system for the American system, without benefiting any section of the
Union, by subjecting us to a foreign legislation, regulated by foreign
interests, would lead to the prostration of our manufactories, general
impoverishment, and ultimate ruin. * * * The danger of our Union does
not lie on the side of persistence in the American system, but on that
of its abandonment. If, as I have supposed and believe, the inhabitants
of all north and east of James River, and all west of the mountains,
including Louisiana, are deeply interested in the preservation of that
system, would they be reconciled to its overthrow? Can it be expected
that two thirds, if not three fourths, of the people of the United
States would consent to the destruction of a policy, believed to be
indispensably necessary to their prosperity? When, too, the sacrifice
is made at the instance of a single interest, which they verily believe
will not be promoted by it? In estimating the degree of peril which may
be incident to two opposite courses of human policy, the statesman would
be short-sighted who should content himself with viewing only the evils,
real or imaginary, which belong to that course which is in practical
operation. He should lift himself up to the contemplation of those
greater and more certain dangers which might inevitably attend the
adoption of the alternative course. What would be the condition of
this Union, if Pennsylvania and New York, those mammoth members of our
Confederacy, were firmly persuaded that their industry was paralyzed,
and their prosperity blighted, by the enforcement of the British
colonial system, under the delusive name of free trade? They are now
tranquil and happy and contented, conscious of their welfare, and
feeling a salutary and rapid circulation of the products of home
manufactures and home industry, throughout all their great arteries.
But let that be checked, let them feel that a foreign system is to
predominate, and the sources of their subsistence and comfort dried up;
let New England and the West, and the Middle States, all feel that they
too are the victims of a mistaken policy, and let these vast portions
of our country despair of any favorable change, and then indeed might we
tremble for the continuance and safety of this Union!
And need I remind you, sir, that this dereliction of the duty of
protecting our domestic industry, and abandonment of it to the fate
of foreign legislation, would be directly at war with leading
considerations which prompted the adoption of the present Constitution?
The States respectively surrendered to the general government the whole
power of laying imposts on foreign goods. They stripped themselves of
all power to protect their own manufactures by the most efficacious
means of encouragement--the imposition of duties on rival foreign
fabrics. Did they create that great trust, did they voluntarily subject
themselves to this self-restriction, that the power should remain in the
Federal government inactive, unexecuted, and lifeless? Mr. Madison, at
the commencement of the government, told you otherwise. In discussing
at that early period this very subject, he declared that a failure to
exercise this power would be a "fraud" upon the Northern States, to
which may now be added the Middle and Western States.
[Governor Miller asked to what expression of Mr. Madison's opinion Mr.
Clay referred; and Mr. Clay replied, his opinion, expressed in the
House of Representatives in 1789, as reported in Lloyd's Congressional
Debates.]
Gentlemen are greatly deceived as to the hold which this system has in
the affections of the people of the United States. They represent that
it is the policy of New England, and that she is most benefited by it.
If there be any part of this Union which has been most steady, most
unanimous, and most determined in its support, it is Pennsylvania. Why
is not that powerful State attacked? Why pass her over, and aim the blow
at New England? New England came reluctantly into the policy. In 1824, a
majority of her delegation was opposed to it. From the largest State
of New England there was but a solitary vote in favor of the bill. That
interesting people can readily accommodate their industry to any policy,
provided it be settled. They supposed this was fixed, and they submitted
to the decrees of government. And the progress of public opinion has
kept pace with the developments of the benefits of the system. Now, all
New England, at least in this House (with the exception of one small
still voice), is in favor of the system. In 1824, all Maryland was
against it; now the majority is for it. Then, Louisiana, with one
exception, was opposed to it; now, without any exception, she is in
favor of it. The march of public sentiment is to the South. Virginia
will be the next convert; and in less than seven years, if there be no
obstacles from political causes, or prejudices industriously instilled,
the majority of Eastern Virginia will be, as the majority of Western
Virginia now is, in favor of the American system. North Carolina will
follow later, but not less certainly. Eastern Tennessee is now in favor
of the system. And, finally, its doctrines will pervade the whole Union,
and the wonder will be, that they ever should have been opposed.
FRANK H. HURD,
OF OHIO. (BORN 1841, DIED 1896.)
A TARIFF FOR REVENUE ONLY;
HOUSE OF REPRESENTATIVES, FEBRUARY 18, 1881.
MR. CHAIRMAN:
At the very threshold it is proper to define the terms I shall use and
state the exact propositions I purpose to maintain. A tariff is a tax
upon imported goods. Like other taxes which are levied, it should
be imposed only to raise revenue for the government. It is true that
incidental protection to some industries will occur when the duty is
placed upon articles which may enter into competition with those
of domestic manufacture. I do not propose to discuss now how this
incidental protection shall be distributed. This will be a subsequent
consideration when the preliminary question has been settled as to what
shall be the nature of the tariff itself. The present tariff imposes
duties upon nearly four thousand articles, and was levied and is
defended upon the ground that American industries should be protected.
Thus protection has been made the object; revenue the incident. Indeed,
in many cases the duty is so high that no revenue whatever is raised
for the government, and in nearly all so high that much less revenue is
collected than might be realized. So true is this that, if the present
tariff were changed so as to make it thereby a revenue tariff, one fifth
at least could be added to the receipts of the Treasury from imports.
Whenever I use the phrase free trade or free trader, I mean either a
tariff for revenue only or one who advocates it.
So far as a tariff for revenue is concerned, I do not oppose it, even
though it may contain some objectionable incidental protection. The
necessities of the government require large revenues, and it is not
proposed to interfere with a tariff so long as it is levied to produce
them; but, to a tariff levied for protection in itself and for its own
sake, I do object. I therefore oppose the present tariff, and the whole
doctrine by which it is attempted to be justified. I make war against
all its protective features, and insist that the laws which contain them
shall be amended, so that out of the importations upon which the duty is
levied the greatest possible revenue for the government may be obtained.
What, then, is the theory of protection? It is based upon the idea that
foreign produce imported into this country will enter into competition
with domestic products and undersell them in the home market, thus
crippling if not destroying domestic production. To prevent this, the
price of the foreign goods in the home market is increased so as to keep
them out of the country altogether, or to place the foreigner, in the
cost of production, upon the same footing as the American producer. This
is proposed to be done by levying a duty upon the foreign importation.
If it be so high that the importer cannot pay it and sell the goods at
a profit, the facilities of production between this and other countries
are said to be equalized, and the American producer is said to be
protected. It will be seen, therefore, that protection means the
increase of price. Without it the fabric has no foundation on which to
rest. If the foreign goods are still imported, the importer adds the
duty paid to the selling price. If he cannot import with profit, the
American producer raises his price to a point always below that at which
the foreign goods could be profitably brought into the country, and
controls the market. In either event, there is an increase of price of
the products sought to be protected. The bald proposition therefore is
that American industries can and ought to be protected by increasing the
prices of the products of such industries.
There are three popular opinions, industriously cultivated and
strengthened by adroit advocates, upon which the whole system rests,
and to which appeals are ever confidently made. These opinions are
erroneous, and lead to false conclusions, and should be first considered
in every discussion of this question.
The first is, that the balance of trade is in our favor when our
exportations exceed our importations. Upon this theory it is argued that
it cannot be unwise to put restrictions upon importations, for they say
that at one and the same time you give protection to our industries and
keep the balance of trade in our favor. But the slightest investigation
will show that this proposition cannot be maintained. A single
illustration, often repeated, but never old in this discussion, will
demonstrate it. Let a ship set sail from Portland, Maine, with a cargo
of staves registered at the port of departure as worth $5,000. They
are carried to the West India Islands, where staves are in demand, and
exchanged for sugar or molasses. The ship returns, and after duty paid
the owner sells his sugar and molasses at a profit of $5,000. Here more
has been imported than exported. Upon this transaction the protectionist
would say that the balance of trade was against us $5,000; the free
trader says that the sum represents the profit to the shipper upon his
traffic, and the true balance in our favor.
Suppose that after it has set sail the vessel with its cargo had been
lost. In such case five thousand dollars' worth of goods would have been
exported, with no importation against it. The exportation has exceeded
the importation that sum. Is not the balance of trade, according to
the protection theory, to that amount in our favor? Then let the
protectionist turn pirate and scuttle and sink all the vessels laden
with our exports, and soon the balance of trade in our favor will be
large enough to satisfy even most advocates of the American protective
system. The true theory is that in commerce the overplus of the
importation above the exportation represents the profit accruing to the
country. This overplus, deducting the expenses, is real wealth added to
the land. Push the two theories to their last position and the true one
will be clearly seen. Export every thing, import nothing, though the
balance of trade may be said to be overwhelmingly in our favor, there
is poverty, scarcity, death. Import every thing, export nothing, we
then will have in addition to our own all the wealth of the world in our
possession.
Secondly, it is said that a nation should be independent of foreign
nations, lest in time of war it might find itself helpless or
defenceless. Free trade, it is charged, makes a people dependent upon
foreigners. But traffic is exchange. Foreign products do not come into a
country unless domestic products go out. This dependence, therefore, is
mutual. By trade with foreign nations they are as dependent upon us as
we upon them, and in the event of a disturbance of peace the nation with
which we would be at war would lose just as much as we would lose, and
both as to the war would in that regard stand upon terms of equality. It
must not be forgotten that the obstruction of trade between nations
is one of the greatest occasions of war. It frequently gives rise to
misunderstandings which result in serious conflicts. By removing these
obstacles and making trade as free as possible, nations are brought
closer together, the interests of their people become intermingled,
business associations are formed between them, which go far to keep down
national dispute, and prevent the wars in which the dependent nation is
said to be so helpless. Japan and China have for centuries practised the
protective theory of independence of foreigners, and yet, in a war with
other nations, they would be the most helpless people in the world.
That nation is the most independent which knows most of, and trades most
with, the world, and by such knowledge and trade is able to avail itself
of the products of the skill, intellect, and genius of all the nations
of the earth.
A third erroneous impression sought to be made upon the public mind is
that whatever increases the amount of labor in a country is a benefit
to it. Protection, it is argued, will increase the amount of labor,
and therefore will increase a country's prosperity. The error in this
proposition lies in mistaking the true nature of labor. It regards it
as the end, not as the means to an end. Men do not labor merely for the
sake of labor, but that out of its products they may derive support
and comfort for themselves and those dependent upon them. The result,
therefore, does not depend upon the amount of labor done, but upon the
value of the product. That country, therefore, is the most prosperous
which enables the laborer to obtain the greatest possible value for the
product of his toil, not that which imposes the greatest labor upon him.
If this were not the case men were better off before the appliances of
steam as motive power were discovered, or railroads were built, or the
telegraph was invented. The man who invents a labor-saving machine is a
public enemy; and he would be a public benefactor who would restore
the good old times when the farmer never had a leisure day, and the
sun never set on the toil of the mechanic. No, Mr. Chairman, it is the
desire of every laborer to get the maximum of result from the minimum
of effort. That system, therefore, can be of no advantage to him which,
while it gives him employment, robs him of its fruits. This, it will be
seen, protection does, while free trade, giving him unrestricted control
of the product of his labor, enables him to get the fullest value for it
in markets of his own selection.
The protectionist, relying upon the propositions I have thus hurriedly
discussed, urges many specious reasons for his system, to a few of which
only do I intend to call attention to-day.
In the first place, it is urged that protection will develop the
resources of a country, which without it would remain undeveloped.
Of course this, to be of advantage to a country, must be a general
aggregate increase of development, for if it be an increase of some
resources as a result of diminution in others, the people as a whole can
be no better off after protection than before. But the general resources
cannot be increased by a tariff. There can only be such an increase by
an addition to the disposable capital of the country to be applied to
the development of resources. But legislation cannot make this. If it
could it would only be necessary to enact laws indefinitely to increase
capital indefinitely. But, if any legislation could accomplish this,
it would not be protective legislation. As already shown, the theory
of protection is to make prices higher, in order to make business
profitable. This necessarily increases the expense of production, which
keeps foreign capital away, because it can be employed in the protected
industries more profit-ably elsewhere. The domestic capital, therefore,
must be relied upon for the proposed development. As legislation cannot
increase that capital, if it be tempted by the higher prices to the
business protected, it must be taken from some other business or
investment. If there are more workers in factories there will be
fewer artisans. If there are more workers in shops there will be fewer
farmers. If there are more in the towns there will be fewer in the
country. The only effect of protection, therefore, in this point
of view, can be to take capital from some employment to put it into
another, that the aggregate disposable capital cannot be increased, nor
the aggregate development of the resources of a country be greater with
a tariff than without.
But, secondly, it is said that protection increases the number of
industries, thereby diversifying labor and making a variety in the
occupations of a people who otherwise might be confined to a single
branch of employment. This argument proceeds upon the assumption that
there would be no diversification of labor without protection. In other
words, it is assumed that but for protection our people would devote
themselves to agriculture. This, however, is not true. Even if a
community were purely agricultural, the necessities of the situation
would make diversification of industry. There must be blacksmiths,
and shoemakers, and millers, and merchants, and carpenters, and other
artisans. To each one of these employments, as population increases,
more and more will devote themselves, and with each year new demands
will spring up, which will create new industries to supply them. I was
born in the midst of a splendid farming country. The business of nine
tenths of the people of my native county was farming. My intelligent
boyhood was spent there from 1850 to 1860, when there was no tariff for
protection. There were thriving towns for the general trading. There
were woollen mills and operatives. There were flouring mills and
millers. There were iron founders and their employes. There were
artisans of every description. There were grocers and merchants, with
every variety of goods and wares for sale; there were banks and
bankers; there was all the diversification of industry that a thriving,
industrious, and intelligent community required; not established by
protection nor by government aid, but growing naturally out of the
wants and necessities of the people. Such a diversification is always
healthful, because it is natural, and will continue so long as the
people are industrious and thrifty. The diversification which protection
makes is forced and artificial. Suppose protection had come to my native
county to further diversify industries. It would have begun by giving
higher prices to some industry already established, or profits greater
than the average rate to some new industry which it would have started.
This would have disturbed the natural order. It would necessarily have
embarrassed some interests to help the protected ones. The loss in the
most favorable view would have been equal to the gain, and besides trade
would inevitably have been annoyed by the obstruction of its natural
channels.
The worst feature of this kind of diversified industry is that the
protected ones never willingly give up the government aid. They scare at
competition as a child at a ghost. As soon as the markets seem against
them, they rush to Congress for further help. They are never content
with the protection they have; they are always eager for more. In this
dependence upon the government bounty the persons protected learn to
distrust themselves; and protection therefore inevitably destroys that
manly, sturdy spirit of individuality and independence which should
characterize the successful American business man.
Thirdly, it is said that protection gives increased employment to labor
and enhances the wages of workingmen. For a long time no position was
more strenuously insisted upon by the advocates of the protective system
than that the wages of labor would be increased under it. At this point
in the discussion I shall only undertake to show that it is impossible
that protection should produce this result. What determines the amount
of wages paid? Some maintain that it is the amount of the wage fund
existing at the time that the labor is done. Under this theory it is
claimed that, at any given time, there is a certain amount of capital to
be applied to the payment of wages, as certain and fixed as though its
amount had been determined in advance. Others maintain that the amount
of wages is fixed by what the laborer makes, or, in other words, by the
product of his work, and that, therefore, his wage is determined by the
efficiency of his labor alone. Both these views are partly true. The
wages of the laborer are undoubtedly determined by the efficiency of his
work, but the aggregate amount paid for labor cannot exceed the
amount properly chargeable to the wage fund without in a little time
diminishing the profits of production and ultimately the quantity of
labor employed.'
But, whichever theory be true, it is clear that protection can add
nothing to the amount of wages. It cannot increase the amount of capital
applicable to the payment of wages, unless it can be shown that the
aggregate capital of a country can be increased by legislation; nor
can it add to the efficiency of labor, for that depends upon individual
effort exclusively. A man who makes little in a day now may in a year
make much more in the same time; his labor has become more efficient.
Whether this shalt be done depends on the taste, temperament,
application, aptitude, and skill of the individual. No one will pretend
that protection can increase the aggregate of these qualities in
the labor of the country. The result is that it is impossible for
protection, either by adding to the wage fund or by increasing the
efficiency of labor, to enhance the wages of laboring men, a theory
which I shall shortly show is incontrovertibly established by the facts.
I will now, Mr. Chairman, briefly present a few of the principal
objections to a tariff for protection. As has been shown, the basis of
protection is an increase in the price of the protected products. Who
pays this increased price? I shall not stop now to consider the argument
often urged that it is paid by the foreign producer, because it can be
easily shown to the contrary by every one's experience. I shall for
this argument assume it as demonstrated that the increase of price which
protection makes is paid by the consumer. This suggests the first great
objection to protection, that it compels the consumer to pay more for
goods than they are really worth, ostensibly to help the business of a
producer. Now consumers constitute the vast majority of the people. The
producers of protected articles are few in comparison with them. It is
true that most men are both producers and consumers. But, for the great
majority, there is little or no protection for what they produce, but
large protection for what they consume. The tariff is principally levied
upon woollen goods, lumber, furniture, stoves and other manufactured
articles of iron, and upon sugar and salt. The necessities of life are
weighted with the burden. It is out of the necessities of the people,
therefore, that the money is realized to support the protective system.
I say, Mr. Chairman, that it is beyond the sphere of true governmental
power to tax one man to help the business of another. It is, by power,
taking money from one to give it to another. This is robbery, nothing
more nor less. When a man earns a dollar it is his own; and no power of
reasoning can justify the legislative power in taking it from him except
for the uses of the government.
Yet, Mr. Chairman, the present tariff takes hundreds of millions of
dollars every year from the farmer, the laborer, and other consumers,
under the claim of enriching the manufacturer. It may not be much for
each one to contribute, yet in the aggregate it is an enormous sum. For
many, too, it is very much. The statistics will show that every head of
a family who receives four hundred dollars a year in wages pays at least
one hundred dollars on account of protection. Put such a tax on all
incomes and the country would be in a ferment of excitement until it was
removed. But it is upon the poor and lowly that the tax is placed,
and their voices are not often heard in shaping the policies of tariff
legislation. I repeat, the product of one's labor is his own. It is his
highest right, subject only to the necessities of the government, to do
with it as he pleases. Protection invades, destroys that right. It ought
to be destroyed, until every American freeman can spend his money where
it will be of the most service to him.