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artificially raise the cost of materials and are unable to control the price of the product into which these materials enter, then it often happens that we must keep the wages down in correspond. ing measure, or else give up the undertaking; and, again, a yet more subtle difficulty: if we can not make a profit over and above the cost of materials, the wages, and the general expenses, then no capital will be invested in that branch of industry, and no wages can be paid, for lack of profit.
Now, observe how subtle this matter is. Any conspicuous or important branch of industry which will pay ten per cent profit will attract capital and will be established; but if the tax on the crude material is even ten per cent upon the finished product, and this tax can not be paid without doing away with the profit, then that art stops, and the other ninety per cent which would be distributed among the workmen is lost to them, merely because there is a disadvantage of ten per cent in the cost of the material as compared to some other places.
Now, then, any one who is conversant with the complexity of all modern manufactures can not fail to be aware that the revenue which the Government derives of $50,000,000 on the crude or partly manufactured materials which we do import and which we do use in the processes of our domestic industry, may so much restrict that industry by increasing our own cost of production as to limit our home market both for domestic and foreign traffic, and may prevent the establishment of arts in which ten times as much, or $500,000,000, might be distributed among those who would do the work if these articles were free from taxation.
This is the consequence of the higher price of domestic products in this country or the lower price which prevails abroad for lack of competition.
The very worst effect of a duty on crude materials ensues when, according to its advocates, it is most successful. They hold that if, by our tax, the price is put down in a foreign country, then the foreigner pays the tax. There are no words suitable to · apply to such folly. By that very depression in the price of pig iron and wool we have built up the manufactures and machineshops of Europe, and have failed more and more to hold our home market even for the specific products of the loom and the forge.
Moreover, the price of some of the most necessary articles of our domestic products which enter into our domestic industry, notably iron and steel, are maintained far above what the price would be except for this system of taxation, although not, perhaps, to the full measure of the rate of duty which is assessed. Hence it follows that, owing to this higher price on the most necessary articles of consumption in the manufacturing and me
chanic arts, we have been unable even to retain our home market for domestic manufactures, and have been cut off from any considerable share in the supply of other countries.
In a rough and ready way, it may be said that the cost of materials, in all the staple products of machinery or in manufactured goods, ranges from one half to three quarters the entire cost of the finished product. If the price of these materials is kept even ten per cent higher in this country than it is in others, then of course all profit may be cut off by that disparity, and, in spite of vain attempts to put on compensating duties, that art languishes, and we protect the foreigner rather than the American.
It will be remembered that no heavy stocks of food, fiber, or fabrics are now carried anywhere in the world, beyond the probable consumption of a single year or less. Hence it follows that, in respect to the import of materials which enter into the processes of our own work, whatever the price may be in any given year, whether high or low, if through our high tariff the consumers are subjected to a higher price than our competitors abroad, our industry languishes and foreign industry is protected.
I have said that there are two parties, each earnestly claiming to promote domestic industry. On the one side we find the Republican party advocating privation of foreign imports, without regard to the uses for which such articles are required, in order to protect the few specific branches of industry in which we do not yet excel other nations. On the other side we find the Democratic party advocating the protection of the domestic industry of all alike, by exempting from taxation every article which is necessary in the processes of domestic industry that we can procure in any other country in exchange for the excess of our cotton, corn, wheat, and other commodities, which, even at the highest wages obtained anywhere in the world, are yet produced at the lowest cost.
Such is the position of the question on which every voter will be called to decide in exerting his influence and in choosing whom he will support.
Such were the exact conditions in Great Britain in 1840, only worse, because the natural resources of Great Britain, both in respect to agriculture and mining, are so much less than our own.
The first measures of relief from taxation in Great Britain were practically instituted by Huskisson in 1824, when wool and some other crude materials were in part or wholly relieved from duties. The effect of this change, especially upon the product of domestic wool in Great Britain, was very beneficial; relief from duty gave the manufacturers of Great Britain the opportunity to buy all the wool which they would require for any kind of work, and the consequence was, that the demand for British wool increased, and did not diminish, as the farmers feared. These measures of Huskisson, however, were purely tentative; and, subsequent to 1824, there was a great financial struggle in the process of restoring specie payment in the Bank of England, and in the bringing about conditions consistent with peace. The great Napoleonic wars in the early part of the century had thrown every art and industry out of its true relation. But the method of reform was not forced upon the attention of the people of Great Britain until the disastrous results of the attempt to regulate prices and wages by way of a high tariff, and the failure of this method of promoting domestic industry and of developing a home market had culminated in 1840.
In every history of this time, the picture of the condition of Great Britain is one of the most painful suffering on the part of most of the working people. The land was held in the hands of a very few great landholders who were protected by the corn laws, and who were thus enabled to charge high prices for necessary food. Great wealth had been accumulating during the period of war in the development of mines, works, and factories. Individual wealth existed in a measure never before witnessed; and this condition misled many legislators in this country; it deceived the very elect, and doubtless led Henry Clay and other champions of a high tariff to advocate the very policy which Great Britain was then being forced to give up by the disastrous results which had ensued. Underneath this outside show of prosperity, poverty, destitution, and want existed on every side; pauperism existed as never before or since among any English-speaking people.
At the time when Sir Robert Peel took office in 1840 it was clearly proved that the very measures which had been enacted for the purpose of establishing a home market and building up domestic manufactures “had destroyed that market by reducing the great mass of the population to beggary, destitution, and want." I quote the exact words of a contemporary observer.
Those who choose to discriminate between the leaders of the two parties of the present time may read the perversion of English history by James G. Blaine, in the North American Review; and the true picture which is given by General M. M. Trumbull.
It would be well worth while for any one who may have been misled by the common errors about the influences which brought Great Britain to reverse her policy in 1842, to read up the economic history of that period. It can be done in a very few days. All the facts are given by the radical Miss Martineau in her History of Fifty Years' Peace; by the Tory, Sir Stafford Northcote, in his Twenty Years' Financial Policy, explaining the changes which Peel brought about; by the economist John Noble's Fiscal Legislation in Great Britain; or in Carlyle's
Past and Present. The best summary is to be found in the little book published in Chicago in 1884, by General M. M. Trumbull, entitled The American Lesson of the Free Trade Struggle in England. In this book will be found the whole record of the condition of England from 1838 to 1846, after the panic of 1836 which originated in this country and spread to Great Britain had spent its force, down to the culmination in 1846 of the measures which Peel instituted but which were substantially completed by Gladstone in 1853. This history ought to be read by every man who desires to make up his mind how to act in this country at the present time. The logic of events is the same. We are repeating history. We are suffering, so far as it is in the power of legislators to stop the progress of this country, from injudicious methods of obstruction; and we may make progress in agriculture and in manufactures by“ great leaps and bounds," as Gladstone put it, whenever we choose to adopt the policy which will soon be brought into action, whether we will or no, by the logic of necessity.
The basis of Peel's tariff reform in England was established by Joseph Hume, who, being appointed chairman of the committee in the House of Parliament, made a report on the tariff of Great Britain, which then covered about twelve hundred and fifty specific articles, at an average rate of about twenty-eight per cent on dutiable imports. In this report he first sorted imports, according to their use, under four heads:
It was a case of condition and not of theory which Sir Robert Peel was called upon to meet when he took office. He met that condition by discriminating in choosing the subjects of taxation in the tariff which he presented, placing in the free list all the little petty taxes or duties on which an agreement was readily made, and then either making free partly manufactured goods or greatly abating duties upon them, at the same time reducing the duties on finished products except those of the fourth class, viz., those of the nature of a luxury or voluntary use.
I had become so much impressed and influenced by the success of this method that, during the last few months of the administration of Secretary Hugh McCulloch, I suggested to him to class the imports of this country in a way corresponding to Hume's method. I gave him my reasons somewhat in this way, that in whatever manner, by whatever party, under whatever name the reform of our tariff should at a future day be taken up, it would of necessity be governed by the logic of the lines or classes on which these imports might then be sorted. The suggestion was
adopted. I made five classes; and since that date the fiscal statement of each year has been tabulated in that way.
I venture to incorporate at this point the statement of the imports under each of the heads named with the duties thereon. I take these figures from the last report of the Bureau of Statistics of the Treasurer of the United States for the fiscal year ending June 30, 1889.
IMPORTS ENTERED FOR CONSUMPTION. Imports of Merchandise subdivided into Groups or Classes according to Degree of
Manufacture and Uses. In the following tables the extended classification for imports entered for consumption, embracing over a thousand articles and classes of articles, which is mainly an alphabetical arrangement with two grand subdivisions of free and datiable articles, has been subdivided into the five following general groups or classes, according to the degree of manufacture and uses of the articles imported. It is hoped that the condensation of imports into these groups will in some measure aid and simplify the labors of those engaged in investigating the operations of our tariff laws.
For more extended explanation of this classification, see report of this office on Imported Merchandise entered for Consumption, 1887, page xxiv, etc.
Class A.-Articles of food, and animals.
cesses of domestic industry.
terials in the manufactures and mechanic arts.
Class E.--Articles of voluntary use, luxuries, etc. The value of imported merchandise entered for consumption in the United States, with the amount of duty collected thereon added, for the year ending June 30, 1889, has been as follows:
This table does not show the cost of the imports landed in our ports. There are not included in the values of articles the cost of coverings, commissions, etc., excluded from the datiable value by the act of March 3, 1883; nor freight charges from the country of importation, and undervaluations, the aggregate amount of which can not be estimated with any approximation to accuracy.