Every business question, in this country, comes back, sooner or later, to
the question of the tariff. You cannot escape from it, no matter in which
direction you go. The tariff is situated in relation to other questions
like Boston Common in the old arrangement of that interesting city. I
remember seeing once, in _Life_, a picture of a man standing at the door
of one of the railway stations in Boston and inquiring of a Bostonian the
way to the Common. "Take any of these streets," was the reply, "in either
direction." Now, as the Common was related to the winding streets of
Boston, so the tariff question is related to the economic questions of our
day. Take any direction and you will sooner or later get to the Common.
And, in discussing the tariff you may start at the centre and go in any
direction you please.
Let us illustrate by standing at the centre, the Common itself. As far
back as 1828, when they knew nothing about "practical politics" as
compared with what we know now, a tariff bill was passed which was called
the "Tariff of Abominations," because it had no beginning nor end nor
plan. It had no traceable pattern in it. It was as if the demands of
everybody in the United States had all been thrown indiscriminately into
one basket and that basket presented as a piece of legislation. It had
been a general scramble and everybody who scrambled hard enough had been
taken care of in the schedules resulting. It was an abominable thing to
the thoughtful men of that day, because no man guided it, shaped it, or
tried to make an equitable system out of it. That was bad enough, but at
least everybody had an open door through which to scramble for his
advantage. It was a go-as-you-please, free-for-all struggle, and anybody
who could get to Washington and say he represented an important business
interest could be heard by the Committee on Ways and Means.
We have a very different state of affairs now. The Committee on Ways and
Means and the Finance Committee of the Senate in these sophisticated days
have come to discriminate by long experience among the persons whose
counsel they are to take in respect of tariff legislation. There has been
substituted for the unschooled body of citizens that used to clamor at the
doors of the Finance Committee and the Committee on Ways and Means, one of
the most interesting and able bodies of expert lobbyists that has ever
been developed in the experience of any country,--men who know so much
about the matters they are talking of that you cannot put your knowledge
into competition with theirs. They so overwhelm you with their familiarity
with detail that you cannot discover wherein their scheme lies. They
suggest the change of an innocent fraction in a particular schedule and
explain it to you so plausibly that you cannot see that it means millions
of dollars additional from the consumers of this country. They propose,
for example, to put the carbon for electric lights in two-foot pieces
instead of one-foot pieces,--and you do not see where you are getting
sold, because you are not an expert. If you will get some expert to go
through the schedules of the present Payne-Aldrich tariff, you will find a
"nigger" concealed in almost every woodpile,--some little word, some
little clause, some unsuspected item, that draws thousands of dollars out
of the pockets of the consumer and yet does not seem to mean anything in
particular. They have calculated the whole thing beforehand; they have
analyzed the whole detail and consequence, each one in his specialty. With
the tariff specialist the average business man has no possibility of
competition. Instead of the old scramble, which was bad enough, we get the
present expert control of the tariff schedules. Thus the relation between
business and government becomes, not a matter of the exposure of all the
sensitive parts of the government to all the active parts of the people,
but the special impression upon them of a particular organized force in
the business world.
Furthermore, every expedient and device of secrecy is brought into use to
keep the public unaware of the arguments of the high protectionists, and
ignorant of the facts which refute them; and uninformed of the intentions
of the framers of the proposed legislation. It is notorious, even, that
many members of the Finance Committee of the Senate did not know the
significance of the tariff schedules which were reported in the present
tariff bill to the Senate, and that members of the Senate who asked Mr.
Aldrich direct questions were refused the information they sought;
sometimes, I dare say, because he could not give it, and sometimes, I
venture to say, because disclosure of the information would have
embarrassed the passage of the measure. There were essential papers,
moreover, which could not be got at.
* * * * *
Take that very interesting matter, that will-o'-the-wisp, known as "the
cost of production." It is hard for any man who has ever studied
economics at all to restrain a cynical smile when he is told that an
intelligent group of his fellow-citizens are looking for "the cost of
production" as a basis for tariff legislation. It is not the same in any
one factory for two years together. It is not the same in one industry
from one season to another. It is not the same in one country at two
different epochs. It is constantly eluding your grasp. It nowhere exists,
as a scientific, demonstrable fact. But, in order to carry out the
pretences of the "protective" program, it was necessary to go through the
motions of finding out what it was. I am credibly informed that the
government of the United States requested several foreign governments,
among others the government of Germany, to supply it with as reliable
figures as possible concerning the cost of producing certain articles
corresponding with those produced in the United States. The German
government put the matter into the hands of certain of her manufacturers,
who sent in just as complete answers as they could procure from their
books. The information reached our government during the course of the
debate on the Payne-Aldrich Bill and was transmitted,--for the bill by
that time had reached the Senate,--to the Finance Committee of the Senate.
But I am told,--and I have no reason to doubt it,--that it never came out
of the pigeonholes of the committee. I don't know, and that committee
doesn't know, what the information it contained was. When Mr. Aldrich was
asked about it, he first said it was not an official report from the
German government. Afterward he intimated that it was an impudent attempt
on the part of the German government to interfere with tariff legislation
in the United States. But he never said what the cost of production
disclosed by it was. If he had, it is more than likely that some of the
schedules would have been shown to be entirely unjustifiable.
Such instances show you just where the centre of gravity is,--and it is a
matter of gravity indeed, for it is a very grave matter! It lay during the
last Congress in the one person who was the accomplished intermediary
between the expert lobbyists and the legislation of Congress. I am not
saying this in derogation of the character of Mr. Aldrich. It is no
concern of mine what kind of man Mr. Aldrich is; now, particularly, when
he has retired from public life, is it a matter of indifference. The point
is that he, because of his long experience, his long handling of these
delicate and private matters, was the usual and natural instrument by
which the Congress of the United States informed itself, not as to the
wishes of the people of the United States or of the rank and file of
business men of the country, but as to the needs and arguments of the
experts who came to arrange matters with the committees.
The moral of the whole matter is this: The business of the United States
is not as a whole in contact with the government of the United States. So
soon as it is, the matters which now give you, and justly give you, cause
for uneasiness will disappear. Just so soon as the business of this
country has general, free, welcome access to the councils of Congress, all
the friction between business and politics will disappear.
* * * * *
The tariff question is not the question that it was fifteen or twenty or
thirty years ago. It used to be said by the advocates of the tariff that
it made no difference even if there were a great wall separating us from
the commerce of the world, because inside the United States there was so
enormous an area of absolute free trade that competition within the
country kept prices down to a normal level; that so long as one state
could compete with all the others in the United States, and all the others
compete with it, there would be only that kind of advantage gained which
is gained by superior brain, superior economy, the better plant, the
better administration; all of the things that have made America supreme,
and kept prices in America down, because American genius was competing
with American genius. I must add that so long as that was true, there was
much to be said in defence of the protective tariff.
But the point now is that the protective tariff has been taken advantage
of by some men to destroy domestic competition, to combine all existing
rivals within our free-trade area, and to make it impossible for new men
to come into the field. Under the high tariff there has been formed a
network of factories which in their connection dominate the market of the
United States and establish their own prices. Whereas, therefore, it was
once arguable that the high tariff did not create the high cost of living,
it is now no longer arguable that these combinations do not,--not by
reason of the tariff, but by reason of their combination under the
tariff,--settle what prices shall be paid; settle how much the product
shall be; and settle, moreover, what shall be the market for labor.
The "protective" policy, as we hear it proclaimed to-day, bears no
relation to the original doctrine enunciated by Webster and Clay. The
"infant industries," which those statesmen desired to encourage, have
grown up and grown gray, but they have always had new arguments for
special favors. Their demands have gone far beyond what they dared ask for
in the days of Mr. Blaine and Mr. McKinley, though both those apostles of
"protection" were, before they died, ready to confess that the time had
even then come to call a halt on the claims of the subsidized industries.
William McKinley, before he died, showed symptoms of adjustment to the new
age such as his successors have not exhibited. You remember what the
utterances of Mr. McKinley's last month were with regard to the policy
with which his name is particularly identified; I mean the policy of
"protection." You remember how he joined in opinion with what Mr. Blaine
before him had said--namely, that we had devoted the country to a policy
which, too rigidly persisted in, was proving a policy of restriction; and
that we must look forward to a time that ought to come very soon when we
should enter into reciprocal relations of trade with all the countries of
the world. This was another way of saying that we must substitute
elasticity for rigidity; that we must substitute trade for closed ports.
McKinley saw what his successors did not see. He saw that we had made for
ourselves a strait-jacket.
When I reflect upon the "protective" policy of this country, and observe
that it is the later aspects and the later uses of that policy which have
built up trusts and monopoly in the United States, I make this contrast in
my thought: Mr. McKinley had already uttered his protest against what he
foresaw; his successor saw what McKinley had only foreseen, but he took no
action. His successor saw those very special privileges, which Mr.
McKinley himself began to suspect, used by the men who had obtained them
to build up a monopoly for themselves, making freedom of enterprise in
this country more and more difficult. I am one of those who have the
utmost confidence that Mr. McKinley would not have sanctioned the later
developments of the policy with which his name stands identified.
What is the present tariff policy of the protectionists? It is not the
ancient protective policy to which I would give all due credit, but an
entirely new doctrine. I ask anybody who is interested in the history of
high "protective" tariffs to compare the latest platforms of the two
"protective" tariff parties with the old doctrine. Men have been struck,
students of this matter, by an entirely new departure. The new doctrine of
the protectionist is that the tariff should represent the difference
between the cost of production in America and the cost of production in
other countries, _plus_ a reasonable profit to those who are engaged in
industry. This is the new part of the protective doctrine: "_plus_ a
reasonable profit." It openly guarantees profit to the men who come and
ask favors of Congress. The old idea of a protective tariff was designed
to keep American industries alive and, therefore, keep American labor
employed. But the favors of protection have become so permanent that this
is what has happened: Men, seeing that they need not fear foreign
competition, have drawn together in great combinations. These combinations
include factories (if it is a combination of factories) of all grades: old
factories and new factories, factories with antiquated machinery and
factories with brand-new machinery; factories that are economically and
factories that are not economically administered; factories that have
been long in the family, which have been allowed to run down, and
factories with all the new modern inventions. As soon as the combination
is effected the less efficient factories are generally put out of
operation. But the stock issued in payment for them has to pay dividends.
And the United States government guarantees profit on investment in
factories that have gone out of business. As soon as these combinations
see prices falling they reduce the hours of labor, they reduce production,
they reduce wages, they throw men out of employment,--in order to do what?
In order to keep the prices up in spite of their lack of efficiency.
There may have been a time when the tariff did not raise prices, but that
time is past; the tariff is now taken advantage of by the great
combinations in such a way as to give them control of prices. These things
do not happen by chance. It does not happen by chance that prices are and
have been rising faster here than in any other country. That river that
divides us from Canada divides us from much cheaper living,
notwithstanding that the Canadian Parliament levies duties on
importations.
* * * * *
But "Ah!" exclaim those who do not understand what is going on; "you will
ruin the country with your free trade!" Who said free trade? Who proposed
free trade? You can't have free trade in the United States, because the
government of the United States is of necessity, with our present division
of the field of taxation between the federal and state governments,
supported in large part by the duties collected at the ports. I should
like to ask some gentlemen if very much is collected in the way of duties
at the ports under the particular tariff schedules under which they
operate. Some of the duties are practically prohibitive, and there is no
tariff to be got from them.
When you buy an imported article, you pay a part of the price to the
Federal government in the form of customs duty. But, as a rule, what you
buy is, not the imported article, but a domestic article, the price of
which the manufacturer has been able to raise to a point equal to, or
higher than, the price of the foreign article _plus the duty_. But who
gets the tariff tax in this case? The government? Oh, no; not at all. The
manufacturer. The American manufacturer, who says that while he can't sell
goods as low as the foreign manufacturer, all good Americans ought to buy
of him and pay him a tax on every article for the privilege. Perhaps we
ought. The original idea was that, when he was just starting and needed
support, we ought to buy of him, even if we had to pay a higher price,
till he could get on his feet. Now it is said that we ought to buy of him
and pay him a price 15 to 120 per cent. higher than we need pay the
foreign manufacturer, even if he is a six-foot, bearded "infant," because
the cost of production is necessarily higher here than anywhere else. I
don't know why it should be. The American workingman used to be able to do
so much more and better work than the foreigner that that more than
compensated for his higher wages and made him a good bargain at any wage.
Of course, if we are going to agree to give any fellow-citizen who takes
a notion to go into some business or other for which the country is not
especially adapted,--if we are going to give him a bonus on every article
he produces big enough to make up for the handicap he labors under because
of some natural reason or other,--why, we may indeed gloriously diversify
our industries, but we shall beggar ourselves. On this principle, we shall
have in Connecticut, or Michigan, or somewhere else, miles of hothouses in
which thousands of happy American workingmen, with full dinner-pails, will
be raising bananas,--to be sold at a quarter apiece. Some foolish person,
a benighted Democrat like as not, might timidly suggest that bananas were
a greater public blessing when they came from Jamaica and were three for a
nickel, but what patriotic citizen would listen for a moment to the
criticisms of a person without any conception of the beauty and glory of
the great American banana industry, without realization of the proud
significance of the fact that Old Glory floats over the biggest banana
hothouses in the world!
But that is a matter on one side. What I am trying to point out to you
now is that this "protective" tariff, so-called, has become a means of
fostering the growth of particular groups of industry at the expense of
the economic vitality of the rest of the country. What the people now
propose is a very practical thing indeed: They propose to unearth these
special privileges and to cut them out of the tariff. They propose not to
leave a single concealed private advantage in the statutes concerning the
duties that can possibly be eradicated without affecting the part of the
business that is sound and legitimate and which we all wish to see
promoted.
Some men talk as if the tariff-reformers, as if the Democrats, weren't
part of the United States. I met a lady the other day, not an elderly
lady, who said to me with pride: "Why, I have been a Democrat ever since
they hunted them with dogs." And you would really suppose, to hear some
men talk, that Democrats were outlaws and did not share the life of the
United States. Why, Democrats constitute nearly one half the voters of
this country. They are engaged in all sorts of enterprises, big and
little. There isn't a walk of life or a kind of occupation in which you
won't find them; and, as a Philadelphia paper very wittily said the other
day, they can't commit economic murder without committing economic
suicide. Do you suppose, therefore, that half of the population of the
United States is going about to destroy the very foundations of our
economic life by simply running amuck amidst the schedules of the tariff?
Some of the schedules are so tough that they wouldn't be hurt, if it did.
But that isn't the program, and anybody who says that it is simply doesn't
understand the situation at all. All that the tariff-reformers claim is
this: that the partnership ought to be bigger than it is. Just because
there are so many of them, they know how many are outside. And let me tell
you, just as many Republicans are outside. The only thing I have against
my protectionist fellow-citizens is that they have allowed themselves to
be imposed upon so many years. Think of saying that the "protective"
tariff is for the benefit of the workingman, in the presence of all those
facts that have just been disclosed in Lawrence, Mass., where the worst
schedule of all--"Schedule K"--operates to keep men on wages on which they
cannot live. Why, the audacity, the impudence, of the claim is what
strikes one; and in face of the fact that the workingmen of this country
who are in unprotected industries are better paid than those who are in
"protected" industries; at any rate, in the conspicuous industries! The
Steel schedule, I dare say, is rather satisfactory to those who
manufacture steel, but is it satisfactory to those who make the steel with
their own tired hands? Don't you know that there are mills in which men
are made to work seven days in the week for twelve hours a day, and in the
three hundred and sixty-five weary days of the year can't make enough to
pay their bills? And this in one of the giants among our industries, one
of the undertakings which have thriven to gigantic size upon this very
system.
Ah, the whole mass of the fraud is falling away, and men are beginning to
see disclosed little groups of persons maintaining a control over the
dominant party and through the dominant party over the government, in
their own interest, and not in the interest of the people of the United
States!
* * * * *
Let me repeat: There cannot be free trade in the United States so long as
the established fiscal policy of the federal government is maintained. The
federal government has chosen throughout all the generations that have
preceded us to maintain itself chiefly on indirect instead of direct
taxation. I dare say we shall never see a time when it can alter that
policy in any substantial degree; and there is no Democrat of
thoughtfulness that I have met who contemplates a program of free trade.
But what we intend to do, what the House of Representatives has been
attempting to do and will attempt to do again, and succeed in doing, is to
weed this garden that we have been cultivating. Because, if we have been
laying at the roots of our industrial enterprises this fertilization of
protection, if we have been stimulating it by this policy, we have found
that the stimulation was not equal in respect of all the growths in the
garden, and that there are some growths, which every man can distinguish
with the naked eye, which have so overtopped the rest, which have so
thrown the rest into destroying shadow, that it is impossible for the
industries of the United States as a whole to prosper under their
blighting shade. In other words, we have found out that this that
professes to be a process of protection has become a process of
favoritism, and that the favorites of this policy have flourished at the
expense of all the rest. And now we are going into this garden and weed
it. We are going into this garden and give the little plants air and light
in which to grow. We are going to pull up every root that has so spread
itself as to draw the nutriment of the soil from the other roots. We are
going in there to see to it that the fertilization of intelligence, of
invention, of origination, is once more applied to a set of industries now
threatening to be stagnant, because threatening to be too much
concentrated. The policy of freeing the country from the restrictive
tariff will so variegate and multiply the undertakings in the country that
there will be a wider market and a greater competition for labor; it will
let the sun shine through the clouds again as once it shone on the free,
independent, unpatronized intelligence and energy of a great people.
One of the counts of the indictment against the so-called "protective"
tariff is that it has robbed Americans of their independence,
resourcefulness, and self-reliance. Our industry has grown invertebrate,
cowardly, dependent on government aid. When I hear the argument of some of
the biggest business men in this country, that if you took the
"protection" of the tariff off they would be overcome by the competition
of the world, I ask where and when it happened that the boasted genius of
America became afraid to go out into the open and compete with the world?
Are we children, are we wards, are we still such puerile infants that we
have to be fed out of a bottle? Isn't it true that we know how to make
steel in America better than anybody else in the world? Yet they say, "For
Heaven's sake don't expose us to the chill of prices coming from any other
quarter of the globe." Mind you, we can compete with those prices. Steel
is sold abroad, steel made in America is sold abroad in many of its forms,
much cheaper than it is sold in America. It is so hard for people to get
that into their heads!
We set up a kindergarten in New York. We called it the Chamber of Horrors.
We exhibited there a great many things manufactured in the United States,
with the prices at which they were sold in the United States, and the
prices at which they were sold outside of the United States, marked on
them. If you tell a woman that she can buy a sewing machine for eighteen
dollars in Mexico that she has to pay thirty dollars for in the United
States, she will not heed it or she will forget it unless you take her and
show her the machine with the price marked on it. My very distinguished
friend, Senator Gore, of Oklahoma, made this interesting proposal: that
we should pass a law that every piece of goods sold in the United States
should have on it a label bearing the price at which it sells under the
tariff and the price at which it would sell if there were no tariff, and
then the Senator suggests that we have a very easy solution for the tariff
question. He does not want to oblige that great body of our
fellow-citizens who have a conscientious belief in "protection" to turn
away from it. He proposes that everybody who believes in the "protective"
tariff should pay it and the rest of us should not; if they want to
subscribe, it is open to them to subscribe.
As for the rest of us, the time is coming when we shall not have to
subscribe. The people of this land have made up their minds to cut all
privilege and patronage out of our fiscal legislation, particularly out of
that part of it which affects the tariff. We have come to recognize in the
tariff as it is now constructed, not a system of protection, but a system
of favoritism, of privilege, too often granted secretly and by subterfuge,
instead of openly and frankly and legitimately, and we have determined to
put an end to the whole bad business, not by hasty and drastic changes,
but by the adoption of an entirely new principle,--by the reformation of
the whole purpose of legislation of that kind. We mean that our tariff
legislation henceforth shall have as its object, not private profit, but
the general public development and benefit. We shall make our fiscal laws,
not like those who dole out favors, but like those who serve a nation. We
are going to begin with those particular items where we find special
privilege intrenched. We know what those items are; these gentlemen have
been kind enough to point them out themselves. What we are interested in
first of all with regard to the tariff is getting the grip of special
interests off the throat of Congress. We do not propose that special
interests shall any longer camp in the rooms of the Committee on Ways and
Means of the House and the Finance Committee of the Senate. We mean that
those shall be places where the people of the United States shall come and
be represented, in order that everything may be done in the general
interest, and not in the interest of particular groups of persons who
already dominate the industries and the industrial development of this
country. Because no matter how wise these gentlemen may be, no matter how
patriotic, no matter how singularly they may be gifted with the power to
divine the right courses of business, there isn't any group of men in the
United States or in any other country who are wise enough to have the
destinies of a great people put into their hands as trustees. We mean that
business in this land shall be released, emancipated.