Home production, indispensible to a supply, at low prices, of the manufactured commodities required for the people of the United States, and adequate home production of these commodities impossible without a protective tariff. By C.D. Todd ...

^ — ^) HP 17/3 NUMBER 30. first pri^e Gssrn/', ^888. HOME PRODUCTION" INDISPENSABLE TO A SUPPLY, AT LOW PRICES, OF THE MANUFACTURED COMMODITIES REQUIRED PEOPLE OF THE UNITED STATES, AND ADEQUATE HOME PRODUCTION OF THESE COMMODITIES IMPOSSIBLE WITHOUT A PROTECTIVE TARIFF. BY C. D. TODD, OF THK UNIVERSITY OF WOOSTER, OHIO, CLASS OF '88. OF THE UNIVERSITY THE AMERICAN PROTECTIVE TARIFF LEAGUE, 23 WEST TWENTY-THIRD STREET, NEW YORK. AWARDS FOR PRIZE ESSAYS, 1888, THE AMERICAN PROTECTIVE TARIFF LEAGUE, } No. 23 West Twenty-Third Street, NEW YORK, July 14, 1888. ) The American Protective Tariff League, in accordance with the accompanying Judges' Report, hereby announces the annual award of prizes to college students for Essays on " Home Production Indispensable to a Supply, at Low Prices, of the Mannfact- ured Commodities Required for the People of the United States, and Adequate Ho'me Production of these Commodities Impossible without a Protective Tariff." The competitors represented 13 States and 19 different colleges. The first prize of $250 has been awarded to C. D. Todd, University of Wooster, Ohio. The second prize of $ ico to S. P. King, of the University of Kansas, Lawrence, Kas. The third prize of $50 to Lincoln Hulley, Bucknell University, Lewisburg, Pa. Ten Silver Medals have been awarded, as follows : 1. Wallace McCamant, Lafayette College, Pa. 2. Chas. S. Winters, Cornell University, N. Y. 3. M. H. Hoover, Williams College, Mass. 4. Chas. Ward Marshall, Amherst College, Mass. 5. Edward Mandell, College of the City of New York. 6. Lewis LeG. Benedict, Trinity College, Conn. 7. Percy R. Benson, University of Minnesota, Minn. 8. F. L. Pattee. Dartmouth College, N. H. 9. Frederick H. Parkhurst, Columbian College, D. C. 10. E. F. Roe, Knox College, 111. E. H. AMMIDOWN, President. JOS. D. WEEKS, General Secretary. NEW YORK, July 14, 1888. Edward H. Ammidoivn, Esq., President: DEAR SIR : — The undersigned, appointed by the American Protective Tariff League to deter- mine the award of prizes for Essays by senior students of American Colleges, respectfully report : The number of Essays submitted was 19. Many of them are of a high order of merit, and worthy of careful perusal. Several of them possess such uniform merit that it has required no little care to discriminate fairly between them. This fact has prevented as prompt a report as would otherwise have been desirable. We have, however, reached the following conclusion with practical unanimity. We award : The first prize to the Essay signed l"C. D." The second prize to the Essay signed " Regulus." The third prize to the Essay signed "Gyp.'.' We designate the following Essays as especially meritorious and entitled to Silver Medals : 1. "Eaglet." 6. "Epsilon." 2. " Hortensius." . 7. " Eilar." 3. " Protect Peri." 8. " F. P. Lewis." 4. " P. R. O'Tection." 9. " Fortunatus." 5. " G. H. M." 10. " Adam Cardwell." Respectfully submitted, ELLI H. ROBERTS, GEO. M. STEELE, B. F. JONES, EDWARD P. NORTH, JOSEPH D. WEEKS, Judges. 1IOMK PRODUCTION INDISPENSABLE TO A SUPPLY, AT LOW PRICES, OF THE MANUFACTURED COMMODITIES RE- QUIRED FOR THE PEOPLE OF THE UNITED STATES, AND ADEQUATE HOME PRODUCTION OF THESE COM- MODITIES IMPOSSIBLE WITHOUT A PROTECTIVE TARIFF. That the policy of the government, on any question, home or foreign, affects the industrial conditions of its people, is evident to all engaged in any branch of trade or manufacture ; but especially is this true concerning the system of revenue adopted by the majority of the civilized nations at the present time. This system of revenue takes for its foundation the principle of polit- ical economy that home markets and the intimate association of producer and consumer is the cheapest industrial condition, both for the producer and consumer, and tends to the greatest increase of wealth in the State of which it has become the settled policy. To show that this policy is a sound one in theory, and that its wisdom is demonstrated by the prosperity of those nations which have adopted it, and that it has been especially verified in our national history, will be the object of this essay. As viewed from the theoretical side, let us examine a few of the princi- ples which have been laid down by the ablest writers of political and social economy. It should, however, be borne in mind that no theory is consid- ered as established until it is able to predict facts which can be realized in actual experience. Viewed in this light I have no hesitation in saying that as a theory of political economy the Protective policy is vastly superior and has been more generally verified in the "experience of nations than any theory of Free-Trade. The two things which the Protectionist has incorporated into his policy and which are denied by the Free-Trader are : 1st. That diversity of industry increases production, both in quantity and quality. Hence it necessarily follows by the laws of trade that as pro- duction is increased the commodity is cheapened, either directly by a decline in price, or indirectly by an increased purchasing power of other com- modities. 2d. That Protection tends to develop and maintain this diversified industrial condition, thus increasing capital and wages. Man cannot make the plant grow, but he can place the seed in such conditions that, by the laws of its own being, it must grow and yield fruit after is kind. Han cannot unite, separate or readjust the molecules of iron, but he can brinsr to bear upon them the forces of heat and stress, and change them from worthless ore to forms of utility. In like manner a nation cannot legislate that nature shall yield more numerous or more diversified products, and yet the nation can regulate and direct those forces of nature to the improvement of its own condition. In many ways the State does exercise such power with gratifying results. And she fails of her duty if she does not exercise it. One of these duties is to foster diversified industries when the individual alone, or by co-operation, could not accomplish the desired end. John Stuart Mill (Vol. i, p. 162) says: "'That a country will seldom have a productive agriculture unless it has a large town population, or the only available substitute, a large export trade in agricultural products.'' The stock argument of the Free-Trader is, that we are naturally an agricultural nation, and that in endeavoring to foster unnatural and expen- sive industries by Tariff laws we are withdrawing thousands of laborers from the soil and permitting the few to gain wealth at the expense of the many. Let us examine the statement of Mr. Mill. " A country will seldom have a productive agriculture unless it has a large town population.'' How can a country have a large town population without diversified industries ? Society requires only a limited number of official, professional and mercan- tile population ; and this is reduced to a minimum when there is but one productive industry. An increase in the number who till the soil cannot increase the value of a bushel of corn. Enlarging the acreage has not made agriculture more profitable. It has only increased the amount of product. This increase diminishes demand, and in the same degree its exchangeable value. This value becomes zero as the increase of the product becomes unre- inuneratively large. The only way to restore value is to decrease produc- tion or increase demand. Evidently the latter would be the wiser alterna- tive. This condition of agriculture has been often experienced in our own history, when grain was left to rot in the field, because its value was not equal to the cost of harvesting. Farmers in Illinois and Iowa have often burned corn for fuel because its exchangeable value was so small that it was cheaper than coal. But since cities have sprung up, factories started and mines opened within their own territory, the purchasing power of corn in respect to coal has increased more than eightfold, showing conclusively that a non-agricultural population is necessary for remunerative farming. As a further effect of a large non-agricultural population on the soil, let us examine the theories of H. C. Carey (Vol. 1, pages 70-85) and test them by some facts in our own experience. The soil, the atmosphere and the sun are the source of all plant life ; the animal lives by consuming the plant, in which process carbon dioxide is liberated and in turn is consumed. The waste of the animal becomes a fertilizer to restore the exhausted soil, thus completing the circle. If there is a lack of nutriment in the soil or carbon dioxide in the air, vegetation declines and animal life becomes more difficult. Thus it is necessary that there should be a large population in every locality in order that the soil may be the most productive. It is also found that the carbon dioxide formed by the combustion of coal and wood in houses and factories will enrich the atmosphere and produce greater vegetable growth. By this means we are able to utilize the great carbon- iferous stores found in our coal beds. These views are amply confirmed by experience ; what do we mean by saying that the soil is "run out," but that some necessary constituent is exhausted ? If the product of the soil be all exported, unless something be imported to restore the loss the soil will " run out;" hence the advantage of consum- ing the product of the farm, as far as possible, by stock upon the land, or the next best thing, in a near town, from which the waste of consumption can be returned to the soil. 6 The yield of corn and wheat per acre in Pennsylvania and Ohio, is greater than in Illinois aud Kansas, although the latter are considered the great grain producing States. Their aggregate yield is greater but the average per acre is less. According to the census of 1880, of the 2461 counties into which the United States are divided, the twenty which rank highest in the value of farms and farm products were those in which are situated large cities or a number of manufacturing towns. Cook County, 111. , and Allegheny County, Pa., are the only ones of the twenty which are situated west of the Al- legheny Mountains. Cook County, 111., yields a farm product valued at $3,699,975 and a manufactured product worth $253,910,548.* Allegheny County, Pa., yields a farm product valued at $3,666,167 and a manufact- ured product worth $105,272,739. The remaining eighteen counties are all situated in New York, Massachusetts and Pennsylvania, the three largest manufacturing States in the Union. " Truck farming" becomes a powerful argument in favor of increasing centers of population, when we consider that, at $1 per Bu. and 15 Bu. per acre, it would require 246,665 acres to yield a wheat product equal in value to the "garden truck " raised on the few acres of Cook County not oc- cupied by the City of Chicago. The following table prepared by J. D. Dodge, commissioner of agri- culture, will illustrate the relation of agriculture to other occupations and how a non-agricultural population and home markets make farming remun- erative : The States are divided into four classes. CLASSES. Per cent, population engaged in farming. Value of land per acre. Value of product per capita to cultivater. First Second Less than 30 per cent. 30 to 50 per cent $38.65 3055 $457 394 Third 50 to 70 per cent 1353 361 Fourth Above 70 per cent. 518 160 These facts prove conclusively that a productive agriculture can only exist where there is a large town population. Having proved the correctness of the first of Mr. Mill's propositions, let us consider the other condition which may be used as a substitute for a large town population— i. e., " a large export trade in agricultural products." * These figures from the census of 1880. The practical question here arises : Can we have a large export trade in agricultural products? The answer to this is most emphatically No. We produce (report of J. D. Dodge, commissioner of agriculture, June 28, 1886) $3,600,000,000 worth of agricultural products annually; our entire ex- port trade (Bureau of Statistics, 1886) in 1886 was $665,964,529, of which 73 per cent., or about $500,000,000, were agricultural products, equal to 15 per cent, of our entire product for that year. Of this amount $238,999,434, or 8 per cent. , was food sent to Europe, which is at present the only market for breadstuff. If the 45 per cent, of our entire population (60,000,000) who are en- gaged in agriculture can produce sufficient food to sustain themselves and the other 55 per cent, of our present population and still have from 10 to 15 per cent, of their product, which they must dispose of in foreign markets, what would be the effect if the 27 per cent, of our population which are en- gaged in mining and manufacturing should cease to be consumers of the products of the toil of others and should become producers of like products? The inevitable result would be that the surplus for foreign markets would be more than doubled; and the market must increase in like proportion if ag- riculture is to be remunerative, for the profit is in this surplus, and if it be doubled without increase of demand its value must decrease one-half. Is it possible then to increase our foreign trade so as to still keep agri- culture as remunerative as before? Evidently it is not, for the market is limited, the sources to draw from are increasing, competition is sharp and the purchaser will always buy where he can get what he wants cheapest. The only way to retain the trade is to lower the price below that of our competitors, which will diminish our profits. Russia and India are fast superseding us in the wheat market ; Australia, India and South America are no mean rivals in the cotton and meat market. What, then, is this market of which our Free-Traders speak so fluently? Is it boundless in ex- tent, limitless in duration? No. It is but at best less than one-half of the Continent of Europe. How can such a territory, less in extent than two of our largest States, ever become an adequate and permanent market for the surplus product of North and South America, Australia and Africa when the agriculture of these vast continents shall have reached the development 8 which it shall attain in the immediate future? The idea is preposterous and the policy which considers it is too short-sighted for American states- men and laborers to support. The policy of our forefathers and ablest statesmen was always to favor a home market and whatever would develop it. Well they knew the evils arising from the lack of such a market. Their bitter experience during our colonial history had taught them that a purely agricultural nation is at the mercy of manufacturing nations, as well when selling as when buying. Fisher Ames, of Massachusetts, said in discussing the first tariff act (the second law passed by the First Congress) : ' ' The present Constitution was dictated more by commercial necessity than by any other cause. The want of an efficient Government to secure our manufacturing interests and ad- vance our commerce was long seen by men of judgment and patriots." The father of our financial and Protective system, Alexander Hamilton, said : " An extensive domestic market for the surplus product of .the soil is of the first consequence. It is, of all things, that which most effectively conduces to a flourishing state of agriculture." (Report on Manufacturing, December 5th, 1791.) John C. Calhoun stated in a speech in Congress, 1816 : "When our manufactures are grown to a certain proportion, as they will under the fostering care of the Government * * * the farmer will find a ready market for his surplus produce, and what is of almost equal consequence, a certain and cheap supply for all his wants." Benjamin Franklin says : "Every manufacturer encouraged in our country makes a part of a market for provisions within ourselves, and saves so much money to the country as must otherwise be exported to pay for the manufactures he supplies." Truly, the experience of a century, with its alternate periods of high and low Tariff, has verified the prophetic words of those who founded this nation, and secured her industries by a Protective Tariff. The reason why I have dwelt so long upon this phase of the subject is, that many political economists have taken as their basis of reasoning upon economical questions the theory that the rate of wages, real and apparent, is determined by the relative rates paid in agricultural pursuits. If it be so, as it doubtless is, that the soil is the measure of all value, as it is the source of all wealth, it becomes necessary first to know what are the most remunerative conditions for a productive agriculture. The natural and most economical relation of producer and consumer ix tlmi of <l<>xc l>r<>.riin!t}( <tnd intimate association. I have already shown that it tends to the greatest production, and therefore it makes possible a greater consumption, and a consequent larger amount per capita, enabling the individual to more fully and more readily satisfy his wants. Taking the elements of nature and making them subservient to the needs and enjoyments of man is one continuous process of production and consumption, at each stage of which something useful or enjoyable is de- veloped. The crude product of one stage by a process of consumption be- comes the more refined and useful product of the next. These processes are often numerous before the first product shall have become the final one. Each process must be attended, not only with a compensation for the effort expended, but also leave a margin for profit or its production will cease. This profit, of all past production, is the accumulated capital or wealth of to-day. Each process of production adds its modicum of wealth to the present capital. ' ' Every addition to capital gives to labor either additional employment or additional remuneration, enriching either the country or the laboring classes." (J. S. Mill, Vol. 1, p. 100.) Therefore that econ- omical condition in which the greatest variety of industries is fostered is that in which capital is most rapidly increased and the toil of the la- borer best requited. The intimate association of producer and consumer makes possible quicker returns to both labor and capital ; robs transportation companies and commission merchants of their exorbitant profits; does away with foreign bills of credit; and lessens all the expenses attendant upon the distant separation of producer and consumer. This decrease of expense means greater profit to the one or cjieaper consumption to the other, in either case benefiting the community by an increase of wealth. It might be pertinent to inquire how great are the expenses attending the exportation of our surplus products and the importation of that which we 10 lack. Is it sufficient to overbalance what the Free-Trader is pleased to call the increased price attending our system of Protection? Our ocean freight bill annually amounts to $100,000,000 upon the $1,607,000,000 (1883 Report of Tariff Com., p. 301) of imports and exports,, or one-sixteenth of the value of our foreign commerce ; and even this is too little unless we concede that we pay the freight both ways. The cost of transporting a bushel of wheat from Chicago, the American grain market, to Liverpool^ the English or so-called market of the world, is from 11 to 12 cents. The price of wheat in each market, December 19th, 1887 (Market Reports of Chicago Inter- Ocean and London Times), was at Chicago 91 J ^ per bushel, Liverpool 97^ cents, leaving a margin of 6J cents in favor of the foreign market (if it were only situated 2000 miles further West) ; but when we deduct 12 cents for transportation, and one cent each for at least three grain merchants, we have a margin of 7f cents in favor of the home market, if we could only utilize our entire product. When we cannot sell advantageously in the home market we must sell in a foreign market at a sacrifice in the price rather than have our surplus product go to waste. How much more profitable it would be if we could dispose of our entire product in the home market? How great an increase of market would be required to consume our entire product ? It is estimated that we now consume 92 per cent, of our cereals, when but 55 per cent, of our population are withdrawn from agriculture. It is plain to be seen that with the present rate of increase of our non-agricultural industries it will be but a short time, even with the wonderfully rapid ex- tension of farming in our Western Territorie, still we will be able to consume our entire product in the home market. Not only is the price diminished but the grade of goods placed upon an independent market must be better than can be placed upon a depend- ent market. Inferior and limited market facilities are always taken advantage of by manufacturers and traders who wish to dispose of inferior goods and those that are out of date. On account of this limitation of market, people in thinly populated districts pay as much for inferior goods as those in the more densely populated districts do for a much better grade. Inferior goods are always dear whatever may be the price. The policy 11 of England has always been to dispose of her inferior goods in the colonial market or in the markets of such nations as are dependent upon her for their manufactured commodities. Such was her policy with us as long as we were dependent upon her for our manufactured commodities, and such would be her policy still if it were not for our domestic manufactories — built up by our Protective system — which compel her to place a better grade of goods upon our markets. Her motto, for the past 150 years, as oft reiterated by her statesmen, has been, "Anything is good enough for the colonies.'1'1 Such was her policy when she sold us rails for $150 per ton which were so inferior in quality that she could not dispose of them in her own market, and which we found to be so brittle as to be worthless. By means of a Protective Tariff we have fostered industries which have driven such goods from our markets, and in their place we have the best steel rails at from $30 to $35 per ton, while Australia and the South American States enjoy the privilege of purchasing England's worthless wares, at exorbitant prices. England's policy has cost her some of her richest possessions and most extensive markets, and it will cost her more of them if she does not soon change her policy. The majority of her colonies have enacted Tariff laws against her, in order that they may supply themselves with better goods, and reap the profits attending their manufacture. * Home production tends to the most rapid accumulation of capital, which capital not only becomes a new and increased power for produc- tion, but it also becomes an increased source of wealth, which shall share in the necessary public expenses of society. Thus increased capital dimin- ishes taxes by increasing the amount of taxable property, and lessens the expenses of production. It also decreases interest upon loans, thus lessen- ing the cost of production. The difference between home and foreign commerce in increasing national wealth is that "Exchange with a foreigner provokes but one production, while domestic exchange provokes two." This is of especial importance to us since our domestic trade is valued at $40,000,000,000 a year, while our foreign trade is but $1,500,000,000, or one-twenty-sixth as 12 large; so that according to this principle our domestic trade becomes 52 times as valuable to us as our foreign trade. The importance of this is apparent, since I have shown that every production is attended with profit to some one, and that all capital is but the gain or surplus of production over consumption. But who shall be the some one that shall enjoy this increase of wealth? Let Adam Smith, the father of political economy, answer this question. ' ' The capital employed in purchasing in one part of a country, in order to sell in another part the product of the industry of that country, gener- ally replaces by such operation two distinct capitals that had both been employed in its agriculture or manufactures, and thus enables them to continue that employment. The capital used in buying foreign goods for domestic consumption, when the purchase is made by the produce of domestic industry, replaces also two distinct capitals, but one of them only supports domestic industry, the other supports foreign industry; and there- fore foreign trade will give but one-half the encouragement to the industry or the productive labor of a country that domestic or internal trade does." Such is the theory. "What has been the practical result of our acting upon it? Stephen Colwell (U. S. Commissioner of Revenue, Report of 1866) states that— "The strength and wealth of a country should be measured by the quantity of its own products which its consumes, and not by what it sends abroad. The cities of New York and New Jersey contribute more to the consumption of the United States than all Europe. The trade be- tween Pennsylvania, New Jersey and New York on the one side and New England on the other vastly exceeds our trade with Europe. Like facts may be found in the statistics of every State and country." From this we conclude that home production and home consumption is the indus- trial condition most productive of wealth, .and therefore most to be sought after by every nation with small capital and large undeveloped re- sources. The relative value of our foreign trade, as compared with our domes- tic, is small, and the sooner we reduce it to those commodities that we can never hope to produce, such as tea, coffee and spice, the better for us financially. If we could change two-thirds of our foreign trade into domestic trade we would be just that much richer. For if $500,000,000 worth of the products shipped abroad were exchanged at home for the necessary products for which they are now exchanged abroad we would as a nation be better off by $500,000,000 a year than we now are; for we would retain at home the $500,000,000 which we now send abroad, and also have added to our national wealth the $500,000,000 which we now purchase abroad; so that our national wealth would be increased $1,000,000,000 a year by domestic trade instead of $500,000,000 a year, as at present. From this it is apparent that it is far wiser to encourage domestic rather than foreign trade, and that the Tariff as a factor in accomplishing this is one of the greatest questions before the American people. Increased capital would diminish the rate of taxation. We have the smallest taxes of any civilized nation; still, the $646,277,221 (1880) of national, State and municipal taxes are a drain upon the resources of the people which it is the duty of our statesmen as far as possible to relieve. As about one-half this amount ($325,000,000) is levied pro rata upon the capital of the citizens, it should be the object of all interested parties to so increase capital that the rate may be as low as- possible. John Bright says that " every workingman in Great Britain gives at least two hours extra per day of toil and of sweat to support the Govern- ment.'" (In a public address, December 11, 1860.) The American laborer gives 10 cents a day or two-thirds of one hour's work to support his Govern- ment, or one-third of that which his English cousin pays. In 1865, with their Free-Trade system in full operation, Richard Cobden said: "The income of the Government is derived in Great Britain in a greater proportion than in any other country from the taxation of the humblest classes. " The cause of this is that England levies $75,000,000 of her $100,000,000 of custom duties upon tea, coffee, tobacco and fruits, things which she cannot produce — and so levies her excise that the poor pay a disproportionate amount of her direct taxes. On the contrary, we remit the duty on things we cannot produce and levy it on luxuries or things we can produce, and 14 our direct tax being pro mta upon capital the rich bear the larger share of the burden. The increase of wealth in the United States during the past 25 years under a high Tariff clearly proves the beneficial effects of a Protective policy. During this period we have quadrupled our wealth, and made such rapid advancement in its aquisition that Mr. Mulhall, of the Royal Society, London, says: "It would be impossible to find in history a parallel to the progress of the United States in the last ten years. Every day that the sun rises upon the American people it sees an addition of $2,500,000 to the accumulated wealth of the republic, which is equal to one-third of the daily accumulation of all mankind outside of the United States.1' If our rivals can thus speak of our prosperity, what m >re is needed to refute the idea that our national resources are not equal to those of other nations — that our system of Protection is of no benefit in developing our in- dustries and increasing our wealth ? Having considered those industrial conditions which conduce to the largest and most varied production, we will now more particularly con- sider the effect of a Protective Tariff and the home production which it fosters upon the price of manufactured commodities. The importance of fostering manufactures must be acknowleged not only because of its relation to agriculture in furnishing a near and lucrative market, but also because it is the means of rapidly increasing the wealth of the nation. Our agricultural product was estimated (1883) at $3,600,000,000. \vbile our manufactured product was valued at $5,369,579,190, showing clearly that manufacturing is more productive of wealth than agriculture. (Report of J. J. Dodge, Commissioner of Agriculture, June 28, 1883.) Not only is this true, but such wealth is produced by much less ex- penditure of human energy than agricultural wealth. We have engaged in manufactures about 4,000,000 persons, or one-twelfth of our entire popula- tion (1880), but they have under their control steam-power equal to the energy of 20,452,960 men, or a force equal to our entire population eu- gaged in any gainful occupation, so that with but half as many engaged in manufacturing as in agriculture they product commodities valued at twice as much. Thus the productive value is in the ratio per capita of oiie to four in favor of the manufacturer. If foreign nations are permitted to monopolize these vast forces in the creation of wealth, and we choose to follow pursuits in which by the very nature of the occupation machinery cannot be used to so great advan- tage, we can never hope to acquire an equal amount of wealth ; for human energy cannot successfully compete with steam power. Under the present conditions it is folly for a purely agricultural nation to engage in trade with a manufacturing nation and expect to keep up the present ratio of wealth between them, for the value of the two products is in the ratio of one to four, so that if an equal number be engaged in each the manufacturing nation will produce four times the amount of wealth, or with one-fourth of the exertion she- would produce an equal amount. This is well illustrated by the fact that in 1858 the yearly profit of the British cotton manufacturers was estimated at $188,000,000, and our total cot- ton crop at but $184,000,000. This shows clearly that the production of raw material is not the greatest source of wealth to any nation, and especi- ally is this true if she has within herself ample facilities for producing the finished product. If the manufacturing nation has a market elsewhere for the remaining three-fourths of her product waich the agricultural nation cannot buy for lack of exchangeable products, she will steadily grow richer as more of her net capital is turned into productive channels, while the agricultural nation will become poorer as the fertility of her soil diminishes. It is useless for one man in agriculture to compete with another in manufacturing if the latter has the force and energy of five men in the steam-power at his command. The force of 20,500,000 men in the form of machinery can be main- tained and utilized more cheaply than can a like force distributed among that number of men. Thus it is that use of machinery cheapens the cost of the manufactured article. On this account commodities can now be pur- chased cheaper than if our manufactures had not been fostered by a Protec- tive Tariff, for if we had not had our manufactures we would have had to exchange our agricultural products for foreign goods, to the enrichment of the foreign manufacturer and the impoverishment of our soil. Such has been the experience of all the nations which for the past cent- ury have not been able to control their own markets. To this cause may be attributed the greater part of Ireland's poverty and distress. As long as she kept her own parliament and maintained her Protective system her people were prosperous and contented. Her union with Great Britain and the consequent removal of her Tariff was not only a political but an indus- trial disaster. The English so managed their political and industrial -rela- tions that within 40 years from the union of 1801 not only had the last yestige of Protective duties disappeared, but likewise her once prosperous manufactures of silk, woolen and linen goods. The number of employees in the cotton mills was reduced from 13,500 to 1620; in the woolen mills from 50,000 to 625. As a consequence the people were driven to the soil and an overproduction of agricultural products ensued; traders got rich, but their wealth was not reinvested in productive industries for the employment of the Irish laborer, but was conveyed to England to be squandered in luxury and vice. As the result, rents became exorbitant, the soil failed in fertility, and ihe major portion of the crops *were seized for the landlord, while the tenant starved. Even during the three years of the great famine of 1849-51 850,- 000 quarters of wheat and 1,000,000 quarters of flour, which the starving tenants had wrung 'from their impoverished soil, were borne to England. With ruined industries and exhausted soil, is it any wonder that the Irish are discontented ? Well do their leaders know that only by a re-establish- ment of their Protective system can they hope to regain their former pros- perity. Similar to that of Ireland has been the experience of Turkey and India under the British system of Free-Trade. Whether adopted through treaties or forced upon them at the point of the bayonet, the result has teen equally disastrous. So injurious has been this system of trade with. Turkey that her once prosperous silk and cotton manufactories have been destroyed, her industrial forces paralyzed, and her government and finances demoralized. Such has been the fate of the East Indian industries since the opening up to Free-Trade in 1813. Their once flourishing silk and cot- ton industries have dwindled to almost nothing. That nation, once the •svealthieBt in the world, in a few short years was compelled to send her raw ! ilk and cotton to England to be manufactured, while their own looms 17 stood idle, and all her industries were deteriorating.— H. C. Carey, vol. 1, p. 308-05. Such has been the result of this system of Free-Trade wherever England has been able, by force or intrigue, to establish it. Such must necessarily he flic result of this system, which is defined by Lord Goderich in a speech on this question as follows: "What we, the English, meant by Free- Trade was nothing more or less than, by means of the great advantage we enjoyed, to get the monopoly of all their markets for our manufactures, and to prevent them, one and all, from ever becoming manufacturing nations." There can be neither true liberty nor independence until there is industrial liberty and a nation becomes able to supply her own wants and defend her markets from the rapacious designs of contemporaneous nations. Home production provides the former, a Protective Tariff the latter. The wisdom of the Protective policy is demonstrated by the fact that all the civilized nations are rapidly adopting it ; and those who have long held it as their policy are making it more stringent. Russia, Germany and France have increased their duties within the past ten years ; England and Holland, the two nations which yet cling to the doctrine of Free-Trade, are being com- pelled to consider the advisability of returning to the Protective system by the poverty and discontent of their unemployed populace and by the decline in many of their industries. Robert P. Porter states that during the past 25 years the number of hands employed in the silk mills of London has de- creased from 60,000 to 4000; in Coventry, from 40,000 to less that 10,000; in Middleton, from 5000 to 400, while the British census shows a decrease in the United Kingdom from 117,989 in 1861 to 63,577 in 1881. The im- portation of raw silk in 1857 was 12,077,931 pounds, but for the past six years it has averaged but 3,000,000 pounds. How does this compare with the fact that we, with a duty of 60 per cent, ad valorem on manufactured silks, have so increased the number of our mills that we are reckoned the third silk manufacturing country in the world, having doubled our product during the six years preceding the census of 1880? Our silk product in 1874 was valued at $16,262,157, in 1880 at $34,410,463. This demonstrates the superiority of Protection over Free-Trade in building up and maintaining any industry. Mr. Porter 18 also states that, with a Protective duty of from 12 to 15 per cent., 'England might have saved her silk industry and given employment to the 55,000 persons who by its decline were driven from this industry. Is it any wonder that her laboring classes are repudiating her policy of Free-Trade and are clamoring loudly for Fair-Trade ? Nor has this benefit been all in favor of the manufacturer and laborer, but every one who wears silk has been benefited by the steady decline in price as our production in- creased. W. C. Wykoff, U. S. Census Agent, states that the decline in price of silk goods during the past 15 years has been from 25 to 30 per cent. Our sewing silk surpasses the foreign product both in quality and cheapness, although there is a duty of 40 per cent, upon it. Our Tariff has cheapened our silks and built up a flourishing industry. No wonder England desires to propogate her doctrines; for unless other nations accept them and act accordingly she must soon relinquish her position as head of the British Empire ; for as soon as Ireland, India, Aus- tralia and her American possessions achieve their industrial independence they will have no further use for and will be no longer controlled by the mother country. What is true of our silk industry is equally true of every other industry which has been fostered by our Protective Tariff. The expense of our Custom House system of revenue is less than that of any other nation and much cheaper than in any system of direct taxation, the cost being but 3.7 per cent., while it is 5 per cent, in England, and the direct tax of the States cost from 7 to 15 percent. (Gov. Rev., by Robt. P. Porter, pp. 162-3.) Whether any particular manufacture is wise depends upon the relation of the cost of the energy expended to the value of the result attained. Protection imparts force and vigor to our industries which astonishes even our rivals in the industrial race. The French Commission, in their report of the Centennial Exposition in 1876, declared "that under the shelter of a prohibitory system the people of the United States have organized a powerful industry which rivals England in cheapness." The German Commission also stated that ' ' the present condition of Ameri- UHITBRSIT3 19 iLris^r cm manufactures slioxv the falhicv of the Free-Trade doctrine, that the products of ;i country arc raised in price by Protective duties." The effect of a Protective duty on the price of a commodity and to what extent this duty is paid by the domestic consumer or the foreign pro- ducer is the most difficult point to comprehend of all the phases of this sub- ject, for the reason that there can be no absolute rule for determining this. 80 much depends upon the condition of trade and production, and these vary in different localities, and at differcrt times. This phase of the question can be resolved into three conditions : The first in which the duty is paid by the consumer. The second, that in which the duty is paid by both producer and consumer in various proportions. Third, that in which it is paid entirely \-j the foreign producer. First — When a duty is first placed upon an article, the selling price is increased by the amount of the duty and the duty is paid by the consumer. Such is generally the immediate effect of a Tariff either for Revenue or Pro- tection. In this case *he foreigner controls the market as effectively as if there were no duty, until home production creates a competition. Second — If home production L: stimulated by the profit which the duty induces, competition steps in and the price declines as far below the cost of the foreign article as the conditions of labor and capital will permit. In this case the duty is shared by both producer and consumer in different proportions, as. the conditions vary. In this class will be found many of the American industi ies, all of them gradually tending toward the third class, in which the entire duty is paid by the foreigner, who pays just that much license for the privilege of selling in our markets. Third — When home production exceeds the foreign importation, competi- tion between domestic and foreign producer will become so sharp that the price will decline more and more as the home product is cheapened by im- proved and more economical processes of production. As soon as the do- mestic price is equal to that of the foreign article without the duty, then the foreigner pays the entire duty, and the domestic trade and not the foreign fixes the price of the commodity and controls the market. By this process commodities are cheapened to the consumer by means of a Protective Tariff, and the country is made richer by the development of her 20 resources, which would not otherwise have been realized for a long time, if ever. These principles have all been verified frequently in the history of our Protective system. Yet there are those who claim that our system in- creases the price of the commodity to the amount of the duty, whether the article be made at home or be imported from abroad, and that the evils of the system in creating and stimulating industries and in encouraging monop- olies increases with the industries. This increased cost of articles of con- sumption has been variously estimated by different Free-Traders as follows : Hon. Frank Hurd, of Ohio, places it at $425,000,000; Hon. O. Wellburn, of Texas, at $l,073,915,-738; Hon. W. R. Morrison, of Illinois, at $2,000,- 000,000, and Oscar Turner, of Kentucky, at $3,000,000,000. Henry George makes the following statement : (Progress and Poverty, p. 270.) " To these must be added in the United States the robbery in volved in the Protective Tariff, which for every 25 cents it puts in the Treasury it takes $1, and maybe $4 and $5, out of the pocket of the con- sumer." By such statements as these they hope to create a sentiment against our system of Protection. Let us examine this statement and see what it is worth. Take Mr. George's extreme supposition, ' ' for every 25 cents in the Treasury * * * $5 (or 20 times as much) is taken out of the pocket of the consumer." In 1883 the custom receipts were $214,- 706,496. Twenty times this amount equals $4, 294, 129, 920, or a sum which is equal to 80 per cent, of the value of our entire manufactured product, which is estimated at $5,369,579,191. According to him we pay 30 per cent, more for our commodities ^han Free-Trade nations, on account of our system of imports, which increases the price to the consumer just that much. The statement is as absurd as the proposition on which it rests is false. The evidence taken before the Tariff and labor commissions, the market re- ports of home and foreign papers, show conclusively that the cost of food, clothes, and necessary manufactured articles is less here than in any Euro- pean country.- The following table shows the relative cost of some common articles under our Protective and England's Free-Trade system. (Taken from Aberdeen Journal and London Iron, January, 1884, and report of Com. Gen. Merritt, November 30, 1883.— Speech of J. H. Walker). United States. England. Beef, per pound 12c . to 20c. 14c. to 31c. Butter, per pound 80c. to 33c. 37c. to 42c. Coffee, per pound 20c. 28c. Tea, per pound 40c. 48c. Sugar, per pound 5c. to 8c. 5c. to 8c. Flour, per pound 8%c. 4c. Petroleum, per gallon 8/£c. 15%c. Potatoes, per peck 15c. 32c. Common hand-saws, per dozen $5.00 $6.00 Jack-planes, per dozen 10.00 15.00 Trowels, per dozen 7.50 8.25 Shovels, per dozen 5.00 7.48 Cast shears, per dozen 4.20 6.00 Carriage bolts, per gross 1.75 2.12 Cotton cloth 1.30 1.10 Prints 1.10 . .90 Denims .63 .58 Satinets 4.50 3.66 Shoes of the same grade, per pair 2.50 3.00 Blankets, 4 pound army 2.56 2.251-5 As to the effect of a Tariff in creating monopolies, I would ask : When has Protection created a monoply like the East India Company, or the Standard Oil Company? Why has there been within three years two cor- ners on coffee, two on wheat and flour, and one on meat, with attending evils of speculation and high prices, and none on iron, cotton or woolen goods, if the Tariff more than Free-Trade conduces to the creation of monopolies? The truth is that the Tariff tends to lessen the possibilities of a monopoly, for the reason that as the number of sources of supply increases monopolies and corners become more difficult. A Tariff creates these sources of supply . The apprehensions of some Free-Traders who fear the creation of monopolies by our Protective system might be allayed by those of others, who fear that it will stimulate our industries to overproduction. To prove that the effect of a Tariff is to create industries, increase production and cheapen the cost of the product, let us produce a few facts in our industrial history both in periods of high and low Tariff and note the corresponding effects. 22 During our Colonial history we were prohibited by law from making even a horseshoe nail, so of necessity we were dependent upon foreign na- tions for our manufactured commodities for some time after our national existence began, for manufactories require both capital and skilled work- men. We had neither. England controlled our markets both as buyer and seller, and she resolved to retain them at all hazards. As soon as our manufactories started, under a small Protective Tariff, she glutted the market with her goods at reduced rates, till we were compelled to close out, when she raised the price to suit herself. During the period from 1805-9, when the French, English and, for a time, our own embargo acts cut off the foreign supply, our factories started again, only to be again closed by the influx of foreign goods when the embargo was removed. The war of 1812-15 gave the sam3 incentive to manufacturing, but it ended with like disastrous results to the business interests of the country. What was lack- ing was a sufficient and permanent incentive to develop our industries. This the Tariff of 1824 afforded, the effects of which is well summed up by Henry Clay in a speech in the Senate, February 2, 3 and 6, 1832- " If I were to select any term of seven years since the adoption of the Constitu- tion, which exhibited a scene of the most wide-spread dismay and desola- tion it would be exactly that term of seven years which immediately preceded the establishment of the Tariff of 1824. If the term of seven years were to be selected of the greatest prosperity which this people have enjoyed, it would be exactly that period of seven years which immediately followed the passage of the Tariff of 1824. And is the fact not indisputa- ble that all essential objects of consumption affected by that Tariff are cheaper and better since the act of 1824 than they were for several years prior to that law ? The total consumption of bar iron in the United States is about 146,000 tons, of which 112,866 tons are made within the country and the residue imported. * * * The annual increase of quantity has been in the ratio of nearly 25 per cent., and the wholesale price of bar iron in the Northern cities was, in 1823, $105 per ton; in 1829, $100; in 1830, $90; and in 1831, from $85 to $75, constantly diminishing." Before the Tariff of 1828 English axes sold here for from $2 to $4. By the Tariff a duty of 35 per cent, was levied on axes. In 1836 foreign and home-made axes were selling side by side at from $1.25 to $1.35 each, and in 1876 they sold for 80 cents each, a decrease to one-quarter of the price of 1828, as a result of home industries fostered by a Protective Tariff. In 1840 the English furnished us our saws at from $15.75 to $19 per dozen; with a Tariff of 45 per cent, on saws they sell at from $5 to $10 per dozen, which is a saving of one-half in the price of a saw to every farmer and mechanic. Besides, the superior methods which we have de- vised in the manufacture of saws enable us to undersell England in her own markets. Hon. Geo. M. Dallas, in a speech in the Senate, February 27, 1842, said : "The reduction of prices was a necessary consequence of the. domestic competition created and excited by the policy of Protection. Since 1818-19-20 the implements of husbandry have sunk in prices thus : Axes from $24 to $12 by the dozen ; iron hoes at $9 per dozen have given away to steel ones at $4 per dozen; socket shovels, o