industries are not in each country equally favored or disfavored by nature, and have not, therefore, equal need of this protecting care. If American protectionists are not prepared to demand protective duties in favor of the Illinois farmer against the competition of his English rival, they are bound to admit either that a high cost of production is not incompatible with effective competition, or else that a high rate of wages does not prove a high cost of production; and if this is not so in Illinois, then I wish to know why the case should be different in Pennsylvania or in New England. If a high rate of wages in the first of these States be consistent with a low cost of production, why may not a high rate of wages in Pennsylvania be consistent with a low cost of producing coal and iron?

"The rate of wages, whether measured in money or in the real remuneration of the laborer, affords an approximate criterion of the cost of production,' either of money, or of the commodities that enter into the laborer's real remuneration, but in a sense the inverse of that in which it is understood in the argument under consideration: in other words, a high rate of wages indicates not a high but a low cost of production.' Thus in the United States the rate of wages is high, whether measured in gold or in the most important articles of the laborer's consumption-a fact which proves that the cost of producing gold, as well as that of producing those other commodities, is low in the United States. . . . I would ask [objectors] to consider what are the true causes of the high remuneration of American industry. It will surely be admitted that, in the last resort, these resolve themselves into the one great fact of its high productive power. . . . I must, therefore, contend that the high scale of industrial remuneration in America, instead of being evidence of a high cost of production in that country, is distinctly evidence of a low cost of production-of a low cost of production, that is to say, in the first place, of gold, and, in the next, of the commodities which mainly constitute the real wages of labor-a description which embraces at once the most important raw materials of industry and the most important articles of general consumption. As regards commodities not included in this description, the criterion of wages stands in no constant relation of any kind to their cost, and is, there

'Business men constantly use the term "cost of production" when in reality they mean that which to the economist is expressed by "cost of labor." If cost of labor becomes higher, it takes from profits-the place where they feel the difficulties of competition-but they say that the cost of production has risen: the cost, to them, only has risen, that is, the "cost of labor," not "cost of production." Cf. Cairnes, "Leading Principles," pp. 324-341; and supra, Book III, Chap. II, § 4.

fore, simply irrelevant to the point at issue. And now we may see what this claim for protection to American industry, founded on the high scale of American remuneration, really comes to it is a demand for special legislative aid in consideration of the possession of special industrial facilities-a complaint, in short, against the exceptional bounty of nature.

"Perhaps I shall here be asked, How, if the case be so-if the high rate of industrial remuneration in America be only evidence of a low cost of production-the fact is to be explained, since fact it undoubtedly is, that the people of the United States are unable to compete in neutral markets, in the sale of certain important wares, with England and other European countries? No one will say that the people of New England, New York, and Pennsylvania, are deficient in any industrial qualities possessed by the workmen of any country in the world. How happens it, then, that, enjoying industrial advantages superior to other countries, they are yet unable to hold their own against them in the general markets of commerce? I shall endeavor to meet this objection fairly, and, in the first place, let me state what my contention is with regard to the cost of production in America. I do not contend that it is low in the case of all commodities capable of being produced in the country, but only in that of a large, very important, but still limited group. With regard to commodities lying outside this group, I hold that the rate of wages is simply no evidence as to the cost of their production, one way or the other. But, secondly, I beg the reader to consider what is meant by the alleged 'inability' of New England and Pennsylvania to compete, let us say, with Manchester and Sheffield, in the manufacture of calico and cutlery. What it means, and what it only can mean, is that they are unable to do so consistently with obtaining that rate of remuneration on their industry which is current in the United States. If only American laborers and capitalists would be content with the wages and profits current in Great Britain, there is nothing that I know of to prevent them from holding their own in any markets to which Manchester and Sheffield can send their wares. And this brings us to the heart of the question. Over a large portion of the great field of industry the people of the United States enjoy, as compared with those of Europe, (1) advantages of a very exceptional kind; over the rest (2) the advantage is less decided, or (3) they stand on a par with Europeans, or (4) possibly they are, in some in

The fact (sufficiently established by Mr. Brassey) is not considered also that England gives higher wages to operatives than the Continent, and yet England is able to undersell France and Germany in neutral markets. It is evident, however, that England can undersell only in occupations in which she has advantages.

stances, at a disadvantage. Engaging in the branches of industry in which their advantage over Europe is great, they reap industrial returns proportionally great; and, so long as they confine themselves to these occupations, they can compete in neutral markets against all the world, and still secure the high rewards accruing from their exceptionally rich resources. But the people of the Union decline to confine themselves within these liberal bounds. They would cover the whole domain of industrial activity, and think it hard that they should not reap the same rich harvests from every part of the field. They must descend into the arena with Sheffield and Manchester, and yet secure the rewards of Chicago and St. Louis. They must employ European conditions of production, and obtain American results. What is this but to quarrel with the laws of nature? These laws have assigned to an extensive range of industries carried on in the United States a high scale of return, far in excess of what Europe can command, to a few others a return on a scale not exceeding the European proportion. American enterprise would engage in all departments alike, and obtain upon all the high rewards which nature has assigned only to some. Here we find the real meaning of the 'inability' of Americans to compete with the 'pauper labor' of Europe. They can not do so, and at the same time secure the American rate of return on their work. The inability no doubt exists, but it is one created, not by the drawbacks, but by the exceptional advantages of their position. It is as if a skilled artisan should complain that he could not compete with the hedger and ditcher. Let him only be content with the hedger and ditcher's rate of pay, and there will be nothing to prevent him from entering the lists even against this rival."

It is often said that wages are kept at a high rate in the United States by the existence of protected industries. On the other hand, the truth is that the protected industries must pay the current high rate of wages fixed by the general productiveness of all industries in the country. When the facts are investigated, it is surprising how small a portion of the laborers of the United States are employed in occupations which owe their existence to the tariff. A general view of the relative numbers engaged in different occupations may be seen by reference to Chart No. XXIV, based on the returns for the census of 1880. The data are well worth examination:"

CHART XXIV.

Chart showing for the United States, in 1880, the ratio between the total population over ten years of age and the number of persons reported as engaged in each principal class of gainful occupations. Compiled from the returns of the Tenth Census, by the Editor.

NOTE.-The interior square represents the proportion of the population which is accounted for as engaged in gainful occupations. The unshaded space between the inner and outer squares represents the proportion of the population not so accounted for.

Of the second class, less than 450,000 work-people are engaged in the chief protected industries-cotton, woolen, and iron and steel, combined. This class, it is to be noted, in the census returns, includes bakers, blacksmiths, brick-makers, builders, butchers, cabinet-makers, carpenters, carriage-makers, and so on through the whole list of similar occupations practically unaffected by the tariff (so far as protection to them is concerned). So that, at the most, there are less than a million laborers engaged in industries directly dependent on the tariff, and the number is undoubtedly very much less than a million. When some writers assert, therefore, that the existence of customs-duties allows industries (even including all those employed in producing cotton, wool, iron, and steel) to employ less than a million laborers in such a way that the remuneration is fixed for the remaining 16,000,000 laborers in the United States, keeping wages high for 16,000,000 by paying current wages for less than a million, the extravagance and ignorance of the statement are at once apparent; while, on the other hand, it is distinctly seen that the causes fixing the generally high rates of wages for the 16,000,000 are those governing the majority of occupations, and that the less than one million must be paid the wages which can be obtained elsewhere in the more productive industries. The facts thus strikingly bear out the principles as stated above.

Confirmation-if confirmation now seems necessary-may be found in a study by our ablest statistician, Francis A. Walker, upon the causes which have operated on the growth of American manufactures. This growth has not been commensurate, he finds, with the remarkable inventive and industrial capacity of our people, and with the richness of our national resources: "I answer that the cause of that comparative failure is found, primarily and principally, in the extraor dinary success of our agriculture, as already intimated in what has been said of the investment of capital. The enormous profits of cultivating a virgin soil without the need of artificial fertilization; the advantages which a sparse population derives from the privilege of selecting for tillage only the choicest spots, those most accessible, most fertile, most easily brought under the plow; and the consequent abundance of food and other necessaries enjoyed by the agricultural class, have tended continually to disparage mechanical industries, in the eyes alike of the capitalist, looking to the most remunerative invest

1 "Princeton Review," 1883, p. 222.

2 The United States have at the present time but five persons engaged in agriculture for each square mile of settled area.