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deal more of it during the next few years than many people suppose. " We
must think only of the consumers," the working-men are told. But when the
producers are nearly as numerous as the consumers, and find themselves on
the verge of starvation, what they will demand remains to be seen. London
World.



ENGLAND AND THE UNITED STATES. 31

strengthened her position against foreign competition. The
repeal of the duties on manufactures could have no such
effect ; and, had these duties been retained, her exports
would not have been diminished, and her home market
would have remained unimpaired. But, rightly to under-
stand the grounds of England's policy in this regard, we
must keep in view the fact, that to induce other nations to
relax their commercial regulations was and is her constant
aim, an aim which largely sways her diplomatic as well
as her legislative action. For several years before the enact-
ment of her free-trade measures, the whole influence of the
government, with all the aid diplomacy could render, was
exerted to induce the nations with which England deals
to favor, by commercial treaties, the admission of her pro-
ductions. These efforts were in every case unsuccessful. 1
Neither the profound arguments of Downing Street, nor the
persuasiveness of able and wily embassadors, could bring
those nations to believe that it would be better for them to
allow Great Britain to do their manufacturing. When this
great and disinterested instructor of the nations had ex-
hausted every other method in vain endeavors to convince
them that she understood their interests far better than
they themselves understood them, she resolved to make one
more effort ; namely, that of teaching by example. To this
end she adopted ''free-trade " as her watchword, and enacted
the so-called free-trade measures, the character and effects
of which I have already explained. The duties on manufac-
tures which these measures repealed had become an insignifi-
cant item in the receipts of the custom-house. At the time
of their repeal, the total annual amount of duties collected
on iron, and on manufactures of cotton, wool, and flax, was
less than half a million dollars. Had England regarded the
repeal of these duties with sole reference to her domestic
interests, it is not likely that it would have occurred ; for
it must have been obvious that its effect would be to weaken
rather than strengthen her home market. But her object
was to enlarge her foreign market. By setting an example

1 See Mr. Gladstone's letter to Mr. Hadfield, p. 47.



32 THE TARIFF POLICY OF

in the direction of free-trade, she hoped to induce other nations
to relax their tariffs, and thereby increase the foreign demand
for her productions in a greater ratio than the home demand
diminished under open competition. Her anticipations in
this regard, however, have not been realized. The figures
which I have already given show that, since the repeal of
these duties, she has lost no inconsiderable part of her home
market ; and there is no evidence that by that repeal she has
gained an equivalent foreign market. In adopting this policy,
England no doubt reckoned on being able to maintain her
pre-eminence as a manufacturing nation ; and probably would
have done so, had other nations acted on her free-trade advice,
and allowed the importation of British productions to dwarf
their own manufacturing industry. But those nations
choosing to imitate England's earlier practice, rather than
follow her later advice continued to defend their own
industries ; and now, instead of being her industrial depend-
ents, are her formidable rivals.

In no other country does England watch the course of
tariff legislation, or strive so much to influence it, as in the
United States ; and for obvious reasons. Of all the foreign
markets for her productions, ours is the largest. According
to the report of the " Bureau of Statistics," our imports from
Great Britain, during the ten years ending 1876, amounted
in value to one thousand eight hundred and thirteen million
dollars. In the year 1872, the value of our imports from that
source was two hundred and forty-nine million dollars, 1 and
their mean annual value for the ten years in question was
one hundred and eighty-one million dollars. Nearly three-fourths
of these imports were productions of the United Kingdom,
and consisted mainly of manufactures. These large importa-
tions, be it remembered, took place under our present tariff,
which is not unfrequently stigmatized as a prohibitory tariff.
A tariff which allows over one hundred and thirty-five million
dollars' worth of manufactures to be annually thrown upon
our market, from one country alone, is very far from being pro-
hibitory. It must be obvious to all who will look at the facts,

1 Quarterly Report (No. 1) of the Bureau of Statistics for 1877, p. 91.



ENGLAND AND THE UNITED STATES. 33

and can trace causes to their effects, that had our duties been
materially lower than they are, excessive importation would
have prostrated our manufacturing industry. Nevertheless,
there are many among us who, in disregard of facts, contend
that our customs duties retard the development of our manu-
factures, and that under free-trade we should be better able
to withstand foreign competition than we now are. This is a
position which they assume without giving the slightest proof
in support of it. Fortunately, we are not left to theory alone
for a decision of this question. We have a practical demon-
stration of it based upon actual experience. The history of
the silk manufacture of England conclusively shows what the
condition of our manufacturing industry generally would be
if our customs duties were repealed. At one time, the silk
manufacture was the third in value of Great Britain's textile
industries. In 1860, it amounted (in round numbers) to
ninety-four million dollars. Of this amount, seventy-nine million
dollars' worth entered into home consumption, and fifteen
million dollars' worth were exported. 1 This important branch
of industry owed its origin and development in Great Britain
to prohibitory or high protective duties. In 1824, the duties
were reduced to thirty per cent ad valorem. They were after-
wards further reduced. Mr. Gladstone, in 1853, in his Budget
speech of that year, spoke in regard to them as follows :
" We have not thought it right to propose a reduction in
the silk duties, which are fifteen per cent ; the question of the
silk-duties is mainly a question of revenue, and in regard to
it we do not think it is an article that has the strongest claims
upon our consideration ; for, so far as it is an article into the
manufacture of which protection enters, the protection has
mainly reference to certain classes of operatives, with respect
to whom it would be the disposition of Parliament to proceed
carefully and with great circumspection."

Notwithstanding that Mr. Gladstone, speaking as Prime
Minister of England, virtually admitted that " certain classes
of operatives" (meaning the silk operatives) needed pro-
tection, the industry which gave them their means of sub-

1 London Journal of the Society of Arts, vol. ix. No. 433.



34



THE TARIFF POLICY OF



sistence was finally sacrificed in behalf of England's one
great aim, namely, to command the foreign markets of the
world. For England, while professing free-trade, and ad-
vising other nations to adopt it, to maintain protective duties
on the only branch of her industry which, at that time, needed
them, was an inconsistency which impeached her sincerity,
and weakened her free-trade influence abroad. Under the
pressure of these circumstances, her silk duties, in 1860, were
repealed. The removal of these duties brought disaster
to the silk industry of England. Her home market was
flooded with foreign silks, numerous manufacturers of silk
failed, thousands of silk operatives were thrown out of em-
ployment, and that once prosperous industry was largely
prostrated. The enormous extent to which foreign silks were
thrown upon her home market, after the repeal of the duties,
is shown in Table I., which gives the value of the imports of
silk manufactures into Great Britain, in each year, from 1854

to 1875 :

TABLE I.



Years.


Value of Imports. 1


Years.


Value of Imports.


1854


Dollars.

11,550,855


1865


Dollars.

41,677,235


1855


11,994,365


1866


46,563,090


1856


13,263,965


1867


44,922,375


1857


11,827,075


1868


53,977,260


1858


11,085,535


1869


58,973,800


1859


11,345,860


1870


75,491,635


1860 2


16,718,805


1871


40,978,625


1861


28,647,225


1872


45,709,315


1862


31,992,810


1873


48,902,445


1863


32,209,745


1874


58,710,330


1864


37,409,035


1875


60,091,660



I invite a careful examination of this instructive table. It
shows that, from 1859 to 1861, that is, the year before
and the year after the repeal of the silk duties, the im-

1 The figures in this Table for 1854 to 1860 were derived from the " Annual
Statement of the Trade and Navigation of the United Kingdom ; " and for 1861
and the following years, from " Statistical Abstract for the United Kingdom,"
23d Number, pp. 36, 37.

2 In 1860 the duties on manufactures of silk were repealed.



ENGLAND AND THE UNITED STATES. 35

ports of silk manufactures into Great Britain increased one
hundred and fifty per cent ; and that from 1859 to 1875, the
increase was five hundred per cent. Thus it appears that the
value of foreign silk manufactures put upon the home mar-
ket, in displacement of English silk manufactures, was forty -
eight million dollars more in 1875 than in 1859.

In view of these facts, it is not surprising to find the silk
Manufacturers of England asking for protection. 1

To understand fully the relation which the tariff experience
of England in regard to her silk industry has to our own
tariff policy, we must take into view the fact, that the silk in-
dustry of P^ngland sustains a relation to foreign competition
similar to that which our manufacturing industries generally
sustain. There are conditions of production which enable
the silk manufacturers of the Continent of Europe to under-
sell the silk manufacturers of England ; and there are con-
ditions of production (as I shall show hereafter) which en-
able the manufacturers of England and of the Continent to
undersell our manufacturers. For these reasons, neither the
silk industry of England nor the manufacturing industries of
the United States can prosper without protective duties.

The disparities in the conditions of production which ex-
ist between England and the Continent are very much less
than those which exist between the United States and
England and the Continent. England's duty of fifteen per
cent as effectually protected her silk industry as our present
tariff protects our manufacturing industries. England has
tried the experiment of repealing her silk duties, the disas-
trous results of which I have already set forth. Shall we
repeat the blunder, by repealing our duties on manufactures
-generally? If England's repeal of her silk duties pros-
trated her silk industry, can any one doubt that the repeal of
our duties on manufactures would prostrate our manufactur-
ing industries ?

I have dwelt long on the experience of England in regard
to her silk duties, as it furnishes the most decisive proof of
the unsound ness of the views of those who assert that our

1 See citation from the " London World," at the foot of page 30.



36



THE TARIFF POLICY OF



manufacturing industries would prosper better under the
policy of free-trade than under the policy of protection.

The question is often asked, Why are protective duties
required to develop and sustain manufactures in the United
States ? Not, certainly, because our countrymen are less
capable than their European rivals ; for, in intelligence, in-
genuity, and aptness to learn, they have no superiors. It is
not because our natural advantages are less, nor from inabil-
ity to acquire the requisite skill ; for we have carried some
manufactures to a perfection nowhere else attained. There are,
however, certain conditions which affect, directly or indirectly,
the cost of production, in respect of Avhich other manufac-
turing nations have a decided advantage over us. Promi-
nent among these disadvantageous conditions, though riot all
of them, are the rates of interest on capital, the rates of wages
paid for labor, and the rates of local taxation. That these
are things beyond the control of our manufactures, no one
will deny. That the necessity of paying, in all these re-
spects, much higher rates than their rivals have to pay, puts
them at a serious disadvantage, seems equally certain. Let
us see how this case stands. For the fifteen years ending
1860, the rate of interest in England averaged 4.02 per cent ;
in France, 4.16 per cent ; and in the United States, 9.12
per cent, showing a disparity against us of five per cent. 1

1 Statement of the Comparative Rates of Interest in England, France, and the
United States, in each Year, from 1846 to 1860.



YEARS.


ENGLAND.


BANK OF
FRANCE.


UNITED

STATES.


MARKET.


BANK.


1846
1847
1848


Per cent.
3.79
5.85
3.21
2.31
2.25
3.06
1.91
3.67
4.94
4.67
5.90
669
3.15
2.74
4.42


Per cent.
3.21
5.21
3.71
2.94
2.52
3.00
2.15
3.69
5.31
5.64
5.90
6.59
3.23
2.74
4.42


Per cent.
4.00
4.92
4.00
4.00
4.00
4.00
3.21
3.21
4.33
4.42
5.54
6.00
3.67
3.46
367


Per cent.
8.35
9.54
15.12
10.08
8.02
968
6.42
10.21
10.37
8.96
8.92
12.77
4.99
6.59
6.80


1849


1850


1851


1852


1853


1854 . . . .


1855
1856 ......


1857 .


1858


1859
I860


Mean rate for the 15 year*


3.90


4.02


4.16


9.12



7



ENGLAND AND THE UNITED STATES. 37

At the present time, the rate of interest is exceptionally low
in all commercial countries. There is no reason to suppose,
however, that, with a revival of business, the normal rates
will not return. Therefore, taking all these facts into ac-
count, I think it is safe to say that in the long run the average
rate of interest is twice as high here as it is with our princi-
pal foreign competitors ; and that this disparity against us is
at least three per cent. In England, a manufacturer is taxed
only on the rental value of his buildings ; whereas here the
whole amount of his capital employed is taxed, and to an
extent which makes the disparity against him fully one per
cent. Skilled labor is well paid in all manufacturing coun-
tries, and commands about the same wages elsewhere as here ;
but our wages for common labor, which makes up the prinpK
pal part of the pay-roll, are twenty-five per cent higher. ] XBut
for these and other inequalities of condition, our manufac-
turers could enter the race of competition with little fear of
being distanced by any foreign rival. It is mainly upon this
ground that they need protective duties. They seek no monop-
oly, no exclusive privilege. Give them an even chance in the
game, and they will take care of themselves. But not until
the cost of labor, taxation, and capital, through a gradual ap-
proximation, or by some great alteration here or there, shall
have become nearly the same in Europe and America, will it
be safe to abandon our present tariff policy. So long as local



1 Mr. David A. Wells, when Special Commissioner of Revenue, investigated
this subject at home and abroad, and thus states the difference between the
rates of wages paid in the United States and the rates which obtain in several
other countries, gold being taken as the standard in all cases :

In the cotton manufacture, the excess of wages paid in the United States
over the wages paid in Great Britain is 27 7-10 per cent ; over Belgium, the
excess is 48 per cent.

In the wool manufacture, the excess over Great Britain is, in woollen mills, 25
per cent ; in carpet and worsted mills, 58 per cent. Over France, Belgium, Prus-
sia, and Austria, the average excess is 100 per cent.

In iron foundries and machinery building, the excess over British wages is
58 per cent.

In the manufacture of iron, the average weekly wages paid to puddlcrs (in
gold) are $16.24 in the United States ; $8.75 in England ; $8 in France; $6 in
Belgium; 1.39 in Russia. Report for the Year 1868.




38 THE TARIFF POLICY OF

taxation shall depend on the will and action of the several
States, so long as the rates of wages and of interest in our
country are kept up by the abundance of land and the demand
for labor, neither skill nor assiduity on the part of our pro-
ducers can remove the causes of that disparity which places
them at so great disadvantage. The remedy, the only remedy,
is in the hands of our national government. With that power
it rests to say whether, in this great question of public and
economic policy, their own people or foreigners shall be first
considered.



OUR EXPORTS OF MANUFACTURES.

For nearly half a century, we have annually exported
more or less of domestic manufactures. At first, these
exports were small in amount ; and, although they have
increased with the growth of the country, the relative prog-
ress which we have made does not enable us to look with
much confidence to that line of trade as a rapidly increasing
source of national prosperity. From a quarter supposed to
be well informed upon the subject, delusive statements have
been put forth in regard to our ability to compete with other
manufacturing nations in neutral markets. A wide publicity
has been given to these statements, and short paragraphs of
the same tenor often appear in the daily papers. The main
drift of these publications is to the effect that the United
States can now, as a general fact, manufacture, at less cost
than other manufacturing nations ; and that a growing for-
eign demand for her manufactures will open to her in the
immediate future a career of prosperity hitherto unknown.
The time may come when these pleasing anticipations may
be realized ; but in the nature of things it must be at some
far distant day. From the circumstance of our being able
to export certain articles of domestic manufacture, the infer-
ence has been inconsiderately drawn that, as a general fact,
we surpass in cheapness of production all other countries.
A broader view of the question does not justify such an
inference. I have already shown that the disparities against



ENGLAND AND THE UNITED STATES. 39

us in the rates of interest, wages, and local taxation, inevi-
tably, as a general fact, make the cost of manufacturing here
r greater than it is abroad. The general expenses of carrying
on business are also much greater here than with our foreign
rivals ; and, though the difference cannot be expressed in
figures, it is known to be such as materially to enhance the
cost of production.

A nation that manufactures at relative disadvantage will
always be able to export more or less of its productions.
Improvements in machinery, a new article of manufacture,
indigenous raw materials, or a peculiar condition of markets
and of exchanges, may at times, and in special cases, coun-
terbalance the general disadvantage, and induce an excep-
tional export trade. By looking over the official list of our
exports of manufactures, any person acquainted with the
conditions of production will see that they are, for the most
part, exceptional, and that there are special reasons why we
'are able to -export them. We export bark-tanned leather,
because the bark used costs here less than one-half of what it
costs abroad, although the labor of tanning costs more. We
export fire-arms, by reason of improved machinery and the
practice of the interchangeable system of parts, whereby a
given part of one arm will fit any similar arm, an advan-
tage which gives the American arms the preference, at higher
cost, over the arms made abroad, where that system has not
been adopted. We export sewing-machines, because they
are of American origin ; but, since their manufacture has
been established in other countries, the number of machines
exported has greatly fallen off. American sewing-silk has
been exported, not, however, because we can manufacture
sewing-silk at less cost than other countries, for the re-
verse of that is true, but because it was adapted to
machine use, and consequently followed the American sew-
ing-machine abroad. Our earliest exports of cotton goods
were mainly to China ; and consisted, for the most part, of
an article known as " brown drilling," a fabric of Amer-
ican origin. At first, it met with no foreign competition ;
and, being well suited to the needs of the Chinaman, it got
a foothold in that market, which it has maintained to this



40 THE TARIFF POLICY OF

day. In later years the cotton fabrics which we export have
been considerably diversified, and the markets to which they
are sent have been multiplied ; nevertheless, the value of
the trade has not much increased. In 1860, the total value
(in round numbers) of our exports of cotton manufactures
was ten million and nine hundred thousand dollars ; and, for
the fiscal year just closed, it was twelve million and eighty-
eight thousand dollars, a gain of only eleven hundred and
eighty-eight thousand dollars in seventeen years. 1 In this brief
history of our exports of domestic manufactures, I see no
evidence that, as a general fact, we manufacture at less cost
than other nations. If we could do so in respect of any of
the great industries, it would be that of the cotton manu-
facture ; for the raw material is indigenous, and we have the
best of machinery, large associated capitals, ample skill, and
persevering enterprise employed in it. Yet, in 1875, while
we exported cotton manufactures to the value of only nine
hundred and eighteen thousand dollars, we imported them to
the value of twenty-seven million dollars, and paid thereon
the present duties. Now, if we can manufacture at less cost
than other nations, why did our cotton manufacturers cur-
tail their production, and in 1875 allow foreign cotton manu-
factures to the value of twenty-seven million dollars, paying
an average duty of thirty-three per cent, to be thrown upon
their home market ?

The growth of our exports of cotton manufactures, as
compared with that of Great Britain, during the past thirty
years, forbids the belief that we are to have a rapid increase
of trade in that line.

Table J shows the value of the cotton manufactures ex-
ported by the United States and by Great Britain, in each
year from 1846 to 1875, and by the United States to 1877.



1 Exceptional circumstances attended the exports of the year just closed.
The prices of cotton goods were unusually low in currency ; and by sending
them out of the country the exporter got the advantage of the premium on
gold, and, to the extent of the exports, relieved the glut in the home market.
Moreover, special efforts were made to increase that trade, and tentative ven-
tures were made, the results of which have not transpired. Of these exports,
$1,852,622 worth were sent to Canada.



ENGLAND AND THE UNITED STATES.



41



TABLE J.



YEARS.


United States Exported.


Great Britain Exported.




Dollars.


Dollars.


1846


3,545,481


127,999,130


1847


4,082,523


116,666,125


1848


5,718,205


113,406,000


1849


4,933,129


133,875,675


1850


4,734,424


141,282,005


1851


7,241,205


150,444,180


1852


7,672,151


149,390,435


1853


8,768,894


163,564,510


1854


5,750,335


158,729,285


1855


5,857,181


173,895,705


1856


6,967,309


191,163,705


1857


6,115,177


195,367,100


1858


5,651,504


215,006,610


1859


8,316,222


241,011,125


1860


10,934,796


260,061,900


1861


7,957,038


234,362,445


1862


2,946,464


183,754,855


1863


2,906,411


237,935,940


186i


1,930,573


274,411,645


1865


876,702


286,330,605


1866


361,874


373,065,230


1867


389,653


354,184,915


1868


906,195


338,433,860


1869


531,745


335,584,870


1870


921,110


357,081,725


1871


1,680,951


364,107,055


1872


1,365,885


400,820,775


1873


1,436,068


386,815,060


1874


1,218,092


371,238,135


1875


918,813


358,858,565


1876


1,593,285




1877


12,088,465











42 THE TARIFF POLICY OF

From this table it appears that, in 1875, the latest year
for which I have the English returns, the United States
exported cotton manufactures to the value of nine hundred


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