George B. (George Boughton) Curtiss.

The industrial development of nations, and a history of the tariff policies of the United States, and of Great Britain, Germany, France, Russia and other European countries online

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vass was made by trained statisticians in counties in Illinois, Iowa, Massa-
chusetts and New York. Superintendent Porter summarizes the results
of the canvass as follows:

First it was shown (by the Cattaraugus County, N. Y. , investigation), with a
fair degree of accuracy, that only eight-tenths of 1 per cent of the total debt repre-
sented by mortgages recorded prior to 1869 remained unpaid. Less than 8 per cent
of the mortgage debt in force is represented by mortgages recorded prior to 1879.
The other experimental inquiries made by the census office fully corroborate the
fact brought out in Cattaraugus County. It was ascertained, for example, that only
3 per cent of the mortgsge del t of the people of Hampden County, Massachusetts,
was created prior to 1880, aud that only 5 per cent of the debt in Scott County,
Iowa, was created before 1880. These three conclusions, all pointing in the same
direction, would indicate in the Western States certainly, and to a considerable
extent in the Eastern States, that a comparatively small percentage of the existing
recorded indebtedness of the present time was created previous to 1880.

Thb Motive for Mortgaging Property in Nine Towns of Cattaraugus

County.

Percentage.

For purchase money, 54-55

For improvements, I7-?P

To pay previous mortgage 1.81

To pay debts J -3 8

To use in business, i-68

To secure indorsements i-4°

To raise money for investment, 60

To sink oil wells, 29

To secure annuities, 2 5

To pay off heirs • I( 5

For support and family expenses T 4

Sickness, x °

Extravagance, J 4

Speculation °°

Miscellaneous, . . 3°

Total 80.24

No motive ascertained T 97 6

Total, loo- 00



The extent
of the
so-called
" mort-
gage eviV



146



TARIFF QUESTION IN THE UNITED STATES.



Atkinson
on the
mortgage
question.



Mr. Edward Atkinson (free trader) took occasion to investigate the
matter from the standpoint of the Mortgage Loan Companies, and his
conclusions were published in Bradstreet's, November 12, 1887. We quote
the following:

The reduction in the rate of interest has been from 10 per cent annual interest
and 10 per cent commission on a five years' mortgage to an average of 6^ to 7^ per
cent at the present time, -without commission.

Many of those to whom loans were first made are now lenders through the
same corporations.

The present conditions indicate widespread and almost universal prosperity.

Mr. Atkinson says further on this subject in the Forum of May, 1894:

There are within the United States 4,564,641 separate farms, averaging about 137
acres each, of which, in the Eastern, Middle, Western and Pacific States, 80 per cent
are occupied and managed by their owners. Far more than one-half these farms are
free of any mortgage whatever ; the rest are mortgaged for far less than half their
value.

The result of that investigation has sustained the conclusions which I had
reached by a very partial investigation of the same subject in the preceding five
years, namely :

1. That the larger part of the Western farms cultivated by owners were free of
any mortgage whatever.

2. That the Western farmers were creditors rather than debtors.

3. That the burden of farm mortgages is a very light one.

In fact, the statistics of this partial investigation, which was necessarily very
limited, had led me to the conclusion that there existed no great body of the people
of any class in this country, who were, as a whole, so free from debt and so abso-
lutely independent as the Western farmers of the grain-growing States.

In making provision for the census of 1890, a special appropriation of $1,000,-
000 was set apart to be expended in ascertaining the exact condition of farms and
homes with respect to mortgages. A more useful appropriation could not have been
made for any statistical purpose. Mr. George K. Holmes and Mr. John S. Lord
were deputed by the superintendent of the census to do this work, and there could
have been no more judicious selection. On the nineteenth of December an extra
census bulletin was issued, giving the statistics of the decade from 1880 to 1889,
inclusive, in thirty-three States and territories. The total mortgage indebtedness
of the whole country has been ascertained, and it is stated that this detailed report
of thirty-three States covers seven-ninths of the mortgages made in the United
States during the decade, and that the outstanding mortgage debt on the first of
January, 1890, given in this report, covers substantially five-sixths of the entire
mortgage debt on acres and lots in the whole country.

The first startling fact developed by the mortgage statistics is that in these speci-
fic thirty- three States and territories nearly 7,000,000 mortgages have been recorded
in ten years for a total sum of nearly $9,500,000,000. The final statement, covering
the whole country, which has not yet been published, discloses the fact that 9,517,-
747 mortgages were executed in the decade 1880-89, to th e amount of $12,094,877,-
793-

On the first of January, 1890, the amount of these mortgages remaining unpaid
in thirty-three States was $4,935,455,896; in the whole United States, $6,019,679,-
985. It, therefore, appears that during the decade one-half the mortgages incurred
had already been paid.



GROWTH OF AGRICULTURE, 1850 TO 1890.



147



These original mortgages executed prior to 1880 must have been wholly liqui-
dated, mostly by payment. Evidence obtained from solvent farm mortgage compa-
nies proves that, as fast as they matured, they were either finally paid, or else in
some instances new mortgages were executed at much lower rates of interest than
were customary in the era of paper money in the previous decade. On this basis
the summary would be :

Mortgages in force January i, 1880, estimated $ 1,500,000,000

Executed since, .... 12,000,000,000

Total, #13,500,000,000

In force January 1, 1890 6,000,000,000

Paid, $ 7,500,000,000

The payments, therefore, amounted to 55 per cent.

We find that the average life of a farm mortgage is a little less than five years
—rather longer in the East than in the West, but practically fiv: years in the grain-
growing States.

In order to bring out the evidence of prosperity rather than adversity developed
in these conditions, one must ask, What does a. man, in fact, borrow, when he
executes a mortgage upon land? He does not borrow money in a true sense. In a
vast number of cases only a title to money passes in the form of a check, a draft
or a bill of exchange. What he in fact borrows is the land itself, or such part of
it as the encumbrance represents. If we regard foreclosure as a sign of lack of
benefit to the borrower, the figures show that in all but an insignificant proportion
of these negotiations it has been as much or more to the advantage of the borrower
to borrow the farm or home as it has been to the benefit of the lender in securing
interest on the loan. The advantage is mutual, but distinctly greater on the part
of the borrower, who has been enabled to become the owner of a homestead and the
improvements thereon at lessening rates of interest throughout this period.

The first effective analysis of farm mortgages which has ever come under my
notice was made by Mr. A. H. Heath, the Commissioner of Labor Statistics of
Michigan for the year 1888. He obtained the data for 58 per cent of all the farms
of Michigan, numbering 90,803, assessed for $194, 854,633.

Out of 90,803 farmers 43,079 stated that their farms were mortgaged. A few
refused to reply. The greater part of the remainder stated that their farms were
not mortgaged. The true value of the farms which were mortgaged, estimated to
be about one-half the total number, was #100,000,000; the mortgage debt $37,500,-
000. Of the farms investigated, 31,570 were owned or occupied by men of foreign
birth, the rest by Americans. In answer to the question put to the foreign element,
"Had they any money when they arrived in the State?" 8067 answered, "Yes, "
giving the sum of money in their possession at $4,633,188 in all; 23,503 answered,
' ' No. ' ' From these data we reach the following conclusion :

Foreigners brought money into the State to the amount of, . . $ 4,633, 188
The mortgage debt on these specific farms was 11,191,714

Making a total of, . . $ 15,824,902

The assessed value of these specific farms was, 52, 537, 871

The true value, 65,672,333

It follows that these 31,570 foreigners who came from Germany, Canada,
England, Ireland, Holland, Scotland and nearly every other country in Europe,
from the East Indies, Australia, Hayti, Mexico and South America, had been



An analy*
sis of the
statistics
of farm,
mortgages.



148



TARIFF QUESTION IN THE UNITED STATES.



Real estate
mortgages
in Eng-
land.



enabled, by borrowing money on mortgage to become possessed of real estate worth
$50, 000,000 more than the encumbrance and the cash brought in by themselves;
and this estimate does not include the farm animals, tools and furniture used upon
the farm.

The principal Western indebtedness on mortgage is in and around Chicago
but there is one startling fact to which my attention has been called by Mr. Holmes.
In the great urban region in and around New York City, in Kings, Queens, New
York, Richmond and Westchester Counties, in the State of New York ; and in the
counties of Bergen, Essex, Hudson, Monmouth, Passaic and Union, in the State of
New Jersey, the real estate mortgage debt is $1, 279, 343, 703. This amount is 21.25
per cent of the whole real estate mortgage debt of the United States. It is 51.04
per cent of the real estate mortgage debt of what is commonly known as the West,
extending from Ohio westward to Kansas and northward to the Dakotas, with its
populous cities of Chicago, Cincinnati, Cleveland, Detroit, Minneapolis, Kansas
City, Milwaukee, Omaha, St. Louis and St. Paul. It is doubtless true that the
value of the real estate in and about New York is far more than sufficient to sustain
this indebtedness, yet it is an important fact to know where the indebtedness lies,
and what is the relative burden contrasting the East with the West.

It will be remarked that the amount of the encumbrance in the eleven counties
in and around the City of New York exceeds the amount of mortgages on all the
farms of the United States.

Speaking further of the Census Inquiry, Mr. Atkinson says:

Thus far the mortgages upon acres have been dealt with as if they were the
same as mortgages on farms. As yet no complete separation has been made, but I
am permitted to make the following statement on the authority of the census officials.

In Bulletin No. 63 a partial analysis is made of the specific mortgages on
actual farms which are occupied by owners apart from hired farms, and acres which
are not strictly farms. Deductions from these figures, applied to the total mort-
gage on acres in the United States, would give the following result :

Total mortgage on acres in the whole country, January 1,

1890,. . . .... • . .$2,209,148,431

On farms occupied and worked by owners (estimated), . 1,009, 148.431
On hired farms and acres not strictly farms, . . 1,200,000,000

The encumbrance on hired farms is believed to be very small. The value of
all the 4,564,641 farms in the United States in 1890, including improvements, was
$13,279,252,649. The estimated mortgage thereon, January 1, 1890, was $1,009, 148,-
431, equal to 8 per cent, subject to the addition of a small amount on hired farms.

In substantiation of these views of Mr. Atkinson, the following can
be added from the last annual report of the Secretary of Agriculture,
Sterling Morton. Speaking of the indebtedness of various classes of
owners he says : ' ' These figures show an enormous and constant indebt-
edness of the banks and bankers alongside of which the money in farm
mortgages and the debts offered by farmers are relatively insignificant.
The debts of railroads, bankers, manufacturers and merchants entitle them
and not the farmers, to be called the ' debtor class ' in America."

In closing this subject it may not be amiss to note that according to
Mulhall the mortgage of real estate in England is 58 per cent of its
value, and Sir Edward Sullivan says: "Since 1876 value of lands and



QROM'TB OF AGRICULTURE, 1850 TO 1890.



149



incomes from farms in England have fallen from 30 to 50 per cent, but
the interest on the mortgages remains the same." Of these same farm-
ers Henry Fawcett, the eminent free trade economist, says:

There are few classes of workmen who in many respects are so thoroughly
wretched as the English agricultural laborers. They are in many respects so miser-
ably poor that if they were converted into slaves to-morrow it would be for the
interest of their owners to feed them far better than they are at present. Through-
out large agricultural districts not a single agricultural laborer will be found who
has saved so much as a week's wages. A life of toiling and incessant industry
offers no other prospect than a miserable old age.

But the condition of the English farmer is not the subject of this
chapter, nor is it necessary to place the American agriculturist in contrast
with the degraded and ruined tillers of other lands to prove his prosperity.
He is the most happy, the most contented and withal the most prosperous
of all our people. His labors, his cares, his responsibilities are all lighter
than those of the average worker. His acres are his own. The products
of his lands he can consume himself or sell at will. His house is a home
and not a hovel.



CHAPTER III.

Showing the Progress oe the Textile, Iron and Steel, and Mis-
cellaneous Industries, erom 1860 to 1890.



Growth of
cotton in-
dustry.



Half a million persons were employed in the textile industries of this
country in 1892 with wages exceeding $165,000,000. The cotton industry
dates back over a century, the Slater Mill of 1790 being the first suc-
cessful one started in this country for spinning by machinery, and in
1890 221,585 persons were employed, turning out $267,981,724 worth of
cotton goods. American grown cotton was not then used. Slater im-
ported his cotton from India, and the man who had predicted that the
United States would one day grow cotton for the world would have been
an object of ridicule. American grown cotton has been in use since
1794. In 1829 the crop amounted to 870,415 bales. In 1891 it exceeded
9,000,000 bales. A duty of three cents per pound was imposed in 1790
and remained with slight changes till 1846. From that year it continued
on the free list till 1862. It was again made free in 1868 and has re-
mained on the free list since. In 1799 we exported 9,000,000 pounds, in
1817 95,000,000 pounds, in 1845 872,000,000 pounds, and in 1894 2,669,-
026,886 pounds valued at $207,964,384. We grow three-quarters of the
world's crop and our American mills consume one-quarter of it. Our
early cotton mills endured a hard struggle. The low duties (15 per cent
ad valorem) were not sufficient to enable our manufacturers to withstand
English competition. In 1807 we imported about $11,000,000 worth of
cotton goods from England, but in the following year came the embargo
act, when imports of foreign goods were prohibited and our cotton manu-
factures took a rapid stride. The war of 1812 increased the output and
in 1815 we had 500,000 spindles at work consuming 90,000 bales of raw
cotton. At the same time England was using 235,350 bales and turning
out far superior goods. In 1816 a uniform duty of 25 per cent ad
valorem, based on a minimum valuation of 25 cents per yard, was im-
posed, the minimum being increased to 35 cents in 1824, and continued
until 1846 with the exception of 1839 to 1842. Even free traders like
Professor Taussig admit that the protective duties of 1816 and 1824
were necessary for the continuance of the cotton industry of this coun-
try. Coarse cotton cloths in 1816 were worth twenty-five and thirty cents
a yard, and in 1830 nine cents. By 1846 the industry was firmly estab-
lished. We were, however, making only the coarser grades. When the
war of the rebellion came, and with it higher duties, finer grades were
made. Since 1870 our progress in all grades of cotton manufactures has
been rapid and constant.

(150)



TEXTILE AND OTHER INDUSTRIES.



151



The table on page 152, from the Bulletin of the National Association of
Wool Manufacturers, 1 compiled from official sources, will show not only
our own progress but a comparison with England as well.

The world has about 80,000,000 spindles in operation. France,
Germany and Russia about 5,000,000 each. In India there are about
150 cotton mills with 3,500,000 spindles. In Japan there are over twenty
mills in operation, and the manufacture is increasing with great rapidity.

With the establishment of cotton mills in the Southern States our
growth in cotton manufacture is likely to continue, and with a return to
protection and a restoration of a home market it will not be many years
before we shall overtake England in the product of our cotton spindles.
As for a foreign market of any value, we cannot obtain it as long as we
pay 117 per cent higher wages than England. Our exports have not
changed in ten years. For the present, at least, the home market under
a protective tariff with an adequate duty on all grades of cotton goods
to cover the difference in cost of manufacture, will suffice to sustain our
great cotton industry and continue its progress.

The following table, showing the difference of wages in American and
English cotton mills, was compiled by William Whitman, Jr., of Westerly,
R. I., and the comparisons are drawn from two mills, one in Bolton,
Lancashire, England, the other in New England, with both of which he
had been connected:



Class of Help.



Boss pickers, . . .

Helpers,

Boss carder, ....
Second hand, . . .
Card grinders, . . .

Card boy,

Card girl,

Comber tenders, . .
Silver lap tenders, .
Ribbon lap tenders,
Drawing lap tenders,
Slubbing lap tenders,
Inter lap tenders, .
Roving lap tenders,
Jack, lap tenders,
Mule spinners, . .
Mule overseer, . .
Mule back boy, . .

Engineer

Fireman,

Machinist, ....

Packer,

Comber overseer, .
Boss warehouse, . .

Total, .



American mill English mill.



$II.OO

6.00

24.OO

rsoo

11.00

5.00

3-75
7.00
5.00
S-5o
6.00
6.50

7-5°
8.00

8.55
16.00
24.00

3.00
18.00
13.00
1500
10.00
15.00
14.00



$257.80



$5-04
2.40
8.64
6.50

5-o4
2.40
2.16
343
2.16
2.76
3.00
3-48
348
3-98
4.20
9.12
9.60
1.92
7.20
6.00
6.72

5-04
7.20
7.20



JI18.72



Difference.



$5-96
3.60

IS-36
8.50
5-96
2.60

1-59
3-52
2.84
2.74
3.00
3.02
4.02
4.02

4-35
6.88

14.40
1.08

10.80
7.00
8.28
4.96
7.80
6.80



$139.08



1 Page afil, Bulletin, 1892.



Compara-
tive wages



152



TARIFF QUESTION IN THE UNITED STATES.



Compara-
tive prog-
ress of
cotton
manufac-
tures in the
United
States.






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CO ^ lo5 i-OT OV



TEXTILE AND OTHER INDUSTRIES.



153



It will be seen that the difference in favor of the English manufac-
turer is 117 per cent in labor cost. Besides this he has the most efficient
machinery in use, abundant capital, long established markets and trade
relations, and artisans as skillful as any in the world. The advantage
derived from labor cost alone enables the British manufacturer to
undersell the American in every foreign market, and if our duties were
removed we should be compelled to reduce our wages to the British level
or close our mills. It has been proven in preceding chapters by the evi-
dence of English manufacturers, that we not only owe the establishment
of this industry to protection, but that without protection it would be
ruined.

This is true notwithstanding the fact that it is an old industry;
that it has received the most constant and highest protection of all indus-
tries, and that there has been attracted to it abundant capital, and our
ablest and most competent manufacturers, who have placed it on the most
efficient basis, so far as the best machinery, the latest and most approved
appliances are concerned. Again, it has the advantage of free raw mate-
rial, as cheap raw material as the industry of any country. Yet we can-
not pay 117 per cent higher wages than are paid in England and make
goods as cheaply as they can. It is all nonsense to talk about the supe-
riority of our labor when many of our operatives came from England,
where they learned their trades. If our manufacturers could make goods
cheaper than they can be made in England, they would be quite as apt to
find it out as the free trade agitators. Our manufacturers are anxious to
extend their business, and if, in fact, they could make goods cheaper than
foreign rivals, they would be shipping their fabrics to South America and
other points as accessible to them as to any one. Customers would be
found, goods sold and our exports would increase, but this has not been
done and cannot be done so long as they pay 117 per cent, or more than
double the wages paid in England. This fact, well understood by the
cotton trade of the entire world, is questioned only by the free trade
agitators.

Knit goods though classified in the census under woolen manufactures
come properly under cotton. In 1850 there were but 85 knitting mills
in this country. In 1890 there were 807 paying $18,000,000 in wages
and producing $67,000,000 worth of fabrics. In three years under the
McKinley bill these 807 knitting mills had increased to 993. It was
almost impossible for hosiery and knit goods manufacturers to get suffi-
cient hands to meet the demands. And yet in a single year under the
Gorman tariff this condition has been reversed, and mills and thousands
of operatives are idle. The protection afforded by the McKinley bill is
necessary for the continuance of the industry on anything like the
scale of 1893. A dollar is paid in Philadelphia for precisely the same
service for which a mark is paid in the knitting mills of Germany.



Existence
of cotton
manufac-
tures de-
pends upon
Protection.



Knit goods.



154



TARIFF QUESTION IN THE UNITED STATES.



Lace
curtains.



Attraction
of foreign
capital.



But the benefit is by no means confined to the laborers in the industry
itself.

A demand has been made on American genius and invention with the
result that there has been wonderful development and improvement in the
manufacture of machinery, much of which is now used in European mills
But for the establishment of the knitting goods industry here neither we
nor our competitors in Europe would have had the machinery now used
and not only our own people but the people of Europe would be paying
much higher prices for the comfortable clothing now obtained so reason-
ably.

The lace curtain industry was hardly known in this country till the
McKinley bill imposed a duty of 60 per cent on fabrics that previously had
a duty of only 40 per cent. In three years instead of one plant with 12
machines there were 122 machines capable of producing weekly from 50,000
to 100,000 pairs of curtains. Our manufacturers were compelled to pay 50
per cent more for their machinery than their foreign competitors paid, as it



Online LibraryGeorge B. (George Boughton) CurtissThe industrial development of nations, and a history of the tariff policies of the United States, and of Great Britain, Germany, France, Russia and other European countries → online text (page 21 of 90)