An address to some free traders. Before the Commonwealth Club of New York, December 19, 1887. By Robert P. Porter ...

Digitized by the Internet Archive in 2007 with funding from IVIicrosoft Corporation http://www.archive.org/details/addresstosomefreOOportrich o \^xx^J?l^^6XS o^ i-vCQ. \f(xA- HP 17/3 Number 18. THE AMERICAN PROTECTIVE TARIFF LEAGUE, 23 West Twenty-Third Street, New York. AN ADDRESS TO SOME FREE-TRADERS. BEFORE THE COMMONWEALTH CLUB OF NEW YORK, DECEMBER 19, 1887, BY ROBERT P. PORTER. [In response to a speech made by Mr. R. R. Bowker, Secretary of the New York Free Trade Club, the same evening, in which that gentlemen took strong grounds in support of the President's Message, declaring that the President had at last clearly defined the issue between Free Trade and Protection and welcoming the coming economic battle.] MY part in this debate is rather to point out the unwisdom of some proposed methods of depleting the Treasury of the surplus than to suggest any particular way of disposing of the accumulating revenue. For several years the business and labor interests of the country have been summoned before committees and commissions, har- assed by tariff bills and overwhelmed by free-trade tracts and oratory. The war between the advocates of Protection and Free Trade in the United States has been carried on vigorously since 1880. I insist on using the term " free trade" in this connection, gentlemen, because that doctrine forms the basis of your argument and that is your goal. While the political party advocating this doctrine has hesitated to venture too far into the tempestuous waters of free trade, you, who have formulated and given force to the ideas, have aggressively and boldly advocated the straight Manchester school of thought. With this plausible theory you have captured most of our colleges, and since the Boston Herald has declared that ' ' nothing could possibly be more pointedly against the spirit of Christ than the spirit of Protection," I am afraid you intend to lay violent hands upon the Church itself. But what is still more to the point, so far as the practical effect upon the national prosperity is concerned, is the complete conversion of President Cleveland to the doctrine which you gentlemen have preached so vigor- ously and so persistently during the last ten years. It is true that the President tries to rub off the finger-marks of those who directed his mind, and requests us not to dwell "upon the theories of protection and free trade." And this after he has enunciated, for the first time in the history of his country in the President's message, the clear and unmistakable doctrine of Cobden and Bright, and denounced the protective system as "vicious, inequitable and illogical." Vicious! What does that mean ? Wicked, depraved, addicted to vice. Inequitable ! What does that mean ? Unjust, partial. Illogical ! What does that mean ? Contrary to the rules of reasoning. The President, at the thresliold of his argfument, declares that Protection, as it exists to-day in the United States, is wicked, depraved and addicted to vice ; that it is unjust and partial, and contrary to the rules of reasoning. Could Mr. Cobden, if he were living, say more than this ? Does Mr. Bright, in his occasional outbursts, " bandy" stronger " epithets" than these? Having thus characterized the theory of Protection and planted himself firmly on the side of Free Trade, he unblushingly informs us that the " question of free trade is absolutely irrelevant." There is not an honest free-trader within the sound of my voice who does not know that the theory advanced by the President that the tariff raises the price to con- sumers of all imported articles by precisely the sum paid for duties is a free-trade theory ; who does not know that the theory advanced by the President that the price of all similar commodities made in this country is likewise increased to nearly or quite the enhanced price which the duty adds to the imported articles is a free-trade theory ; who does not know that the theory advanced by the President that duties levied on foreign goods is merely a scheme to tax every consumer in the land for the ben- efit of our manufacturers is a free-trade theory ; who does not know that the theory advanced by the President that only a small minority of the wage earne^^ of this country are benefited by Protection is a free-trade theory ; who does not know that the theory advanced by the President that the increase in the price of articles of general consumption more than counteracts the advantage of higher wages is a free-trade theory ; who does not know that the theory advanced by the President that sheep husbandry in America would flourish better if wool were removed from the dutiable list is a free-trade theory. The President's own theories and utterances in the message of Dec. 6 stamp him unquestionably as a free-trader. It is he himself who has lessened the chances of a wise conclusion on this question by dwelling too long and too fondly upon the theories of Free Trade. It is he him- self who has converted a condition into a theory, and not the Protection- ists. The President's attempt to shirk the responsibility of his own words may comfort and console a few janus Democrats, but it will not deceive either honest free-traders nor honest Protectionists. Robbed of its free-trade theories and fustian, what is there in the President's message ? Simply this. We have two schemes of taxation, and too much revenue. One scheme — that of internal revenue on tobacco and alcohol — he thinks is not a burden, and does not bear heavily on the people. And yet it is the most direct tax upon American in- dustry. It was created as a war measure, to provide for extraordinary expenses. The party to which President Cleveland belongs opposed this tax as unconstitutional, at the time. It was only justified as a war measure. The internal tax is ^ burden upon every farmer who grows a bushel of corn or a pound of tobacco. Free alcohol in the arts and manufactures (and I am glad to find that Mr. Bowker agrees with me on this point) would help our chemical industries and cheapen thousands of articles into which alcohol goes. And when Mr. Bowker advocates free alcohol for the arts and manufactures he comes farther over to our side of the question than he thinks. Does he know what percentage of the total products is used in this way ? One-half. So the Committee on Legislation of the National Wholesale Druggists' Association assert. One-half, gentlemen, of the total production of distilled spirits is thus used. The retention of this tax and that on tobacco fosters monopoly and encourages trusts, and the tobacco tax is as much of a burden upon the farmers of the South as a similar tax would be upon potatoes in this State of New York. As an act of justice to the Southern States these real war taxes ought to be removed. And yet, the first Democratic president in twenty-five years is unable to see anything burdensome or unjust in these taxes to the Southern people. The Atlanta Constitution, a representative Southern democratic journal, recently referring to these taxes, says : " When it is necessary to shed blood to collect an unnecessary tax, that tax should be abolished. That is one of the reasons why the excise tax should be abolished." In his desire to serve the free-traders of the pivotal State of New York and the free raw material manufacturers of New England, the President ignores the cry from the South that the penalty of collecting these internal taxes is blood — the blood of those who feel that in a free country they ought to enjoy the right of disposing of the corn they raise in the fields and the tobacco they grow on their plantations without government interference. The injustice of this war tax, and the horrors connected with its collection, form a chapter in American history that should in the interest of national harmony be blotted out at the earliest possible moment. The President brushes this whole question of the internal revenue on one side as almost unworthy of consideration in his anxiety to get down to solid work on the " vicious, inequitable and illogical" tariff. Our " second scheme of taxation" is that of custom duties on imports. He proposes to reduce the surplus revenue in two ways. First, taking certain articles from the dutiable schedule and placing them on the free list ; and second, by scaling down to the lowest possible point the duties in important schedules, such as the woolen, cotton, chemical, earthenware, glassware, and iron and steel schedules. # There is no doubt but the way to stop revenue is to increase the free list. Now we are confronted by " conditions," not " theories " — so the President says. What is the " condition " of the free list ? It is safe to say, gentlemen, that at the present moment it contains almost every article that we don't produce here. Protectionist statesmen of the blueist, straightest sort have burned midnight oil selecting articles for the free list. The Tariff Commission, of which I was a member, sat up nights trying to discover articles for the free list. And we were measurably successful. The free list has grown from less than one-ninth of the dutiable list in 1870, to one-half of the dutiable list in 1886. More than $212,000,000 worth of goods entered the ports of the United States free of duty last year. First, to reduce the surplus revenue and decrease the price of clothing to the wage earner, the President proposes to put wool upon the free list. It is a curious fact, and one that the President does not appear to have considered, that the price of wool has always been higher under a low than a high tariff. "Why should the farmers be so anxious to retain the tariff, then?" I hear my free-trade friends ask. Because under a protective tariff the breeds of sheep have been improved. In i860, the average weight of fleece was less than two and one-half pounds ; in 1885, more than five pounds. A five-pound sheep will eat no more than a two-and-a-half-pound sheep. It will be seen that the same conditions apply here as in manufacturing industries ; the fostering care of a tariff has increased production, improved the quality, and ultimately cheapened the cost of the product to the consumer. Under such circumstances, it is narrow statesmanship that would remove an industry so vast and so productive of good, from the dutiable list to the free list. With this duty, we have founded and developed a great woolen in- dustry, upon which hundreds of thousands depend for their daily bread. We have become the great carpet producing and consuming country of the world. And these industries have all been built up, mark you, with a high duty on wool. And more than that. The clothing of the people is cheaper, style and quality considered, than in any market of the world. Nine-tenths of all card wool fabrics are made direct for ready- made clothing establishments, by means of which most of the laboring people and the boys are supplied with woolen garments. H«nce we see overcoats advertised as low as one dollar, and good suits of clothes for five dollars. While you gentlemen are advocating your worn-out theories in solid nonpareil letters to the editor, flaring advertisements, such as the following, greet the eye of workingmen on the outside pages of the papers : 500 Men's Heavy Winter Overcoats at 500 Men's Heavy Winter Suits at 500 Men's Heavy Winter Pants at 500 Boys' Heavy Winter Overcoats at 500 Boys' Heavy Winter Suits at 500 Pairs Boys* Knee-Pants at . $1 50 3 50 75 90c. 90c. IOC. Gentlemen, I have been looking into the clothing business lately, and am prepared to show you sample suits at prices that will astonish you, when the style and quality are taken into consideration. You can really procure here in New York a serviceable suit of clothes for $5, and a very good suit for $10, made of American goods — goods, too, that will wear and hold their color. I can also show you blankets at $2. 10 per pair that cannot be beaten at los. ($2.50) a pair in England, and blankets at $5 a pair that cannot be beaten in that happy free-trade country at ;^i ($5) a pair. In these days of cheap clothing and cheap blankets, that venerable chestnut of yours about the poor man's blanket has lost its charm, and the workingman gazes on shop windows filled with excellent blankets, which can be bought in New York as cheap and as good as in London. Not long ago, I was in a factory where 25,000 pairs of men's winter trousers, made of goods weighing fourteen ounces per yard, were being made to be sold at the price $1.50 per pair. Strictly all-wool complete suits were held at $5.50 per suit. Good heavy full winter suits at $6.50 and $7.50. Winter overcoats of satinet at $2 each. The prices of good and substantial garments, sufficient to supply a workingman for a year, were as follows : a handsome suit for Sunday wear, $10.00 ; working suit, $7.00 ; extra pair of trousers, $2.00 ; overcoat, $5.00 ; total, $24.00. A workingman earning two dollars a day can thus obtain his clothing for a year by the labor of two weeks. He can do no better than this in England. I have priced hundreds of workingmen's suits there, and found nothing fit to wear for less than $10 or $12. The commonest corduroy trousers cost, in England, $2.50, while machine-made boots and shoes are more expensive there than in this country. These facts in regard to our woolen industry refute effectually the grotesque statements made by the President, to the effect that the masses of the people in this country are compelled to pay as a tax the duty, not only on imported goods, to the government, but an equivalent amount, in increased cost, to the American manufacturer for goods made at home. And his other proposition — and I quote his exact language — that ' ' the amount of duty measures the tax paid by those who purchase for use the imported article," is equally false in fact, though you have admitted by your cheers true, as a free-trade theory. A few illustrations, borrowed from Mr. Charles Heber Clark, will be sufficient to prick this free-trade bubble, especially when we remember that the President does not give a single specific example to prove that his assumption is true. The present price of steel rails in this country is $33.00 a ton. The duty is $17.00, and the freight $2.50, together making $19.50, the tax on imported rails. This deducted from $33.00 leaves $13.50, which should be the British price of steel rails, if the President's theory is correct. But the British price is, in fact, $20.00, instead of $13.50. Further, the steel rail industry in this country was built up under a duty of $28.00 a 4 ton. In 1885 steel rails were sold here for $27.00, just one dollar less than the original duty. Take another illustration. The price of cut nails in Philadelphia is $2.00 for a keg of 100 pounds. The duty on cut nails is $1.25. If the President's proposition be correct, cut nails should be bought in Europe for 75 cents a keg. In fact, they cannot be bought anywhere on earth for less than $1.50 a keg. Again, cut nails have been sold in this country as low as $1.85 a keg of 100 pounds, while the duty was $1.50 a keg. Thus, according to the President, cut nails must then have been purchasable in Europe for 35 cents a keg. An example even more remarkable is found in the fact that while chloroform is subject to a duty of 50 cents a pound, the domestic article is selling in this country for 35 cents a pound, or actually for 15 cents a pound less than the duty ! Here are the facts. I challenge contradiction, both in regard to the price of clothing and blankets and a thousand other articles. First, I claim that the price of the home commodity is governed by home com- petition, and not by the price of the foreign article plus the duty ; and second, I assert, and prove the assertion, that the price of the imported article is not the foreign price plus the duty, as the President claims it is. He has no facts, and can produce no facts to support his position. I have produced facts and can produce any amount of additional facts that will sustain my position It has been truly said by a writer in the North American Review that the President presents the weakest side of the free-trade argument. And this is true, "in comprehension as in courage " this writer says, " he resembles the school-boy. Dogmatic and positive where a competent free-trader would be most vague and cautious, he discharges obsolete and long-abandoned theories which resemble economic arms of precision no more than a Queen Anne blunderbus resembles a modern Lebel rifle." That he has "betrayed a melancholy and hopeless ignorance" of facts there can be no doubt. And that his argument is built upon the proposition that prices of protected products are, as a rule, enhanced to the full extent of the protective duties, even a free-trader will not deny. Before the people will believe this, you gentlemen will have a good deal of explaining to do. You will not only have to explain the facts which I have laid before you, and which Mr. Charles Heber Clark has laid before you, but you will, as the writer in the North American Review says, be cruelly handicapped by his ignorance in another way. You will have * * to explain how glassware came to be bought in Pittsburg for Cunard steamers ; how American bridge-builders secured the contract to put thousands of tons of American steej into an Australian bridge ; how Pennsylvania rails went to Mexico, or New Jersey locomotives to Europe, or American mining machinery to British mines in South Africa, and by what miracle it comes to pass that American cottons are sold in Man- chester and American cutlery in Sheffield. " Linked with these are the other fallacies that foreign prices would be what they now are if American production were to cease, and that cheaper materials can be had by depending upon foreign supplies. In 1879 an increased demand for iron from this country, amounting to 550,000 tons, actuaUy raised the prices of pig-iron in Great Britain 67 per cent., of bar iron 66 per cent., and of some other manufactured kinds 100 per cent., and yet Mr. Cleveland imagines that a demand five or ten times greater, consequent upon a removal of duties, would not lift the foreign price as much as the existing duty of 43 per cent. Simi- lar examples by the hundred could be presented of sudden and fatal rise in the cost of materials, when this country has suffered itself to become dependent upon foreign supplies." And while you are enveloping these facts with theories for the con- sumption of the working people the manufacturers will resent the Presi- dent's statement in regard to enormous dividends and demonstrate, as Mr. Abram S. Hewitt did, how small are their profits by offering to rent his vast mills for a dividend of six per cent. If you stand firm by the text of this extraordinary message, you will have to work hard. The people of this land want the facts about the tariff. You cannot humbug them with your "ninety per cent, ad valorem on blankets," and "eighty per cent, on clothing." They understand that over sixty per cent, of their income goes for food, which is cheaper here than anywhere on earth ; and they also know that the average of seventeen per cent, of their income which is expended on clothing can be laid out to as good advantage in the New York market as in the Lon- don market. They also know that the development of these great in- dustries under a protective tariff has had much to do with cheapening all commodities that enter into general consumption. What is true of wool applies with equal force to the other articles pro- posed for the free list, but which the President does not specifically men- tion. It will be a fatal mistake to put iron ore, coal, manufactured lumber, salt or flax upon the free list. Under the tariff, the iron ore product has increased from 1,000,000 to 10,000,000 tons annually. Mr. George H. Ely, of Cleveland, told me the other day that, including the investments for distribution (railroads, vessels, etc.), not less than $150,000,000 of capital was invested in this industry. We are now im- porting 1,000,000 tons. Take the duty off, and either the wages of miners must be reduced or development stop, I contend that it is better for this country to pay a good deal higher for its ore, its coal, its pig-iron, its iron and steel, than to bring about either one of these catastrophes. If I had the time, and you gentlemen had the patience, I could take up every one of these American industries and show what has been accom- plished under this protective system. Free-traders and revenue reformers admit all this. But there is a broader view of the subject that the Presi- dent apparently has not thought of. He looks at this question in spots, through a microscope, and fancies he sees all manner of dreadful things. It is not a question simply of whether we shall clothe ourselves in cloths manufactured from American wools, or in cloths fabricated from Austra- lian wools, but how will the nation at large and the individual citizen be affected by the policy which makes the latter necessary, if not inevitable. This is the position taken by the minority of the Ways and Means Com- mittee in 1886, when the question of free wool was before the commit- tee. It is not the narrow question, that committee contended, of the cost of the clothes we wear, or the food we eat, or the lumber which gives shelter to our homes ; but what will be the general effect of such reduced cost, and all which must follow it, upon our citizenship, and ulti- mately, its influence upon the strength and character of our institutions. The government, which derives all its powers from the people, must be mindful of their interests, considerate of their character, and in every way possible favor their preparation for the responsibilities with which they are charged. It is a broader question than the price of the foreign or the domestic product. I submit the following five propositions for con- sideration : I. A nation should make what it can make cheaper than it can buy it. II. The cost of a thing is what we part with to obtain it. III. A nation parts with raw materials when she devotes them to pro- ductive manipulation, thus using them up. IV. A nation does not part with her capital or her labor. Their pro- ductive employment costs her no more than their idleness. V. Therefore, the only element of cost in domestic production — so far as concerns the produeing nation — is the nature of the materials used up ; their value, that is, to the nation in their natural site and condition. Comparing the condition of the nation at the inception of the act of pro- duction with its condition at the completion of the act, the only difference 6 due to the act that can be discovered is the impairment of her natural resources. Thus, with sufficient spare capital, and sufficient spare labor, it pays us to do our own manufacturing, even at an enhanced cost to the individual — that is, it pays the nation. And now one word on the President's second proposition to reduce duties, as a means of cheapening commodities and decreasing revenue. No specific schedules are mentioned, so there is doubt as to which schedules he would doom. Is it the iron and steel schedule ? If so, has he taken into consideration that last year nearly $50,000,000 worth of foreign iron and steel products came into this market. The woolen schedule, with $40,000,000 of foreign products ; the silk schedule, with $30,000,000 ; the cotton schedule, with $30,000,000 and the flax and hemp schedule with $31,600,000, A few years ago I made an estimate show- ing that in the four years ending 1884 $1,204,000,000 worth of imported manufactured goods had been landed in this country that should have been made here, something like $240,000,000 annually. The duties on these goods aggregate nearly $100,000,000 annually. There is no rea- son why we should not ourselves produce these important articles of man- ufacture. With abundant coal and iron ore, we have no right to go to foreign countries annually for one-sixth of our supply of iron and steel. The greatest cotton-producing country in the world, and the most in- genious in the use of machinery, has no right to buy nearly $30,000,000 worth of the manufactures of this same cotton of other nations. The third great wool-producing country of the world should not stand idly by and pay foreign labor and foreign capital for one-sixth of what it uses of these goods, and mostly goods into which the greatest amount of labor has gone. Our tin-plate factories are silent, while England supplies us with the goods, and puts up the price by a combination with French pro- ducers. Including those that come in free, one-third of our annual sup- ply of chemicals come from Europe ; four times the value of our total flax products is imported ; one-third of our glassware, and one-half of our earthenware and china. And, in the face of this, there are people foolish enough to talk of American manufactures being able to compete with the manufactures of the world. In some lines, especially in articles of universal consumption, perhaps we can ; but these figures do not indicate that we can in the higher grades of goods in the principal protected industries. Here we have in five years $1,200,000,000 worth of manufactured goods that ought to have been made here. What does this mean to the workingman of the United States, supposing we could have made all these goods at home ? At least fifty per cent, of this was labor, for the goods that come in under our present tariff are, as a rule, the finer class of goods, in the making of which a large amount of labor is consumed. At least fifty per cent, of this is labor, I repeat. The American workman has lost $600,000,000, or over $120,000,000 every year in wages. Supposing that mythical and soulless person known to political economists as the " con- sumer" has been able to get these goods ten per cent, cheaper, the nation, as I have clearly shown, has lost ten times ten per cent, in not employing her idle labor and surplus capital. While there is land to build factories upon, capital to stock them and hands to run them, it is a sin not to make all we can at home. It costs the nation nothing but the impair- ment of its natural resources. The working people of this country, in my opinion, are far more likely to demand a higher rate of duty, so that more of these imported goods can be made at home, than a lower rate, so that more can be made abroad. If one of our leading statesmen would ably and vigor- ously go before the country on a platform pledging a tariff high enough to really protect American wage-earners, it would sweep the country. 7 That is more likely to be the cry of the future here than that of lower duties. Why, even a free-trade economist like Prof. F. A. Walker ad- mits that we are on the eve of a great protection revival, and that the demand is coming from wage-earners. The man engaged in the partially protected industries, such as iron and steel, woolen manu- facturing, etc., looks around and finds his fellow-workmen engaged in the absolutely protected industries like type-setting, carpentering, butcher- ing, brick-laying, etc., earning higher wages than he does. " If I was absolutely protected," he argues, " my wages would be higher." If we made $240,000,000 worth more goods at home, they certainly would be higher. Reducing duties as a means of reducing the revenue will never work. We reduced the duty in 1883 on certain articles in the wool and woolen schedules, and the revenue collected on those articles has in- creased over $11,000,000. And worse. The Secretary of the Treasury is obliged to admit that the manufacture of worsted goods in the United States must soon cease. This means the sacrifice of $20,000,000 of capital, and idleness for 20,000 operatives. Is this wise? It is necessary for our interior health to keep our manufactories vigorous. It will not do for a country that is fortunate to have such establishments to pinch them down to a starvation point. If this is done, they cannot do their work properly. If a man is lucky enough to have a good stomach or a good liver, he does not pinch it down to the mere point of letting him live. It is a good thing for him to keep it vigorous. So with these manufactories. Let them live. And if they live and prosper, the Re- public will live and progress. In all that goes to make a nation strong and prosperous ; in all that goes to make a country great and independent ; in all that goes to broaden the horizon of the laborer, increase his earnings, cheapen the cost of what he buys, and improve his condition ; in all this lies the strength of the protective system. Firm in the convictions of our lead- ing thinkers, deeply seated in the experience of the country, strong in the hearts of the majority of people, and laden with evidences of its rich fruit, it is not likely the American system, shaped by the same hands that built the Republic, is to be wiped out for a system originated by the manufacturers of Manchester, England, for the sole purpose of grinding down the wages of their mill operatives. And that system is now advocated squarely by the President of the United States. Ig- norance is no excuse for advocating a system that would destroy American industries and pauperize American labor. For advocating a system which acknowledges laisserfaire as an excuse for doing nothing while people starve, and the all-sufficiency of competition as a plea for grinding the poor. Though you gentlemen may raise the cry that only free-traders are Christians, we still contend that common-sense and Christian precept are part of our economic faith. All that is best in human nature should have its place in economic life. Man is not a machine, and until he becomes one, you can never apply with success the principle of the old Manchester school. of political economists upon his action. In this broad domain of ours there is yet plenty for human hands to do. The more diversified that employment is, the better for the Nation. We are called upon to deal with the economic conditions of this country, not of the world at large, as some of you gentlemen seem to imagine. We must judge of what is best for our own country at this time, and the sooner you divest yourselves of played-out theories, and take up living facts, the better for the country, and as a country like our own cannot become rich and prosperous without the inhabitants improving their condition, the better for yourselves. 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