Tariff For Prosperity Only
( Originally Published Early 1900's )
THE most important measure of a Republican Congress was the Tariff Bill. This, despite the strongest possible free trade opposition, was passed almost on the lines of the former McKinley Bill, which during the brief period of its existence gave such bright promise of permanent prosperity. The salutary effect of the late tariff legislation has been demonstrated most conspicuously in the unparalleled showing of our foreign trade, which I shall review in the following chapter. Another good result of the tariff law is that a sufficient revenue, if economically administered, seems to be assured to the government, and that "endless chain," which had a constant tendency to deplete the treasury gold reserve, and which gave such trouble to the last Democratic administration, has vanished. The Treasury at the end of the fiscal year had a gold surplus of $188,000,000; the largest, I believe, during the past eight years. There can be no doubt about the legitimacy and propriety of this taxation, for the Constitution of the United States says in the Eighth Section of the First Article: "Congress shall have power to lay and collect taxes, duties, imposts, and excises to pay the debts and provide for the common defense and general welfare of the United States, also to regulate commerce with foreign nations." This authority, being the highest law of the land, places the power of Congress to " collect taxes, duties, and imposts " beyond doubt. The question may then arise: If Congress has power to impose taxes other than those for " revenue only," has the lawmaking machinery the power to lay taxes, through tariff laws, for the protection of American industries and labor? Most decidedly it has, for it is expressly stated in the section quoted that these taxes are to " provide for the common defense and general welfare of the United States." There is no provision for defense more urgently required than that against the invasion of the needy manufacturers of Europe, with their pauper labor goods and merchandise, for the purpose of capturing our markets, breaking up our manufactories, and reducing our great army of artisans and laborers to their own status. If the free-trade party in this country should get the upper hand, the invasion suggested would be worse than that of the Goths, Huns, and Vandals who overran western Europe and eventually brought about the fall of the Roman Empire. If anybody should consider this opinion as to the possible invasion exaggerated, I should simply give him an object lesson in geography. Europe has an army, most of it hungry and desperate, of 312,000,000 to be drawn upon for the purpose of that invasion, with the forces of Asia, more hungry still, consisting of a reserve of 800,000,000. If 100,000,000 of the latter were imported - a number that would hardly be missed - Americans would have a hard time of it, and this, or something like it, is the inevitable prospect if ever the free-traders should get a chance of running this country on the lines indicated in the original Wilson Tariff Bill. If these immigrants did not appear here in physical form, the fruits of their labor would, and that would be worse. This contingency, I think, however, is now remote. The people have had a rude awakening from the soft lethargy into which they had been lulled by those who promised to lead them to the Elysian fields of permanent prosperity, where, by virtue of European cheap clothing and a list of luxuries put before their hungry gaze (which they had no money to buy), they might pass the remainder of their days in rest, quietude, and happiness. That dream has passed away, I hope forever; and the people are able to look back and perceive how they were misled and cajoled out of their votes to create a condition of things that had brought the country, but for its wonderful internal strength and unlimited resources, to the very verge of bankruptcy. Four years more of that regime would probably have left the reserve corps of the invaders very little except land to plunder on their arrival. The free-trade leaders, with their foreign myrmidons, seemed determined on making a clean sweep of everything available, and bringing ruin upon all that the protective system had been instrumental in building up since the close of the war. True, their late chief has not relinquished hope nor ceased trying to inspire the small remnant of his adherents to maintain the fight in the future. He left office exhorting his followers to "continue the struggle" against "mad protection," to "challenge boldly to open warfare the enemies of free trade, and guard against treachery and half-heartedness in the camp." This was the language which he had used a few years before to Mr. Catchings, a Congressional friend of his, and these were the sentiments with which he still seemed to be inspired on his departure from the White House, despite the signal defeat of all the factions by whom he had been elected. His former forces, however, met their defeat in November, I896, and the McKinley administration, despite the war with Spain in the meantime, has brought prosperity to the nation, as shown in the unprecedented balance of trade in our favor. On the subject of this balance of trade, as exhibited in the report of the Bureau of Statistics, a separate chapter will show the prosperous results of the recent tariff law as opposed to the free-trade idea. The subject of tariff taxes, or duties, divides itself into two parts. One is a tariff for revenue only, and the other is a tariff for both revenue and the protection of labor and native industries. Failure to recognize this distinction has led to grave and numerous errors, one of which is that all articles, both home and foreign, which are on the tariff list, cost consumers the price of the article as estimated by the manufacturer or producer, to which is added the amount of the tariff. This seems at first sight to be very plausible reasoning, but it is quite erroneous, applying only to the foreign productions which are not also produced on this side, or not in sufficient quantity to supply demand. The consumer "pays the freight " in that case, but the articles that are produced exclusively on the other side are in a very small minority and are becoming daily smaller. This is one reason why there is such deep anxiety there for a share, and that the lion's share, if possible, of our markets. When a foreigner tells you that this desire arises purely out of international love and amity for the United States and a strong desire to patronize our country without any ulterior motive, you should take his statement cum grano salis, and sometimes the dose of salt must be a very big one. There must be a selfish motive in all trade, outside the ranks of socialists, and they are unselfish only theoretically. As Mr. McKinley has given the best definition of these two kinds of tariff, let us allow him the floor on that subject. In the course of a speech he says, regarding a revenue tariff: - " This brings us face to face with the two opposing systems, that of a revenue as distinguished from a protective tariff, and upon their respective merits they must stand or fall. Now, what are they? First, what is a revenue tariff? Upon what principle does it rest? It is a tariff or tax placed upon such articles of foreign production imported here as will produce the largest revenue with the smallest tax; or, as Robert J. Walker, late Secretary of the Treasury and author of the tariff of I846, from whom the advocates of the measure draw their inspiration, put it:” ‘The only true maxim is that which experience demonstrates will bring in each case the largest revenue at the lowest rate of duty, and that no duty be imposed upon any article above the lowest rate which will yield the largest amount of revenue. The revenue (said Mr. Walker) from ad valoremz duties last year (1845) exceeded that realized from the specific duties, although the average of the ad valorem duties was only 23.57 per cent. and the average of the specific duties 41.30 per cent., presenting another strong proof that the lower duties increase the revenue.' "To secure larger revenue from lower duties necessitates largely increased importations, and if these compete with domestic products the latter must be diminished or find other and distant, and I may say impossible, markets or get out of the way altogether. A genuine revenue tariff imposes no tax upon foreign importations the like of which are not produced at home; or, if produced at home, in quantities not capable of supplying the home consumption, in which case it may be truthfully said the tax is added to the foreign cost and is paid by the consumer. " A revenue tariff seeks out those articles which domestic production cannot supply, or only inadequately supply, and which the wants of our people demand, and imposes the duty upon them, and permits as far as possible the competing foreign product to be imported free of duty. This principle is made conspicuous in the bill under consideration; for example, wool, a competing foreign product, which our own flock-masters can fully supply for domestic wants, is put upon the free list, while sugar, with a home product of only one eleventh of the home consumption, is left dutiable." Mr. McKinley defines a protective tariff as follows: - " What is a protective tariff? It is a tariff upon foreign imports so adjusted as to secure the necessary revenue, and judiciously imposed upon those foreign products the like of which are produced at home or the like of which we are capable of producing at home. It imposes the duty upon the competing foreign product; it makes it bear the burden or duty, and, as far as possible, luxuries only excepted, permits the non-competing foreign product to come in free of duty. Articles of common use, comfort, and necessity which we cannot produce here it sends to the people untaxed and free from custom-house exactions. Tea, coffee, spices, and drugs are such articles, and under our system are upon the free list. It says to our foreign competitor, if you want to bring your merchandise here, your farm products here, your coal and iron ore, your wool, your salt, your pottery, your glass, your cottons and woolens, and sell alongside of our producers in our markets, we will make your product bear a duty; in effect, pay for the privilege of doing it. Our kind of a tariff makes the competing foreign article carry the burden, draw the load, supply the revenue; and in performing this essential office it encourages at the same time our own industries and protects our own people in their chosen employments. That is the mission and purpose of a protective tariff. That is what we mean to maintain, and any measure which will destroy it we shall firmly resist, and if beaten on this floor we will appeal from your decision to the people, before whom parties and policies must at last be tried. We have free trade among ourselves throughout thirty-eight states and the territories and among sixty millions of people. Absolute freedom of exchange within our own borders and among our own citizens is the law of the Republic. Reasonable taxation and restraint upon those without is the dictate of enlightened patriotism and the doctrine of the Republican party." Free-traders, both foreign and domestic, seem to assume that the human race is one happy family, and that each nation should share its peculiar advantages and surplus production with every other nation. They appear to think this is the natural right of the latter, but they do not extend this style of reasoning to other concerns of life. They do not seem to see that our markets are a part of our natural rights which have been built up by the people, just as much as a piece of property belonging to any one is his peculiar right; or, to make the illustration clearer, as much as a share or number of shares of stock in a corporation is the property of the person who purchases or obtains them for some valuable consideration. No one of common sense and discretion would think of asking that person for a part of those securities without paying for them; and the United States citizen has just as vital and solid interest in the markets which he and perhaps some of his forefathers have assisted to build up, while the free-trade foreigners with the aid of our own free traders were trying hard to pull them down, as the holder in the supposed case has in his corporation securities. The only difference is that the law of the land does not always recognize property in general markets, yet the claim of the citizen is as equitable from the standpoint of natural justice in the one case as in the other, and that is one of the strongest reasons why we want a statute law that will recognize our equitable claim. If it is asked why the consumer does not pay the full amount of the tariff, it is easy to point out that the sharp competition, both foreign and domestic, has a tendency to keep prices down, while in the case of the non-protected article, there is no competition, and the seller as a matter of course takes full advantage of the demand. The consumer and foreign producer pay the tariff between them. The doctrine of the Cobden Club is just the reverse of our tariff principle. Their rule is to tax no foreign product whose like is a home product. Our protective principle is to tax every product whose like is a home product, and to put those we do not produce on the free list. It is very well for a nation to take the Cobden attitude when it is not self-supporting in the prime necessities of life, and when it is to its great advantage to have all the ports of the world open to it; but even England does not carry out the Cobden free-trade idea in toto. The ad valorem system has been done away with as far as possible in the new Dingley Tariff Bill, and the specific system has been adopted wherever it was practicable. The ad valorem system is based upon value, the other upon quantity. The one is based upon the foreign valuation, difficult of ascertainment and resting in the judgment of experts, whose interests are usually on the side of undervaluation; the other rests upon quantity, fixed and well-known the world over, always determinable and always uniform. The one is assessed by the yard-stick, the ton, and the pound weight of commerce, and the other is assessed by the foreign valuation fixed by the foreign importer or his agent in New York or elsewhere, fixed by the producer, fixed by anybody, at any price, to escape the payment of full duties. The valuation under the ad valorem system is not even uniform throughout the United States, for the valuations fixed upon imported goods at the port of Boston are often different from the valuations fixed on the same class of goods arriving in New York, Philadelphia, San Francisco, or Charleston. So we do not have and cannot have a uniform value, for the value is subject always to the cupidity or dishonesty of the foreign importer or producer. It is a system that has been condemned by all the leading nations of the world, for the reason that there can be no honest administration of the revenue laws so long as the value is fixed thousands of miles away from the point of production and impossible of verification at home. Henry Clay said fifty years ago: "Let me fix the value of the foreign merchandise, and I do not care what your duty is." The " home market" is another object of disapproval on the part of the free-trader. He wants it abolished, and this with the knowledge that it absorbs more than nine tenths of our own products. He wants us to go outside and hunt for new markets, in competition with nations who can procure labor for as much per week, and in some instances per month, as we pay by the day. How would the country get along without the home market of New England, for instance? The New England states purchase about $200,000,000 worth annually of products from the northwest, middle, and Pacific sections. It would be foolish to give up such a profitable market as this to go in search of another in some foreign country. Yet that is virtually what free-traders ask us to do, although we have competition to face, no matter which way we turn. Even in our great staple, wheat, competition is becoming exceedingly sharp. India, for example, which about a dozen years ago shipped only about 50,000 bushels, is now shipping more than 50000,000,ooo annually; and India can put wheat down in the markets of Europe, counting both cost of production and carriage, about as cheaply as we can transport it to the markets abroad, without calculating the cost of production. Of course that country is now handicapped in exports through the recent famine, but this is only temporarily. Just think of it, the transportation of wheat is as heavy an item to our farmers as the whole cost of raising and transportation is to the farmers of India! This would seem impossible, but a prominent member of the House of Representatives, Mr. Dunn, is responsible for the figures; and, if they are correct, competition in wheat is certainly out of the question. I learn from another source that agricultural wages in India range from $20 to $25 a year. This would be but a moderate rate per month for a farm laborer in the United States, where the average, I believe, is about $25. Yet we find some free traders who seem to be under the delusion that wages are as high abroad as they are here. Mr. William Barbour, of the Flax Spinning Company, Paterson, New Jersey, who has also a flax mill at Lisburn, Ireland - the number of hands in the Irish mill being 2900 and in the New Jersey mill 1400 - says that the total pay roll is pretty nearly the same in both establishments, which makes the wages here more than double. The German laborer gets from 47 to 70 cents per day, and for skilled labor 80 to 92 cents. In England the wages paid for agricultural labor is about $12.65 per month. In British India the wages of men is 6 cents per day, and 1- cents for women. In Kurnel the highest permanent wages are 50 cents per month. In Bombay and Madras laborers are paid from 6 to 2 cents per day. So these are some of the rates against which we should have to seek new markets for our grain if the free-trade doctrine should prevail. When the free-trader is driven from most of his strongholds in argument, he takes refuge in that of cheap clothing. A laughable incident occurred a few years ago in Congress illustrating this point. Major McKinley played the comedy part with serious effect, and an honorable member of the House, who was also the head of a prominent clothing establishment in Boston, furnished the chief butt for the ridicule, in company with Mr. Mills of Texas. Major McKinley was arguing that the subject of cheaper clothing so much talked about was not broad enough for a national issue, and that there was more talk than reality about it. This was the whole scene as reported verbatim in the Congressional Record. Major McKinley was saying: “I represent a district comprising some 200,000 people, a large majority of the voters in the district being workingmen. I have represented them for a good many years, and I have never had a complaint from one of them, that their clothes were too high. Have you? [Applause.] Has any gentleman on this floor met any such complaint in his district? " MR. MORSE (of Massachusetts). They did not buy them of me. " MR. MCKINLEY. No! Let us see; if they had bought of the gentleman from Massachusetts it would have made no difference, and there could have been no complaint. Let us examine the matter. " [Mr. McKinley here produced a bundle containing a suit of clothes, which he opened and displayed amidst great laughter and applause.] "Come, now, will the gentleman from Massachusetts know his own goods? [Renewed laughter.] We recall that the chairman of the Committee on Ways and Means [Mr. Mills of Texas] talked about the laboring man who worked for ten days at a dollar a day, and then went with his ten dollars' wages to buy a suit of clothes. It is the old story. It is found in the works of Adam Smith. [Laughter and applause.] I have heard it in this House for ten years past. It has served many a free-trader. It is the old story, I repeat, of the man who gets a dollar a day for his wages, and having worked for the ten days goes to buy his suit of clothes. He believes he can buy it for just $10; but "the robber manufacturers " have been to Congress, and have got 100 per cent. put upon the goods in the shape of a tariff, and the suit of clothes he finds cannot be bought for $10, but he is asked $20 for it, and so he has got to go back to ten days more of sweat, ten days more of toil, ten days more of wear and tear of muscle and brain to earn the $10 to purchase the suit of clothes. Then the chairman gravely asks, Are not these ten days entirely annihilated? "Now, a gentleman who read that speech or heard it was so touched by the pathetic story that he looked into it and sent me a suit of clothes identical with that described by the gentleman from Texas, and he sends me also the bill for it, and here is the entire suit, "robber tariffs and taxes and all" have been added, and the retail cost is what? Just $10. [Laughter and applause.] So the poor fellow does not have to go back to work ten days more to get that suit of clothes. He takes the suit with him and pays for it just $10. [Applause.] "But in order that there might be no mistake about it, knowing the honor and honesty of the gentleman from Massachusetts [Mr. Morse], he went to his store and bought the suit. [Laughter and sheers.] I hold in my hand the bill. "MR. STRUBLE (of Iowa). Read it. "MR.MCKINLEY (reading): - " ' BOSTON, MAY 4, i888. "'J. D. Williams, bought of Leopold Morse & Co.; Men's, Youths', and Boys' clothing; 131 to 137 Washington street, corner of Brattle. To one suit of woolen clothes, $10. Paid.' "[Renewed laughter and applause.] "I never knew of a gentleman engaged in this business who sold his clothes without a profit. [Laughter.] And there is the same $10 suit described by the gentleman from Texas that can be bought in the city of Boston, can be bought in Philadelphia, in New York, in Chicago, in Pittsburg, anywhere throughout the country at $10 retail the whole suit, coat, trousers, and vest, and at 40 per cent. less than it could have been bought for in 1860 under your low tariff and low wages of that period. [Great applause.] It is a pity to destroy the sad picture of the gentleman from Texas which was to be used in the campaign, but the truth must be told. But do you know that if it was not for protection you would pay a great deal more for these clothes?" The bewildering inconsistency of some of the items in the Wilson Law bordered on the sublime of effrontery. For instance, while it taxed the farmer on almost everything he has to buy, it put one of his best paying staples, wool, on the free list, thus at the same time depriving the country of the means of making good cheap home-made clothing, turning the market over to the foreigner, and also depriving the people of cheap mutton. Cheap mutton is a great boon, especially when the "Beef Trust" raises prices. Mutton at such times has usually been advanced in price only very slightly as compared with other provisions. The restoration of wool to the farmer is another good point in the Dingley Bill, which is substantially a restoration of the McKinley statute, and it has thus far been largely instrumental in reviving a state of business and industrial prosperity such as that enjoyed under the free operation of the McKinley Law, especially during the last year of the Harrison administration. It was rather amusing to witness the ostensible surprise (for it would be an insult to their judgment to call it real) of certain of the free-trade and low-tariff newspapers at the high tariff of the Dingley Bill. Certain of these exponents of public opinion pretended that they imagined the changes, if any, were going to be on the lines of the Wilson-Gorman Law. Now this is a confession that these organs know less than the rank and file of the voters whom they propose to instruct. Did not a large majority of the latter state emphatically, at the polls, that they had had enough of the Wilson Bill and all similar enactments? and by the same silent expression did they not demand the higher tariff that would protect labor and the industries upon which labor has to depend for sustenance? It was the plain duty of Congress to proceed, as the servants of the sovereign voters, to formulate this expression of the latter into a bill, which they did, and for the same reason it became the executive duty of the President to sign that bill, making it a law, if it were to his mind in harmony with the will of the people who elected both him and Congress to do this work. Some of these very newspapers referred to strongly advocated the election of the McKinley ticket, knowing that in the platform of the Republican party there was a plank promising " the most ample protection for wool, the product of the great industry of sheep raising, as well as for the finished woolens of the mill"; and then the same newspapers turned around, because the Republican Congressmen proposed, very unlike free-trade politicians, to fulfill their promises as laid down in the platform on which they were elected. The only question about the wool schedule was the real meaning of " most ample protection" in the platform. Though the phrase is somewhat vague, perhaps designedly so, yet it is manifest that it cannot mean any less protection by the Dingley Law than that afforded by the McKinley Law. The people wanted it, and they were bound to have it. With all the free-trade complaints about high-tariff taxation, the foreigners have managed, even under the Dingley Law, to send us as much stuff of the kind easily produced here as would give profitable employment to half a million of men on this side. From these data, it can be faintly imagined what the condition of enforced idleness would be to a few millions of our wage earners under a full free-trade enactment, with the contraction of and loss to capital which that would imply. In order to prove that this state of things is no fancy picture, that my inferences are reasonable, and that the unfortunate history of distress and business stagnation is liable to repeat itself under either free-trade or very low-tariff principles, I herewith present the opinions and testimony of two of the most reliable witnesses on this subject, namely, Grover Cleveland and James Buchanan. In Buchanan's message of December, 1857, a year after his election and thirty-six years before the election of Mr. Cleveland, the following language was used: - "The earth has yielded her fruits abundantly; our great staples command high prices, and up till within a brief period our mineral, manufacturing, and mechanical occupations have largely partaken of the general prosperity. We have possessed all the elements of material wealth in rich abundance, yet notwithstanding these advantages, our country in its monetary interests is at present in a deplorable condition. " In the midst of unsurpassed plenty we find our manufactures suspended, our public works retarded, our private enterprises abandoned, and thousands of useful laborers thrown out of employment and reduced to want. Under these circumstances a loan may be required before the close of your present session, but this, although deeply to be regretted, would prove to be only a slight misfortune when compared with the suffering and distress prevailing among our people." In President Cleveland's message of August, I893, ten months after his election, this emphatic language descriptive of the business and industrial situation was used: "With plenteous crops, with abundant promise of remunerative production and manufacture, with unusual invitation to safe investment, and with satisfactory assurance to business enterprise, suddenly financial distrust and fear have sprung up on every side. "Numerous moneyed institutions have suspended, because abundant assets were not immediately available to meet the demands of frightened depositors. Surviving corporations and individuals are content to keep in hand the money they are usually anxious to loan, and those engaged in legitimate business are surprised to find that securities they offer for loans, though heretofore satisfactory, are no longer accepted. " Values supposed to be fixed are fast becoming conjectural, and loss and failure have involved every branch of business." The periods at which these similar conditions are described in similar terms were thirty-six years apart, but in each instance the free-trade mania was the ruling passion of the leaders of the party in power. Who can resist the inference that these similarly deplorable conditions of the country, so graphically described by both Presidents, originated to a large extent in the free-trade heresy?