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for him is the getting more to replace it. And then the interest
of those who have empty pockets, of the unemployed laborers
of a country, runs still more strongly in the same direction.
Terence could buy " as much for a shilling in Ireland as he can
here for a dollar." Why then didn't he stay there ? Because
he " couldn't get the shilling," and he can compass the dollar.

It is not, then, anybody's interest to buy in the cheapest and
sell in the clearest of existing markets, if by that operation he
leaves himself, in the long run, without much or anything to
buy with. Least of all is it the interest of a nation, which has
the power to create for itself markets in which the relative
cheapness and dearness is really in favor of all classes of buyers
and sellers.

§ 264. (3) " Every country has its own natural advantages,
from which Providence meant the rest to derive benefit.
Each country should do the things that are easiest. Free trade
proposes that they shall do so — Protection that they shall not.
It is, therefore, a setting aside the course of nature; it is intro-
ducing an unnatural system of exclusion."

Every country has its own natural advantages, from which
Providence evidently meant its own people to derive benefit.
To that end Providence itself gives a certain measure of natu-
ral protection in the cost of transportation, &c. "Were all the
international relations of the people in a natural state, that natu-
ral protection would possibly be quite sufficient. But the purely



NATURAL ADVANTAGES. 271

artificial status of those relations, produced by an unnatural
national economy of some of them, deprives others, the newer
and weaker countries, of the opportunities of natural growth
and development. It is the aim of protection merely to remove
the obstacles to natural growth.

This natural growth is achieved in the equilibrium of the
industries. If one wealthy nation has destroyed that at home,
has impoverished her agriculture by driving out of that channel
the mass of the population, and is thereby forced to find work
for them in manufacturing goods for foreign countries, and food
for them in the unequal exchange of those goods for wheat and
corn, all her finaucial power is at once exerted in the direction
of destroying or hindering the growth of the equilibrium of the
industries elsewhere. That she may manufacture for the rest
of the world, the rest of the world must confine itself to raising
food and raw materials for her.

Is it " natural " that any nation should keep its farms on one
continent and its workshops on another ? Is it " natural" that
cotton, on its way from the grower to the wearer, should go
half-way round the globe and back again ? Is it " natural "
that a large part of the race should be employed in carrying
bulky articles — raw materials and coarse goods — from some
countries to others in the same climate and of the same
general capacity'' Is it "natural" that a country with
millions of tons of iron on the surface of her soil, and
square miles of good coal not far below it, and most of her labor
running to waste for lack of employment, should send for rail-
road iron thousands upon thousands of miles ? (See § 297.) Is
it not a most unnatural and artificial system? Or is there no
test of what is " natural " in this connection, except present
cheapness in money price?

Protection is natural resistance to an unnatural state of
things. If to the superficial eye it wear the appearance of
artificiality, it shares in the reproach of many a just war, which,
although defensive in reality, wore the appearance of being
offensive.



272 SOCIAL SCIENCE AND NATIONAL ECONOMY.

§ 265. (4) " Protection can change the direction of capital,
but does not add to its amount or efficiency. It can only divert
it from more to less remunerative channels, without in the least
adding to its power to employ and fertilize labor, or increase
the national wealth."

This argument has been partly refuted in the exhibition of
the effects of a varied industry upon labor. Its chief author,
Adam Smith, gives us its refutation in another direction, when
he calls attention to the greater rapidity of movement of a capi-
tal employed in a home manufacture than a foreign trade, a con-
sideration that has great weight when a country of limited capi-
tal is under discussion. We have also seen that the capital that
is wastefully and feebly employed in a native manufacture under
free trade, becomes far more efficient when a protective duty
gives it a larger market. Far less than double capital will do
quadruple the work, when the demand is quadrupled.

But the chief answer is that capital grows steadily under a
nationalist policy, and declines as steadily in its absence. For
capital grows as the power of association is increased, and the
social circulation is accelerated ; declines with the decline of
either. Men can save only when they have plenty of work, and
that work is remunerative. A nation that leaves its labor largely
unemployed is unable to make those accumulations of the results
of past labor that we call capital. A nation that secures its peo-
ple as much and as varied industry of a productive and re-
munerative kind as the case permits, is on the road to wealth.
In the latter case the results of labor are more evenly distributed
than in the former; they are represented by the houses owned
by well-paid workmen ; the accounts kept at the saving's
banks; the possession of better furniture; the better education
of the children. In the former the gains effected gather into
the possession of a few men of great fortune ; they make a
greater display, but the mass of the population are in penury.

Even if this objection were true in the sense in which it is
meant, the advantage of protection would be great. To direct
a part of the capital out of the channels in which alone it would



" PROTECTION DOES NOT PROTECT." 273

earn a return under free trade, — the channels of money-lend-
ing land speculation, transportation and agriculture — would
prove a great gain to all classes, by increasing the rapidity of
commerce at home, by diversifying industry, and adding to the
mutual helpfulness and interdependence of the people. For a
new country, in the present state of the world's industry, the
question is not between this manufacture and that; not between
" manufactures suited to the character of the country, and there-
fore remunerative," and others that " must be carried on at a
loss." It is substantially between agriculture associated only
with a few of the rudest industries that supply its direct wants,
and the equilibrium of the industries, in which manufactures
hold their due place. Under all these smooth sayings lies this
harsh alternative, which is carefully hid away from the popular
Bight by round words.

§266. (5) "Protection does not protect." This epigram
bears two senses : 1. " Production does not increase prices, and,
therefore, does not stimulate home production. Look," we
are told, ; ' at its effect on copper. A heavy duty was imposed,
and the effect was that the article reached figures so low that
several mines had to stop, and its price at home is more governed
by the prices that it brings in the foreign market than ever
before." This is quite true, and yet the aim of the protective
duty was accomplished. The American producer was secured
control of the home market; if he went into over-production he
made ;i mistake from which no national policy or legislation could
Bave him. That he began to export pig copper, and thus to
make himself dependent upon the foreign market, is not the
fault of the tariff. He merely repeated what has been pointed
out as the great mistake made by the farming interest. Mean-
time, what becomes of the theory that protective duties add
ju<t their amount to the price at home ?

'1. It is also said to mean : " Protection makes production so
expensive that the home manufacturer is shut out from com-
peting in the foreign market. The amount of our exports
declines, and the national wealth is diminished."
18



274 SOCIAL SCIENCE AND NATIONAL ECONOMY.

In what way does protection increase the cost of manufac-
ture ? Chiefly by securing larger incomes to the very classes
that are regarded as especially oppressed by it. The workman
gets higher wages and the farmer larger profits. In our own
country, vast taxation levied during and since the war, first by
both the national and the local governments, latterly by the
latter, has made production expensive. The tariff has had
nothing to do with that. Perhaps our manufacturing interests
have suffered abroad in consequence. But those who are most
interested seem to be well content with the home market that
has been secured to them instead. They do not cry that they
are not protected, nor do they seem satisfied that they are for
ever forbidden to export by the prices they give for labor. The
plea is sometimes urged that " the exporting manufacturer " is
heavily burdened by protection without reaping any correspond-
ing advantage. The only truth in this is that in a few long-
established branches of manufacture the home producer, after
driving the foreign manufacturer off the field, and securing the
entire home market to native industry, is now struggling to
extend his foreign trade, and in many cases with great success.
Any little backset to his prosperity abroad he sets down to the
hi<rher cost of some material which he uses, and which his
foreign rivals can procure more cheaply.

But it must be borne in mind that the amount of its exports
is no safe criterion of the general prosperity of a country. That
notion originated in countries that have made themselves de-
pendent upon the vicissitudes of foreign trade. If we export
less because we have the power to consume more at home so
much the better. This must certainly be true of the United
States under the present tariff. The manufactures of the
country have vastly increased, and if we send less of their pro-
ducts abroad, it must be because we have grown wealthier as a
nation and individually — able to command the use of more
commodities.

§ 267. (6) " Protection discriminates against the poorer and
more thinly settled districts of the nation in favor of the older



THE POWER OF IMAGINATION. 275

and the richer .states." We have partly answered this in show-
in" - that it did not discriminate against the farmer.

The tariff is no more designed for the East than for the West.
Even if it had only the effect of bringing the Western farmer's
market to buy and sell from across the Atlantic to our own sea-
board, the West would have saved that much — the tax of trans-
portation across the sea, the uncertainty of foreign demand, &c.
The only industry that the West could cultivate without the
tariff is the raising large quantities of wheat, to be sold in Lon-
don or Liverpool at $1.40 per bushel put down, after paying
railroads, grain-dealers, shipowners, and the like.

But the official figures show that the West is benefiting by the
tariff even more than the East. While the increase in the entire
value of our manufactures between 1860 and 1870 was 128 per
cent , in the seven principal Western States it was over 400 per
cent., and the increase in all the Southern States also outran the
national average, in spite of the vast destruction of property and
the prolonged suspension of industry there during the war.

These facts are sufficient for our purpose here, but to the ad-
vocates of the Nationalist policy they are not satisfactory. The
South and West might have done far better than this ; would
have dune so were it not for the wide dissemination of the notion
that the tariff is a law for the benefit of Eastern and Northern
manufacturers. Even in regard to material interests imagina-
tion governs men greatly. The West sends large quantities of
money for loan to the New York money market, that might be
far better invested in manufactures at home. One zealous and
intelligent advocate of home manufactures in every county would
soon bring its people to see the wisest way of expending their
savings, in creating local centres of varied industry, and thus
adding immensely to the local demand for labor and the return
for its outlay.

My old classmate, the postmaster of Charlotte, N. C, tells mc that he
found the people of Inn neighborhood so completely possessed with this
prejudice, thai he could hardly induce them to begin manufacturing their
ms h col ton instead of exporting it. By taking advantage of every occa-
sion, public or private, he at last persuaded them to organize companies



276 SOCIAL SCIENCE AND NATIONAL ECONOMY.

to start spinning-mills and weaving-factories, so as to find a local invest-
ment for their little savings. The result has been that employment has
been found for large numbers who would otherwise have remained idle ;
the water-power that was running to waste has been utilized ; profits
larger than those of the Northern manufacturer have been realized; the
price of cottons in the neighborhood has been reduced, and the general
well-being of society generally promoted.

§ 268. (7) " The doctrine of protection leads on logically to
the platform of the Communists. It teaches the people that it
is the business of the state to provide for the prosperity and em-
ployment of the people. The next step is to assert that the
people have a right to employment, and that if the competition
of individual capitalists fail to furnish them with that, the state
must step in to establish national workshops for the benefit of
those who are out of work. From this, to the monopoly of all
industry, and consequently of all property by the state, is an
easy descent."

The Nation (April 9th 1874) speaks of "European socialism, the seeds
of which were naturally found in Continental centralization, and were
brought to this country in the protective system."

Protection cordially accepts the existing order of society, the
present distribution of wealth and the lawful freedom of indi-
vidual action, as right and proper. Its chief advocates (Thiers,
&c.) have been zealous opponents of Communistic socialism, and
the ablest defenders of the rights of property. . While it asserts
that the industrial growth and welfare of the people must be
among the first cares of the statesman, it does not teach — what
all experience refutes, that this can be attained through the
direct action of the state as the employer and organizer of labor
in general, while it with consistency accords the state a monopoly
of a few departments, such as the post-office.

That the protectionist principle bears some resemblance to the
false positions of the Communists, or can be made to do so in
clever but hostile statements, we do not care to deny. It con-
tains the truth of which communism is the counterfeit false-
hood, — the truth that it is the duty of the state to " promote
the general welfare." It thus furnishes the best refutation of



PROTECTION AND COMMUNISM. 277

communism, for error is never defeated and put to rest by bare
contradictions, but by statement of tbe truth that lies nearest to
them, or even involved in them, and that give them what vitality
they have. If the assertion of that duty leads on to com-
munism there is unhappily no escape for the American nation ;
the country stands already committed to it by the preamble to
the United States Constitution. That that preamble pointed to
a protectionist policy is clear from the expressions of popular
feeling while the Constitution was under discussion, and from
the legislation adopted by the first Congress under the new
government.

Throughout the earlier chapters we have seen two great con-
trasted theories of the nature and effects of social progress under
the existing constitution of society. The one declares that the
world under the freedom of individual action is drifting steadily
toward distress and misery ; that whatever progress is achieved
enures only to the benefit of the few, and rather detracts from
than adds to the well-being of the many; that it is in the
iuterests of the rich to keep the wages of the poor as low as pos-
sible so long as free competition is the law and rule of industry.
Whoever holds with this teaching must vibrate between
the theory of state passivity or free trade, and that of the reno-
vation of society by the destruction of the existing rights of
property and methods of distribution. He will incline to the
former whenever he is least hopeful of the future of society, or
alive to its miseries. He will favor the other whenever he
.vake to those miseries, but confident that they are not the
necessary lot of mankind.

The other body of teaching declares that power and freedom
and in hand in the world's progress ; that except by arti-
ficial interference every gain for man in power over nature is a
gain for all ; that wealth naturally tends to an equable distribu-
tion among all classes ; that the interest of the capitalist is to
pay well those whom he employs so as to develop their power to
the uttermost ; that labor continually and naturally grows in
power over all the accumulations of past labor that we call



278 SOCIAL SCIENCE AND NATIONAL ECONOMY.

capital. If the latter teaching be likely to lead some of the
thoughtless into communism or socialism, is it not far more likely
that the former will lead thither those of the thoughtful who are
not able to think their way out of these doctrines ?

And we are not left to conjecture here. Mr. Mill is certainly,
after Adam Smith, the most distinguished writer of the Free
Trade School ; in his Autobiography he discloses the fact that
his hearty acceptance of the doctrines of Malthus, Ricardo and
his own father, had led him to such gloomy conclusions as to the
results of the existing organization of society and its distribution
of property, that he had come to the conclusion that it would
be a change for the better were some modification of socialism
to be substituted so as to put a limit to the great and growing
inequality of wealth and extension of poverty that he saw around
him. He also tells us, what is the fact, that Bastiat adopted in
part the views of the Nationalist school in order the better to
fight the Communists who attack landed property. What
Schultze-Delitzsch and his opponent Lassalle have to say on
this question has already been told (§ 129).



SCIENCE AND ECONOMY OF MANUFACTURES. 279



CHAPTER TWELFTH.

The Science and Economy of Manufactures. — The

Practice.

§ 269. The theory and the practice of national economy, as
already remarked, (§ 6), do not always go hand iu hand. The
theory in some cases is much better than the practice ; men see
and approve the better course and follow the worse. In other
cases it is worse than the practice, or lags behind it. In all the
more necessary and practical affairs of life, men are not left de-
pendent upon the possession of correct theories. They do in-
stinctively the right thing, having no conscious reason, or only
a bad one ; and after their practice has been repeatedly sub-
jected to the censures or the mockery of shallow theorists, it is
at last vindicated by the riper judgment and clearer insight of
wiser men.

It is, therefore, a mistake to suppose that the practice of na-
tional economy at a time when correct or current theories of the
subject had not yet begun to be formed, is unworthy of our study.
Men " builded wiser than they knew " in many things ; the great
and wholesome instincts that grew out of the national life into
which thev were born, and from which their own life derived
half its value, led them aright where they had no theory; and
only shallow doctrinaires would depreciate the results as having
no right to exist, because not attained logically.

§ 270. The ancient writers on political philosophy confined
their attention chiefly to the jural state. But the actual rulers
had a clear notion of economic policy. Boeckh has shown (as
against Ileercn) that Athens took measures to protect home in-
dustry, to develop its various forms, and to make the state inde-
lenl of its rivals foithe necessaries of life. The low concep-
tions of political morality that prevailed, allowed of the use of
mean- to this end that are not capable of vindication, [fan* ally
of Athens had com to sell, it must be brought to the port of



280 SOCIAL SCIENCE AND NATIONAL ECONOMY.

Athens (the Peiraios), and a certain proportion must be sold for
use in the city itself, and at a fixed price, before any could be
disposed of at competition prices to the merchants of other
cities. The effect of these measures was limited by the nature
of the political constitution of Greece. In this as in other mat-
ters every city legislated for itself; nothing was done to benefit
Greece as a whole, and to bring her different divisions into the
close and friendly relations of mutual helpfulness. Even the
structure of the country forbade this; it was easier and cheaper
to feed Athens with corn from the Chersonesus than to carry
food over the mountain passes from Bceotia. That the country
never became an industrial whole, is connected with the fact that
it was never a political unit. It fell into subjection through the
weakness of its social constitution.

Rome also adopted a Protectionist or Nationalist policy in
earlier times, when she was still a people among the peoples
Already she was a great industrial city, competing with Carthage
for the commercial preeminence of the Mediterranean. When
she became an empire, the enemy and the destroyer of nationali-
ties, she of course abandoned that policy.

§ 271. In the middle ages industry was in the hands of
chartered guilds, and was a matter of privilege and prescrip-
tion. The states that awoke to the importance of the industrial
life of the community all took measures to protect and cherish
local industries. In Italy the great prosperity of Venice was
largely owing to the care with which she protected all the inte-
rests of her merchant princes, and the rival cities of the main-
land followed hard in her footsteps.

Charles V., of Spain and Germany, studied the maxims and
methods of A r enetian policy, and adopted them in Spain. But
when the industries of his kingdom sprang into life, he loaded
them down with oppressive and vexatious burdens, in order to
raise money for his wars. The alcavaJa imposed a tax upon
every transaction, the intercourse between the provinces was
put under a heavy tariff of duties, and the right to collect these
was farmed to individuals who were often foreigners. Every



HENRY IV. AND COLBERT. 281'

wise maxim was set at nought, and the country languished in
ever-deepening poverty.

§ 272. In France, the leading statesmen had learnt the
same lesson from the Italian cities, but to better purpose. Sully,
indeed (anticipating the Economistes of last century), wished to
promote agriculture alone, and regarded manufactures as promo-
ting luxury and waste. But France owes to the care and
patronage of his wiser master, Henry IV., the transfer of the
growth and manufacture of silk from Italy to her own soil.

Colbert, the greatest statesman of the reign of Louis XIV.,
was recommended to the confidence of that monarch by the
Cardinal Mazarin as his last act. The King " might with truth
and justice say that, in giving him Colbert, God had done much
for the prosperity and glory of his reign. France might add
that she owes to his wise counsels the wonderful develop-
ment of her industry" (Thierry). His "spirit has appa-
rently never ceased to influence the councils of his country"
(Dr. Travers Twiss, in 1847). He found the finances in a ruin-
ous state, and that the industrial interests of the country had
been sadly neglected during the period of confusion that had
elapsed since the death of Henry IV. As Adam Smith says,
he combined great integrity and great clearness of intellect,
with the habits of a laborious man of business. His weakness
was undoubtedly his too great faith in the virtues of legislative
interference. He did not know when to stop. He found the
frontiers of the provinces lined with custom-houses for the col-
li '-ii f unnatural duties upon domestic commerce, and these he

wisely transferred to the frontiers of the nation. He developed
the French marine by a system of bounties. He removed
excessive burdens from the shoulders of the agricultural class,
and then did them more than equal harm by prohibiting the
export of wheat. In 1661 he had enacted his great tariff law,



Online LibraryRobert Ellis ThompsonSocial science and national economy → online text (page 25 of 38)