
 bate on the Morrison bill, or in speeches made 
 whenever the subject of the tariff has been before 
 Congress, or if you will refer to any of the pro- 
 tectionist writers, or if you want something 
 more easily reached, Mr. Elaine's letter of ac- 
 ceptance, you will find it claimed without excep- 
 tion that American prosperity is due to the 
 protective policy of our government. One can 
 pick up any of the pamphlets which are issued 
 in advocacy of either of the two great principles, 
 and find plenty of evidence of the truth of the 
 statement I have made. Both these claims can- 
 not be correct. 
 
 Again, it is alleged that the periodical stagna- 
 tion or depression in American industrial enter- 
 prises is largely, if not wholly, due to protection, 
 because protection prevents our manufacturers 
 from finding a foreign market for their surplus 
 goods, and that free trade here would prevent such 
 recurrence, while the fact exists that in Great 
 Britain, under free trade, the same conditions 
 are met with, and that stagnation there when it
 
 Scientific Basis of Tariff Legislation. 199 
 
 does come, is as severe as any that we experi- 
 ence. The American and the English manufac- 
 turer alike demand extended markets for their 
 surplus. 
 
 There is something in this besides the influ- 
 ence of free trade and protection 
 
 The free trader, urging the adoption of free 
 trade in America in order that surplus products 
 may be sold abroad, claims at the same time 
 that "there are scores of profitable industries 
 that cannot now be carried on in this country 
 on account of the tariff, but would spring into 
 existence as soon as it was removed."* On the 
 other hand, the equally intelligent protectionist 
 says in substance, there are scores of industries 
 now carried on because the tariff does exist, that 
 with its removal would be abandoned. 
 
 Which of these two propositions can be de- 
 monstrated as true ? One must be false, but it is 
 said by a prominent writer that the guarantee 
 for the anticipation of the results of the adoption 
 of the English system "is in a correct under- 
 standing of the laws of production and com- 
 merce. " f Such an understanding would also 
 settle the question relative to the extension of 
 trade, so as to secure a market for the surplus 
 products of both free trade and protective 
 countries. I am afraid that the conditions of 
 Prof. Sumner's guarantee cannot be accepted for 
 
 *W. O. Sumner, In " North American Review," September. 1884. 
 tlbld.
 
 200 The National Revenues. 
 
 many generations. Certainly not while emin- 
 ent doctors disagree. 
 
 Again, it is claimed by ardent protectionists 
 that protection is the sole cause, or if they do 
 not go so far, that it is the leading cause, of the 
 advance of wages in America, while the free 
 trader, on the other hand, claims that the ad- 
 vance of wages in Great Britain is due to the 
 policy of free trade, while any careful investiga- 
 tion will show that there has been an advance in 
 wages during the last fifty years in both countries, 
 and that so far as the manufacture of textiles is 
 concerned the advance has been nearly equal 
 under the two great commercial systems.* This 
 one fact shows that the claims of each party as to 
 wages is entirely without foundation 
 
 The discoverer of the causes which regulate 
 the rates of wages has not yet seen fit to give his 
 name to the public. It is perfectly easy to dis- 
 cuss the question of wages in various lights, and 
 to assume this, that, or the other cause as most 
 powerful in their regulation, and yet one rises 
 from a study of such discussions entirely unsat- 
 isfied. 
 
 My friend, Mr. Atkinson, has come nearer to 
 a satisfactory explanation than any other writer, 
 or rather, I should say, nearer to the practical 
 demonstration of the best theory on the subject 
 than any other writer. Probably President 
 
 *See chapter on Wastes in "Factory System," Vol. 2, Report on the 
 United States Census for 1880
 
 Scientific Basis of Tariff Legislation. 201 
 
 Walker has more ciearly stated a theory which 
 can be demonstrated than any of his contempo- 
 raries ; but the great causes are still beyond 
 such demonstration as will satisfy all men alike 
 of their fundamental character. Certainly, the 
 permanent influence of the tariff upon wages is 
 a mooted question. 
 
 To be sure, the protectionist quotes the high 
 wages of America to substantiate his ground, 
 and he puts them in comparison with the lower 
 wages of England ; the free trader turns upon 
 the protectionist, and while he admits the higher 
 wages of America quotes the low wages of the 
 protectionist countries of Europe in comparison 
 with the rates paid in the free trade country of 
 England. I have been waiting to see some 
 writer go still further in the race, and quote the 
 still lower wages of countries way down in the 
 scale of civilization in comparison with the rates 
 paid in the protective countries of Europe. 
 
 The free trader, without being able even to 
 hint at the proof of his assertion, knocks the 
 protectionist down with the statement that wages 
 are high in America notwithstanding the tariff, 
 and would be whether we had a tariff or not. 
 The protectionist trips up the heels of the free 
 trader by his assumption that wages are higher 
 in England than on the continent without regard 
 to the tariff, and thus each uses the other's argu- 
 ments so far as wages are concerned to prove
 
 202 The National Revenues. 
 
 himself in a muddle, and we get no nearer the 
 truth, and the whole discussion consists largely 
 of assertions and assumptions. 
 
 Again, it is observed that nearly all the argu- 
 ments in favor of either great system of com- 
 merce are usually based upon the same array of 
 statistics, when statistics are used, and the stu- 
 dent who does not care which system prevails 
 but who is simply seeking the true one, con- 
 cludes that, as a rule, the pretended arguments 
 are mere assumptions, the assumptions being 
 the results of the theory of the speaker or 
 writer, and that the theory is usually the result 
 of his relation to the industries of the country. 
 That my own statement in this respect may not 
 mark my own condemnation, and be considered 
 a mere assumption, allow me to illustrate: 
 
 In a little work entitled " Wages, Living, and 
 Tariff," by Mr. E. A. Hartshorn, now promi- 
 nently before the public, the results in the 
 United States of the various tariff measures, or 
 rather the results of the two systems of com- 
 merce during a period of seventy years from 
 1813 to 1883, have been summarized, and from 
 this summary we find that the writer concludes 
 that under the free trade or revenue tariffs, as 
 established in 181Y, 1834, 1846, and 1857, labor 
 was seeking employment, wages low, emigration 
 declining, farm products low, manufactures high, 
 revenue, public and private, small and decreas-
 
 Scientific Basis of Tariff Legislation. 203 
 
 ing, bankruptcy nearly universal, the national 
 status one of growing dependence, and the 
 national credit bud ; while under the protective 
 tariffs, as established in 1813, 1828, 1842, and 
 1861, labor was in demand, wages high, manu- 
 factured products low, public and private reve- 
 nues large and increasing, public and private 
 wealth increasing, the national status one of 
 growing independence, and the national credit 
 good; and the writer then remarks, "In the 
 presence of these important historical facts, let 
 the candid reader remember that the American 
 people have never yet attained the best results 
 of protection, nor the worst results of free 
 trade," and further he asks this question, "If 
 the results of partial protection to labor have 
 been so satisfactory, and the results of partial 
 free trade so unsatisfactory, which system shall 
 we choose ?" 
 
 In laying down Mr. Hartshorn's pamphlet, 
 and picking up the admirable treatise of Mr. 
 Henry Loom is Nelson, entitled, "Our Unjust 
 Tariff Law," we find in his chapter on " What a 
 low tariff did for the country," the following 
 statement: "There never was a period of great- 
 er prosperity in the history of the country, "and 
 then he goes on with an elaborate and very care- 
 fully adjusted statement of facts to prove the 
 correctness of his assertion, and concludes, while 
 referring to the very tariffs which Mr. Harts-
 
 204 The National Revenues. 
 
 horn claimed were productive of so much evil, 
 by saying, "No other decade, except that during 
 which the country was blessed with a revenue 
 tariff, has such a story of prosperity to tell as 
 these ten years have stamped on our history. 
 No other decade will have such a story to tell, 
 until the government ceases to tax four-fifths of 
 the people for the benefit of a small fraction of 
 the other fifth." 
 
 I have quoted these two little works to illus- 
 trate my point, instead of quoting larger and 
 more elaborate treatises, and perhaps more stand- 
 ard works, because these two that I have named 
 are prepared with apparent candor andintegrity, 
 and are being widely read at the present time 
 by the people; but the same features might be 
 illustrated, and very fully too, from older and 
 more standard works. Certainly if we turn to 
 the newspapers of the day, we find statistics 
 relative to imports and exports, and the trade 
 and productions of the country, brought into 
 elaborate tables, and arrayed on either side, and 
 if we did not know the tendency of the paper in 
 which we found these arrays of figures, we 
 should not know upon which side they were 
 used as arguments, unless the writer was care- 
 ful to announce his point. 
 
 The feat is constantly attempted of bringing 
 diverse conclusions from the same premises. A
 
 Scientific Basis of Tariff Legislation. 205 
 
 recent writer * quotes the low interest at present 
 paid for the use of capital in this country, as a 
 demonstration that obstruction to imports or ex- 
 ports immediately acts to reduce the value of 
 capital ; but what has reduced the rate of inter- 
 est in England ? Our own rates of interest are 
 now approaching the rates of interest paid in 
 Great Britain. What has the tariff to do with it ? 
 
 The same writer, with all the facts before him, 
 concludes that the average rate of wages paid in 
 American cotton mills, in proportion to the 
 number of hours at work, is actually less than 
 it is in England ; and then, after arraigning 
 the theories of his opponents, says, that " all 
 these theories are the purest assumptions, not 
 warranted by facts, and directly contrary to ex- 
 perience and reason." This is exactly the 
 charge made by protectionists, and upon the 
 same array of facts. 
 
 Another charge which is reciprocally made is, 
 that 4 ' men whose minds have once closed with a 
 good grip on a dogma, never give it up on ac- 
 count of facts of experience, or on account of 
 absurdities into which it carries them." 
 
 All these attempts to secure antagonistic con- 
 clusions from a single premise, thoroughly illus- 
 trate the necessity of a scientific basis, not only 
 for tariff legislation, but for tariff discussion. 
 
 With the one secured, the other follows. This 
 
 *Tbos. G. Shearman, "North American Review," September. 1884.
 
 206 The National Revenues. 
 
 necessity is further illustrated by a study of the 
 rates of duty established by law, and when this 
 study is made, it is no wonder that the tariff is 
 declared to be a muddle. The table showing the 
 excess of tariff duties over cost of labor, pre- 
 pared by Hon. Thomas J. Wood, of Indiana, 
 for use in debate on the Morrison tariff bill, is 
 exceedingly valuable in this connection. By this 
 table it is shown that the smallest excess under 
 the existing tariff is 5 per cent., and the largest 
 about 80 per cent. A comparison of the wage 
 statistics reported in the Fifteenth Annual Re- 
 port of the Massachusetts Bureau of Statistics of 
 Labor, where the percentage of excess of wages 
 paid in Massachusetts over those paid in Great 
 Britain* in like industries is mathematically 
 
 "The disparity between the average wages paid in certain industries In 
 
 Great Britain and Massachusetts, and tlie average duty laid on the pro- 
 ducts of such industries, ia shown in the following table : 
 
 Average weekly wages Average 
 
 higher in Massachu- duty laid 
 
 INDUSTRIES. setts than in Great under ex- 
 Britain by percent- isting laws 
 ages, as follows : Per cent. 
 
 Agricultural Implements, - - 15.8 35to40 
 
 Artisans' Tools, .... 141.3 45 
 
 Boots and Shoes, .... 166-1 30 
 
 Brick 107.5 20 
 
 Carpetings, 47.9 49.78 
 
 Carriages and Wagons, - - - 182.2 85 
 
 Clothing 49.1 35 to 60 
 
 Cotton Goods ----- 88.4 38.3 
 
 Food Preparations - 260.7 20 
 
 Furniture 38.7 35 
 
 Glass - 76.9 25.2 to 68.5 
 
 Hats 99.8 35 to 50 
 
 Hosiery 39.0 40 to 55 
 
 Metals and Metallic Goods - - 52.0 45 
 
 Printing and Publishing - - 106.0 25 
 
 Wooden Goorlj .... Hn.O 35 
 
 Woollen Goods .... 42.0 64 
 
 Worsted Goods .... 103.3 49.8
 
 Scientific Basis of Tariff Legislation. 207 
 
 stated, with the rates of duties affecting the same 
 industries, would show a discrepancy as large 
 as that displayed by the table prepared by Mr. 
 Wood. 
 
 These two statistical illustrations show most 
 forcibly the necessity of a scientific basis, so far 
 as arguments drawn from like premises are con- 
 cerned. 
 
 Again, one party asserts that the people are 
 robbed through the action of the tariff, that the 
 manufacturer may gain wealth ; while the other 
 side as strenuously asserts that the manufacturer 
 gains nothing beyond his legitimate due, and 
 that the payment of taxes for the support of the 
 national government through consumption is the 
 easiest method for providing for our national 
 budget. One of these propositions must be 
 false, and the proper basis for tariff legislation 
 would prove which one is false. 
 
 Finally, the necessity of such a basis as I have 
 indicated is proved, because no adequate data 
 exists for determining the indicative points pre- 
 sented. 
 
 Third. If there is a necessity for a scientific 
 basis for tariff legislation, how can it be reached ? 
 
 Such a basis can be reached only through a 
 knowledge of all the facts bearing upon the 
 question, arid these facts have not as yet been 
 classified. They may have been collected in 
 part and exist in fugitive condition, but as yet
 
 208 The National Revenues. 
 
 without thorough classification. To reach this 
 classification, I submit four propositions : 
 
 PROPOSITION I. a. There should be a clas- 
 sification of all articles on which a duty is now 
 laid, and the rates on each article. 
 
 b. There should be a classification of articles 
 on which duties are now laid, showing those 
 articles the duties on which are intended for 
 protection, and those on which the duties are 
 laid simply for securing revenue. 
 
 c. A classification of such articles as are pro- 
 duced in this and other countries, and in what 
 countries. 
 
 d. A classification of such articles as are 
 produced in other countries only, and in what 
 countries. 
 
 e. A classification of duties imposed upon 
 such articles under the various tariffs. 
 
 f. A classification of what may be termed 
 natural industries of the various countries in 
 competition with the United States. 
 
 PROPOSITION II. a. A collection and classi- 
 fication of data relating to the composition of 
 the product of all leading articles named in 
 Proposition I, and showing the percentage of 
 labor, raw material, etc., entering into the 
 product in each of the leading countries where
 
 Scientific Basis of Tariff Legislation. 209 
 
 such articles are produced, such data to be col- 
 lected entirely from original sources. 
 
 5. The collection and classification of data, 
 showing the cost, including all elements up to 
 the selling price of such articles in the leading 
 countries where they are produced, such data to 
 be collected on samples as far as possible. 
 
 c. A list of jobbing and retail prices of all 
 such articles in the countries where produced. 
 
 d. The cost of importation of such articles 
 as are produced in countries abroad. 
 
 e. A list of jobbing and retail prices in this 
 country of such articles. 
 
 f. The jobbing and retail prices of like arti- 
 cles produced in this country. 
 
 g. A summary of prices of such articles 
 with and without duty charges, and under vari- 
 ous tariffs so far as possible. 
 
 [This proposition involves rates of wages paid, 
 in the industries involved, in various countries, 
 the efficiency of labor in the countries involved, 
 the capacity of machinery and all other elements 
 affecting cost of production ; and the mathemati- 
 cal working out of the results of the proposition 
 would show exactly what consumers of articles 
 imported and produced here pay for goods on 
 account of the tariff, and what they would have 
 to pay if no duty were laid on the articles 
 named. It would also enable one to find that 
 rate of duty absolutely essential to place the 
 14
 
 210 The National Revenues. 
 
 American producer on an equal footing, and on 
 the same footing, so far as goods offered for sale 
 in our markets are concerned, with the foreign 
 producer, the foreign producer having thereby 
 no advantage in this country that he would not 
 have were his works located here. With such a 
 rate in our leading industries, which would be a 
 mathematically correct rate, duties could be 
 levied on that rate, or above it, or below it, as 
 the exigencies of the country might demand, 
 but the people would know the exact point, and 
 that a duty laid above it would be for protection 
 as well as for revenue. If the rate were laid 
 exactly on the rate mathematically determined, 
 then the consumer would know that he was pay- 
 ing the same for his goods that he would pay 
 were there no foreign manufacturers of the 
 same goods in existence. If a duty above this 
 mathematical point were laid, the consumer 
 would know that he was paying something 
 toward the running expenses of the government, 
 and that at the same time he was aiding in the 
 exclusion of foreign products. 
 
 [The working out of this Proposition II, would 
 also enable the United States Government to 
 adopt, with regard to every leading industry, 
 the well established principle adopted by the 
 British Government, and as at present practiced 
 by that Government, of laying a duty on the 
 importation of certain articles on which an excise
 
 Scientific Basis of Tariff Legislation. 211 
 
 tax is laid at home, so that the importer shall 
 have no advantage over the home manufacturer 
 on account of the excise tax paid by the latter.] 
 
 PROPOSITION III. a. A classification of data, 
 showing the amount of tax paid by consumers 
 on account of tariff, such amount to be shown 
 by means of budgets of annual expenses of 
 families in various grades of life. 
 
 b. Data showing what a "per capita" tax 
 would be on the basis of our national expenses, 
 should the revenue be raised by such a tax. 
 
 c. Data showing what a property tax would 
 be on the basis of raising our national revenue 
 by such a tax. 
 
 d. Comparative statistics giving the results 
 of the data as to the three methods, namely, per 
 capita, property, and an import duty method of 
 raising our public revenue. 
 
 [The working out of this proposition would 
 show which method would bear the lightest and 
 the most justly on the people, and it would also 
 show what grade of consumers, using the word 
 grade with relation to annual expenses, bears the 
 tax burden chiefly.] 
 
 PROPOSITION IV. A statement of the preced- 
 ing propositions, mathematically wrought out. 
 
 These propositions embody only the leading 
 features of what I should call a basis for securing
 
 212 The National Revenues. 
 
 the proper information for ascertaining a rate of 
 duty in each industry which should equalize the 
 advantages and disadvantages of foreign and do- 
 mestic producers, and the process of taxation by 
 which the consumer should be justly taxed, and 
 by which he should know whether he was being 
 justly taxed or not 
 
 If a single illustration of the point I would 
 attain, with regard to each leading industry, is 
 required, it will be found in the supposition, that 
 if in woollen goods, after the collection and 
 analysis of the information I have indicated, and 
 all other information relative thereto, it should 
 be found that the American producer of broad- 
 cloth stands at a disadvantage of $1.00 per yard 
 as compared with the British producer of the 
 same kind of goods, then a tax of $1.00 per yard 
 would simply place the foreign and American 
 producer on an equality ; in other words, the 
 American manufacturer of broadcloths, if a tax 
 of $1.00 per yard were laid on his product, 
 would have no inducement to abandon his fac- 
 tory in America and set it up in England. If 
 the tax of $1.00 per yard were not laid, it would 
 be for his interest to abandon his factory in 
 America, and move to England, or to Canada, or 
 out of the country somewhere, where the same 
 conditions which give the foreign producer the 
 advantage of $1.00 per yard exist, and there set 
 up his works. Having a tax, exactly and mathe
 
 Scientific Basis of Tariff Legislation. 213 
 
 matically determined, as essential to place the 
 foreign and domestic manufacturers on an 
 equality, the consumer of broadcloth is simply 
 aiding in preserving that equality when he pur- 
 chases broadcloth, and through the duty which 
 he pays, he is not enabling the manufacturer to 
 ask any more for his yard of broadcloth than he 
 would if no duty were laid. The revenue is 
 preserved and no advantage given to the Ameri- 
 can producer, nor is he placed at a disadvantage 
 through the location of his factories in this 
 country instead of in some other. If now Con- 
 gress wished to protect the American manufac- 
 turer of broadcloth, that is to say, put him in a 
 position where the foreign producer of the same 
 goods could not compete with him, then any 
 tax or rate of duty on broadcloth above $1.00 
 per yard would be essential, and he could 
 ask a higher price for his goods on that 
 account, and the home consumer could pur- 
 chase the foreign article if ho chose, although 
 it would be enhanced in price on account 
 of the duty beyond the one dollar. The dis- 
 tance beyond the $1.00 per yard of the duty 
 laid upon broadcloth would determine whether 
 the duty was a protective one or a revenue duty 
 only, and the public would know exactly what 
 kind of duty it was paying. 
 
 The result of this illustration, if it could be 
 applied to all leading articles, would soon define
 
 214 The National Revenues. 
 
 the lines of the parties in this country, and 
 would soon determine the question of how far a 
 tariff shall become protective. Do not misun- 
 derstand me in the use of the word protective. I 
 use it in its literal sense, that the protective duty 
 excludes foreign products. The consumers, 
 under the basis I have indicated, would clearly 
 understand the question. 
 
 One of the chief advantages of determining 
 
 o o 
 
 mathematically the rates essential in each great 
 industry to the preservation of equality between 
 the domestic and foreign producer, would be in 
 the wise adjustment, or, rather, extension of the 
 free list ; that is to say, Avith the results of such 
 a basis we would know exactly what articles 
 could be placed upon the free list without in- 
 jury to the domestic producer. 
 
 The great question of the reduction of the 
 surplus revenue, which now disturbs the minds 
 of the people, would be easily settled, or at 
 least the surplus could be so adjusted lhat it 
 would not be a source of anxiety to those who 
 see in the accumulation of surplus a danger far 
 exceeding that attending a great indebtedness. 
 
 One of the chief results, and to my own mind 
 the most just result, of legislation upon such a 
 basis as I have outlined, lies in the fact that all 
 articles would be taxed with perfect fairness and 
 equality. I cannot better illustrate this than by 
 quoting from J. B. Sargent's recent article on
 
 Scientific Basis of Tariff Legislation. 216 
 
 the "Evils of the Tariff System," found in the 
 September "North American Review ": "No 
 article is entitled to a higher tariff for protection 
 than any other; or, in other words, the people 
 should not be compelled by the Government to 
 pay to the producer of any one article a greater 
 percentage of extortion than is paid on another. 
 In all cases where one article has a higher rate 
 of tariff than another, either no attempt to pro- 
 duce the higher rate article should ever have 
 been attempted in this country, or there was 
 improper and unholy scheming by, and favorit- 
 ism to, the producers or manufacturers of it." 
 
 The morality of this proposition cannot be 
 controverted. 
 
 A further advantage of correctly adjusted 
 duties lies in the ease with which they are read- 
 justed. Under the conditions indicated, a bill 
 for the horizontal readjustment of rates would 
 be logical. 
 
 I am perfectly well aware that, as regards 
 some industries, the attempt has been made, on 
 a limited scale, to apply the force of the facts 
 especially to the correct adjustment of tariff 
 rates. This has been notably so in this country 
 in the woollen industry; but even here the 
 application has been only one of degree. 
 
 I am also aware that the carrying out of the 
 propositions laid down would involve on the part 
 or Congress quite a large appropriation. I 
 believe all the data indicated could be collected,
 
 216 The National Revenues. 
 
 classified, and each rate mathematically wrought 
 out, at an expense not exceeding $50,000; but the 
 expense, even at $100,000, would be productive 
 of far greater good than has been secured by 
 much larger appropriations for similar purposes, 
 but without similar motives. 
 
 I cannot, of course, say where an investiga- 
 tion of the nature indicated would lead politi- 
 cally, whether it would aid the party of free 
 traders or the party of protectionists ; but I am 
 of the opinion that it would lead to a discovery 
 of rates which would be mathematically and 
 scientifically correct, and morally just to all. 
 The working out of the propositions laid down 
 must be done fearlessly and without regard to 
 results, for the necessary investigations should 
 be made with a patriotic view of benefiting the 
 consumers and the producers, without reference 
 to individual interests. 
 
 I am sure there is nothing chimerical in the 
 scheme ; on the other hand, I am sure, from the 
 necessities of the case, that with such a basis as 
 I have indicated, or any other which will secure 
 the results which I think this would secure, the 
 tariff question would assume a simplicity in its 
 constituent elements which would enable all 
 men to understand it, and which would secure 
 its early and final removal from the politics of 
 the country. Certainly these are results to be 
 desired by all patriotic citizens. 
 
 CARROLL D. WRIGHT.
 
 CONCLUSION. 
 BY THE EDITOR. 
 
 It is not the purpose of the editor to attempt 
 a complete summary or review of the opinions 
 expressed in the foregoing essays. Each reader 
 may well be left to sum up for himself. Yet, 
 without any desire to make authoritative inter- 
 pretation, there may be noted a few general con- 
 clusions that seem to be justified. 
 
 1. The contributors to this volume are all in 
 favor of some revision of the revenue system of 
 the United States Government. All are in favor 
 of changes which, in their opinion, will tend to 
 lessen and to equalize the burdens of taxation. 
 All, or practically all, are in favor of changes 
 that will result in a material reduction of ordin- 
 ary revenue. 
 
 2. It is vigorously urged by several contribu- 
 tors, notably Professors Adams and Seligman, 
 and President Walker that a federal govern- 
 ment like ours cannot, without grave evils and 
 constant danger, have a volume of ordinary 
 revenue considerably larger than the volume of 
 ordinary expenditure. Professor Wilson also 
 especially urges the importance of a close relation 
 between income and expenditure, and the peri- 
 odical readjustment of the former to the require 
 ments of the latter. It would perhaps be fair to 
 
 217
 
 218 The National Revenues. 
 
 conclude that all, or nearly all, of the contribu- 
 tors to these pages hold that the Government's 
 annual receipts should be limited as strictly as 
 possible to an amount equal to the sum total of 
 such annual expenditures, for all purposes, as 
 Congress deliberately decides to be wise and 
 necessary. This view places expenditure first 
 and taxation second. 
 
 3. It would also, however, seem to be gen- 
 erally agreed that, while revenue should be 
 adjusted carefully and periodically to meet wise 
 demands for expenditure, the reduction should 
 be made in such a way as not to cripple the 
 financial resources of the Government. Thus, 
 Professor Adams urges that in time of peace 
 various sources of income should be kept below 
 the maximum revenue-yielding point. And 
 others hold it to be a maxim that the Govern- 
 ment should keep several strings attached to its 
 bow, for ready use in time of need. 
 
 4. President Walker regards the surplus reve- 
 nue as a subject for distinct treatment. He holds 
 that this immediate problem should be solved 
 without reference to the permanent policy of the 
 Government as regards the main features of a 
 revenue system. He thinks that all parties 
 should be able to agree in a day upon a bill re- 
 ducing revenue, a bill so framed as not to dis- 
 
 O ' 
 
 turb the status quo of contending parties on 
 tariff or internal revenue questions. Professor
 
 Conclusion. 219 
 
 Thompson's suggestions are in the same line. 
 Professors Ely, Adams, Smith, and others, also 
 seem to hold that the surplus situation should 
 not be taken advantage of for the purpose of 
 forcing a fight against protection. Probably it 
 would be just to infer that American economists 
 would agree with President Walker, that the 
 surplus should be dealt with immediately, and in 
 such a way as not to prejudice other and more 
 permanent issues. 
 
 As the best way to restore to circulation the 
 large sum of "net cash" that has accumulated 
 in the Treasury since the summer of 1887, Pro- 
 fessor Thompson urges distribution among the 
 States. Professor Adams discusses the plan of 
 distribution, and opposes it ; but what he really 
 argues against is the maintenance of a supera- 
 bundant revenue, and the regular practice of 
 distribution. After the adoption of a bill prun- 
 ing down the federal income to a correspondence 
 with expenditures, he would perhaps not strenu- 
 ously object to the distribution of the amount on 
 hand. He does not regard the purchase of 
 bonds in open market as economical. Professor 
 Ely urges the adoption by Congress of a policy 
 of large expenditure for public improvements 
 of productive value to the country, especially 
 waterway improvements. Some contributors 
 favor a plan of refunding, and the application of 
 the accumulated surplus to debt reduction.
 
 220 The National Revenues. 
 
 There is perhaps only one general conclusion to 
 be drawn from the various expressions on this 
 subject of the use to be made of the accumu- 
 lated money, and that is this : The presence of 
 money in the Treasury is not a valid argument 
 for any kind of expenditure ; and no project 
 ought to be entered upon, the wisdom of which 
 could be doubtful if taxes had to be levied 
 especially to meet its expense. This maxim 
 might not have the assent of all, but a majority 
 would probably agree with Professor Hadley in 
 accepting it. 
 
 6. As to the sources of national revenue, the 
 contributors for the most part use the historical 
 mode of approaching the question. They find 
 the federal government obtaining its income 
 from indirect taxation. They accept this as a 
 settled fact. Historically, the principal source 
 of revenue has been customs duties upon 
 imported goods. It is easily within bounds to 
 say that American economists agree that cus- 
 toms duties must remain, at least for an indefi- 
 nite period, the principal source of ordinary 
 revenue. Several contributors would regard a 
 national tax on private incomes as a desirable 
 source of revenue ; but none urge it as now 
 feasible. 
 
 7. The proposition that the internal revenue 
 system be abolished does not meet with accept- 
 ance. Its retention is favored by every contrib-
 
 Conclusion. 221 
 
 utor. Professor Richmond Smith makes a con- 
 clusive argument on this subject. He shows 
 that the Government should not rely upon a 
 single source of income, customs duties being 
 constantly variable in amount and certain to 
 yield least when large revenue is most needed. 
 Whiskey and tobacco are regarded by econo- 
 mists as proper and desirable articles upon 
 which to levy taxes. If abandoned by the fed- 
 eral Government as articles of taxation, they 
 would probably be subjected to heavy revenue 
 charges by the States. It might have been 
 shown by Professor Smith, in addition to his 
 other arguments, that a federal tax on spirits and 
 tobacco is much more equal in its operation than 
 a tax levied by the States would be. The con- 
 sumers ultimately pay the tax, and the consumers 
 are pretty evenly distributed throughout the 
 Union. But the great bulk of the tobacco and 
 spirits is produced in a few States, as is shown 
 by the reports of the Commissioner of Internal 
 Revenue. Thus the States of Illinois, Kentucky, 
 etc., would be enabled to levy heavily fgr their 
 public treasuries upon consumers in all parts of 
 the Union, the tax being collected at the point 
 of production. Evidently it is more just to all 
 that revenues from these articles be paid to the 
 general Government. 
 
 8. Professor Folwell distinguishes the tariff 
 question as one of National economy rather than
 
 222 The National Revenues. 
 
 one of general political economy, and discusses 
 it from that point of view. This useful distinc- 
 tion, it may fairly be said, is in effect observed by 
 most of the contributors to the volume. Ours is 
 an age of nations and nation-building. In an infi- 
 nite number of ways the State touches the social 
 and industrial life of its citizens. Whether, in the 
 promotion of the independence and the symmet- 
 rical growth of the nation's industries, protec- 
 tive tariffs are wise and beneficial, is to be studied 
 as a question of fact in the light of all the cir- 
 cumstances. American economists no longer 
 attempt to overthrow protection with a dogma, 
 a syllogism, or a universal maxim. As Professor 
 Seligman says: "The sway of the Manchester 
 school is gone." Economists are not precisely 
 agreed as to the extent to which America should 
 henceforth maintain a protective policy ; but all 
 are united in holding that these practical prob- 
 lems of statesmanship are not to be settled upon 
 any mere statement of a priori considerations, 
 but rather upon painstaking and impartial study 
 of the facts, with the aid of science and in the 
 spirit of patriotism. So far as modern econo- 
 mists are concerned, the old division between 
 Free Traders and Protectionists is disappearing 
 rapidly. Questions at issue are those of practi- 
 cal policy rather than those of theory. 
 
 9. The chief difficulty about the practical re- 
 adjustment of the tariff is seen to lie in the fact
 
 Conclusion. 223 
 
 that it exists at once for revenue and for the en- 
 couragement of home production. Protective 
 considerations aside, it would be a comparatively 
 easy task to adjust the tariff for revenue pur- 
 poses. But to combine the two objects intelli- 
 gently and advantageously is not an easy task. 
 This difficulty evidently leads some economists 
 who accept Protection as a theory, to doubt the 
 practical expediency of maintaining it on a very 
 extensive scale. The general verdict seems to 
 be in favor of simplification. Yet the practical 
 unanimity with which the contributors seem to 
 favor the placing on the free list of all articles 
 wholly or chiefly produced abroad and not sus- 
 ceptible of large production at home, would show 
 that in their opinion the protective idea should 
 be present, at least incidentally, in the future ar- 
 rangements of our tariff schedules. Thus, there 
 seems to be something like accord in favor of 
 placing sugar on the free list with tea and coffee, 
 or at least in favor of a large reduction of the 
 duty on unrefined sugar. 
 
 10. There seems, also, something like a com- 
 mon opinion to the effect that the next step in 
 tariff readjustment should be in the line of free, 
 or freer, crude articles and materials used in 
 manufactures. If the editor may be pardoned a 
 a suggestion of his own, it would seem that the 
 economists have yet more carefully to analyse 
 these so-called "raw materials," and to distin-
 
 224 The National Revenues. 
 
 guish between those that are the crude product 
 of the forest and the mine and those that are the 
 result of a diversified agriculture. To differen- 
 tiate and intensify agriculture may be as proper 
 an object of the protective policy as to build up 
 manufactures. 
 
 11. President Walker's interesting analysis, 
 which seems to have the indorsement of Profes- 
 sors Canfield, Ely, and others, places the burden 
 of protective tariffs upon the agricultural inter- 
 est. This analysis is exceedingly valuable, and 
 would seem to be impregnable as far as it goes. 
 But the editor may again be pardoned for sug- 
 gesting a further step in the anatysis. President 
 Walker's distinction between those primary 
 trades and industries that are immediately ad- 
 junct to an agricultural community and those 
 which ma} r be located abroad because their pro- 
 ducts are transportable, is clear and useful ; but 
 agriculture should itself also be similarly 
 analyzed. The farming industries of a non- 
 manufacturing country become wholly trans- 
 formed when manufactures are established. 
 
 Simple wheat-raising the lowest form of ag- 
 riculturegives place to stock growing, dairy- 
 ing, fruit culture, gardening, and in general the 
 production of articles which are demanded by 
 the home market, but could not be sent to foreign 
 markets. This diversified agriculture is vastly 
 more profitable than the raising of cereals, and
 
 Conclusion. 225 
 
 it quadruples the value of farming lands. Does 
 not this change in the character of agriculture 
 quite compensate the farmer, or even more than 
 compensate him, for the higher price he has to 
 pay at the outset for the articles of manufacture 
 produced in his neighborhood under a protec- 
 tive policy ? It is not here asserted that this is 
 the case ; but the query is made by way of 
 suggestion. The hard conditions of agriculture 
 which Professor Canfield describes as existing in 
 Kansas are those of cereal raising in a new re- 
 gion. They do not exist in the older States, 
 from the Atlantic coast to the Mississippi river, 
 where primary agriculture has given way to a 
 large diversification of farming on account of 
 the local markets furnished by the up-building 
 of non-agricultural industries. Is it not quite 
 possible that, if American manufactures had not 
 been encouraged under the protective policy, 
 Ohio, Indiana and Illinois Avould now be pro- 
 ducing our export wheat, while Kansas, Ne- 
 braska and Dakota lands would not as yet have 
 been called into requisition ? The editor has no 
 wish to controvert the views of his contributors, 
 and only adds these hints by way of extending, 
 possibly, the field of the inquiry. 
 
 12. Commissioner Wright's admirable out- 
 line of a statistical and scientific basis for tariff 
 legislation would doubtless have the indorsement 
 of a great majority of American economists. In 
 15
 
 226 The National Revenues. 
 
 the same line is Professor Ely's proposal for an 
 expert and impartial tariff commission. It is 
 perceived that the current discussions turn 
 chiefly upon questions of fact, and that modern 
 statistical science can be trusted to answer many 
 of those questions with approximate accuracy. 
 
 ALBERT SHAW.
 
 APPENDIX 
 
 OF 
 
 STATISTICAL TABLES.
 
 Statistical Tables. 229 
 
 ANALYSIS OF UNITED STATES REVENUES FOR THE TEAR 
 ENDING JUNE 30, 1887. 
 
 From Customs 1217,286,893.13 
 
 From Internal Revenue 118,823,391.22 
 
 From Sales of Public Lands 9,254,286.42 
 
 From Profits on Coinage, Bullion Deposits and Assays 8,929,252.83 
 
 From Tax on National Banks 2,385,851.18 
 
 From Fees Consular, Letters Patent, and Land 8,301,647.16 
 
 From Customs Fees, Fines, Penalties, etc 1,053,037.86 
 
 From Sales of Indian Lands 1,479,028.81 
 
 From Soldiers' Home, Permanent Fund 1,226,259.47 
 
 From Sinking-Fund for Pacific Railways 1,364,435.87 
 
 From Repayment of Interest by Pacific Railways 914,793.13 
 
 FromSalesof Old Public Buildings 624,882.20 
 
 From Sales of Government Property 262,832.32 
 
 From Immigrant Fund 258,402.50 
 
 From Tax on Sealskins 817,452.75 
 
 From Deposits by Individuals for Surveying Public Lands. 94,289.76 
 
 From Revenues of the District of Columbia 2,867,869.01 
 
 From Miscellaneous Sources 1,458,672.04 
 
 Total Ordinary Receipts 371,403,277.66 
 
 ANALYSIS OF UNITED STATES EXPENDITURES FOR THE YEAR 
 ENDING JUNE 30, 1887. 
 
 For Civil Expenses $ 22,072,436.27 
 
 For Foreign Intercourse 7,104,490.47 
 
 For Indian Service 6,194,522.69 
 
 For Pensions 75,029,101.79 
 
 For the Military Establishment, Including Rivers and Har- 
 bors and Arsenals 38,561,025 85 
 
 For the Naval Establishment, Including Vessels. Machin- 
 ery and Improvements at Navy Yards 15,141,126.80 
 
 For Miscellaneous Expenditures, Including Public Build- 
 ings, Light-houses and collectlngthe Revenue 52,002,647.46 
 
 For Expenditures on Account of the District of Columbia. 4,085,251 .39 
 
 For Interest on the Public Debt 47,741,577.25 
 
 For the Sinking Fund 47,903,248.15 
 
 Total Ordinary Expenditures 315,835,428.12
 
 230 
 
 The National Revenues. 
 
 RECEIPTS OF THE UNITED STATES, BT TEARS, FOR THIRTY 
 
 YEARS FROM CUSTOMS, INTERNAL REVENUE AND 
 
 OTHER SOURCES. 
 
 YKARS. 
 
 CUSTOMS. 
 
 INTERNAL 
 BEVENUE. 
 
 ALL OTHEB 
 SOURCES. 
 
 TOTAL NET 
 OBDINABY RE- 
 CEIPTS, 
 
 (EXCLUDING 
 
 LOANS ) 
 
 1859 
 
 $ 49,565,824 
 
 
 $ 3,211,283 
 
 $ 52,777,107 
 
 I860 
 
 53,187,512 
 
 
 2,867,088 
 
 56,054,600 
 
 1861 
 
 39,582,126 
 
 
 1,894,174 
 
 41,476,300 
 
 1862. ... 
 
 49,056,398 
 
 
 2.862,864 
 
 51,919,262 
 
 1863 
 
 69,059,042 
 
 37,640,788 
 
 5,394,515 
 
 112,094,945 
 
 1864 
 
 102,316,153 
 
 109,741,134 
 
 31,355,684 
 
 243,412,971 
 
 1865 
 
 84,928,261 
 
 209,464,215 
 
 27,638,682 
 
 322,031,158 
 
 1866 
 
 179,046,652 
 
 309,226,813 
 
 81,776,099 
 
 520,049,564 
 
 1867 
 
 176,417,811 
 
 266,027,537 
 
 20,401,332 
 
 462,8461680 
 
 1868 
 
 164,464,600 
 
 191,087,589 
 
 20,882,265 
 
 376,434,454 
 
 1869 
 
 180,048,427 
 
 158,356.461 
 
 18,783,369 
 
 357,188,257 
 
 1870 
 
 194,538,374 
 
 184,899,756 
 
 16,521,703 
 
 395,959,833 
 
 1871 
 
 206,270,408 
 
 143,098,154 
 
 25,062,543 
 
 374,431,105 
 
 1872 
 
 216,370,287 
 
 130,642.178 
 
 17,681,765 
 
 364,694,230 
 
 1873 
 
 188,089,523 
 
 113,729,314 
 
 20,358,837 
 
 322,177,674 
 
 1874 
 
 163,103,834 
 
 102,409,785 
 
 34,427,472 
 
 299,941,091 
 
 1875 
 
 157,167,722 
 
 110,007,494 
 
 16,845,555 
 
 284,020,771 
 
 1876 
 
 148,071,985 
 
 116,700,732 
 
 25,293,868 
 
 290,066,585 
 
 1877 
 
 130,956,493 
 
 118,630,408 
 
 31,513,741 
 
 281,100,642 
 
 1878 
 
 130,170,680 
 
 110.581,625 
 
 16,712,471 
 
 257,464,776 
 
 1879 
 
 137,250,048 
 
 113,561,611 
 
 21,510,478 
 
 272,322,137 
 
 1880 
 
 186,522,065 
 
 124,009,374 
 
 22,995,063 
 
 333,526,502 
 
 1881 
 
 198,159,676 
 
 135,264,386 
 
 27,358,231 
 
 360,782,293 
 
 1882 
 
 220,410,730 
 
 146,497,595 
 
 36,616,924 
 
 403,525,249 
 
 1883.. 
 
 214,706,497 
 
 144,720,369 
 
 38,1- 60.716 
 
 398,287,582 
 
 1884 
 
 195.067,490 
 
 121,586,073 
 
 31,866,288 
 
 348.519,851 
 
 1885 
 
 181,471,939 
 
 112,498,726 
 
 '^9 720,041 
 
 323,690,706 
 
 1886 
 
 192,905,023 
 
 116,805,936 
 
 26,728.767 
 
 336,439,726 
 
 1887 
 
 217,286,893 
 
 118,823,391 
 
 35,293,033 
 
 371,403.317 
 
 1888 . .. 
 
 
 
 
 *390,000,000 
 
 
 
 
 
 
 Official estimates, based on actual receipts for 8 months of the fiscal 
 year.
 
 Statistical Tables. 
 
 231 
 
 
 YKARS. 
 
 EXPENDITURES OF THE UNITED STATES FOR THIRTY TEARS. 
 
 S2SSS 
 
 x.xi 
 
 ^. A V, / J- I- J. J- J. S- J 1 1- V. J. J: I, I- 
 
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 S23 
 
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 CS8833dSoiS88S83SS* 
 
 
 
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 CO H^ CO -J CO 
 
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 towSoSSoS-wSSSSJo-gif 
 
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 _ 
 
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 NAVY. 
 
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 SSS"SSSSSS5S^SS2g 
 
 S2S2S 
 
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 3g5SSgg82eg322S5g 
 
 Sots;ss 
 
 
 
 
 
 <Acnc7t**^u*cnao0i*^i^}*^co-^?i(^i*^>cocntocototo{OCc 
 
 INDIANS. 
 
 SlsssSssli^IlISsllIiSiilsHlsl 
 
 to Ot <D 
 
 (COM 
 
 ssiflsssillslsisSS 
 
 M *- 00 to CO 
 CO CO -^ tO Ol 
 
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 sgs 
 
 0,0,COtO MM tO M tOtO M tO-- 
 
 
 
 PENSIONS. 
 
 2^ 
 
 *. O CO 
 
 S-]toco"SwcnSfc"MooSo"S 
 
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 >--.- 
 
 23 
 
 S22S2S5SS55i!SgSSSSgg;2 
 
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 3So 
 
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 TOTAL. 
 
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 sSssi
 
 232 
 
 The National Revenues. 
 
 ANALYSIS OF INTEREST -BEARING PUBLIC DEBT, 
 
 JAN. 1, 1387, AND JAN. 1, 1888. 
 
 DESCRIPTION. 
 
 OUTSTANDING 
 
 JAN. 1, 1887. 
 
 OUTSTANDING 
 JAN. 1, 1888. 
 
 DECREASE. 
 
 Bonds at 4}^ per cent., pay- 
 able 1891 
 
 $ 250,000,000 
 
 $230 544,600 
 
 $19,455,400 
 
 Bonds at 4 per cent., pay- 
 able 1907... 
 
 737,971,950 
 
 732,593,630 
 
 5 378,320 
 
 Bonds at 3 per cent., ma- 
 tured. 
 
 63,899,000 
 
 all paid. 
 
 63 899,000 
 
 Navy Pension Fund 
 
 14,000,000 
 
 14,000,000 
 
 
 Bonds known as " Currency 
 6 per cents." 
 
 64,623,512 
 
 64,623,512 
 
 
 
 
 
 
 TOTAL 
 
 $1,130,494,462 
 
 $1,041,761,742 
 
 $88,732,720 
 
 
 
 
 
 DISPOSITION OF SURPLUS FOR YEAR ENDING JUNE 30, 1887. 
 
 The Excess of Receipts over ordinary Expenditures for 
 
 the year was $55,567,849.54 
 
 The above amount, together with a sum taken from pre- 
 vious cash balance In the treasury amounting to 24,455,720.46 
 
 Making a total of $80,023,570.00 
 
 Was applied to the redemption of the matured 3 per cent. 
 
 bonds to the amount of $79,864,100.00 
 
 And to the redemption of outstanding matured bonds of 
 
 various old Issues to the amount of $ 159,470.00 
 
 $80,023,570.00 
 
 THE SURPLUS. NET CASH IN TREASURY BY MONTHS DURING 
 CURRENT FISCAL YEAR. 
 
 July 1, 1887 - $ 40,853,369 
 
 August 1, 1887 45,698,594 
 
 September 1, 1887 . 44,760,908 
 
 October 1, 1887 - 45,269,665 
 
 November 1, 1887 56,758,704 
 
 December 1, 1887... 55,258,701 
 
 January 1,1888 69,842,879 
 
 February 1, 1888 85,230,746 
 
 March 1, 1888 92,987,796 
 
 April 1, 1888 104,573.930 
 
 May 1, 1888 110,244,969
 
 Statistical Tables. 
 
 233 
 
 STATEMENT OF AMOUNT OF INTEREST-BEARING PUBLIC DEBT 
 FOR THIRTY TEAKS AND ANNUAL INTEREST CHARGE.' 
 
 TEAB. 
 
 TOTAL OUT8TAND- 
 IHG INTKRB8T- 
 
 HKAKI.VU IlKlir. 
 
 AN .NT A I, 
 INTEREST 
 CHARGE. 
 
 1859 (July 1.) 
 
 $ 58 290 738 
 
 $ 3 126,166 
 
 1860 
 
 64 640 838 
 
 8 443,687 
 
 1861 
 
 90,380 873 
 
 5,092,630 
 
 1862 
 
 365,304,826 
 
 22,048,509 
 
 1863 ... . 
 
 707 531,634 
 
 41,854,148 
 
 1S64 
 
 1,359,930,763 
 
 78,853,487 
 
 1865 
 
 2,221,311,918 
 
 137,742,617 
 
 1865 (Aug. 31.) 
 
 2,381,530,294 
 
 150,977,697 
 
 1866 
 
 2,332,331,207 
 
 146,068,196 
 
 1867 
 
 2,248,067,387 
 
 138,892,450 
 
 1868 
 
 2,202,088,727 
 
 128,459,598 
 
 1869 
 
 2,162,060,522 
 
 125,523,993 
 
 1870 
 
 2,046,455,722 
 
 118,784,960 
 
 1871 
 
 1,934,696,750 
 
 111,949,330 
 
 1872 
 
 1,814,794,100 
 
 109,988,463 
 
 1873 
 
 1,710,483,950 
 
 98,049,804 
 
 1874 
 
 1,738,930,750 
 
 98,796,004 
 
 1875 
 
 1,722,676,300 
 
 96,855,690 
 
 1876 
 
 1,710,685,450 
 
 95,104,261 
 
 1877 
 
 1,711,888,500 
 
 93,160,643 
 
 1878 
 
 1,794,735,650 
 
 94,654,472 
 
 1879 
 
 1,797,643,700 
 
 83,773,778 
 
 1880 
 
 1,72 ,993,100 
 
 79,633,981 
 
 1881 
 
 1,639,567,750 
 
 75,018,695 
 
 1882 
 
 1,463,810,400 
 
 57,360,110 
 
 1883 
 
 1,338,229,150 
 
 51,436,709 
 
 1884 
 
 1,226,563,850 
 
 47,926,432 
 
 1885 
 
 1,196,150,950 
 
 47,014,133 
 
 1886 
 
 1,146,014,100 
 
 45,510,098 
 
 1887 
 
 1,021,692,350 
 
 41,780,529 
 
 1888* 
 
 1,041,764,052 
 
 
 
 
 
 *Debt Statement April 2, 1888.
 
 234 
 
 The National Revenues. 
 
 LEADING ARTICLES OF IMPORTS, 1887. 
 
 The following table shows the values of the leading and all othet 
 articles of Imported merchandise entered for consumption In the United 
 States, including both entries for Immediate consumption and withdrawals 
 from warehouse for consumption, during the year ending June 30, 1887 : 
 
 FREE OF DUTY. 
 
 Articles. 
 
 Values. 
 
 Dollars. 
 
 Coffee 56,360,701.42 
 
 Chemicals, drugs, dyes, and medicines 27,025,787.62 
 
 Hides and skins, other than fur-skins 24,225,776.21 
 
 Silk, unmanufactured, cocoons, eggs, etc 19,640,397.00 
 
 Tea 16,373,42166 
 
 India-rubber and gutta-percha, crude 13,762,627.00 
 
 Tin, bars, blocks, or pigs, grain or granulated 6,927,710.00 
 
 Fruits, Including nuts 4,767,628.58 
 
 Paperstock, crude 4,538,719.21 
 
 Ores, (emery, gold and silver) 3,840,925.00 
 
 Wood, unmanufactured 3,550,191.83 
 
 Spices, unground 3,315,964.92 
 
 Animals. 3,136,081.52 
 
 Household effects, etc., of Immigrants 2,659,700.47 
 
 Furs and fur skins, undressed. 2,471,279.60 
 
 Hair 2,404,423 00 
 
 Eggs 1,960,405.39 
 
 Fertilizers 1,773,367.98 
 
 Oils, fixed or expressed and volatile or essential 1,736,239.58 
 
 Cocoa, or cacao, crude, leaves and shells of 1,670,008.00 
 
 Cork wood, or cork bark, unmanufactured 1 ,239,247.00 
 
 Fish 1,098,561.82 
 
 Books and other printed matter 968,466.21 
 
 Farinaceous substances, preparations of 721,984.16 
 
 Ivory, unmanufactured 631,031.00 
 
 Seeds 596,522.05 
 
 Cotton, unmanufactured .' 533,219.00 
 
 Platina orplatlnum 497,441 00 
 
 Artworks, the production of American artists 495,936.50 
 
 Hide-cuttings, raw, and all glue stock 485,042.00 
 
 Plumbago 331,621.00 
 
 Diamonds, rough or uncut, dust andglazlers* 304,882.00 
 
 Tanning materials - 292,090.00 
 
 Sausage skins 278,140.00 
 
 Bolting-cloths - 271,693.00 
 
 Plants, trees, shrubs, and vines of all kinds, not else. 
 
 where specified 254,472.45 
 
 Hoofs, horns, and parts of horns, unmanufactured, 
 
 and horn strips and tips 235,249.50 
 
 Cabinets of coins, medals, and all other collections 
 
 of antiquities 231,370.00 
 
 Feathers for beds and downs 204,961.55
 
 Statistical Tables. 
 
 235 
 
 LEADING ARTICLES OF IMPORTS Continued. 
 FREE OF DUTY. 
 
 Articles. 
 
 Values. 
 
 Articles, the growth, production, etc., of the United 
 States, exported and brought back 
 
 Articles from the Hawaiian Islands, free under recip- 
 rocity treaty 
 
 All other free articles 
 
 Dollars. 
 8,485,813.94 
 
 9,654,048.00 
 3,140,509.98 
 
 Total free of duty . 
 
 $233,093,659.15 
 
 DUTIABLE. 
 
 Articles. 
 
 Values. 
 
 Ordinary du- 
 ties collected. 
 
 Average 
 ad va- 
 lorem 
 rates of 
 duty. 
 
 Sugar, confectionary, and 
 molasses: 
 
 Dollars. 
 5 336 729 63 
 
 Dollars. 
 1,496,863.32 
 
 Per cent 
 
 Sugar and confectionary 
 
 68,905,549.57 
 
 36,519,823.02 
 
 82.03 
 
 Total 
 
 74.242,279.20 
 
 58,016,686.34 
 
 78.15 
 
 Wool, and manufactures of: 
 Wool, raw 
 
 16 351 369 97 
 
 5,899,816.63 
 
 36 08 
 
 
 44 235 243 64 
 
 29 729,717 50 
 
 
 
 
 
 
 Total 
 
 60,586,613.61 
 
 35,629,534.13 
 
 58.81 
 
 Iron and steel, and manufac- 
 tures of: 
 
 2,112,128 00 
 
 855,995.83 
 
 40 53 
 
 
 6 510 126 08 
 
 2,811,026.05 
 
 43 18 
 
 
 41 996,731 52 
 
 17,046,212.01 
 
 40 59 
 
 
 
 
 
 Total 
 
 50.618.985.60 
 
 20,713,233.89 
 
 40.92 
 
 Flax, hemp, jute, etc., and 
 manufactures of: 
 Unmanufactured 
 Flax 
 
 1,908,845.00 
 
 154,508.63 
 
 8.09 
 
 Hemp, jute, sisal grass, 
 and other vegetable 
 substances 
 
 9,971,276.00 
 
 1,775,831.39 
 
 17.81 
 
 Manufactures of .. 
 
 21,927,161.55 
 
 7,567,641.72 
 
 34.52 
 
 
 
 
 
 Total . . 
 
 83,807,282.55 
 
 9,497.981.74 
 
 28.10
 
 236 
 
 The National Revenues. 
 
 LEADING ARTICLES OF IMPORTS Continued. 
 DUTIABLE. 
 
 -s 
 
 c 
 
 Articles. 
 
 Values. 
 
 Ordinary du- 
 ties collected. 
 
 Average 
 ad va- 
 lorem 
 rates of 
 duty. 
 
 5 
 6 
 
 Silk, manufactures of 
 Cotton, manufactures of 
 Fruits, Including nuts.. __ 
 
 Dollars. 
 31,264,276.58 
 29,150,058.83 
 15,088,073.82 
 
 Dollars. 
 15,540.300.70 
 11,710,719.88 
 4,210,098.64 
 
 per cent 
 49.71 
 40.17 
 27 90 
 
 8 
 
 Chemicals, drugs, dyes, and 
 medicines. 
 
 13,285,225.75 
 
 4,654,165.24 
 
 35.03 
 
 9 
 10 
 
 Jewelry and precious stones 
 Tobacco, and manufactures 
 of 
 
 10,981,191.66 
 10,955,125.03 
 
 1,162,300.19 
 9,127,758.26 
 
 10.58 
 83.32 
 
 11 
 
 Leather, and manufactures 
 of 
 
 10,933,569.77 
 
 3,286,862.17 
 
 30.06 
 
 
 
 
 
 
 13 
 
 Liquors: Malt, spirituous, 
 and wines 
 Malt liquors . _ 
 
 1,267,309.25 
 
 614,186.73 
 
 48.47 
 
 
 Spirits, distilled 
 
 1,909,899.96 
 
 2,939,923.04 
 
 154.01 
 
 
 Wines 
 
 7,013,737.19 
 
 3,848,133.05 
 
 54.90 
 
 
 
 
 
 
 
 Total 
 
 10,190,946.40 
 
 7,402,242.82 
 
 72.68 
 
 
 
 
 
 
 13 
 
 Wood, and manufactures of: 
 Unmanufactured 
 
 15 087 39 
 
 2,977.26 
 
 19.73 
 
 
 Manufactures of 
 
 8,208,416.67 
 
 1,500,206.83 
 
 18.28 
 
 
 
 
 
 
 
 Total 
 
 8,223 504 06 
 
 1,503,184.09 
 
 18.28 
 
 
 
 
 
 
 14 
 
 Glass and glassware 
 
 7,301 339 78 
 
 4,510,312.48 
 
 59.01 
 
 
 Fancy articles 
 
 7 185 998 9") 
 
 2,949,360.14 
 
 41 04 
 
 
 Breadstuffs 
 
 6 386 560 72 
 
 1,075.811.24 
 
 16.84 
 
 17 
 
 Earthen, stone, and china- 
 
 5,708 093 40 
 
 3,251,881,22 
 
 56.97 
 
 IS 
 
 Hats, bonnets, and hoods, 
 and materials for. 
 
 4,902,911 07 
 
 1,051,609.00 
 
 21.4- 
 
 19 
 
 Animals 
 
 4,665,066 51 
 
 933,013.30 
 
 20 00 
 
 20 
 21 
 2 
 
 Furs, and manufactures of. 
 Buttons and button materials 
 
 4,545,265.24 
 3,772,927.25 
 3,117,662 70 
 
 926,217.73 
 897,645.17 
 1,329,506.31 
 
 20,38 
 23.79 
 42.64 
 
 23 
 24 
 
 Metals, metal compositions, 
 and manufactures of 
 Fish . 
 
 2,988,882.51 
 2,817,351.73 
 
 962,785.71 
 611,937.69 
 
 82.21 
 21.72 
 
 29 
 
 Coal and coke .. 
 
 2,811,158.31 
 
 633,728.46 
 
 24.32 
 
 2u 
 
 Books, maps, engravings, 
 
 2,736,187.70 
 
 684,004.10 
 
 25/0 
 
 77 
 
 Vegetables --- 
 
 2,276,304.47 
 
 547,509.90 
 
 24.05 
 
 25 
 
 29 
 
 Paper, and manufactures of . 
 Art works : Paintings and 
 
 1,985,264.36 
 1,925,905.87 
 
 424,618.27 
 577,771.75 
 
 21.39 
 30.00 
 
 30 
 
 Clocks and watches, & parts of 
 
 1,882,564.05 
 
 489,325.83 
 
 25.90
 
 Statistical Tables. 
 
 237 
 
 LEADING ARTICLES OF IMPORTS Continued. 
 DUTIABLE, 
 
 J 
 
 9 
 
 i 
 
 o 
 
 Articles. 
 
 Values. 
 
 Ordinary du- 
 ties collected. 
 
 Average 
 ad va- 
 lorem 
 rates of 
 doty. 
 
 81 
 
 Provisions, comprising meat 
 and dairy products 
 
 Dollars. 
 1,759 163 45 
 
 Dollars. 
 429 987 42 
 
 per cent 
 24 44 
 
 >> 
 
 Musical Instruments 
 
 1,613,883.78 
 
 403 470 95 
 
 25.00 
 
 
 Rice 
 
 1 518 766 10 
 
 971 454 89 
 
 64 01 
 
 " 1 
 
 Salt 
 
 1,455 385.18 
 
 676 865 50 
 
 49 92 
 
 --, 
 
 Paints and colors 
 
 1,220,806 26 
 
 399 532 98 
 
 32.78 
 
 "'i 
 
 Bristles . 
 
 1,156,435.00 
 
 174,423 71 
 
 15.03 
 
 3r 
 
 Cement, Roman, Portland, 
 and all other 
 
 1 102 532 41 
 
 220 506 48 
 
 20 00 
 
 3^ 
 
 Oils, animal, mineral and 
 vegetable 
 
 1,067,145 98 
 
 269 926 60 
 
 25 31 
 
 89 
 
 in 
 
 Corsets and corset cloth 
 Marble and stone, and man- 
 ufactures of 
 
 1,058,793.00 
 960,981.64 
 
 370,577.55 
 381,405 48 
 
 35.00 
 39.69 
 
 11 
 
 > 
 
 Matting and mats for floors. 
 Seeds 
 
 885,968.75 
 846,580.84 
 
 177,193.75 
 172,437.68 
 
 20.00 
 20 36 
 
 ia 
 
 Hay 
 
 791,686.75 
 
 157,444.53 
 
 18.89 
 
 i 
 
 Brushes - 
 
 557,347.54 
 
 167,204.26 
 
 30.00 
 
 IT) 
 
 Paper pulp, dried, for paper- 
 makers' use 
 
 497,275.45 
 
 49,727.34 
 
 10.00 
 
 It 
 
 Glue 
 
 479,756.00 
 
 95,951.20 
 
 20.00 
 
 a 
 
 Gold and silver, manufac- 
 tures of .-.- 
 
 440,707.99 
 
 132,067.87 
 
 29.97 
 
 i - 
 
 Soap ... 
 
 436,223.96 
 
 1 17, 130.52 
 
 26.89 
 
 19 
 
 Gun powder and all explosive 
 substances ... 
 
 423,955.00 
 
 368,137.10 
 
 86.83 
 
 so 
 
 r >! 
 
 52 
 
 Brass, and manufactures of. 
 Lead, and manufactures of. 
 Grease 
 
 405,755.81 
 346.623.35 
 324,486.66 
 
 170,937.70 
 236,617.78 
 52,343.97 
 
 43.13 
 63.26 
 15.13 
 
 M 
 
 Copper: 
 Unmanufactured . . 
 
 212,646.00 
 
 105,887.20 
 
 49.80 
 
 M 
 
 Manufactures of 
 
 U 1,099.60 
 
 23,06y.88 
 
 44,14 
 
 
 Total 
 
 323.745.60 
 
 128,957.'i8 
 
 48.r,8 
 
 59 
 
 Sponges. 
 
 302,509.57 
 
 60, S01.<)1 
 
 20 00 
 
 u 
 
 
 286,768 24 
 
 89,884 18 
 
 81 ^4 
 
 -? 
 
 5S 
 ',9 
 
 80 
 
 Zinc, and manufactures of. 
 India - rubber and gutta- 
 percha, manufactures of. 
 Carriages, and parts of 
 Corks, and cork-bark, man- 
 ufactured 
 
 286,156.65 
 
 263,743.55 
 242,91)8.72 
 
 209,531.58 
 
 140,3 IS. 54 
 
 76,047.34 
 85,049.55 
 
 52,382.90 
 
 49.03 
 
 28.83 
 C5.00 
 
 25.nO 
 
 
 Hair: 
 Unmanufactured. 
 
 103,852.28 
 
 24,839.23 
 
 23.92 
 
 
 Manufactures of .. 
 
 96,906.09 
 
 30,418.58 
 
 31.30 
 
 
 Total... 
 
 200,758 37 
 
 55,257.81 
 
 2752
 
 238 
 
 The National Revenues. 
 
 LEADING ARTICLES OF IMPORTS-Concluded. 
 DUTIABLE. 
 
 
 
 1 
 
 c 
 
 Articles. 
 
 Values. 
 
 Ordinary du- 
 ties collected. 
 
 Average 
 ad va- 
 lorem 
 rates of 
 duty. 
 
 61 
 
 Mineral substances.not else- 
 where specified 
 
 Dollars. 
 191,295 84 
 
 Dollars. 
 24,025.83 
 
 per cent. 
 12 25 
 
 03 
 
 Saddlery, coach, and harness 
 hardware, etc.. 
 
 184,258.83 
 
 64,490.58 
 
 35 00 
 
 63 
 
 Spices, ground 
 
 170,303.70 
 
 66,271.12 
 
 88 91 
 
 64 
 
 65 
 66 
 
 Chicory root, ground or un- 
 ground, burnt or prepared 
 Ginger ale or ginger beer .. 
 Umbrellas, parasols, shades, 
 and parts of 
 
 163,682.00 
 153,376.54 
 
 152,742.27 
 
 106,671.70 
 30,675.30 
 
 62,186.71 
 
 65.17 
 20.00 
 
 40.71 
 
 67 
 
 Cocoa, prepared, and cocoa 
 butter 
 
 144,905.92 
 
 12,692.69 
 
 8.76 
 
 68 
 
 Inks of all kinds and Ink 
 powder . 
 
 103,658.81 
 
 31,097.64 
 
 30.00 
 
 69 
 
 All other dutiable articles.. 
 
 1,258,096 98 
 
 888,455.87 
 
 30.88 
 
 
 Total dutiable 
 
 450,325,321.55 
 
 212,032,423.90 
 
 47.10 
 
 
 Total free of duty 
 Additional and dlscrlm- 
 
 233,093,659.15 
 
 a 2, 189, 885. 75 
 
 
 
 
 
 
 
 
 Total - 
 
 683,418,980.70 
 
 214,222,309.65 
 
 
 a Of this amount $1,996,528.49 was duty equal to unpaid Internal" 
 revenue tax on domestic spirits and tobacco brought back.
 
 Statistical Tables. 
 
 239 
 
 TABLE SHOWING RELATIVE VALUES OF PRINCIPAL CLASSES 
 
 OF FREE AND DUTIABLE IMPORTS, AND THE DELATION OF 
 
 THE DUTY ON EACH CLASS TO ITS VALUE. 
 
 Classes. 
 
 Dollars. 
 
 Per cent, 
 of total. 
 
 FBK OF DUTY. 
 
 (A) Articles of food, and animals ....... 
 
 Value. 
 99 183 773 
 
 Value. 
 14 51 
 
 (B) Articles In a crude condition which enter 
 Into the various processes of domestic 
 Industry . 
 
 106,389 032 
 
 15.57 
 
 (C) Articles wholly or partially manufactured, 
 for use as materials In the manufactures 
 
 12 149 883 
 
 1 78 
 
 (D) Articles manufactured, ready for con- 
 sumption .. ..... 
 
 11,565 665 
 
 1 69 
 
 (E) Articles of voluntary use, luxuries, etc. ._ 
 
 3,805,306 
 
 .56 
 
 Total 
 
 233,093 659 
 
 84.11 
 
 
 
 
 DUTIABLE. 
 
 (A.) Articles of food and animals. . . 
 
 112,273,076 
 
 16.43 
 
 (B) Articles In a crude condition which enter 
 Into the various processes of domestic 
 
 59,542,660 
 
 8.71 
 
 (C) Articles wholly or partially manufactured, 
 for use as materials in the manufactures 
 and mechanic arts - 
 
 67,505,441 
 
 9.88 
 
 (D) Articles manufactured, ready for consump- 
 tion .. . .. 
 
 124,473,106 
 
 18.21 
 
 (E) Articles of voluntary use, luxuries, etc,-.- 
 
 86,531,039 
 
 12.66 
 
 Total 
 
 450,325,322 
 
 65.89 
 
 DUTIABLE. 
 
 Duty. 
 67,998,334 
 
 Duty. 
 32.07 
 
 (B) Articles In a crude condition which enter 
 Into the various processes of domestic 
 
 19,567,903 
 
 9 23 
 
 (C) Articles wholly or partially manufactured, 
 for use as materials In the manufactures 
 
 20,393,493 
 
 9.62 
 
 (D) Articles manufactured, ready for consump- 
 tion 
 
 61,898,366 
 
 29.19 
 
 (E) Articles of voluntary use, luxuries, etc 
 
 43,174,328 
 
 19.89 
 
 Total .. 
 
 212,032,424 
 
 100.00
 
 240 
 
 The National Revenues. 
 
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 3 
 
 
 
 H
 
 Statistical Tables. 
 
 241 
 
 ANALYSIS OF INTERNAL REVENUE RECEIPTS. 
 
 Objects of Taxation. 
 
 Receipts during fiscal year 
 ended June 30 
 
 8PIBITS. 
 
 Spirits distilled from apples, peaches, 
 and grapes 
 
 1886. 
 
 1887. 
 
 $ 1,400,394 48 
 
 62,365,825.13 
 178,650.17 
 4,714,735.18 
 418,406.24 
 1,102.90 
 
 3,000.00 
 10,151.90 
 
 $1,090,379.07 
 
 59,551,972.59 
 176,600.12 
 4,587,268.21 
 416,304.66 
 860.86 
 
 2,860.00 
 3,076.20 
 
 Spirits distilled from materla s other 
 than apples, peaches, and grapes 
 Rectifiers (special tax) 
 
 Retail liquor-dealers (special tax) 
 Wholesale liquor dealers (special tax). 
 Manufacturers of stills (special tax).. 
 Stills and worms manufactured (special 
 tax) 
 
 Stamps for distilled spirits Intended for 
 exports . .. 
 
 Total 
 
 69,092,266.00 
 
 65,829,321.71 
 
 TOBAOOO. 
 
 Cigars and cheroots 
 
 10,532,804.05 
 655,569.55 
 493,283.80 
 14,834,095.42 
 53,875.63 
 
 1,208,529 17 
 5,575.85 
 108.695.45 
 14,933.61 
 
 11,364,916.33 
 792,279.60 
 524,942.26 
 15,995 019.46 
 51,891.14 
 
 1,245,412.65 
 5,563.75 
 113,340.00 
 14,701.94 
 
 Cigarettes . 
 
 Snuff 
 
 Tobacco, chewing and smoking . . 
 
 Dealers In leaf -tobacco (special tax).. 
 Dealers In manufactured tobacco (spe- 
 cial tax) 
 
 Manufacturers of tobacco (special tax) 
 Manufacturers of cigars (special tax) 
 Peddlers of tobacco (special tax) 
 
 Total 
 
 27,907,362.53 
 
 30,108,067.13 
 
 FEKMKNTED LIQUORS. 
 
 Ale, beer, lager-beer, porter, and other 
 similar fermented liquors 
 
 19,157,612.87 
 186,928.89 
 
 169,502.56 
 162,686 97 
 
 21,387411.79 
 187,352.24 
 
 177,148.13 
 170,275.33 
 
 
 Retail dealers In malt liquors (special 
 tax) 
 
 Wholesale dealers In malt liquors (spe- 
 tax) 
 
 Total 
 
 19,676,731.29 
 
 21,922,187.49 
 
 Oleomargarine 
 
 
 723 948.04 
 253,776.69 
 
 Miscellaneous, Including Penalties 
 Total receipts ... 
 
 226,509.62 
 
 116.902.869.44 
 
 118.837.301.06
 
 242 
 
 The National Revenues. 
 
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 1888, accompa
 
 Statistical Tables. 243 
 
 ESTIMATED REDUCTION OF INTERNAL TAXATION TINDER THE 
 PROVISIONS OF " A BILL TO REPEAL CERTAIN TOBACCO 
 AND OTHER TAXES, AND TO MODIFY INTERNAL-REVENUE 
 LAWS."' 
 
 Total receipts from tobacco, fiscal year 1S87 $30,108,067 
 
 Deduct cigars and cigarettes $12,157.196 
 
 Deduct special taxes manufacturers 
 
 of cigars 18,570 X $3 = 55,710 
 
 Deduct special taxes dealers In to- 
 bacco 514,000 X $1 = 514,000 
 
 12,726,906 
 
 Receipts from proposed repealed sources, fiscal year 1887 17,381,161 
 
 The Increase In the receipts of that part of the tobacco tax 
 which this bill proposes to repeal during the first seven 
 months of the current fiscal year over the receipts for 
 the corresponding period of the last fiscal year was 
 $1,234,101, or 13 per cent. Assuming that this rate of 
 increase will continue to the close of the fiscal year, the 
 receipts from these objects of taxation would be In- 
 creased 2,259,551 
 
 Special taxes retail liquor dealers, fiscal year 1887 4,587,268 
 
 Special taxes retail dealers In malt liquors, fiscal year 1887.. 177,148 
 
 Special taxes manufacturers of stills and stills manufactured, 
 
 fiscal year 1887 3,721 
 
 Add for assessed penalties 41,758 
 
 Add for Interest clause In section 10, say 5,000 
 
 Total estimated reduction 24,455,607 
 
 *This table was prepared by the Commissioner of Internal Revenuf, 
 March 12, 1888, at the request of Mr. Mills, and accompanies the report 
 (April 2, 1888) of the majority of the Ways and Means Committee.
 
 244 
 
 The National Revenues. 
 
 REVENUE REDUCTIONS SINCE THE WAR.* 
 
 Of Internal taxes the following have been the reductions made since 
 the conclusion of the war : 
 
 By the acts of July 13, 1866, and March 2, 1867 $103, 81 199 
 
 By the acts of March 31, 1868, and February 3, 1868 54,802,578 
 
 By the act of July 14, 1870... 55,315,321 
 
 By the act of December 21, 1871 14,436,862 
 
 By the act of June 6, 1872 15,807,618 
 
 By the acts of March 1, 1879, and May 28, 1880.. 6,368,935 
 
 By the act of March 3, 1883 40,677,682 
 
 Total $290,790,193 
 
 From customs duties (according to estimates prepared when the sev- 
 eral bills were passed) the following reductions of revenue have been 
 made : 
 
 By the act of July 14, 1870 : By additions to free list $ 2,403,000 
 
 Ditto: Estimated reduction from dutiable list 23,651,748 
 
 Total 26,054,748 
 
 By the act of May 1. 1872, tea and coffee were placed upon 
 
 the free list, making a reduction of $ 15,893,847 
 
 By the act of June 6 . 1872, tariff duties were further reduced 
 
 asfollows: By additions to free list $ 3,345,724 
 
 Ditto: Estimated reduction from the dutiable list 11,933,191 
 
 Total $ 15,278,915 
 
 By the act of March 3, 1S83, were made the following reduc- 
 tions : By additions to free list $ 1.365,999 
 
 Ditto: Estimated reduction from dutiable list 19,489,800 
 
 Total $ 20,855,799 
 
 GENERAL FEATURES OF OUR EXPORT TRADE FOR THE TEAR 
 ENDING JULY 1, 1887. 
 
 Articles. 
 
 Values. 
 
 Per cent. 
 
 Products of agriculture 
 
 Products of manufacture. 
 
 Products of mining (Including mineral oils) 
 
 Products of the forest. 
 
 Products of the fisheries 
 
 Other products 
 
 $523,073,798 
 
 136,735,105 
 
 11,758.662 
 
 21,126,273 
 
 5,155,775 
 
 5,173,310 
 
 Total. 
 
 703,022,923 
 
 74.41 
 
 19.45 
 
 1.67 
 
 3.01 
 
 .73 
 
 .73 
 
 100.00 
 
 * This table is taken from Mr. McKlnley's minority report of the Ways 
 and Means Committee on the so-called Mills' bills.
 
 Statistical Tables. 
 
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