ment of his savings, and of the laborer, seeking that avocation which should promise the most liberal and constant support. "It has been the competition of the farm with the shop which, throughout the entire century of our national independence, has most effectually hindered the growth of manufactures. A people who are privileged to cultivate a reasonably fertile soil, under the conditions indicated above, can secure for themselves subsistence up to the highest limit of physical wellbeing. If that people possess the added advantage of great skill in the use of tools, and great adroitness in meeting the large and the little exigencies of the occupation and cultivation of the soil, the fruits of their labor will include not only everything which is essential to health and comfort, but much that is of the nature of luxury." It remains to be said in this connection that workmen are already discerning the practical and real causes at work affecting their wages-affecting them more directly than any tariff system possibly could-by showing no small alarm at the immigration of foreigners, such as the Hungarian miners and Italian laborers, who willingly underbid them. In other words, they are beginning to realize, in a practical way, the truth that increasing numbers are far more potent than anything else in reducing wages. So long as immigration is free to any race or nationality, there is no such thing as "protection to home laborers"; the only protection to them-not that I am urging the desirability of such measures-can come solely from forces which limit the number of workmen who enter into competition with them. Any other protection to laboring-men than the prohibition of immigration-which no one thinks of (except for the Chinese)-is an economic delusion. Instead of "protecting" them to the extent of affording higher wages, the tariff increases the cost of woolen clothing and other articles of their consumption, in addition to forcing capital into employments which yield a less return, and so insure lower wages. § 6. It must be kept in mind that Political Economy deals only with the phenomena of material wealth; it does not supply ethical or political grounds of action. It is quite conceivable that a legislator, in coming to a decision, may have to balance economic gains against moral or political losses, and may choose to give up the former to prevent the latter. But the economic truth remains unchanged. Political economy, for instance, to the question, Is there any gain in international trade? answers, unequivocally, yes. Would it be a loss of wealth to the community to have the goods formerly bought abroad now produced at home? The answer is, certainly it would. But here it has been ably urged by intelligent writers that a state has other ends to gain than the accumulation of mere riches; that it must aim to secure the greatest moral, social, and elevating influences possible for the working-classes; and that while free exchange of goods may add to wealth, it may injure the social and political well-being of a nation. So far as these are social and political questions they do not belong to Political Economy. But the commonest form of argument is that, under free exchange, the United States would become purely an "agricultural" country, its social horizon would become narrowed, and a lower standard of industrial activity would then ensue; instead of which, it is said, we should, by protection, keep in existence diversified industries by which the national mind may be better stimulated, and greater enterprise may be encouraged in all branches of industry. This argument for "diversity of industries," however, is not merely a sociological question; it can only be fully discussed from an economic stand-point, and deserves even more than the brief attention we can give it here. In the first place, as soon as any purely agricultural country gains even a slight density of population-a density only such as to warrant the introduction of the principle of division of labor-there comes an inevitable differentiation of pursuits, wholly outside of legislation, and through the operation of natural causes. Not all of any population is required in agriculture to provide the whole with food. By a division of labor, one man in agriculture can produce the sustenance of himself and many others. "The United States have at the present time but five persons engaged in agriculture for each square mile of settled area." By the side of the farm must early spring up a wide circle of industries-the shoemaker, the carpenter, the blacksmith, the wagon-maker, the painter, the builder, the mason, and all the ordinary employments which arise in any small community from the earliest division of labor. Moreover, "agriculture" is often used in a too limited sense as confined to producing food alone (although even in that limited sense employing nearly one half of the total number of our laborers). In a new country the natural field of employment is found in the "extractive industries," which include the preparation for the market not only of food, but also of all ores, coal, minerals, oils, hides, leather, wool, lumber, and the industries intimately connected with them; all the employments which transport these from one part of the country to another (employing at present over one ninth of all our laborers); and professional and personal services of an extended variety. Even, therefore, if we were obliged to forego manufactures entirely, the "extractive industries" would necessarily involve a very extensive diversity of employments. The real question, however, for most persons, centers in the next stage of the industrial evolution-that of the manufactures of these above-mentioned products of the "extractive industries." It will be remembered, here, that a country does not possess an equal ability in producing each of these or any commodities: the timber formerly near great rivers may vanish into the interior; the oil-sources may be more or less fertile; or the ore-deposits may be more or less rich, more or less accessible, than those of other countries. This being understood, then, as soon as the demand in the country calls for an increased quantity of a particular article, the cost may increase under the law of diminishing returns until a foreign country-having inferior agents of production as compared with our bestmay be able to send supplies into our markets. It all depends on whether the United States wants more articles than can be produced on grades of natural agents superior to those possessed by foreigners, taking cost of carriage to this country into consideration. Even though foreign competition appears when we reach poorer grades of natural agents, it does not follow that some of the particular articles will not be produced. What ought to be clear is, that untrammeled exchange between countries will not prevent the existence of various industries, but only limit production to those grades of agents which are its best. This may be better seen by a simple dia gram: England may have seven different grades of productiveness in her iron and coal supplies, of which her grades 1, 2, and 3 are superior to the best grade of the United States, while grades 1, 2, 3, and 4 in the United States may compare only with grades 4, 5, 6, 7 of England. So long as England can supply herself and the United States also with coal and iron from the three superior grades, the United States can not work grade 1 at home. But if the supply for England and the world requires grade 5 to be worked, then the United States can begin the industry on her best grade, although that is far inferior to the best grade in England. Likewise, if the United States has three grades of wheat-land superior to England's best grade, the ability of England to grow wheat depends on whether the United States can, or can not, supply both herself and England from grades 1, 2, and 3. If we must resort to grade 4, then England can begin to grow wheat as well as we. In short, under a system of free exchange, as great a diversity as under protection is probably possible, but only in such a way that the best possible advantages in each particular industry are employed. Smaller amounts in some branches, and greater amounts in others, may be produced under a free than under a restrictive system, but with all the greater gain which arises from a proper and healthy adjustment of trade. The most poorly endowed enterprises in each occupation would be given up, but not the whole industry itself. No class of persons feel the competition of rivals more than English farmers since American wheat has come into English markets, and yet it does not follow that England can not grow a bushel of wheat. The fact is, merely, that some kinds of lands were thrown out of cultivation, and a readjustment made, to the benefit of those wanting cheaper food. So with us: we should not, by the free exchange, be forced to give up the iron and coal industries entirely; for the best mines would still keep that occupation in existence to "diversify" the others. So far the explanation covers the "extractive industries” only, or those industries affected by the law of diminishing returns when a larger quantity is demanded. The real question arises as to the manufactures of these materials. But we count upon larger industrial rewards, in the form of wages, and profits, here than in England; we must get more from an industry than England in order to satisfy us. Our grades of occupations, therefore, must be more productive to a certain extent, grade for grade, than English grades, in order to allow of their remaining free from competition. But we have this superiority, as regards our home market, owing to natural causes (1) cheap raw materials (if we except wool and other commodities whose price is raised by the tariff); (2) advantage over England in cost of transportation of raw products; and (3) in the cost of transportation, again, of the finished goods in reaching our markets. Now, the processes of manufacture which do not put much labor upon the materials, especially where the articles are bulky, are conducted in this country without fear of foreign competition. And the range of this class of manufactures is surprisingly large. It includes the manufactures of iron, such as stoves, and the common utensils of every-day life; of hides, such as leather, harnesses, etc.; and of wood, such as all the furniture of common use. The list is too long to be fully stated here. These industries are not kept in existence by the tariff; and a diversity as wide as this would arise under a system of free exchange, as well as of restriction. Indeed, if duties were removed from so-called "raw materials," it is altogether probable that a wider diversity would exist than ever before. And yet, it will be said, there are some things we can not produce in free competition with England. Of course there are; and it is to be hoped it will long continue so. If there are not some kinds of commodities which foreigners can produce to better advantage than we, then there will be no possibility of any foreign trade whatever; since, if they can send us nothing, they can take nothing from us. To deny this position, is to say that the export and import trade of the United States (amounting in 1883 to more than $1,500,000,000) is of no profit, and had best be entirely destroyed, in order that a few industries in which we have no natural advantages (and which employ less than one seventeenth of the laborers in the United States) should be continued at a loss to the general productiveness of our labor and capital, and so to a general diminution of wages and profits. 87. The argument-heard less frequently now than formerly-has been advanced, drawn inductively from statistics, that protection does not raise prices; because, after duties are put on, a larger quantity is produced, the advantages of large production are reaped, and then the price of the manufactured commodity falls lower here than it was before the duty was imposed. The position is then held that protection does not raise prices. It is, of course, understood to mean the prices of protected commodities-a necessary precaution, because we find our own agricultural (unprotected) commodities cited to show that prices are lower here than in England. No one, however, will deny that there has been a fall in the prices of textile fabrics and manufactured goods. That is the result of a general law of value, and of the tendencies of a progressive state of industry.' The causes of this acknowledged fall would be at work, no matter whether tariffs existed or not. It is the result of the general forward march of improvements, as evidenced in the application of new inventions and the display of skill and ingenuity in new processes. To say that it comes because of a tariff, is a complete non sequitur. How true this is may be seen by observing that a country like England, without tariffs, shares in the general fall of prices of manufactured goods equally with the country which has heavy customs-duties. The causes must be wider than tariffs, if they are seen working alike in tariff and non-tariff countries. But the fact itself can not be gainsaid that protection does raise the prices of the protected goods in the home market. The comparison is not to be made between prices as they now are in this country and as they were twenty or forty years ago also in this country, for this would show only the general march of 1 Book IV, Chap. I, § 2; and see Chart No. XX. |