Nathaniel Hillyer. Egleston.

The North American review (Volume 139) online

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considerations may be summed up thus :

First. Every tariff necessarily robs the poor, by taxing them
ten or twenty times as heavily, in proportion to their means, as
the rich.

Second. Such a system can be justified only on the theory
that a tariff so framed as to prevent revenue by shutting out
foreign goods will increase the profits of home manufacturers,
and thus induce them generously to increase wages.

Third. The actual effect of every tariff is to increase the cost
of production, to restrict its amount, and to reduce the demand
for workmen, consequently reducing their wages.



288 THE NORTH AMERICAN REVIEW.

Fourth. The more highly protective the tariff is made, the
more rapidly will it restrict the employment of workmen, and
the more surely will it cut down their wages.

Mfth. Free trade, on the contrary, by making materials
cheaper, would enable manufacturers to pay higher wages,
without loss of profits; and, by compelling them to rely for
their profit upon the amount of their production, instead of the
monopoly of a narrow market, would compel them to employ
more workmen, and therefore to pay higher wages.

Sixth. The uniform experience of this country shows that
these results have come to pass. The average advance in wages
has always been far greater under low tariffs than under high
ones ; while to-day, after twenty-three years of high protection,
wages in the protected industries are much lower, on the
average, than they were under the non-protective tariff of
1860.

THOMAS G. SHEARMAN.



IT is a well-known law of business that the consumption of
an article increases as the cost of the article decreases. It is
also a well-known law in manufactures that a largely increased
manufacture of an article, in the manufacturing of which there
is sharp competition, is immediately followed by a great decrease
in the actual cost to manufacture. Increased consumption and
decreased cost of production act and react upon each other, pro
ducing results previously deemed unattainable. A compara
tively small decrease in the cost of an article has often, in a
short time, doubled the demand and consumption in this coun
try, giving vastly increased employment in its manufacture and
calling forth business energy in its sale and use. No legislation
should be allowed to bolster up unnaturally high prices, or to
stand in the way of that free and wholesome competition that
not only brings low prices of merchandise to the whole people,
but stimulates the energy and inventive faculties of the producers
to new improvements and inventions, and to more economical
and better methods. Free competition, whether home or foreign,
sharpens the wits and increases the wisdom, ability, and wealth,
not only of those actually engaged in the peaceful strife, but
of the whole country.



EVILS OF THE TARIFF SYSTEM. 289

No people relieved of competition in their manufactures and
commerce could attain or hold a high position in those branches
of employment, and no people not ranking fairly well in those
branches could rank high as a nation. Fortunate it is for the
people of the United States that free trade has been the law and
practice between the different States, as the competition in man
ufactures and commerce resulting from that free trade has
roused the energy, sharpened the wits, and broadened the minds
not only of the business man, but of the whole people. The
United States has been, and still is, an entirely free-trade coun
try so far as relates to imports and exports between the States,
and to that free trade we should give credit for the growth and
expansion of the business of the country to its present impor
tance, for the income to all classes that has been the means of
adding so much to the welfare and happiness of the people and
has spread knowledge among them so universally. The high
condition of our mechanic arts, and the immensity of our internal
commerce, are due to free trade, and not to high tariffs. With
out this freedom from tariffs between the States, our country
would have been a collection of comparatively weak States, with
armed customs-officers lining the borders. A desire for the
extension of the limits of free trade is the fundamental motive
of the almost universal craving for expansion of territory by
annexation and of civilization by new settlements.

The protection theory is based upon the supposed necessity of
protecting our labor against the pauper labor of other countries
a theory based upon another false theory that underpaid and
underfed labor is more profitable to the employer than well-paid,
well-fed, and intelligent labor. The people of the United States
need not, on that account, fear free trade. The continental
countries of Europe, with their low-paid and underfed labor,
continue the high-tariff system ostensibly to protect against the
comparatively high-paid labor of England, but without success ;
for well-paid means satisfied, energetic, intelligent labor, and it
will overrun cheap labor whenever they are brought into con
test ; and, therefore, British free-trade-made merchandise sells
all over Europe in spite of protective tariffs.

By reason of the immensity of this country, with its cheap
and fertile lands, its wealth of forests and mines, with means of
steam-power and water-power without limit, and with an intelli
gent and vigorous population descended from, and made up of,



290 THE NORTH AMERICAN REVIEW.

the more energetic of the world's best nationalities, the United
States should be the leading manufacturing and commercial
country of the world. Capital is abundant and cheap, although
shy of manufacturing employments because of the fluctuations
and uncertainties of a manufacturing business based on a pro
tective tariff that substantially confines it to the necessities of
one country for a customer. With no burdens or unnecessary
restrictions upon agriculture, manufactures, and commerce, our
ships would cover the oceans, and the products of our factories,
as well as of our soil, would share largely in supplying the
markets of the world. We should receive in return such articles
from all other countries as we cannot profitably produce here,
and that is a commerce that is mutually advantageous. Were
our resources, intelligence, and activity relieved of the burdens
of a high tariff, we need fear no competition except in the pro
duction of articles that we ought not to attempt to produce, by
reason of the unsuitableness of our soil or climate or our remote
ness from the raw materials.

Each nation, and the individual men of each nation, should
be free from Government direction, and be allowed to be their
own judges as to what they can most advantageously produce
or manufacture, whether circumstances are favorable for suc
cessful competition with foreign makers, and whether they have
the necessary knowledge and skill to compete successfully
with others especially well situated. What our people can
not produce or manufacture to good advantage should be
purchased, and be paid for in articles they can produce or
manufacture to advantage. A division of labor is as desirable
among peoples as among individuals. No family, even, can
profitably produce every article it consumes, but must sell and
buy j and so with nations. It is folly for the United States to
try to produce every article it needs; but the manufacturers
should be allowed the privilege of getting their raw materials at
as low prices as the most favored, and free of duty, or their
productions cannot be sold abroad, nor can they be sold at home
except at prices burdensome to the consumer.

Under free trade with foreign nations that would bring free
trade in raw materials, the increased home demand for manu
factured goods would require immensely increased manufactures,
and consequently greater demand for labor. The great increase
in manufactures, and free competition, would promote discoveries



EVILS OF THE TARIFF SYSTEM. 291

of new and better methods, and still lower costs for better goods
would follow, without reducing the wages of labor. Compara
tively few branches of manufacture in this country are now
unable to compete in neutral markets with the manufactures of
Europe, for any reason but the higher cost of raw materials.
This is shown by the fact that the more labor expended in the
manufacture and finish of an article, or, in other words, the
farther advanced from the condition of raw materials the article
is, the more readily it can be exported. Labor in this country,
when measured by what it accomplishes, is the cheapest labor
in the world, although the day's wages are larger and the wage-
earner receives the highest reward here. The number of per
sons employed in manufacturing and mining in this country is
insignificant when compared with the numbers employed in
agricultural and other pursuits; and the factory and mining
employes' wages depend not upon the so-called "protection to
American labor," but upon the inducements and earnings of
farming and farm labor, the price of the products of which is
made in the foreign countries that take the surplus. The employ
ing manufacturers and miners, however much they may be pro
tected by high tariff, do not carry on their respective branches
of business for the sake of advancing or keeping up the price of
labor, but for their own profit. They pay for their labor not one
cent more than will induce it to leave the farms or keep it from
going to the farms. The more prosperous farming is, the higher
farm labor is, and the higher the factory or mining operatives'
wages will be. Surely, it is for the interest of the mining or
factory operatives to have the farming interests in a prosperous
condition and relieved of the burdens of high-tariff prices on
everything they consume, that the farming interest may be
able not only to pay higher wages, but to consume more of
manufactured goods. When mining and factory operatives
become assured of the fact that a Government protective tariff
not only does not bring them higher wages, but actually reduces
the profits of farming and farm-laborers' wages, and their own
in proportion; increases the cost of their own living; and, in
addition, protects their employers, in their associations and
combinations, in the limiting of production through stoppages,
lock-outs, and intentionally produced strikes ; they will vote with
the political party, whatever may be its name, that is in favor
of an early adoption of the policy of free trade. And whenever



292 THE NORTH AMERICAN REVIEW.

the producers of the great articles of now highly " protected "
raw materials accept that policy, they will see that an immensely
increased and steady demand for the things they have to sell,
with lower cost of production, brings them a higher and more
permanent condition of prosperity than they have ever seen.

With the inflow of foreign skilled and unskilled labor, added
to our native labor, which is constantly increasing and becoming
more productive with our increased and increasing machinery
and better methods and processes of manufacture, foreign mar
kets should be opened to us, and would be by free trade. Only
the low costs, based on free-trade raw materials, will do this to
any considerable extent. Any approach to free trade, however
short the steps may be, should be welcomed by all. It may be
well that timidity and ignorance under the name of conserva
tism, and narrow selfishness under the cloak of patriotism, will
prevent the progress from being so rapid as to create alarm by
reducing values too fast $ but the present period of low prices is
a peculiarly favorable time for a long step toward free trade.
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 any other. In
all cases where one article has a higher rate of tariff than
another, either no attempt to produce the higher-rate article
should ever have been attempted in this country, or there was
improper and unholy scheming by, and favoritism to, the pro
ducers or manufacturers of it. Or, to put it more mildly, the
producers or manufacturers of the low-tariff article neglected
their own interests in not also getting a monopoly tariff.

Nature has given the coarser raw materials a large per
centage of protection in the form of freight from the foreign
country. Freight on iron ore is one hundred per cent, $ on
pig-iron it varies from ten to twenty-five per cent. And the
country pays, in addition, a price for all the iron it uses that is
nearly double the price in England, on account of a tariff
equal to about sixty-six and two-thirds per cent., nearly all of
which goes to the American producer, but none to his employe's,
and scarcely anything to the support of Government.

In order to oppress the great body of the people as little as
possible, and logically and honestly carry out the protection
policy of supporting the Government by duties on imports, so



EVILS OF THE TAEIFF SYSTEM. 293

that the alleged protection shall be impartial to the employes in
all the various branches of industry that produce the protected
articles, the tariff should be no higher than is necessary to sup
port the Government economically, and should be the same on all
articles, that is, the same percentage on the value at the last
place of export. But in making up the account of duties at the
custom-house, to be paid by the importer, the freight on the im
ports, from the last place of export, should be deducted, and the
remainder only should be paid to the Government as duties.
This plan, in its operation, would make protection impartial,
freight from the place of exportation being a part of the pro
tection. Surely, under a tariff law claimed to be framed for the
purpose of protecting labor, the protection on coarse, raw
materials, including freight protection, should not be greater
than on manufactured articles, in condition for use, made from
such raw materials. By the skillful handling of Congressional
committees, metals, such as iron and steel in all forms, copper,
lead, etc., and wool (raw materials) now have nearly double the
protective tariff that the articles manufactured from them have,
and this under a tariff falsely called protective to American in
dustry. The producers of the raw materials hold the Govern
ment to this policy with a narrow selfishness that is becoming
intolerable to the people, who will soon learn what a burden
labor is carrying. Monopolies never yield except on compulsion.

J. B. SARGENT.



WE have now had twenty- three years' experience of the pro
tective system. The advocates of that system hold that there
is some adjustment of taxes by which the industry of a country
can be forced into a better organization than that into which
it would grow by the voluntary cooperation of free citizens.
They have no tests for finding out what that adjustment is, and
they can give the legislator no rules for applying their theory.
It is a purely arbitrary dogma, and the only method of applying
it is by constant trial and failure. The legislator has no knowledge
of the laws of the force he is using, of the mode in which it will
operate, of the proportion of its effects, of its remoter conse
quences, or of its incidental combinations and relations. He never



294 THE NORTH AMERICAN REVIEW.

obtains any subsequent tests of the result of his work. The pro
tectionists themselves say of their scheme that it is not quite
right, that " inequalities need to be remedied," that it needs
" re-adjustment, 77 that there are " snakes " in it. If any one pro
poses to reform it, they complain of tariff-tinkering, but they
are tinkering it all the time. They propose to raise taxes at
any time, as, for instance, that on wool, but denounce a propo
sition to lower taxes as tending to " disturb industry." They
say that they want protection only for a time, but refuse to de
fine the time. It is always " not yet." They refuse to be bound
by the results of their own experiment, but have a special plea
to bar every rational inference, undisturbed by the fact that
their special pleas, when taken two and two, destroy each other.
It is plain that the whole theory is impracticable. It is like
trying to invent perpetual motion. It is always at the point
where it will not yet quite work.

For after twenty-three years of experiment it is fair to ex
amine results. Not a single result that was promised has come
to pass. The industries of the country have been set at war with
one another, and consequently have organized as rings and mo
nopolies, whenever possible, so as to plunder the industries that
cannot be formed into rings (agriculture, etc.). We have had no
steady growth and prosperity, no immunity from industrial ills,
but rather a constant succession of heats and chills, industrial
convulsions, strikes, combinations, suspensions of industry, and
irritation between classes. The protectionists, it is true, claim
that they have produced the prosperity that the country has had.
They take credit for the bounty of nature to the inhabitants of
North America. They claim to have produced the happiness due
to the bounty of nature, because they have not altogether de
stroyed it. They claim that they have given to the farmer the
part of his produce that they have not taken away from him, and
that they have given to the laborer the part of his earnings that
they have allowed him to keep. It is manifestly impossible to
tell what protection has done for the country, unless one is able
to form some judgment of what our state would have been
to-day, if, for the past twenty years, the American people had
been allowed, man by man, to earn what they could, and keep
what they earned. That the accumulation of capital here would
have been far greater than it is ; that it would have been more
equally distributed ; that population would have been distrib-



EVILS OF THE TARIFF SYSTEM. 295

uted where it would have been industrially more secure 5 that
laborers would have been more steadily and securely gaining
capital, and would have been more contented ; that the organiza
tion of industry would have been more free and fair ; and that
the Government would have been more sound and pure, are
convictions that will be forced upon any candid student of the
laws of economic forces and social development.

In the twenty-three years during which we have been trying
the experiment of protection, the arts and sciences have made
greater progress than in any century before. "We have nearly
doubled our population. The acreage of improved land has
increased in the ratio of 4 to 7. The capital in manufactures
has increased in the ratio of 3 to 7. The number of miles of
railroad in operation has been multiplied by five. Our exports
and imports of merchandise have increased from $687,000,000
to $1,547,000,000 $ for we produce a surplus of wheat, cotton,
tobacco, provisions, and petroleum, that we must export, and
when we export it we get something for it, in spite of theories
that make commerce folly. Our system of taxation for protec
tion, with incidental revenue, has carried our revenue from
customs from $53,000,000 in 1860 to $216,000,000 in 1872. It
reacted to $130,000,000 in 1878, and rose again to $220,000,000
in 1882. In 1866, we collected $309,000,000 by internal taxes.
This was reduced in 1874 to $102,000,000 ; but, in 1883, in spite
of abolition and reduction of taxes, it was nearly $145,000,000.
In the same period a great number and variety of new industries
have been opened; others have been entirely transformed in
process and organization : others have been reconstructed sev
eral times over by new inventions, or by changes in fashion, or
by the adaptation of new materials. Ocean transportation has
been completely revolutionized, and international communica
tion has been established by ocean telegraph cables. Within
the same period, banking facilities in this country, and between
this and foreign countries, have undergone great improvement.
Finally, it is not to be overlooked that a new generation has
grown up under a common-school system far superior to that of
any earlier period, and that free labor has taken the place of
slave labor throughout the Southern States.

Over all this unprecedented natural and social growth, the
war-tariff taxes have been maintained, with few unessential modi
fications, as a rigid, cast-iron frame-work to which industry

VOL. cxxxix. NO. 334. 21



296 THE NOETH AMERICAN REVIEW.

under all its expansions must conform. The modifications that
have been made in the system have been by way of subdivision
and refinement of classification. These changes have been
pushed to the most ridiculous extreme, but the general scheme
and adjustment of the tariff is what it was twenty years ago.
But it must be plainly evident that, if Congress could once hit
upon some beneficial adjustment of tariff taxes, it is impossible
that such an adjustment could stand good for a month in the
face of the growth and expansion of the country. When a tariff
system is laid upon a country that has had a free system, the new
system gives advantages to its beneficiaries at the expense of
other domestic industries, while the change is going on, or until
the effect is distributed. When the effect is once distributed
throughout the industrial system, the device is of no benefit to
any one, but is a burden upon all. Such is our position now.
The system runs down into ruts. Masters of industry expend
their ingenuity to conform to, or defeat, the unfavorable opera
tion of the system in its details, and come to believe in the
system with a purely superstitious faith. They cannot see a
point in which it helps them, but they dare not trust themselves
out of it. They know that they give and take under it. They
have no means at all of finding out whether individuals or in
dustries give more than they get, while it is a mathematical
certainty that some must give ; all cannot win. Undoubtedly
some are now far worse off than they would be under absolute
free trade. They do not see what the tariff robs them of in the
way of chances. All the new openings of industry and com
merce that would present themselves under freedom are unknown
and unheeded. It is safe to say that we are turning our backs
on an industrial empire, while our protectionists are painfully
constructing their systems for log-rolling with one another for
the plunder of the agriculturists at home. They tell us about
the comparative advantage of home and foreign trade as if
there were any such distinction, or as if we must give up one
kind of trade to get the other.

The protective system is sure to be disintegrated and swept
away in time by the advance of improvements in science and
art, just as passports and other devices of police government
were destroyed. But it belongs to the character of intelligent
men to recognize a mistake, and to draw the correct conclusion
from an experiment j and, if we do this, the question is, how



EVILS OF THE TARIFF SYSTEM. 297

we are to extricate ourselves, with as little loss as possible, from
the situation in which we have placed ourselves. At the present
moment, the system is producing for us consequences of the
utmost moment, both economically and politically. Since we
cannot, as above shown, cut off foreign commerce, we obtain an
excessive revenue. We find a national surplus a far greater
curse than a national debt. Lest the taxes which are paid to
the protective interests should be reduced as a means of lower
ing the revenue, the protectionists propose all sorts of schemes
for squandering the surplus, and we are invited to collect taxes
from ourselves to swell a great fund for corrupting both our
Government and ourselves. Certainly it is an astounding theory
of wealth that cannot be carried out in practice without taking
citizens' earnings away from them and then giving them back
again, in order to make them rich ; but men whose minds have
once closed with a good grip on a dogma never give it up on
account of facts of experience, or on account of the absurdities
into which it carries them, least of all, if they think it favorable
to their interests.

The task of taking down such a tariff system as we now have
is, no doubt, difficult, and, under our political system, it is not to
be expected that that task will be undertaken intelligently and
carried through methodically. It is easy enough to find fault
with any plan of horizontal reduction, or the correction of the



Online LibraryNathaniel Hillyer. EglestonThe North American review (Volume 139) → online text (page 29 of 60)