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that line of production. Then, why not leave importing and go
to manufacturing? Oh, they are too moral! "Those who
believe that a legal monopoly is a system of robbery protest
against it on principle, and do not want to share its ill-got gains "
Evening Post). Or if this be incredible there is another reason.
" The profits are so precarious that before the year is up we may
lose everything by a reduction of the tariff" ( Ibidem). There
would be very little danger of a reduction were it not for the
zealous warfare that these gentlemen wage upon the tariff. If
our manufactures arc an unsafe investment, it is they who make
them so. Tn doing so they not only keep those profits up. if
they are high, by checking die flow of capital in that direction,
but make those (supposed) high profits right and reasonable, as



2G0 SOCIAL SCIENCE AND NATIONAL ECONOMY.

covering not only a fair return for the invested capital but a fair
insurance for the risk thus created.

§ 255. Fourthly, and especially, the restrictive policy fosters
and encourages the growth of manufactures, and is often the
only way to create a varied industry in a new or a poor country
that does not possess it.

In imposing a protective duty upon the products of foreign
manufacture, the aim is not dearness or scarcity, but the reverse.
Prohibitory duties or the legal monopoly of a manufacture by a
few persons might produce a scarcity; but protective duties
operate in exactly the contrary direction.

If dearness — and we measure that by the labor-cost always —
were to be the result, and even the permanent result of such a
policy, it might yet be vindicated as a wise measure, for all the
reasons we have already specified. — reasons that relate to the
economy of labor, of agriculture, and of commerce.

But a rise in price can be but a temporary result of the pro-
tective duty, while only prohibitory duties can create s-carcity.
And even if we leave out of view those compensatory advantages
that accrue to the community from the first, the temporary sacri-
fice involved in the temporary increase of price is a measure of
wise policy quite in the line of the best statesmanship in other
fields of national life.

The establishment of a post office, which in a country like the
United States will not pay for itself for centuries to come, is a
measure whose wisdom none disputes. It binds the people in
one, promotes intelligence, helps the popular education, renders
services that far outweigh its cost. Yet a consistent free trader
must oppose the measure, as taxing the mass of the people for
the benefit of the classes who use the post office; if he defended
it, it would be on grounds of indirect benefit that would justify
a like sacrifice in the protection of home industry.

Our public school and college system is another instance of
this. Consistent free traders, like Herbert Spencer and Gerritt
Smith, must oppose the measure. It is taxing all classes for the
benefit of one class of "producers," the fathers and mothers;



WISE NATIONAL SACRIFICES. 261

it is the expenditure of public money for other ends than those
of police at home and defence abroad. It can only be justified
on the ground that it pays in the long run, and indirectly to all
classes, as protection does. And protection itself, as Mr. Mill
very forcibly puts it, is a method by which producers are " edu-
cated up to the level of those with whom the processes have
become habitual."

Not only the education, but the rearing of children, which
the Christian state imposes upon the parents by its laws to give
perpetuity to the relationship of marriage, and to punish in-
fanticide, is a business involving large sacrifices for an ultimate
benefit. Were not the natural affections too strong for logic, we
might have zealous advocates of free trade urging men to give
up this wasteful business, and import full-grown men and
women from Europe, where they are to be had so cheaply.

In short, wherever we turn we find the farsightedness that
makes the sacrifice, and the nearsightedness that refuses to make
it, set over against one another, and the one approved as wisdom
by the consent of mankind, which rejects the other as folly.

§ 256. Protection, adopted for these ends, has the sanction of
nearly all the great free trade authorities. Adam Smith con-
ceded that, "by means of such regulations, indeed, a manufacture
may sometimes be acquired sooner than it could have been other-
wise, and after a certain time may be made as cheap or cheaper
than in the foreign country." His chief French disciples are
Say, Blanqui, Rossi, and Chevalier. Say taught that " pro-
tection granted with a view to promote the profitable ap-
plication of labor and capital might be productive of universal
benefit. New modes of employment, though destined to result
in great advantage when the workmen have been trained and
the preliminary obstacles surmounted, were liable, without the
aid of government, to cause heavy loss to the undertaker — a
result carefully to be avoided." Blanqui writes that " experience
has already taught us that a people ought never to deliver over
to the chances of foreign trade the fate of its manufactures."
Rossi declared that " in the conduct of a nation," as in that of



262 SOCIAL SCIENCE AND NATIONAL ECONOMY.

a family, sacrifices needed to be made in the hope of thereby
opening " new roads to affluence." Chevalier declares that
'' every nation owes to itself to seek the establishment of diversi-
fication in the pursuits of its people, as Germany and England
have already done in regard to cottons and woollens, and as
France herself has done in reference to so many and so widely
different departments of industry;" that this " is not an abuse
of power on the part of the government ; on the contrary, it is
the accomplishment of a positive duty which required it so to
act at each epoch in the progress of a nation as to favor the
taking possession of all the branches of industry whose acquisi-
tion is authorized by the nature of things. Governments are,
in effect, the personification of nations, and it is required that
they should exercise their influence in the direction indicated by
the general interest, properly studied and fully appreciated."
And in his opinion, " combination of varied effort is not only
promotive of general prosperity, but is the one and only condi-
tion of national progress."

All these gentlemen belong to the free trade school, especially
Chevalier. So does John Stuart Mill, who is of the opinion
that " the superiority of one country over another in a branch
of industry often arises only from it having begun it sooner. A
country which has this skill and experience to acquire may iu
other respects be better adapted to the production than those
earlier in the field ; and, besides, it is a just remark that no-
thing has a greater tendency to produce improvement in any
branch of production than its trial under a new set of conditions.
But it cannot be expected that individuals should at their own
risk, or rather to their certain loss, introduce a new manufacture
and bear the burthen of carrying it on until the producers have
been educated up to the level of those with whom the processes
have become traditional. A protecting duty continued for a
reasonable time will sometimes be the least inconvenient mode
in which a country can tax itself for the support of such an
experiment."

Mr. Geo. W. Smalley (of The N. Y. Tribune) asked Mr. Mill during
his later years, " whether he still adhered to this statement ?" " Cer-



MB. J. S. MILL ON PROTECTION. 2G3

tainly," was his answer; "I have never affirmed anything to the con-
trary. I do not, presume to say that the United State? may not find
protection expedient in their present state of development. I do not
even say that if I were an American I should not be a protectionist."

If there be any doubt as to the practical bearing of these
concessions, especially the last, it is dispelled by Prof. Thorold
Rogers : " Few statements made by any writer have, I am per-
suaded, been more extensively, though unintentionally, mis-
chievous than this admission of Mr. Mill. The passage has
been quoted over and over again in the United States, and in
the British colonies, as a justification of the financial system
which these communities have adopted. The circumstances in
which they are situated exactly square with the hypothesis of
Mr. Mill. The countries are young and rising, — industries, as
yet nascent, are thoroughly suited to the natural capacity of the
region and of the people ; the latter being of the same stock
with the mother country whose manufactures they prohibit and
discourage. There is no reason, apparently, except that of
priority in the market, why the industry of the old country
should not be transplanted to the new. Hence, I repeat, Mr.
Mill's concession is perpetually quoted, and is perpetually mis-
chievous." We protectionists may now cease quoting Mr. Mill,
and begin to quote Prof Thorold Rogers.

§ 257. The object and the effect of protective duties, then, is
to enable the home producer to furnish the manufactured goods
more plentifully and cheaper than before the duty was imposed.
" Though it were true," says Alexander Hamilton, " that the
immediate and certain effect of regulations controlling the com-
petition of foreign with domestic fabrics was an increase of
price, it is universally true that the contrary is the ultimate
effect of every successful manufacture. When a domestic manu-
facture has attained to perfection, and has engaged in the prose-
cution of it a competent number of persons, it invariably
becomes cheaper. Being free from the heavy charges which
attend the importation of foreign commodities, it can be afforded
cheaper, and accordingly seldom or never fails to be afforded
cheaper in process of time than was the foreign article for which



264 SOCIAL SCIENCE AND NATIONAL ECONOMY.

it is the substitute. The internal competition which takes place
soon does away everything like monopoly, and by degrees re-
duces the price of the article to the minimum of a reasonable
profit on the capital employed."

So well ascertained and so necessary is this result as regards
the profits of manufacture that Prof. Thorold Rogers alleges it
as a reason against protection : " Unless the state were to go so
far as to grant a monopoly of production to one or a few indi-
viduals whom it protects, it could not prevent the operation of
that economic law which reduces profits, other things being
equal, to an equality. Manufacturers crowd into the protected
occupation, and the benefit intended to be secured by the policy
of the government is distributed and annihilated by competi-
tion." Mr. Rogers does not seem to be aware that this is the
very " benefit intended to be secured." But we have his word
as to how that policy does and must work, — above all that it
involves no monopoly.

" Competition being always free," says McCulloch, " among
home producers, the exclusion of any particular species of foreign
manufactured goods cannot elevate the profits of those who pro-
duce similar articles at home above the common level, and
merely attracts as much additional capital to that particular
business as may be required to furnish an adequate supply of
goods."

Neither of these two authors, it will be perceived, concedes that prices
are brought down by protection to the foreign rate ; but they both show
that the foolish clamor as to the excessive profits of the protected manu-
facturer has nothing to go upon. Mr. D. A. Wells flatly contradicts his
English teachers when he says : " It not unfreqaently happens that the
imposition of a tax in the form of a tariff on an imported article is made
the occasion for very greatly and unnecessarily advancing the prioe of a
corresponding domestic product."

§ 258. What are the reasons for this final reduction in price ?
It is because the obstacles to cheap production have been over-
come, and the home producers are competing for the home
market. These obstacles are manifold. (1) The lack of se-
curity deters the manufacturer from putting his capital into a
large undertaking. He has to make great outlays, great sacri-



PROTECTION EDUCATES. 2G5

fices even, but he has no security that he will ever reap the
fruits, unless the home market is secured to him. He fears the
foreign competition more than that of his competitors at home,
because the latter stand on an equality of power and capacity
with him, while the former are able and ready to make large
sacrifices simply to drive him out of the market and secure it to
themselves. It is not a matter as to which we are left in any
doubt that artificial fluctuations are produced for this purpose.
"It has already been shown," says Coleridge in 1834, "in evi-
dence which is before all the world, that some of our manu-
facturers have acted upon the accursed principle of deliberately
injuring foreign manufacturers, if they can." " Experience,"
says Blauqui, one of the free trade economists of France, " has
already taught us that a people ought never to deliver over to
the chances of foreign trade the fate of its manufactures."

A report presented to the British Parliament in 1S64 by a commission
appointed to investigate the state of industry in the mining districts
says :—

" The laboring classes generally in the manufacturing districts of this
country, and especially- in the iron and coal districts, are very little aware
of the extent to which they are often indebted for being employed at all
to the immense losses which their employers voluntarily incur in bad
times in order to destroy foreign competition, and to gain and keep
possession of foreign markets. Authentic instances are well known of
employers having, in such times, carried on their works at a loss amount-
ing in the aggregate to £300,000 or £400,000 in the course of three or
four years.

" If the efforts of those who encourage the combinations to restrict the
amount of labor and to produce strikes were to be successful for any
length of time, the great accumulations of capital could no longer bo
made which enable a few of the most wealthy capitalists to overwhelm
all foreign competition in times of great depression, and thus to clear the
way for the whole trade to step in when prices revive, and to carry on a
great business before foreign capital can again accumulate to such an ex-
tent as to be able to establish a competition in prices with any chance of
success.

'• The great capitals of this country are the great instruments of war-
fare against the competing capital of foreign countries, and are the most
essential instruments now remaining by which our manufacturing su-
premacy can be maintained ; the other element.— cheap labor, abundance
of raw materials, means of communication, and skilled labor — being
rapidly in process of being equalized."



266 SOCIAL SCIENCE AND NATIONAL ECONOMY.

So much for Tennyson's

"... fair, white-winged peace-maker."
A greater poet had some excuse for making his Eaust say : —
" Krieg, Handel nnd Piraterie
Dreieiuig sind sic, nicht zu trennen."

§ 259. (2) The inexperience of the laboring class is not to be
overcome in a day. Their lack of skill involves difficulties and
losses ; their industrial education, like all education, is an invest-
ment that pays only in the long run. The unprotected manu-
facturer is a captain of industry who must drill his men under
fire, must expect to fight with them from the first day that he
enlisted them. Foreign operatives, indeed, can be secured in
some branches and for positions that require special skill. The
non-commissioned officers of the industrial army may therefore
be men of some experience, but the rank and file employed in a
new industry are raw recruits. But when once the army has
learnt its drill, work becomes as effective as anywhere else, and
the labor-cost, and with it the labor-price of production, is as
low as elsewhere, and lower at home, as the cost of transportation
and the profits of a long string of middlemen are no longer
added to the price while the article is on its way from the pro-
ducer to the consumer.

And the captains of industry themselves need drill and ex-
perience as well as their workmen. The processes of a great
manufacture are not to be learnt in a day, even if no changes in
method are contemplated. But among the great advantages
Gained in the acclimatization of new industries, not the least is
the gain in improved methods when an old industry is tried
under a new set of conditions. Many of the most notable labor-
saving inventions, beginning with Whitney's cotton-gin, owe
their existence to the efforts of those who were engaged in
prosecuting new and protected industries. Such has been the
history of the sugar manufacture in Europe, which now actually
pays duties that discriminate in favor of cane sugar from the
West Indies, and yet partly supplies even the English demand.
The great advances made in the application of chemistry to



A DIFFICULT CASE. 267

manufactures, date from the efforts of Napoleon to make the Con-
tinent independent of England. Thirty years ago Dr. Wayland
entered his protest against the duties that discriminated in favor
of home-made cutlery, since " not a thousandth part of the
cutlery used is made here." Since then, by the invention of
new machines, England is actually surpassed in the production
of all but the finest varieties.

An English Trade Circular of 1871 says: "Every Canadian season
affords unmistakable evidence that some additional article in English
hardware is being supplanted by the produce of the Northern States, and
it is notorious how largely American wares are rivalling those of the
mother country in other of our colonial possessions, as well as upon the
Continent. The ascendancy of the Protectionist party in the States con-
tinues to operate most favorably for the manufacturing interest there, and
it is no wonder that, under such benignant auspices, the enterprise in
this direction is swelling to colossal proportions."

The Spectator (London) declares that the new manufactures
in Bengal will in a few years be strong enough to hold their own
against English competition, but that if at present, or so long as
" coal is dear, and the habit of manufacture upon the large scale
not yet formed" the removal of high duties would cause them
first to languish and then to die out, as the native manufactures
of India did half a century ago,

§ 260. (3) The complete organization of industry, and the
accumulation of the capital that make it possible, are not effected
in a day. It is a commonplace of the economists that the pro-
ducts of industry are cheapened by extending the scale of pro-
duction. Very often a manufacture already existing in the face
i'f unrestricted foreign competition is carried on in a small,
feeble and costly way for lack of assurance as to a large demand
for it. But as soon as protection gives it that assurance the
production is doubled, trebled, (|uadrupled, — and the price is
pulled down to less than the previous selling rates instead of
rising to the height of the duty imposed. Thus the selling
price of American cottons fell after the tariff of 1842 imposed a
heavy duty on English cottons, instead of rising. Something
of the same sort in the hardware trade was evidenced by an



268 SOCIAL SCIENCE AND NATIONAL ECONOMY.

English circular of that year offering hardware at rates that.
after paying the new duties would still be a little lower than
they had been before. The same was the case with the price of
starch, and doubtless with many other articles, which at once
began to be made in large quantities instead of small. Mr.
Greeley illustrates this by the case of a newspaper; double its
circulation, and the publisher can afford a better paper at a less
price.

§ 261. Much is often made by the opponents of protection of
a case in which the adjustment of duties is exceedingly difficult.
It may be desirable to protect both the production of the raw
material and of the finished product of an industry. This occurs
more frequently elsewhere than in our own country, but the case
of the woollen and iron industries brings this within the number
of our tariff problems. Our present tariff on wools and woollens
was adjusted on a basis agreed to by a joint convention of wool-
growers and wool-manufacturers, but it is complained, by a small
minority of the latter, that it forces them to pay an exorbitant
price for certain grades of foreign wool which they must have
to mix with native wool for the production of some classes of
goods ; and that the protection accorded them by duties on the
goods is nullified by the duties on wool. The same complaint is
made by some manufacturers who need a large supply of steel and
iron, and who say that the steel that they can buy in the Ameri-
can market is inferior, or the iron too dear. These complaints
may or may not have foundation in fact, but the true remedy
seems to be the higher protection of the manufactured goods,
rather than the proposed " removal of duties from articles re-
productively consumed." The difficulty will disappear as the
production of these raw materials of the manufacture-is brought
nearer perfection ; and no one that believes in protection could
consistently seek its solution in the removal of duties.

In conclusion, a formal answer to a feiv of the more common
object ions may not be out of place.

§ 262. (1) "Protection discriminates against the consumer,
in favor of the producer." AVho this consumer is, that is neither



WHAT IS HIS INTEREST ? 269

a producer as well, nor directly dependent upon the prosperity of
other people who are producers, is hard to say. His name and
the mysteriousness of his character would seem to indicate that
he is the Devil. But most likely he is an innocent ens logician,
manufactured by the same process of abstraction by which the
economists devised their economical man — " a covetous machine,
inspired to action only by avarice and the desire of pro-
gress." That is, they cut away or stole away (abstracted) the
better half of the real being, and persisted in treating the
remainiug human fragment (if we can call it human) as a living
reality. "The consumer" always buys and never sells — has no
soul and no patriotism — has no interest but the cheapness of
commodities — belongs to none of the classes that make up the
industrial state. His sole function in life is to devour the result
of other men's labors, but he adds nothing himself to the sum
of the utilities that make wealth. There may be a few excep-
tional persons In the nation that deserve to be called mere con-
sumers — fruges consumere nati — but that the national policy is to
be for ever directed in accordance with the interests of an insig-
nificant and useless class, is a large assumption. And that their
interest lies in the direction of dependence upon the farther
producer, instead of the nearer, we have seen reason enough
to doubt. " The consumer" must be as short-sighted as he is
hard to find, if he thinks it does.

We have shown, by a review of all the classes of producers
in a nation, that each is benefited by protection, and that the
harmony of their interests is thus achieved. Is anything gained
by regarding these people as not being what they are, in order
to base upon a false assumption a false antithesis between the
two aspects that every industrial unit in the nation presents, as
each is at once producer and consumer ? The Apostle set aside
this false antithesis when he conditioned eating upon working
consumption upon production.

§ 263. (2) " But it is every one's interest — his money inte-
rest, at least — to buy in the cheapest market, and sell in the
dearest he has access to." Suppose that his buying in the



270 SOCIAL SCIENCE AND NATIONAL ECONOMY.

cheapest market makes the difference of his having no dearest
market to sell in, but only a cheapest market for that purpose also.
Then manifestly his interest is found, if he have anything to
sell, be it sweat of brow or of brain, be it wares or provisions,
in the comparative rates of the two markets. Free trade simply
forces him — forces all the producers in the country — to buy in
the markets that now exist, be they good or bad, without giving
them either right or power to create a new and a better market
than auy that exists.

The sole interest of a man is not in the spending the money
he has now in his pocket, be it great or small. A larger interest



Online LibraryRobert Ellis ThompsonSocial science and national economy → online text (page 24 of 38)