The advocates of free trade in this country at the present time are
very unlike Emerson's "fine young Oxford gentlemen" who said "there
was nothing new, and nothing true, and no matter." They not only
believe their pet doctrine to be true, but they seem to assume that it
is also new. They further treat it as if it were an exact science and
a great moral question as well. Unwarranted assumptions merely confuse
and this question of national economic policy is too important to be
clouded with confusions. It is worth while, therefore, to look at
these assumptions one by one and try, before attempting any discussion
of the tariff, to clear the ground from cant and to see the question
exactly as it is.
In the first place, the question of free trade or protection is in no
sense a moral one. Free traders are prone to forget that their great
prophet, Adam Smith, drew this distinction very plainly at the outset.
He wrote two important works. One of them all the world has read. It
is called "The Wealth of Nations," deals with the selfish interests of
mankind, and embodies the author's political economy. The other is an
equally elaborate work entitled "The Moral Sentiments." It is the
complement of "The Wealth of Nations," which is devoted to the selfish
side of human nature and the world at large has found no trouble in
forgetting it. Adam Smith himself was under no confusion of mind as to
his subject when he wrote about political economy. He knew that he was
dealing with questions of a selfish character, of an enlightened
selfishness, no doubt, but none the less questions of self-interest.
He never for a moment thought of putting his political economy on a
plane of pure morality.
When the great political movement toward free trade began in England,
it was largely a movement of the middle classes and of the industrial
interests of Great Britain. The great middle class of England, which
furnishes the backbone and sinew of the nation, is essentially a moral
class, and in appealing to it the political leader is always tempted
to put forward the moral aspect of his theme, even if he has to twist
his argument and his facts to find one. The manufacturers of England
believed that free trade would be profitable, but it soothed them to
be assured that the system was also highly moral. It is to the
Manchester School, therefore, that we owe the attempt to give to the
entire free trade system a moral coloring for which the narrower
question of the repeal of the corn laws afforded an opportunity. Our
own free traders for the most part are devout followers of the
Manchester School, and take all their teachings and practices with
little discrimination. They are essentially imitative. The anti-corn
law agitators pointed their arguments by exhibiting loaves of bread of
different sizes, and so our free traders, during a campaign, have gone
about in carts and held up pairs of trousers, a more humorous if less
intelligent form of object lesson. They attempt, too, in like fashion,
to give the weight of morality to their doctrines. Unfortunately for
them, inasmuch as everyone likes to be moral at some one's else
expense, their position is untenable. Adam Smith's distinction was a
broad and sound one; and deeply important as political economy and
questions of tariff are, they are in no sense matters of morals. They
are purely questions of self-interest, of profit and loss, and can be
decided properly on these grounds alone.
In the second place, the assumption made tacitly, at least, if not
avowedly, that political economy is an exact science is wholly
misleading. Political economy covers a wide range of subjects of which
the tariff is only one; but in none of its branches is it an exact
science. Modern investigation has, no doubt, revealed certain economic
laws which we may fairly say operate with reasonable certainty, but
this is a very different proposition from that which would make the
conclusions of economists in all directions as absolute as those of
mathematicians. Political economy, in fact, does not differ greatly in
this respect from history, because both deal with subjects where the
conditions and sympathies of men and women play a large part, and
where human passions are deeply engaged. In fields like these, where
the personal equation of humanity plays a controlling part, it is
absurd to attempt to argue as if we were dealing with a mathematical
formula. There may be a philosophy of political economy as there is
of history; there may be scientific methods of dealing with it and
certain economic laws, subject to many exceptions, which we may
consider to be established, but nevertheless it is as far from being
an exact science as one can conceive. The exact science notion is the
misconception of cloistered learning which can build impregnable
systems where there are none to attack them, but which has no idea of
the practical difficulties of an unsympathetic world where the
precious system must meet every possible objection and not merely
those devised by its framers. In discussing a question of political
economy, therefore, it is well to bear in mind that we are handling a
subject where new facts are always entering in to modify old
conclusions, and where there are many conditions, the effect of which
it is impossible to calculate.
In the third place, the ardent tariff reformer at the present moment
always discourses upon his subject as if he had some perfectly new
truth to lay before the world from which it would be as impossible to
differ, unless one was illiterate or corrupt, as from the conclusion
of Galileo in regard to the movement of the earth. In one of our
recent political campaigns I quoted an argument of Hamilton's in favor
of protection from his famous Report of Manufactures. Thereupon one of
my opponents in a public speech, referring to this quotation, said it
would be as sensible to adopt Hamilton's views on the tariff as to go
back to stage coaches simply because those vehicles were the means of
conveyance in Hamilton's time. I could not help wondering what my
learned opponent would have thought if I had retorted that, by parity
of reasoning, we ought to reject the "Wealth of Nations" because Adam
Smith flourished a little earlier than Hamilton, and stage coaches
were used in his day also. The simple truth is that there is nothing
very new to-day in the question of free trade or protection. The
subject is one which has been under consideration for some time. It
has received great developments in the last hundred years, and is
still so far from the last word that it is safest not to be too
dogmatic about it.
In this matter of the tariff, then, we have before us a question which
is not new, which is not moral, but which deals simply with matters of
self-interest according to the dictates of an enlightened selfishness.
What is the condition of the question of free trade to-day in its
practical aspect? Fifty years ago, roughly speaking, the movement for
it in England became successful, and the English people abandoned a
protective tariff which they had maintained for some centuries and
adopted the free trade tariff which they have to-day. The latter
system has had a thorough trial in England under the most favorable
circumstances. If there is any country in the world which, by its
situation, its history and its condition, is adapted for free trade,
England is that country. If free trade, therefore, is the certain and
enormous benefit which its advocates assert, and if it is the only
true system for nations to adopt, its history in England ought to
prove the truth of these propositions. How near has free trade come to
performing all that its original promoters claimed in its behalf? How
brilliant has been its success in practise? One thing at least is
certain: it has not been such an overwhelming and glittering success
as to convince any other civilized nation of its merits. England
stands alone to-day, as she has stood for the last fifty years, the
one free trade nation in the world. Possibly England of all the
nations may be right and everybody else may be wrong, but there is, at
least, a division of opinion so respectable that we may assume, with
all due reverence for our free trade friends, that there are two sides
to this question as to many others.
Let us look for a moment at some of the early promises. Free trade,
according to its originators, was to usher in an era of peace and
good-will. It was, in its extension, to put an end to wars. It has
certainly not brought peace to England, which has had a petty war of
some sort on her hands almost every year since the free trade gospel
was preached. I do not mean to say that this is in the least due to
free trade, but it is quite obvious that free trade did not stop
fighting. The prosperity of England has, of course, been undeniably
great, and it has been especially great among the vast industrial and
manufacturing interests which supported the free trade policy.
Possibly they have thriven better under this system than they would
have done under the old one, but this must remain mere speculation,
and as we know that some protected countries have prospered as much if
not more than England, the prosperity argument has little weight.
There are, however, other fields where we need not rely on conjecture.
Has free trade been an unquestionable benefit not merely to the
industrial but to all classes in England? It certainly has not put an
end to strikes, for strikes have never been more frequent anywhere
than they have been in Great Britain of late years. It does not seem
to have perceptibly diminished poverty, if we may judge from such
recent books as "The Bitter Cry of Outcast London," and "Through
Darkest England." The state of Ireland has not been indicative of a
healing and life-giving prosperity. In a word the great problems of
labor, of poverty, and of over-population seem as severe in free trade
England as in protective countries. Free trade again does not seem to
have prevented the rise of trusts and syndicates, nor to have stopped
the accumulation of vast wealth in a few hands. In other words, there
is no evidence that free trade has had any effect on the most serious
questions of the day, which touch the welfare of the great masses of
the people. All that can be said is that the manufacturing and
industrial interests of Great Britain seem to have thriven under it.
For a system which arrogates to itself absolute truth, this is a
meagre showing.
Free trade has not demonstrated its infallibility in the single
country where it has been tried. The question, therefore, for the
people of the United States is, whether under their conditions it is
well to make the change which England made nearly fifty years ago, and
to adopt a system of which the success has been doubtful in its chosen
field. In order to decide the question intelligently we must put aside
all vague confusions about an exact science which will work the same
results everywhere because it operates under an immutable law. Even if
free trade had been a brilliant and conclusive success in England, of
which there is no proof, does it follow that it would be a better
system for us? We have, to begin with, in our possession, instead of a
small island a continent capable of almost every variety of natural
production and mechanical industry. This is also a new country and a
young country. We have been developing our resources rapidly for the
last hundred years, but they are still not fully developed. The policy
of the United States, although with many fluctuations, has been in the
main to develop all our natural and mechanical opportunities to their
fullest extent. The free trader is always ready with the terse
statement that, "You cannot make yourself rich by taxing yourself,"
followed by a freshly humorous allusion to lifting one's self by one's
boot-straps. He then feels that he has met the case. If political
economy and the financial policy of nations were as simple as this
argument seems to imply, life would be an easier thing both for
nations and individuals. Unluckily the problems of mankind which
engage their interests and passions cannot be solved by cheap
aphorisms. The statement of the free trader about taxing yourself in
order to grow rich has a final and conclusive sound, but it is simply
sound. There are, for example, plenty of towns in New England which
have built factories and relieved certain persons from taxation in
order to secure their capital and industry, and the additional
population and the increased taxes which have thus come to the town
have made it rich or at least richer than it was before. It is quite
possible to adjust taxes or to offer bounties or premiums in such a
way as to add to the aggregate wealth of the community.
The free trader's question is not really pertinent. The point is not
whether you will tax yourself in order to grow rich, but whether you
will so frame your tax laws and so raise your revenues as to
discriminate in favor of your own production and your own wages
against the production and wages of other countries, or whether, on
the other hand, you will let everything strictly alone and leave the
country to come out the best way it can. The general policy of the
United States has been to give encouragement to the domestic producer
and manufacturer, and maintenance to high rates of wages, by laying
duties in such a way as to discriminate in their favor against those
outside. The result, speaking broadly, has been to put the United
States as a competitor into countless lines of new industries. The
effect of the competition of the United States, added to that already
existing in the rest of the world, has been to reduce the world's
prices in the products of those industries according to the well-known
laws of competition. Hence comes the lowering of prices to the
consumer in protected articles, a fact which is the cause of much
satiric laughter to the free trader because he can neither deny nor
explain it.
The practical question now before the people of the United States is
twofold: shall we protect new and nascent industries, and shall we
continue to guard existing industries and existing rates of wages
against an undue competition? John Stuart Mill admits the soundness of
the former policy, and with that admission protectionists may be
content. In fact, it may be doubted whether any intelligent man would
argue to-day that it would have been wiser for the United States never
to have built up any industries, but to have remained a purely
agricultural community, dependent on Europe for everything in the way
of manufacture. I think we may assume that the wisdom of protecting
nascent industries in a country with such capacities and resources as
the United States can hardly be questioned.
Nevertheless, the most hotly contested feature of the McKinley bill
was that which continued the policy of protecting nascent industries
in certain products, and notably that of the manufacture of tin plate.
If the protection of nascent industries at the beginning of this
century was a sound policy, then it is a sound policy to industries of
that description to-day. Whether we have tin mines or not (and it now
appears that we have) there is no reason on the surface why we should
not buy our Straits tin and manufacture tin plate as well as England.
Some Democratic newspapers appear to have an idea that the tin mines
of Cornwall and Wales make a monopoly in this direction for England.
They forget that to-day the tin used by England comes chiefly from the
Straits, and she can buy it there on no better terms than the United
States. If the policy of protection to nascent industries is sound,
then the tariff of 1890 is sound in this direction, and we should seek
its results in the new industries which have been started since it
became a law.
In the second branch, the question of whether we should continue
protection to industries already established is one largely of degree
and of discretion. Where a removal of the duty would mean either a
heavy reduction of wages or a stopping of existing industries with the
rise of prices consequent upon the withdrawal of the United States
from the world's competition, then the removal of the duty would be a
misfortune. It would be a misfortune not only to the industry which
was ruined and to the wage earners who were reduced to idleness or
poverty, but it would be an injury to the consumer because it would in
a short time raise the price of the world's production diminished by
our withdrawal. In industries where no such results could possibly
be feared, or where the production of the article is not possible in
the United States, it would certainly be wise to remove duties, and
this has been the purpose of the protectionists and of the Republican
party.
The policy of protection has received its most recent expression in
this country in the tariff of 1890. It is a truism that no tariff
bill, whether passed by free traders or protectionists, can hope to be
perfect. It is sure to have defects in detail and some inequalities.
The McKinley bill was not exempt from error, but the question for the
people to decide now is whether it is well to abandon the protective
policy and substitute that of free trade. In 1888 the cry was that we
must get rid of the surplus revenue and that that necessity made a
revision of the tariff imperative. The Republican party since it has
been in power has taken two hundred and forty-six millions of the
accumulated surplus and paid off the bonded indebtedness of the
country to that amount. It has also, by the removal of the duty on
sugar and other articles, reduced the annual surplus revenue some
fifty or sixty millions. The danger from the surplus, therefore (and
it was a very real danger), is at an end. No party need be called upon
now to dispose of the annual surplus which was taking so many millions
out of the channels of trade. The question between the parties and
before the country on this issue is very much simpler than it was. It
is whether we shall repeal the tariff of 1890, abandon the protective
system and take up free trade, or whether we shall maintain the
protective system, making such amendments to the law as may from time
to time seem necessary.
I have tried to state the general argument upon the question of free
trade or protection in its broadest way. It only remains to bring
forward so far as possible the facts which show, in part at least, the
results of the tariff of 1890, for upon those results as a whole its
justification or condemnation must rest. It is important to know first
whether the new industries which the McKinley bill was designed to
encourage have begun to start, and second, whether the bill has had
the disastrous effect in raising prices which was so loudly asserted
and prophesied by its opponents at the last election.
I will give first a table showing comparative prices before and after
the tariff of 1890 of some of the cotton fabrics most commonly used.
They are all protected industries and ought to have been advanced in
price if any part of the assertions made by the advocates of free
trade during the last campaign were true.
PRICES OF PRINT GOODS SIX MONTHS BEFORE THE MCKINLEY TARIFF PASSED
COMPARED WITH THEIR PRESENT PRICES.
Before New Under New
Trade Names of Prints. Tariff. Tariff.
Allen's Pink Checks $.06 and .06-1/2 $.05-1/2
Allen's Shirtings .04-3/4 and .05 .04
Allen's Turkey Reds .06-1/2 .05-3/4
American Indigo Blue .06-1/2 .06
American Shirting .05 and .05-1/2 .04-1/2
Anchor Shirting .05 and .05-1/4 .04-1/2
Arnold Long Cloth C .09 .08-1/2
Berlin Solids .06 .05
Berlin Red, 3/4 .07-1/3 .07
Berlin Red, 4-4 .11 .10
Cocheco XX Twills .06-3/4 .06-1/2
Charter Oak Fancies .05 and .05-1/4 .04
Eddystone Fancy .06-1/2 .06
Eddystone Sateen .06-1/2 .06