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[Illustration:
_William Graham Sumner_
[1907]]
THE FORGOTTEN MAN AND OTHER ESSAYS
by
WILLIAM GRAHAM SUMNER
Edited by Albert Galloway Keller
[Illustration]
New Haven
Yale University Press
London: Humphrey Milford
Oxford University Press
MDCCCCXVIII
Copyright, 1919,
by Yale University Press
PREFACE
With the present collection the publication of Sumner’s Essays comes to
an end. The original project of publishers and editor contemplated but
a single volume--“War and Other Essays”--and they accordingly equipped
that volume with a bibliography which was as complete as they then
could make it. But when, later on, other materials came to be known
about, and especially after the discovery of a number of unpublished
manuscripts, the encouraging reception accorded to the first venture
led us to publish a second, and then a third collection: “Earth Hunger
and Other Essays” and “The Challenge of Facts and Other Essays.” It was
during the preparation of the latter of these, now some five years ago,
that the late Professor Callender deplored to the editor the omission
of certain of Sumner’s essays in political economy--in particular those
dealing with free trade and sound money. And the reviewers of preceding
collections had reminded us, rightly enough, that there should be a
fuller bibliography and also an index covering all the essays.
In this last volume we have striven to meet these several suggestions
and criticisms. And it is now the purpose of the publishers to form
of these singly issued volumes a set of four, numbered in the order
of their issue. Since the series could not have been planned as such
at the outset, this purpose is in the nature of an after-thought;
and there is therefore no general organization or systematic
classification by volumes. In so far as classification is possible,
under the circumstances, it is made by way of the index. This and the
bibliography are the work of Dr. M. R. Davie; and are but a part of the
service he has performed in the interest of an intellectual master whom
he could know only through the printed word and the medium of another
man.
Sumner’s dominant interest in political economy, as revealed in his
teaching and writing, issued in a doughty advocacy of “free trade and
hard money,” and involved the relentless exposure of protectionism
and of schemes of currency-debasement. As conveying his estimate of
protectionism, it is only fitting that his little book on “The -Ism
which teaches that Waste makes Wealth” should be recalled from an
obscurity that it does not deserve; it is typical of the author’s most
vigorous period and witnesses to the acerbity of a former issue that
may recur. In default of a single, comprehensive companion-piece in the
field of finance, and one making as interesting reading, it has been
necessary to confine selection to several rather brief articles, most
of them dating from the campaign of 1896. In the choice of all economic
essays I have been guided by the advice of my colleague, Professor F.
R. Fairchild, a fellow-student under Sumner and a fellow-admirer of his
character and career. Professor S. L. Mims also has been generous in
his aid. I do not need to thank either of these men, for what they did
was a labor of gratitude and love.
The title essay will be found at the end of the volume. It is the
once-famous lecture on “The Forgotten Man,” and is here printed for
the first time. When “War and Other Essays” was being prepared, we
had no knowledge of the existence of this manuscript lecture; and, in
order to bring into what we supposed was to be a one-volume collection
this character-creation of Sumner’s, one often alluded to in modern
writings, we reprinted two chapters from “What Social Classes Owe to
Each Other.” It has been found impracticable in later reprintings of
Vol. I to replace those chapters with the more complete essay; and we
have therefore decided to reproduce the latter, despite the certain
degree of repetition involved, rather than leave it out of the series.
In view of the fact that Sumner has been more widely known, perhaps, as
the creator and advocate of the “Forgotten Man,” than as the author of
any other of his works, we entitle this volume “The Forgotten Man and
Other Essays.”
Several essays not of an economic order have been included because they
have come to my knowledge within the last few years and have seemed to
me to call for preservation. It is almost impossible to fix the dates
of such manuscript essays, for I have not been able in all cases to
secure information from persons who might be able to identify times and
occasions. And there remain a good number of articles and manuscripts,
published or unpublished, which can receive no more than mention, with
a word of characterization, in the bibliography.
Some mention ought to be made here of a large body of hand-written
manuscript left by Sumner and representing the work of several
years--1899 to 1905 or thereabouts--upon a systematic treatise on “The
Science of Society.” Printed as it was left, partially and unevenly
completed and with many small and some wide hiatuses, this manuscript
would make several substantial volumes. It is a monument of industry,
involving, as it did, the collection over many years of thousands of
notes and memoranda, and the extraction from the same, by a sort of
_tour de force_, of generalizations intended to be set forth, with the
support of copious evidence, in the form of a survey of the evolution
and life of human society. These manuscripts, as left, represent no
more than a preliminary survey of a wide field, together with more
elaborately worked out chartings of sections of that field. The
author planned to re-write the whole in the light of “Folkways.” The
continuation, modification, and completion of this enterprise, in
something approaching the form contemplated by its author, must needs
be, if at all possible, a long task.
As one surveys, through these volumes of essays, the various phases
of scholarly and literary activity of their author, and then recalls
the teaching, both extensive and intensive, done by him with such
unremitting devotion to what he regarded as his first duty--and when
one thinks, yet again, of his labors in connection with college
and university administration, with the Connecticut State Board of
Education, and in other lines--it is hard to understand where one man
got the time, with all his ability and energy, to accomplish all this.
In the presence of evidence of such incessant and unswerving industry,
scarcely interrupted by the ill-health that overtook Sumner at about
the age of fifty, an ordinary person feels a sense of oppression and of
bewilderment, and is almost willing to subscribe to the old, hopeless
tradition that “there were giants in those days.”
In the preparation of this set of books the editor has been constantly
sustained and encouraged by the interest and sympathy of the woman who
stood by the author’s side through life, and to whom anything that had
to do with the preservation of his memory was thereby just, perfect,
and altogether praiseworthy. The completion of this editorial task
would be the more satisfying if she were still among us to receive the
final offering.
A. G. KELLER.
WEST BOOTHBAY HARBOR, ME.,
September 1, 1918.
CONTENTS
PAGE
PREFACE 3
PROTECTIONISM, THE -ISM WHICH TEACHES THAT WASTE MAKES
WEALTH (1885) 9
TARIFF REFORM (1888) 115
WHAT IS FREE TRADE? (1886) 123
PROTECTIONISM TWENTY YEARS AFTER (1906) 131
PROSPERITY STRANGLED BY GOLD (1896) 141
CAUSE AND CURE OF HARD TIMES (1896) 149
THE FREE-COINAGE SCHEME IS IMPRACTICABLE AT EVERY POINT
(1896) 157
THE DELUSION OF THE DEBTORS (1896) 165
THE CRIME OF 1873 (1896) 173
A CONCURRENT CIRCULATION OF GOLD AND SILVER (1878) 183
THE INFLUENCE OF COMMERCIAL CRISES ON OPINIONS ABOUT ECONOMIC
DOCTRINES (1879) 213
THE PHILOSOPHY OF STRIKES (1883) 239
STRIKES AND THE INDUSTRIAL ORGANIZATION (1887) 249
TRUSTS AND TRADES-UNIONS (1888) 257
AN OLD “TRUST” (1889) 265
SHALL AMERICANS OWN SHIPS? (1881) 273
POLITICS IN AMERICA, 1776–1876 (1876) 285
THE ADMINISTRATION OF ANDREW JACKSON (1880) 337
THE COMMERCIAL CRISIS OF 1837 (1877 OR 1878) 371
THE SCIENCE OF SOCIOLOGY (1882) 401
INTEGRITY IN EDUCATION 409
DISCIPLINE 423
THE COÖPERATIVE COMMONWEALTH 441
THE FORGOTTEN MAN (1883) 465
BIBLIOGRAPHY 499
INDEX 521
PROTECTIONISM
THE -ISM WHICH TEACHES THAT WASTE MAKES WEALTH
[1885]
PREFACE
During the last fifteen years we have had two great questions to
discuss: the restoration of the currency and civil-service reform.
Neither of these questions has yet reached a satisfactory solution,
but both are on the way toward such a result. The next great effort to
strip off the evils entailed on us by the Civil War will consist in the
repeal of those taxes which one man was enabled to levy on another,
under cover of the taxes which the government had to lay to carry on
the war. I have taken my share in the discussion of the first two
questions, and I expect to take my share in the discussion of the third.
I have written this book as a contribution to a popular agitation.
I have not troubled myself to keep or to throw off scientific or
professional dignity. I have tried to make my point as directly and
effectively as I could for the readers whom I address, _viz._, the
intelligent voters of all degrees of general culture, who need to
have it explained to them what protectionism is and how it works. I
have therefore pushed the controversy just as hard as I could, and
have used plain language, just as I have always done before in what I
have written on this subject. I must therefore forego the hope that
I have given any more pleasure now than formerly to the advocates of
protectionism.
Protectionism seems to me to deserve only contempt and scorn, satire
and ridicule. It is such an arrant piece of economic quackery, and it
masquerades under such an affectation of learning and philosophy, that
it ought to be treated as other quackeries are treated. Still, out of
deference to its strength in the traditions and lack of information of
many people, I have here undertaken a patient and serious exposition of
it. Satire and derision remain reserved for the dogmatic protectionists
and the sentimental protectionists; the Philistine protectionists and
those who hold the key of all knowledge; the protectionists of stupid
good faith and those who know their dogma is a humbug and are therefore
irritated at the exposure of it; the protectionists by birth and
those by adoption; the protectionists for hire and those by election;
the protectionists by party platform and those by pet newspaper;
the protectionists by “invincible ignorance” and those by vows and
ordination; the protectionists who run colleges and those who want to
burn colleges down; the protectionists by investment and those who sin
against light; the hopeless ones who really believe in British gold and
dread the Cobden Club, and the dishonest ones who storm about those
things without believing in them; those who may not be answered when
they come into debate, because they are “great” men, or because they
are “old” men, or because they have stock in certain newspapers, or are
trustees of certain colleges. All these have honored me personally,
in this controversy, with more or less of their particular attention.
I confess that it has cost me something to leave their cases out of
account, but to deal with them would have been a work of entertainment,
not of utility.
Protectionism arouses my moral indignation. It is a subtle, cruel, and
unjust invasion of one man’s rights by another. It is done by force
of law. It is at the same time a social abuse, an economic blunder,
and a political evil. The moral indignation which it causes is the
motive which draws me away from the scientific pursuits which form my
real occupation, and forces me to take part in a popular agitation.
The doctrine of a “call” applies in such a case, and every man is
bound to take just so great a share as falls in his way. That is why I
have given more time than I could afford to popular lectures on this
subject, and it is why I have now put the substance of those lectures
into this book.
W. G. S.
CHAPTER I
DEFINITIONS: STATEMENT OF THE QUESTION TO BE INVESTIGATED
(_A_) THE SYSTEM OF WHICH PROTECTION IS A SURVIVAL.
1. The statesmen of the eighteenth century supposed that their business
was the art of national prosperity. Their procedure was to form ideals
of political greatness and civil prosperity on the one hand, and to
evolve out of their own consciousness grand dogmas of human happiness
and social welfare on the other hand. Then they tried to devise
specific means for connecting these two notions with each other. Their
ideals of political greatness contained, as predominant elements, a
brilliant court, a refined and elegant aristocracy, well-developed fine
arts and _belles lettres_, a powerful army and navy, and a peaceful,
obedient, and hard-working peasantry and artisan class to pay the taxes
and support the other part of the political structure. In this ideal
the lower ranks paid upward, and the upper ranks blessed downward, and
all were happy together. The great political and social dogmas of the
period were exotic and incongruous. They were borrowed or accepted from
the classical authorities. Of course the dogmas were chiefly held and
taught by the philosophers, but, as the century ran its course, they
penetrated the statesman class. The statesman who had had no purpose
save to serve the “grandeur” of the king, or to perpetuate a dynasty,
gave way to statesmen who had strong national feeling and national
ideals, and who eagerly sought means to realize their ideals. Having as
yet no definite notion, based on facts of observation and experience,
of what a human society or a nation is, and no adequate knowledge
of the nature and operation of social forces, they were driven to
empirical processes which they could not test, or measure, or verify.
They piled device upon device and failure upon failure. When one
device failed of its intended purpose and produced an unforeseen evil,
they invented a new device to prevent the new evil. The new device
again failed to prevent, and became a cause of a new harm, and so on
indefinitely.
2. Among their devices for industrial prosperity were (1) export taxes
on raw materials, to make raw materials abundant and cheap at home; (2)
bounties on the export of finished products, to make the exports large;
(3) taxes on imported commodities to make the imports small, and thus,
with No. 2, to make the “balance of trade” favorable, and to secure
an importation of specie; (4) taxes or prohibition on the export of
machinery, so as not to let foreigners have the advantage of domestic
inventions; (5) prohibition on the emigration of skilled laborers,
lest they should carry to foreign rivals knowledge of domestic arts;
(6) monopolies to encourage enterprise; (7) navigation laws to foster
ship-building or the carrying trade, and to provide sailors for the
navy; (8) a colonial system to bring about by political force the very
trade which the other devices had destroyed by economic interference;
(9) laws for fixing wages and prices to repress the struggle of the
non-capitalist class to save themselves in the social press; (10)
poor-laws to lessen the struggle by another outlet; (11) extravagant
criminal laws to try to suppress another development of this struggle
by terror; and so on, and so on.
(_B_) OLD AND NEW CONCEPTIONS OF THE STATE.
3. Here we have a complete illustration of one mode of looking at human
society, or at a state. Such society is, on this view, an artificial
or mechanical product. It is an object to be molded, made, produced
by contrivance. Like every product which is brought out by working up
to an ideal instead of working out from antecedent truth and fact,
the product here is haphazard, grotesque, false. Like every other
product which is brought out by working on lines fixed by _a priori_
assumptions, it is a satire on human foresight and on what we call
common sense. Such a state is like a house of cards, built up anxiously
one upon another, ready to fall at a breath, to be credited at most
with naïve hope and silly confidence; or, it is like the long and
tedious contrivance of a mischievous schoolboy, for an end which has
been entirely misappreciated and was thought desirable when it should
have been thought a folly; or, it is like the museum of an alchemist,
filled with specimens of his failures, monuments of mistaken industry
and testimony of an erroneous method; or, it is like the clumsy product
of an untrained inventor, who, instead of asking: “what means have
I, and to what will they serve?” asks: “what do I wish that I could
accomplish?” and seeks to win steps by putting in more levers and cogs,
increasing friction and putting the solution ever farther off.
4. Of course such a notion of a state is at war with the conception
of a state as a seat of original forces which must be reckoned with
all the time; as an organism whose life will go on anyhow, perverted,
distorted, diseased, vitiated as it may be by obstructions or
coercions; as a seat of life in which nothing is ever lost, but every
antecedent combines with every other and has its share in the immediate
resultant, and again in the next resultant, and so on indefinitely;
as the domain of activities so great that they should appall any
one who dares to interfere with them; of instincts so delicate and
self-preservative that it should be only infinite delight to the wisest
man to see them come into play, and his sufficient glory to give them a
little intelligent assistance. If a state well performed its functions
of providing peace, order, and security, as _conditions_ under which
the people could live and work, it would be the proudest proof of its
triumphant success that it had nothing to do--that all went so smoothly
that it had only to look on and was never called to interfere; just
as it is the test of a good business man that his business runs on
smoothly and prosperously while he is not harassed or hurried. The
people who think that it is proof of enterprise to meddle and “fuss”
may believe that a good state will constantly interfere and regulate,
and they may regard the other type of state as “non-government.” The
state can do a great deal more than to discharge police functions. If
it will _follow_ custom, and the growth of social structure to provide
for new social needs, it can powerfully aid the production of structure
by laying down lines of common action, where nothing is needed but
_some_ common action on conventional lines; or, it can systematize a
number of arrangements which are not at their maximum utility for want
of concord; or, it can give sanction to new rights which are constantly
created by new relations under new social organizations, and so on.
5. The latter idea of the state has only begun to win way. All history
and sociology bear witness to its comparative truth, at least when
compared with the former. Under the new conception of the state, of
course liberty means breaking off the fetters and trammels which the
“wisdom” of the past has forged, and _laissez-faire_, or “let alone,”
becomes a cardinal maxim of statesmanship, because it means: “Cease
the empirical process. Institute the scientific process. Let the state
come back to normal health and activity, so that you can study it,
learn something about it from an observation of its phenomena, and
then regulate your action in regard to it by intelligent knowledge.”
Statesmen suited to this latter type of state have not yet come forward
in any great number. The new radical statesmen show no disposition to
let their neighbors alone. They think that they have come into power
just because they know what their neighbors need to have done to them.
Statesmen of the old type, who told people that they knew how to make
everybody happy, and that they were going to do it, were always far
better paid than any of the new type ever will be, and their failures
never cost them public confidence either. We have got tired of kings,
priests, nobles and soldiers, not because they failed to make us all
happy, but because our _a priori_ dogmas have changed fashion. We have
put the administration of the state in the hands of lawyers, editors,
_littérateurs_, and professional politicians, and they are by no means
disposed to abdicate the functions of their predecessors, or to abandon
the practice of the art of national prosperity. The chief difference is
that, whereas the old statesmen used to temper the practice of their
art with care for the interests of the kings and aristocracies which
put them in power, the new statesmen feel bound to serve those sections
of the population which have put them where they are.
6. Some of the old devices above enumerated (§ 2) are, however, out
of date, or are becoming obsolete.[1] Number 3, taxes on imports for
other than fiscal purposes, is not among this number. Just now such
taxes seem to be coming back into fashion, or to be enjoying a certain
revival. It is a sign of the deficiency of our sociology as compared
with our other sciences that such a phenomenon could be presented in
the last quarter of the nineteenth century, as a certain revival of
faith in the efficiency of taxes on imports as a device for producing
national prosperity. There is not a single one of the eleven devices
mentioned above, including taxes on the exportation of machinery and
prohibitions on emigration, which is not quite as rational and sound as
taxes on imports.
I now propose to analyze and criticize protectionism.
(_C_) DEFINITION OF PROTECTIONISM--DEFINITION OF “THEORY.”
7. By protection_ism_ I mean the doctrine of protective taxes as
a device to be employed in the art of national prosperity. The
protectionists are fond of representing themselves as “practical”
and the free traders as “theorists.” “Theory” is indeed one of the
most abused words in the language, and the scientists are partly
to blame for it. They have allowed the word to come into use, even
among themselves, for _a conjectural explanation_, or _a speculative
conjecture_, or _a working hypothesis_, or _a project which has not
yet been tested by experiment_, or _a plausible and harmless theorem
about transcendental relations_, or _about the way in which men will
act under certain motives_. The newspapers seem often to use the word
“theoretical” as if they meant by it imaginary or fictitious. I use the
word “theory,” however, not in distinction from fact, but, in what I
understand to be the correct scientific use of the word, to denote _a
rational description of a group of coördinated facts in their sequence
and relations_. A theory may, for a special purpose, describe only
certain features of facts and disregard others. Hence “in practice,”
where facts present themselves in all their complexity, he who has
carelessly neglected the limits of his theory may be astonished at
phenomena which present themselves; but his astonishment will be due to
a blunder on his part, and will not be an imputation on the theory.
8. Now free trade is not a theory in any sense of the word. _It is
only a mode of liberty_; one form of the assault (and therefore
negative) which the expanding intelligence of the present is making on
the trammels which it has inherited from the past. Inside the United
States, absolute free trade exists over a continent. No one thinks
of it or realizes it. No one “feels” it. We feel only constraint
and oppression. If we get liberty we reflect on it only so long as
the memory of constraint endures. I have again and again seen the
astonishment with which people realized the fact when presented to them
that they have been living under free trade all their lives and never
thought of it. When the whole world shall obtain and enjoy free trade
there will be nothing more to be said about it; it will disappear from
discussion and reflection; it will disappear from the text-books on
political economy as the chapters on slavery are disappearing; it will
be as strange for men to think that they might _not_ have free trade as
it would be now for an American to think that he might not travel in
this country without a passport, or that there ever was a chance that
the soil of our western states might be slave soil and not free soil.
It would be as reasonable to apply the word “theory” to the protestant
reformation, or to law reform, or to anti-slavery, or to the separation
of church and state, or to popular rights, or to any other campaign in
the great struggle which we call liberty and progress, as to apply it
to free trade. The pro-slavery men formerly did apply it to abolition,
and with excellent reason, if the use of it which I have criticized
ever was correct; for it required great power of realizing in
imagination the results of social change, and great power to follow and
trust abstract reasoning, for any man bred under slavery to realize, in
advance of experiment, the social and economic gain to be won--_most
of all for the whites_--by emancipation. It now requires great power
of “theoretical conception” for people who have no experience of the
separation of church and state to realize its benefits and justice.
Similar observations would hold true of all similar reforms. Free trade
is a revolt, a conflict, a reform, a reaction and recuperation of the
body politic, just as free conscience, free worship, free speech, free
press, and free soil have been. It is in no sense a theory.
9. Protectionism is not a theory in the correct sense of the term, but
it comes under some of the popular and incorrect uses of the word. It
is purely dogmatic and _a priori_. It is desired to attain a certain
object--wealth and national prosperity. Protective taxes are proposed
as a means. It must be assumed that there is some connection between
protective taxes and national prosperity, some relation of cause and
effect, some sequence of expended energy and realized product, between
protective taxes and national wealth. If then by theory we mean a
speculative conjecture as to occult relations which have not been and
cannot be traced in experience, protection would be a capital example.
Another and parallel example was furnished by astrology, which assumed
a causal relation between the movements of the planets and the fate
of men, and built up quite an art of soothsaying on this assumption.
Another example, paralleling protectionism in another feature, was
alchemy, which, accepting as unquestionable the notion that we want
to transmute lead into gold if we can, assumed that there was a
philosopher’s stone, and set to work to find it through centuries of
repetition of the method of “trial and failure.”
10. _Protectionism, then, is an_ ISM; that is, it is a doctrine
or system of doctrine which offers no demonstration, and rests
upon no facts, but appeals to faith on grounds of its _a priori_
reasonableness, or the plausibility with which it can be set forth.
Of course, if a man should say: “I am in favor of protective taxes
because they bring gain to me. That is all I care to know about them,
and I shall get them retained as long as I can”--there is no trouble
in understanding him, and there is no use in arguing with him. So far
as he is concerned, the only thing to do is to find his victims and
explain the matter to them. The only thing which can be discussed is
the doctrine of national wealth by protective taxes. This doctrine
has the forms of an economic theory. It vies with the doctrine of
labor and capital as a part of the science of production. Its avowed
purpose is impersonal and disinterested--the same, in fact, as that
of political economy. It is not, like free trade, a mere negative
position against an inherited system, to which one is led by a study of
political economy. It is a species of political economy, and aims at
the throne of the science itself. If it is true, it is not a corollary,
but a postulate, on which, and by which, all political economy must be
constructed.
11. But then, lo! if the dogma which constitutes
protectionism--_national wealth can be produced by protective taxes
and cannot be produced without them_--is enunciated, instead of going
on to a science of political economy based upon it, the science falls
dead on the spot. What can be said about production, population, land,
money, exchange, labor and all the rest? What can the economist learn
or do? What function is there for the university or school? There is
nothing to do but to go over to the art of legislation, and get the
legislator to put on the taxes. The only questions which can arise are
as to the number, variety, size, and proportion of the taxes. As to
these questions the economist can offer no light. He has no method of
investigating them. He can deduce no principles, lay down no laws in
regard to them. The legislator must go on in the dark and experiment.
If his taxes do not produce the required result, if there turn out to
be “snakes” in the tariff which he has adopted, he has to change it. If
the result still fails, change it again. Protectionism bars the science
of political economy with a dogma, and the only process of the art
of statesmanship to which it leads is eternal trial and failure--the
process of the alchemist and of the inventor of perpetual motion.
(_D_) DEFINITION OF FREE TRADE AND OF A PROTECTIVE DUTY.
12. What then is a protective tax? In order to join issue as directly
as possible, I will quote the definitions given by a leading
protectionist journal,[2] of both free trade and protection. “The term
‘free trade,’ although much discussed, is seldom rightly defined.
It does not mean the abolition of custom houses. Nor does it mean
the substitution of direct for indirect taxation, as a few American
disciples of the school have supposed. It means such an adjustment
of taxes on imports as will cause no diversion of capital, from any
channel into which it would otherwise flow, into any channel opened
or favored by the legislation which enacts the customs. A country
may collect its entire revenue by duties on imports, and yet be an
entirely free trade country, so long as it does not lay those duties
in such a way as to lead any one to undertake any employment, or make
any investment he would avoid in the absence of such duties: thus, the
customs duties levied by England--with a very few exceptions--are not
inconsistent with her profession of being a country which believes
in free trade. They either are duties on articles not produced in
England, or they are exactly equivalent to the excise duties levied
on the same articles if made at home. They do not lead any one to put
his money into the home production of an article, because they do not
discriminate in favor of the home producer.”
13. “A protective duty, on the other hand, has for its object to effect
the diversion of a part of the capital and labor of the people out of
the channels in which it would run otherwise, into channels favored or
created by law.”
I know of no definitions of these two things which have ever been made
by anybody which are more correct than these. I accept them and join
issue on them.
(_E_) PROTECTIONISM RAISES A PURELY DOMESTIC CONTROVERSY.
14. It will be noticed that this definition of a protective duty
says nothing about foreigners or about imports. According to
this definition, a protective duty is a device for effecting a
transformation in our own industry. If a tax is levied at the port
of entry on a foreign commodity which is actually imported, the tax
is paid to the treasury and produces revenue. A protective tax is
one which is laid to act as a bar to importation, in order to keep a
foreign commodity out. It does not act protectively unless it does act
as a bar, and is not a tax on imports but an obstruction to imports.
Hence a protective duty is a wall to inclose the domestic producer and
consumer, and to prevent the latter from having access to any other
source of supply for his needs, in exchange for his products, than
that one which the domestic producer controls. The purpose and plan of
the device is to enable the domestic producer to levy on the domestic
consumer the taxes which the government has set up as a barrier,
but has not collected at the port of entry. Under this device the
government says: “I do not want the revenue, but I will lay the tax so
that you, the selected and favored producer, may collect it.” “I do not
need to tax the consumer for myself, but I will hold him for you while
you tax him.”
(_F_) “A PROTECTIVE DUTY IS NOT A TAX.”
15. There are some who say that “a tariff is not a tax,” or as one of
them said before a Congressional Committee: “We do not like to call it
so!” That certainly is the most humorous of all the funny things in
the tariff controversy. If a tariff is not a tax, what is it? In what
category does it belong? No protectionist has ever yet told. They seem
to think of it as a thing by itself, a Power, a Force, a sort of Mumbo
Jumbo whose special function it is to produce national prosperity. They
do not appear to have analyzed it, or given themselves an account of
it, sufficiently to know what kind of a thing it is or how it acts. Any
one who says that it is not a tax must suppose that it costs nothing,
that it produces an effect without an expenditure of energy. They do
seem to think that if Congress will say: “Let a tax of ---- per cent
be laid on article A,” and if none is imported, and therefore no tax
is paid at the custom house, national industry will be benefited and
wealth secured, and that there will be no cost or outgo. If that is so,
then the tariff is magic. We have found the philosopher’s stone. Our
congressmen wave a magic wand over the country and say: “Not otherwise
provided for, one hundred and fifty per cent,” and, presto! there we
have wealth. Again they say: “Fifty cents a yard and fifty per cent
_ad valorem_”; and there we have prosperity! If we should build a wall
along the coast to keep foreigners and their goods out, it would cost
something. If we maintained a navy to blockade our own coast for the
same purpose, it would cost something. Yet it is imagined that if we
do the same by a tax it costs nothing.
16. This is the fundamental fallacy of protection to which the analysis
will bring us back again and again. Scientifically stated, it is that
_protectionism sins against the conservation of energy_. More simply
stated, it is that _the protectionist either never sees or does not
tell the other side of the account, the cost, the outlay for the gains
which he alleges from protection, and that when these are examined and
weighed they are sure vastly to exceed the gains, if the gains were
real_, even taking no account of the harm to national growth which is
done by restriction and interference.
17. There are only three ways in which a man can part with his product,
and different kinds of taxes fall under different modes of alienating
one’s goods. First, he may exchange his product for the product of
others. Then he parts with his property voluntarily, and for an
equivalent. Taxes which are paid for peace, order, and security, fall
under this head. Secondly, he may give his product away. Then he parts
with it voluntarily without an equivalent. Taxes which are voluntarily
paid for schools, libraries, parks, etc., fall under this head.
Thirdly, he may be robbed of it. Then he parts with it involuntarily
and without an equivalent. Taxes which are protective fall under this
head. The analysis is exhaustive, and there is no other place for them.
Protective taxes are those which a man pays to his neighbor to hire
him (the neighbor) to carry on his own business. The first man gets
no equivalent (§ 108). Hence any one who says that a tariff is not a
tax would have to put it in some such category as tribute, plunder, or
robbery. In order, then, that we may not give any occasion for even an
unjust charge of using hard words, let us go back and call it a tax.
18. In any case it is plain that _we have before us the case of two
Americans_. The protectionists who try to discuss the subject always
go off to talk English politics and history, or Ireland, or India,
or Turkey. I shall not follow them. I shall discuss the case between
two Americans, which is the only case there is. Whether Englishmen
like our tariff or not is of no consequence. As a matter of fact,
Englishmen seem to have come to the opinion that if Americans will take
their own home market as their share, and will keep out of the world’s
market, they (the Englishmen) will agree to the arrangement; but it is
immaterial whether they agree, or are angry. The only question for us
is: What kind of an arrangement is it for one American to tax another
American? How does it work? Who gains by it? How does it affect our
national prosperity? These and these only are the questions which I
intend to discuss.
19. I shall adopt _two different lines of investigation_. First,
I shall examine protectionism on its own claims and pretensions,
taking its doctrines and claims for true, and following them out to
see whether they will produce the promised results; and secondly, I
shall attack protectionism adversely, and controversially. If any
one proposes a device for the public good, he is entitled to candid
and patient attention, but he is also under obligation to show
how he expects his scheme to work, what forces it will bring into
play, how it will use them, etc. The joint stock principle, credit
institutions, coöperation, and all similar devices must be analyzed
and the explanation of their advantage, if they offer any, must be
sought in the principles which they embody, the forces they employ,
the suitableness of their apparatus. We ought not to put faith in any
device (_e.g._, bi-metalism, socialism) unless the proposers offer an
explanation of it which will bear rigid and pitiless examination; for,
if it is a sound device, such examination will only produce more and
more thorough conviction of its merits. I shall therefore first take
up protectionism just as it is offered, and test it, as any candid
inquirer might do, to see whether, as it is presented by its advocates,
it has any claims to confidence.