CHAPTER III

PROTECTIONISM EXAMINED ADVERSELY

62. I have so far examined protectionism as a philosophy of national

wealth, assuming and accepting its own doctrines, and following them

out, to see if they will issue as is claimed. We have found that they

do not, but that protectionism, on its own doctrines, issues in the

impoverishment of the nation and in failure to do anything which it

claims to do. On the contrary, an examination in detail of its means,

methods, purposes, and plans shows that it must produce waste and loss,

so that _if it were true, we should have to believe that waste and loss

are means of wealth_. Now I turn about to attack it in face, on an open

issue, for if any project which is advocated proves, upon free and fair

examination, to be based on errors of fact and doctrine, it becomes a

danger and an evil to be exposed and combated, and truth of fact and

doctrine must be set against it.

1. _PROTECTIONISM INCLUDES AND NECESSARILY CARRIES WITH IT

HOSTILITY TO TRADE OR, AT LEAST, SUSPICION AGAINST TRADE_

(_A_) RULES FOR KNOWING WHEN IT IS SAFE TO TRADE.

63. Every protectionist is forced to regard trade as a mischievous or

at least doubtful thing. Protectionists have even tried to formulate

rules for determining when trade is beneficial and when harmful.

64. It has been said that we ought to trade only on meridians of

longitude, not on parallels of latitude.

65. It has been affirmed that we cannot safely trade unless we have

taxes to exactly offset the lower wages of foreign countries. But it is

plain that if the case stands so that an American employer says: “I am

at a disadvantage compared with my foreign competitor, because he pays

less wages than I”--then, by the same token, the American laborer will

say: “I am at an advantage, compared with my foreign comrade, for I get

better wages than he.” If the law interferes with the state of things

so that the employer is enabled to say: “I am now at less disadvantage

in competition with my foreign rival, because I do not now have to pay

as much more wages than he as formerly”--then, by the same token, the

American laborer must say: “I am not now as much better off than my

foreign comrade as formerly, for I do not now gain as much more than

he as I did--there is not now as much advantage in emigrating to this

country as formerly.” Therefore, whenever the taxes just offset the

difference in wages, _they just take away from the American laborer

all his superiority over the foreigner_, and take away all reason

for caring to come to this country. So much for the laborer. But the

employer, if he has arrested immigration, has cut off one source of the

supply of labor, tending to raise wages, and is at war with himself

again (§ 47).

66. It has been said that two nations cannot trade _if the rate of

interest in the two differs by two per cent_. The rate of interest in

the Atlantic States and in the Mississippi Valley has always differed

by two per cent, yet they have traded together under absolute free

trade, and the Mississippi Valley has had to begin a wilderness and

grow up to the highest standard of civilization in spite of that state

of things.

67. It has been said that we ought to _trade only with inferior

nations_. The United States does not trade with any other nation, save

when it buys territory. A in the United States trades with B in some

foreign country. If I want caoutchouc I want to trade with a savage

in the forests of South America. If I want mahogany I want to trade

with a man in Honduras. If I want sugar I want to trade with a man in

Cuba. If I want tea I want to trade with a man in China. If I want silk

or champagne I want to trade with a man in France. If I want a razor

I want to trade with a man in England. I want to trade with the man

who has the thing which I want of the best quality and at the lowest

rate of exchange for my products. What is the definition or test of an

“inferior nation,” and what has that got to do with trade any more than

the race, language, color, or religion of the man who has the goods?

68. If trade was an object of suspicion and dread, then indeed we

ought to have _rules for distinguishing safe and beneficial trade_

from mischievous trade, but these attempts to define and discriminate

only expose the folly of the suspicion. We find that the primitive

men who dwelt in caves in the glacial epoch carried on trade. The

earliest savages made footpaths through the forests by which to traffic

and trade, winning thereby mutual advantages. They found that they

could supply more wants with less effort by trade, which gave them a

share in the natural advantages and acquired skill of others. They

trained beasts of burden, improved roads, invented wagons and boats,

all in order to extend and facilitate trade. They were foolish enough

to think that they were gaining by it, _and did not know that they

needed a protective tariff to keep them from ruining themselves_. Or,

why does not some protectionist sociologist tell us at what stage

of civilization trade ceases to be advantageous and begins to need

restraint and regulation?

(_B_) ECONOMIC UNITS NOT NATIONAL UNITS.

69. The protectionists say that their system advances civilization

inside a state and makes it great, but the facts are all against them

(see § 136ff). It was by trade that civilization was extended over

the earth. It was through the contact of trade that the more civilized

nations transmitted to others the alphabet, weights and measures,

knowledge of astronomy, divisions of time, tools and weapons, coined

money, systems of numeration, treatment of metals, skins, and wool, and

all the other achievements of knowledge and invention which constitute

the bases of our civilization. On the other hand, the nations which

shut themselves up and developed an independent and self-contained

civilization (China and Japan) present us the types of arrested

civilization and stereotyped social status. It is the penalty of

isolation and of withdrawal from the giving and taking which properly

bind the whole human race together, that even such intelligent and

highly endowed people as the Chinese should find their high activity

arrested at narrow limitations on every side. They invent coin, but

never get beyond a cast copper coin. They invent gunpowder, but cannot

make a gun. They invent movable types, but only the most rudimentary

book. They discover the mariner’s compass, but never pass the infancy

of ship-building.

70. The fact is, then, that _trade has been the handmaid of

civilization_. It has traversed national boundaries, and has gradually,

with improvement in the arts of transportation, drawn the human race

into closer relations and more harmonious interests. The contact of

trade slowly saps old national prejudice and religious or race hatreds.

The jealousies which were perpetuated by distance and ignorance cannot

stand before contact and knowledge. To stop trade is to arrest this

beneficent work, to separate mankind into sections and factions, and to

favor discord, jealousy, and war.

71. Such is the action of protectionism. The protectionists make much

of their pretended “nationalism,” and they try to reason out some

kind of relationship between the scope of economic forces and the

boundaries of existing nations. The argumentation is fatally broken

at its first step. They do not show what they might show, _viz._,

that the scope of economic forces on any given stage of the arts does

form economic units. An English county was such a unit a century ago.

I doubt if anything less than the whole earth could be considered

so to-day, when the wool of Australia, the hides of South America,

the cotton of Alabama, the wheat of Manitoba, and the meat of Texas

meet the laborers in Manchester and Sheffield, and would meet the

laborers in Lowell and Paterson, if the barriers were out of the way.

But what the national protectionist would need to show would be that

the economic unit coincides with the political unit. He would have to

affirm that Maine and Texas are in one economic unit, but that Maine

and New Brunswick are not; or that Massachusetts and Minnesota are in

one economic unit, but that Massachusetts and Manitoba are not. Every

existing state is a product of historic accidents. Mr. Jefferson set

out to buy the city of New Orleans. He awoke one morning to find that

he had bought the western half of the Mississippi Valley. Since that

turned out so, the protectionists think that Missouri and Illinois

prosper by trading in perfect freedom.[6] If it had not turned out

so, it would have been very mischievous for them to trade in perfect

freedom. Nova Scotia did not join the revolt of our thirteen colonies.

Hence it is thought ruinous to let coal and potatoes come in freely

from Nova Scotia. If she had revolted with us, it would have been for

the benefit of everybody in this union to trade with her as freely

as we now trade with Maine. We tried to conquer Canada in 1812–1813

and failed. Consequently the Canadians now put taxes on our coal and

petroleum and wheat, and we put taxes on their lumber, which our coal

and petroleum industries need. We did annex Texas, at the cost of war,

in 1845. Consequently we trade with Texas now under absolute freedom,

but, if we trade with Mexico, it must be only very carefully and under

stringent limitations. Is this wisdom, or is it all pure folly and

wrongheadedness, by which men who boast of their intelligence throw

away their own chances?[7]

72. _Trade is a beneficent thing._ It does not need any regulation or

restraint. There is no point at which it begins to be dangerous. It is

mutually beneficent. If it ceases to be so, it ceases entirely, because

he who no longer gains by it will no longer carry it on. (See § 125.)

2. _PROTECTIONISM IS AT WAR WITH IMPROVEMENT._

73. The cities of Japan are built of very combustible material, and

when a fire begins it is rarely arrested until the city is destroyed.

It was suggested that a steam fire-engine would there reach its

maximum of utility. One was imported and proved very useful on

several occasions. Thereupon the carpenters got up a petition to

the government to send the fire-engine away, because it ruined their

business.

74. The instance is grotesque and exaggerated, but it is strictly true

to the principle of protectionism. The southern counties of England,

a century ago, protested against the opening of the great northern

turnpike, because that would bring the products of the northern

counties to the London market, of which the southern counties had

had a monopoly. After the St. Gothard tunnel was opened the people

of southern Germany petitioned the Government to lay higher taxes on

Italian products to offset the cheapness which the tunnel had produced.

In 1837 the first two steamers which ever made commercial voyages

across the Atlantic arrived at the same time. A grand celebration was

held in New York. The foolish people rejoiced as if a new blessing had

been won. Man had won a new triumph over nature. What was the gain of

it? It was that he could satisfy his needs with less labor than before;

or, in plain language, get things cheaper. But in 1842 a Home Industry

Convention was held in New York, at which it was alleged as the prime

reason why more taxes were needed, that this steam transportation

had made things cheap here.[8] Taxes were needed to neutralize the

improvement.

(_A_) TAXES TO OFFSET CHEAPENED TRANSPORTATION.

75. For the last twenty-five years, to go no farther back, we have

multiplied inventions to facilitate transportation. Ocean cables,

improved marine engines, and screw steamers, have been only improved

means of supplying the wants of people on two continents more

abundantly with the products each of the other. The scientific

journals and the daily papers boast of every step in this development

as a thing to be proud of and rejoice in, but in the meantime the

legislators on both sides of the water are hard at work to neutralize

it by taxation. We, in the United States, have multiplied monstrous

taxes on all the things which others make and which we want, to prevent

them from being brought to us. The statesmen of the European continent

are laying taxes on our meat and wheat, lest they be brought to their

people. The arts are bringing us together; the taxes are needed to

keep us apart. In France, for instance, the agriculturist complains

of American competition--not “pauper labor,” but gratuitous soil and

sunlight. He does not want the French artisan to have the benefit of

our prairie soil. The government yields to him and lays a tax on our

meat and wheat. This raises the price of bread in Paris, where the

reconstruction of the city has collected a large artisan population.

The government then finds itself driven to fix the price of bread

in Paris, to keep it down. But the reconstruction of the city was

accomplished by contracting a great debt, which means heavy taxes.

These taxes drive the population out into the suburbs. At least one

voice has been raised by an owner of city property that a tax ought to

be laid on suburban residents to drive them back to the city,[9] and

not let them escape the efforts of the city landlord to throw his taxes

on them. Then, again, France has been subsidizing ships, and when the

question of renewing the subsidy came up, it was argued that the ships

subsidized at the expense of the French taxpayer had lowered freight on

wheat and made wheat cheap; that is, as somebody justly replied, had

wrought the very mischief against which the increased tax had just been

demanded on wheat. Therefore the taxpayer had been taxed first to make

wheat cheap, and then again to make it dear.

76. Tax A to favor B. If A complains, tax C to make it up to A. If

C complains, tax B to favor C. If any of them still complain, begin

all over again. Tax them as long as anybody complains, or anybody

wants anything. This is the statesmanship of the last quarter of the

nineteenth century.

77. Bismarck, too, is going into the business. He has to rule a people

who live on a poor soil and have to bear a crushing military system.

The consequence is that the population is declining. Emigration exceeds

the natural increase. Bismarck’s cure for it is to lay protective taxes

against American pork and wheat and rye. This will protect the German

agriculturist. If it lowers still more the comfort of the buyers of

food, and drives more of them out of the country, then he will go and

buy or fight for colonies at the expense of the German agriculturists

whom he has just “protected,” although the surplus population of

Germany has been taking itself away for thirty years without asking

help or giving trouble. What can Germany gain by diverting her

emigrants to her own colony unless she means to bring the able-bodied

men back to fight her battles? If she means that, the emigrants will

not go to her colony.

78. France is also reviving the old colonial policy with discriminating

favors and compensatory restraints. She already owns a possession

in Algeria, which is the best example of a colony for the sake of a

colony. It has been asserted in the French Chambers that each French

family now in Algeria has cost the Government (_i.e._, the French

taxpayer) 25,000 francs.[10] The longing of these countries for

“colonies” is like the longing of a negro dandy for a cane or a tall

hat so as to be like the white gentlemen.

(_B_) SUGAR BOUNTIES.

79. The worst case of all, however, is sugar. The protectionists long

boasted of beet-root sugar as a triumph of their system. It is now

an industry in which an immense amount of capital is invested on the

Continent, but cheap transportation for cane sugar, and improvements

in the treatment of the latter, are constantly threatening it. Mention

is made in _Bradstreet’s_ for June 28, 1885, of a very important

improvement in the treatment of cane which has just been invented

at Berlin. Germany has an excise tax on beet-root sugar, but allows

a drawback on it when exported which is greater than the tax. This

acts as a bounty paid by the German taxpayer on the exportation.

Consequently, beet-root sugar has appeared even in our market. The

chief market for it, however, is England. The consequence is that the

sugar, which is nine cents a pound in Germany, and seven cents a pound

here, is five cents a pound in England, and that the annual consumption

of sugar per head in the three countries[11] is as follows: England,

sixty-seven and a half pounds; United States, fifty-one pounds;

Germany, twelve pounds. I sometimes find it difficult to make people

understand the difference between wanting an “industry” and wanting

goods, but this case ought to make that distinction clear. Obviously

_the Germans have the industry and the Englishmen have the sugar_.

80. No sooner, however, does Germany get her export bounty in good

working order than the Austrian sugar refiners besiege their government

to know whether Germany is to have the monopoly of giving sugar to the

Englishmen.[12] They get a bounty and compete for that privilege. Then

the French refiners say that they cannot compete, and must be enabled

to compete in giving sugar to the Englishmen. I believe that their case

is under favorable consideration.

80_a._ I have found it harder (as is usually the case) to get recorded

information about the trade and industry of our own country than about

those of foreign nations. However, we too, although we do not raise

beet-sugar, have our share in this bounty folly, as may be seen by

the following statement, which comes to hand just in time to serve my

purpose.[13] “The export of refined sugar [from the United States]

is entirely confined to hard sugars, or, to be more explicit, loaf,

crushed, and granulated. This is because the drawback upon this class

of sugar is so large that refiners are enabled to sell them at less

than cost. The highest collectable duty upon sugar testing as high as

99° is but 2.36, but the drawback upon granulated testing the same, and

in the case of crushed and loaf less, is 2.82 less 1 per cent. This

is exactly 43 cents per one hundred pounds more than the government

receives in duty. But it rarely happens that raw sugar is imported

testing 99°, and never for refining purposes. The following table gives

the rates of duty upon the average grades used in refining:

Degrees Duty

Fair refining testing 89 1.96

Fair refining testing 90 2.00

Centrifugal testing 96 2.28

Beet-sugar testing 88 1.92

It will be clearly seen from the above figures that with a net drawback

upon hard sugar of 2.79 our refiners are able to sell to foreigners,

through the assistance of our Treasury, sugar at less than cost.

Taking, for instance, the net price of centrifugal testing only 97° and

the net price less drawback of granulated:

Centrifugal raw sugar testing 97° 6.00

Less duty 2.28

Net ----- 3.72

Granulated refined testing 99° 6.37½

Less drawback 2.71

Net ----- 3.66½

--------

6½

Nothing could demonstrate the absurdity of the present rate of drawback

more clearly than the above. A refiner pays 6½ cents per hundred

more for raw sugar testing 2° less saccharine than he sells refined

for. Not, however, to the American consumers, but to foreigners.

After paying the expenses necessary to refining by the assistance

of a drawback, which clearly amounts to a subsidy of about 50 cents

a hundred pounds, our large sugar monopolists are assisted by the

government to increase the cost of sugar to American consumers. One

firm controls almost the entire trade of the east; at all events it is

safe to say that the trade of the entire country is controlled by three

firms, and the Treasury assists this monopoly in sustaining prices

against the interest of the country at large. Up to date the exports of

refined sugar have amounted to 83,340 tons, which, taken at 50 cents

a hundred, has cost the treasury over $830,000. All this may not have

gone into the pockets of the refiners, as the ship owners have obtained

a share, but the fact remains that the Treasury is the loser by this

amount. Besides this bounty presses hard upon the consumers. They not

only have to pay the tax, but during the late rise they were compelled

to pay more for their sugar than they otherwise would have done had not

the export demand caused by selling sugar to foreigners at less than

cost, the Treasury paying the difference, increased prices. While an

American consumer is charged 6½ cents for granulated, foreign buyers,

through the liberality of our government, can buy it under 3¾ cents.

Certainly it is time that the Secretary of the Treasury asked the

sugar commission to commence a comprehensive and impartial inquiry.”

81. Of course the story would not be complete if the English refiners

did not besiege their government for a tax to keep out this maleficent

gift of foreign taxpayers. This, say they, is not free trade. This is

protection turned the other way around. We might hold our own on an

equal footing, but we cannot contend against a subsidized industry. A

superficial thinker might say that this protest was conclusive. The

English government set on foot an investigation, not of the sugar

refining, but of _those other interests which were in danger of being

forgotten_. There was a tariff investigation which was worth something

and was worthy of an enlightened government. It was found that the

consumers of sugar had gained more than all the wages paid in sugar

refining. But, on the side of the producers, it was found that 6,000

persons are employed and 45,000 tons of sugar are used annually in

the neighborhood of London in manufacturing jam and confectionery. In

Scotland there are eighty establishments, employing over 4,000 people

and using 35,000 tons of sugar per annum in similar industries. In the

whole United Kingdom, in those industries, 100,000 tons of sugar are

used and 12,000 people are employed, three times as many as in sugar

refining. Within twenty years the confectionery trade of Scotland has

quadrupled and the preserving trade--jam and marmalade--has practically

been originated. In addition, refined sugar is a raw material in

biscuit making and the manufacture of mineral waters, and 50,000 tons

are used in brewing and distilling. Hence the _Economist_ argues (and

this view seems to have controlled the decision): “It may be that the

gain which we at present realize from the bounties may not be enduring,

as it is impossible to believe that foreign nations will go on taxing

themselves to the extent of several millions a year in order to supply

us and others with sugar at less than its fair price, but that is no

reason for refusing to avail ourselves of their liberality so long as

it does last.”[14] (See § 83, note.)

82. One point in this case ought not to be lost sight of. If the

English government had yielded to the sugar refiners without looking

further, all these little industries which are mentioned, and which

in their aggregate are so important, would have been crushed out. Ten

years later they would have been forgotten. It is from such an example

that one must learn to form a judgment as to _the effect of our tariff

in crushing out industries_ which are now lost and gone, and cannot

even be recalled for purposes of controversy, but which would spring

into existence again if the repeal of the taxes should give them a

chance.

83. On our side the water efforts have been made to get us into the

sugar struggle by the proposed commercial treaties with Spain and

England, which would in effect have extended our protective tariff

around Cuban and English West Indian sugar.[15] The sugar consumers of

the United States were to pay to the Cuban planters the twenty-five

million dollars revenue which they now pay to the treasury on Cuban

sugar, on condition that the Cubans should bring back part of it and

spend it among our manufacturers. It was a new extension of the plan of

taxing some of us for the benefit of others of us. Let it be noticed,

too, that when it suited their purpose, the protectionists were ready

to sacrifice the sugar industry of Louisiana without the least concern.

We have been trying for twenty-five years to secure the home market

and keep everybody else out of it. _As soon as we get it firmly shut,

so that nobody else can get in, we find that it is a question of life

and death with us to get out ourselves._ The next device is to tax

Americans in order to go and buy a piece of the foreign market. At the

last session of Congress Senator Cameron proposed to allow a drawback

on raw materials used in exported products. On that plan the American

manufacturer would have two costs of production, one when he was

working for the home market, and another much lower one when working

for the foreign market. As it is now, the exports of manufactured

products, of which so much boasting is heard, are for the most part

articles sold abroad lower than here so as not to break down the home

monopoly market. The proposed plan would raise that to a system, and we

should be giving more presents to foreigners.

84. To return to sugar, our treaty with the Sandwich Islands has

produced anomalous and mischievous results on the Pacific coast. In the

southern Pacific New Zealand is just going into the plan of bounties

and protection on sugar.[16] It would not, therefore, be very bold to

predict a worldwide catastrophe in the sugar industry within five years.

85. Now what is it all for? What is it all about? Napoleon Bonaparte

began it in a despotic whim, when he determined to force the production

of beet-root sugar to show that he did not care for the supremacy of

England at sea which cut him off from the sugar islands. In order not

to lose the capital engaged in the industry, protection was continued.

But this led to putting more capital into it and further need of

protection. The problem has tormented financiers for seventy-five

years. There are two natural products, of which the cane is far

richer in sugar. But the processes of the beet-sugar industry have

been improved, until recently, far more rapidly than those of the

cane industry. Then the refining is a separate interest. If, then,

a country has cane-sugar colonies which it wants to protect against

other colonies, and a beet-sugar industry which it wants to protect

against neighbors who produce beet-sugar, and refiners to be protected

against foreign refiners, and if the relations of its own colonial

cane-sugar producers to its own domestic beet-sugar producers must

be kept satisfactorily adjusted, in spite of changes in processes,

transportation, and taxation, and if it wants to get a revenue from

sugar, and to use the colonial trade to develop its shipping, and if

it has two or three commercial treaties in which sugar is an important

item, the statesman of that country has a task like that of a juggler

riding several horses and keeping several balls in motion. Sugar is the

commodity on which the effects of a world-embracing commerce, produced

by modern inventions, are most apparent, and it is the commodity

through which all the old protectionist anti-commercial doctrines will

be brought to the most decisive test.

(_C_) FORCED FOREIGN RELATIONS TO REGULATE IMPROVEMENT WHICH CAN NO

LONGER BE DEFEATED.

86. If we turn back once more to our own case, we note the rise in

1883–1884 of the policy of commercial treaties and of a “vigorous

foreign policy.” For years a “national policy” for us has meant

“securing the home market.” The perfection of this policy has led to

isolation and ostentatious withdrawal from cosmopolitan interests.

I may say that I do not write out of any sympathy with vague

humanitarianism or cosmopolitan sentiments. It seems to me that local

groupings have great natural strength and obvious utility so long as

they are subdivisions of a higher organization of the human race, or so

long as they are formed freely and their relations to each other are

developed naturally. But now suddenly rises a clap-trap demand for a

“national policy,” which means that we shall force our way out of our

tax-created isolation by diplomacy or war. The effort, however, is to

be restrained carefully and arbitrarily to the western hemisphere, and

we have anxiously disavowed any part or lot in the regulation of the

Congo, although we shall certainly some day desire to take our share in

the trade of that district. Our statesmen, however, if they are going

to let us have any foreign trade, cannot bear to let us go and take it

where we shall make most by it. They must draw _a priori_ lines for

it. They have taxed us in order to shut us up at home. This has killed

the carrying trade, for, if we decided not to trade, what could the

shippers find to do? Next ship-building perished, for if there was no

carrying trade why build ships, especially when the taxes to protect

manufactures were crushing ships and commerce? (§ 101.) Next the navy

declined, for with no commerce to protect at sea, we need no navy. Next

we lost the interest which we took thirty years ago in a canal across

the isthmus, because we have now, under the no-trade policy, no use for

it. Next diplomacy became a sinecure, for we have no foreign relations.

87. Now comes the “national policy,” not because it is needed, but

as an artificial and inflated piece of political bombast. We are to

galvanize our diplomacy by contracting commercial treaties and meddling

in foreign quarrels. No doubt this will speedily make a navy necessary.

In fact our proposed “American policy” is only an old, cast-off,

eighteenth-century, John Bull policy, which has forced England to keep

up a big army, a big navy, heavy debt, heavy taxes, and a constant

succession of little wars. Hence we shall be taxed some more to pay

for a navy. Then it is proposed to tax us some more to pay for canals

through which the navy can go. Then we are to be taxed some more to

subsidize merchant ships to go through the canal. Then we are to be

taxed some more to subsidize voyages, _i.e._, the carrying trade. Then

we are to be taxed some more to provide the ships with cargoes (§ 83).

88. All this time, the whole West Indian, Mexican, and Central and

South American trade is ours if we will only stand out of the way and

let it come. It is ours by all geographical and commercial advantage,

and would have been ours since 1825 if we had but taken down the

barriers. Instead of that we propose to tax ourselves some more to

lift it over the barriers. Take the taxes off goods, let exchange go

on, and the carrying trade comes as a consequence. If we have goods to

carry, we shall build or buy ships in which to carry them. If we have

merchant ships, we shall need and shall keep up a suitable navy. If

we need canals, we shall build them, as, in fact, private capital is

now building one and taking the risk of it. If we need diplomacy we

shall learn and practice diplomacy of the democratic, peaceful, and

commercial type.

89. Thus, under the philosophy of protectionism, the very same thing,

if it comes to us freely by the extension of commerce and the march of

improvement, is regarded with terror, while, if we can first bar it

out, and then only let a little of it in at great cost and pains, it

is a thing worth fighting for. Such is the fallacy of all commercial

treaties. The crucial criticism on all the debates at Washington in

1884–1885 was: _Have these debaters made up their minds to any standard

by which to measure what you get and what you give under a commercial

treaty?_ It was plain that they had not. A generation of protectionism

has taken away the knowledge of what trade is (§§ 125, 139), and whence

its benefits arise, and has created a suspicion of trade (§§ 63 ff.).

Hence when our public men came to compare what we should get and what

we should give, they set about measuring this by things which were

entirely foreign to it. Scarcely two of them agreed as to the standards

by which to measure it. Some thought that it was the number of people

in one country compared with the number in the other. Others thought

that it was the amount sold to as compared with the amount bought from

the country in question. Others thought that it was the amount of

revenue to be sacrificed by us as compared with the amount which would

be sacrificed by the other party. If any one will try to establish a

standard by which to measure the gain by such a treaty to one party or

the other, he will be led to see the fallacy of the whole procedure.

The greatest gain to both would be if the trade were perfectly free.

If it is obstructed more or less, that is a harm to be corrected as

far and as soon as possible. If then either party lowers its own

taxes, that is a gain and a movement toward the desirable state of

things. No state needs anybody’s permission to lower its own taxes, and

entanglements which would impair its fiscal independence would be a new

harm.[17]

90. Protectionism, therefore, is at war with improvement. It is only

useful to annul and offset the effects of those very improvements of

which we boast. In time, the improvements win power so great that

protectionism cannot withstand them. _Then it turns about and tries

to control and regulate them at great expense by diplomacy or war._

The greater and more worldwide these improvements are, the more

numerous are the efforts in different parts of the world to revive or

extend protection. No doubt there is loss and inconvenience in the

changes which improvement brings about. A notable case is the loss

and inconvenience of a laborer where a machine is first introduced to

supplant him. Patient endurance and hope, in the confidence that he

will in the end be better off, has long been preached to him. It is

true that he will be better off; but why not apply the same doctrine in

connection with the other inconveniences of improvement, where it is

equally true?

3. _PROTECTION LOWERS WAGES_.

91. On a pure wages system, that is, where there is a class who have

no capital and no land, wages are determined by supply and demand of

labor. The demand for labor is measured by the capital in hand to pay

for it just as the demand for anything else is measured by the supply

of goods offered in exchange for it. In Cobden’s language: “When two

men are after one boss, wages are low; when two bosses are after one

man, wages are high.”

(_A_) NO TRUE WAGES CLASS IN THE UNITED STATES.

92. The United States, however, have never yet been on a pure wages

system because there is no class which has no land or cannot get any.

In fact, the cheapening of transportation which is going on is making

the land of this continent, Australia, and Africa available for the

laborers of Europe, and is breaking down the wages system there. This

is the real reason for the rise of the proletariat and the expansion of

democracy which are generally attributed to metaphysical, sentimental,

or political causes. A man who has no capital and no land cannot live

from day to day except by getting a share in the capital of others in

return for services rendered. In an old society or dense population,

such a class comes into existence. It has no reserves; no other

chances; no other resource. In a new country no such class exists. The

land is to be had for going to it. On the stage of agriculture which is

there existing very little capital and very little division of labor

are necessary. Hence he who has only unskilled manual strength can get

at and use the land, and he can get out of it an abundant supply of the

rude primary comforts of existence for himself and his family. If it

is made so cheap and easy to get from the old centers of population to

the new land that the lowest class of laborers can save enough to pay

the passage, then the effect will reach the labor market of the old

countries also. Such is now the fact.

93. The weakness of a true wages class is in the fact that they have

no other chance. Obviously, however, _a man is well off in this world

in proportion to the chances which he can command_. The advantage of

education is that it multiplies a man’s chances. _Our_ noncapitalists

have another chance on the land, and the chance is near and easy to

grasp and use. It is not necessary that all or any number should

use it. Every one who uses it leaves more room behind, lessens the

supply and competition of labor, and helps his class as a class. The

other chance which the laborer possesses is also a _good_ one, and

consequently sets the minimum of unskilled wages high. Here we have the

reason for high wages in a new country.

94. The relation of things was distinctly visible in the early colonial

days. Winthrop tells how the General Court in Massachusetts Bay tried

to fix the wages of artisans by law. It is obvious that artisans were

in great demand to build houses, and that they would not work at their

trades unless the wages would buy as good or better living than the

farmers could get out of the ground, for these artisans could go and

take up land and be farmers too. The only effect of the law was that

the artisans “went West” to the valley of the Connecticut, and the law

became a dead letter. The same equilibration between the gains from the

new land and the wages of artisans and laborers has been kept up ever

since.

95. In 1884 an attempt was made to unite the Eastern and Western Iron

Associations for common effort in behalf of higher wages. The union

could not be formed because the Eastern and Western Associations _never

had had the same rate of wages_. The latter, being farther west, where

the supply of labor is smaller and the land nearer, have obtained

higher wages. It may be well to anticipate a little right here in

order to point out that this difference in wages has not prevented the

growth of the industry in the West, and has not made competition in

a common market impossible.[18] The fact is of the first importance

to controvert the current assumption of the protectionists. They

say that an industry cannot be carried on in one place if the wages

there are higher than must be paid by somebody in the same industry

in another place. This proposition has no foundation in fact at all.

Farm laborers in Iowa get three times the wages of farm laborers in

England. The products of the former pay 5,000 miles transportation, and

then drive out the products of the latter. Wages are only one element,

and often they are far from being the most important element, in the

economy of production. _The wages which are paid to the men who make an

article have nothing to do with the price or value of that article._

This proposition, I know, has a startling effect on the people who

hold to the monkish notions of political economy, but it is only a

special case of the theorem that “_Labor which is past has no effect on

value_,” which is the true cornerstone of any sound political economy.

Wages are determined by the supply and demand of labor. Value is

determined by the supply and demand of the commodity. These two things

have no connection. Wages are one element in the capitalist’s outlay

for production. If the total outlay in one line of production, when

compared with the return obtained in that line, is not as advantageous

as the total outlay in another line when compared with the return

available in the second line, then the capital is withdrawn from the

first line and put into the second; but the rate of wages in either

case or any case is the market rate, determined by the supply and

demand of labor, for that is what the employers must pay if they want

the men, whether they are making any profits or not.

96. The facts and economic principles just stated above show plainly

why wages are high, and put in strong light the assertion of the

protectionists that their device makes wages high (§ 47), that is,

higher than they would be otherwise, or higher here than they are in

Europe. Wages are not arbitrary. They cannot be shifted up and down at

anybody’s whim. They are controlled by ultimate causes. If not, then

what has made them fall during the last eighteen months, ten to forty

per cent, most in the most protected industries (§ 26)? Why are they

highest in the least protected and the unprotected industries, _e.g._,

the building trades? Hod-carriers recently struck in New York for three

dollars for nine hours’ work. Where did the tariff touch their case?

_Why does not the tariff prevent the fall in wages?_ It is all there,

and now is the time for it to come into operation, if it can keep wages

up. Now it is needed. When wages were high in the market, and it was

not needed, it claimed the credit. Now when they fall and it is needed,

it is powerless.

97. Wages are capital. If I promise to pay wages I must find capital

somewhere with which to fulfill my contract. If the tariff makes me

pay more than I otherwise would, where does the surplus come from?

Disregarding money as only an intermediate term, a man’s wages are

his means of subsistence--food, clothing, house rent, fuel, lights,

furniture, etc. If the tariff system makes him get more of these for

ten hours’ work in a shop than he would get without tariff, _where does

the “more” come from_? Nothing but labor and capital can produce food,

clothing, etc. Either the tax must make these out of nothing, or it can

only get them by taking them from those who have made them, that is by

subtracting them from the wages of somebody else. Taking all the wages

class into account, then the tax cannot possibly increase, but is sure

by waste and loss to decrease wages.

(_B_) HOW TAXES DO ACT ON WAGES.

98. If taxes are to raise wages they must be laid not on goods but on

men. Let the goods be abundant and the men scarce. Then the average

wages will be high, for the supply of labor will be small and the

demand great. If we tax goods and not men, the supply of labor will be

great, the demand will be limited, and the wages will be low. Here

we see why employers of labor want a tariff. For it is an obvious

inconsistency and a most grotesque satire that the same men should tell

the workmen at home that the tariff makes wages high, and should go to

Washington and tell Congress that they want a tariff because the wages

are too high. We have found that the high wages of American laborers

have independent causes and guarantees, outside of legislation. They

are provided and maintained by the economic circumstances of the

country. This is against the interest of those who want to hire the

laborers. No device can serve their interest unless it lowers wages.

From the standpoint of an employer the fortunate circumstances of the

laborer become an obstacle to be overcome (§ 65). The laborer is too

well off. Nothing can do any good which does not make him less well

off. The competition which troubles the employer is not the “pauper

labor” of Europe.

99. “Pauper labor” had a meaning in the first half of this century,

in England, when the overseers of the poor turned over the younger

portion of the occupants of the poorhouses to the owners of the new

cotton factories, under contracts to teach them the trade and pay them

a pittance. Of course the arrangement had shocking evils connected

with it, but it was a transition arrangement. The “pauper laborers’”

children, after a generation, became independent laborers; the system

expired of itself, and “pauper laborer” is now a senseless jingle.

100. The competition which the employers fear _is the competition of

those industries in America which can pay the high wages and which keep

the wages high because they do pay them_. These draw the laborer away.

These offer him another chance. If he had no other way of earning more

than he is earning, it would be idle for him to demand more. The reason

why he demands more and gets it is because he knows where he can get

it, if he cannot get it where he is. If, then, he is to be brought

down, the only way to do it is _to destroy, or lessen the value of, his

other chance_. This is just what the tariff does.

101. The taxes which are laid for protection must come out of somebody.

As I have shown (§§ 32 ff.) the protected interests give and take

from each other, but, if they as a group win anything, they must

win from another group, and that other group must be the industries

which are not and cannot be protected. In England these were formerly

manufactures and they were taxed, under the corn laws, for the benefit

of agriculture. In the United States, of course, the case must be

complementary and opposite. We tax agriculture and commerce to benefit

manufactures. Commerce, _i.e._, the ship-building and carrying trade,

has been crushed out of existence by the burden (§ 86). But the burden

thus thrown on agriculture and commerce lowers the gains of those

industries, lessens the attractiveness of them to the laborer, lessens

the value of the laborer’s other chance, lessens the competition of

other American industries with manufacturing, and so, by taking away

from the blessing which God and nature have given to the American

laborer, enable the man who wants to hire his services to get them at a

lower rate. The effect of taxes is just the same as such a percentage

taken from the fertility of the soil, the excellence of the climate,

the power of tools, or the industrious habits of the people. Hence it

reduces the average comfort and welfare of the population, and with

that average comfort it carries down the wages of such persons as work

for wages.

(_C_) PERILS OF STATISTICS, ESPECIALLY OF WAGES.

102. Any student of statistics will be sure to have far less trust in

statistics than the uninitiated entertain. The bookkeepers have taught

us that figures will not lie, but that they will tell very queer

stories. Statistics will not lie, but they will play wonderful tricks

with a man who does not understand their dialect. The unsophisticated

reader finds it difficult, when a column of statistics is offered to

him, to resist the impression that they must prove _something_. The

fact is that a column of statistics hardly ever proves anything. It

is a popular opinion that anybody can use or understand statistics.

The fact is that a special and high grade of skill is required to

appreciate the effect of the collateral circumstances under which

the statistics were obtained, to appreciate the limits of their

application, and to interpret their significance. The statistics which

are used to prove national prosperity are an illustration of this, for

they are used as absolute measures when it is plain that they have no

use except for a comparison. Sometimes the other term of the comparison

is not to be found and it is always ignored (§ 52).

103. A congressional committee in the winter of 1883–1884, dealing with

the tariff, took up the census and proceeded to reckon up the wages in

steel production by adding all the wages from the iron mine up. Then

they took bar iron and added all the wages from the bottom up again, in

order to find the importance of the wages element in that, and so on

with every stage of iron industry. They were going to add in the same

wages six or eight times over.

104. The statistics of comparative wages which are published are of

no value at all.[19] It is not known how, or by whom, or from what

selected cases, they were collected. It is not known how wide, or how

long, or how thorough was the record from which they were taken. The

facts about various classifications of labor in the division of labor,

and about the rate at which machinery is run, or about the allowances

of one kind and another which vary from mill to mill and town to town

are rarely specified at all. Protected employers are eager to tell

the wages they pay per day or week, which are of no importance. The

only statistics which would be of any use for the comparison which

is attempted would be such as show the proportion of wages to total

cost per unit. Even this comparison would not have the force which is

attributed to the other. Hence the statistics offered are worthless

or positively misleading. In the nature of the case such statistics

are extremely hard to get. If application is made to the employers,

the inquiry concerns their private business. They have no interest

in answering. They cannot answer without either spending great labor

on their books (if the inquiry covers a period), or surrendering

their books to some one else, if they allow him to do the labor. If

inquiry is made of the men, it becomes long and tedious and full of

uncertainties. Do United States Consuls take the trouble involved

in such an inquiry? Have they the training necessary to conduct it

successfully?

105. The fact is generally established and is not disputed that wages

are higher here than in Europe. The difference is greatest on the

lowest grade of labor--manual labor, unskilled labor. The difference is

less on higher grades of labor. For what the English call “engineers,”

men who possess personal dexterity and creative power, the difference

is the other way, if we compare the United States and England. The

returns of immigration reflect these differences exactly (§ 122, note).

The great body of the immigrants consists of farmers and laborers.

The “skilled laborers” are comparatively a small class, and, if the

claims of the individuals to be what they call themselves were tested

by English or German trade standards, the number would be very small

indeed. Engineers emigrate from Germany to England. Men of that class

rarely come to this country, or, if they come, they come under special

contracts, or soon return. Each country, spite of all taxes and other

devices, gets the class of men for which its industrial condition

offers the best chances. The only thing the tariff does in the matter

is to take from those who have an advantage here a part of that

advantage.

4. _PROTECTIONISM IS SOCIALISM_

106. Simply to give protectionism a bad name would be to accomplish

very little. When I say that protectionism is socialism I mean to

classify it and bring it not only under the proper heading but into

relation with its true affinities. _Socialism is any device or doctrine

whose aim is to save individuals from any of the difficulties or

hardships of the struggle for existence and the competition of life by

the intervention of “the State.”_ Inasmuch as “the State” never is or

can be anything but some other people, socialism is a device for making

some people fight the struggle for existence for others. The devices

always have a doctrine behind them which aims to show why this _ought_

to be done.

107. The protected interests demand that they be saved from the trouble

and annoyance of business competition, and that they be assured profits

in their undertakings, by “the State,” that is, at the expense of their

fellow-citizens. If this is not socialism, then there is no such thing.

If employers may demand that “the State” shall guarantee them profits,

why may not the employees demand that “the State” shall guarantee them

wages? If we are taxed to provide profits, why should we not be taxed

for public workshops, for insurance to laborers, or for any other

devices which will give wages and save the laborer from the annoyances

of life and the risks and hardships of the struggle for existence? The

“we” who are to pay changes all the time, and the turn of the protected

employer to pay will surely come before long. The plan of all living

on each other is capable of great expansion. It is, as yet, far from

being perfected or carried out completely. The protectionists are only

educating those who are as yet on the “paying” side of it, but who will

certainly use political power to put themselves also on the “receiving”

side of it. The argument that “the State” must do something for me

because my business does not pay, is a very far-reaching argument. If

it is good for pig iron and woolens, it is good for all the things to

which the socialists apply it.

The Forgotten Man, and Other Essays · 第 3 / 11 章