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Free trade.

William Ewart Gladstone, several times Prime Minister of England, wrote the following plea for Free Trade, to which a reply was made by James G. Blaine, which will be found in the article on protection:

The existing difference of practice between America and Britain with respect to free trade and protection of necessity gives rise to a kind of international controversy on their respective merits. To interfere from across the water in such a controversy is an act which may wear the appearance of impertinence. It is prima facie an intrusion by a citizen of one country into the domestic affairs of another, which as a rule must be better judged of by denizens than by foreigners. Nay, it may even seem a rather violent intrusion; for the sincere advocate of one of the two systems cannot speak of what he deems to be the demerits of the other otherwise than in broad and trenchant terms. In this case, however, it may be said that something of reciprocal reproach is implied in the glaring contrast between the legislation of the two countries, apart from any argumentative exposition of its nature. And where should an Englishman look for weapons to be used against protection, or an American for weapons to be wielded in its favor, except in America and England respectively?

This sentiment received, during a late Presidential struggle, a lively illustration in practice. An American gentleman, Mr. N. McKay, of New York, took, according to the proverb, the bull by the horns. He visited Great Britain, made what he considered to be an inspection of the employments, wages, and condition of the people, and reported the result to his countrymen, while they were warm with the animation of the national contest, under the doleful titles of Free-trade toilers and Starvation wages for men and women. He was good enough to forward to me a copy of his most interesting tract, and he did me the further honor to address to me a letter covering the pamphlet. He challenged an expression of my opinion on the results of free trade in England and on “the relative value of free trade and protection to the Englishspeaking people.”

There was an evident title thus to call upon me, because I had, many years since, given utterance to an opinion then and now sincerely entertained. I thought, and [442] each of the rolling years teaches me more and more fixedly to think, that in international transactions the British nation for the present enjoys a commercial primacy; that no country in the world shows any capacity to wrest it from us, except it be America; that, if America shall frankly adopt and steadily maintain a system of free trade, she will by degrees, perhaps not slow degrees, outstrip us in the race, and will probably take the place which at present belongs to us; but that she will not injure us by the operation. On the contrary, she will do us good. Her freedom of trade will add to our present commerce and our present wealth, so that we shall be better than we now are.

It would have been impertinent in me, and on other grounds impolitic, to accept the invitation of Mr. McKay while the Presidential contest was yet pending. But all the agencies in that great election have now done their work, and protection has obtained her victory. Be she the loveliest and most fruitful mother of the wealth of nations, or be she an impostor and a swindler, distinguished from other swindlers mainly by the vast scale of her operations, she no longer stands within the august shadow of the election, and she must take her chance in the arena of discussion as a common combatant, entitled to free speech and to fair treatment, but to nothing more. So that the citizens of two countries long friendly, and evidently destined to yet closer friendliness, may now calmly and safely pursue an argument which, from either of the opposing points of view, has the most direct bearing on the wealth, comfort, and well-being of the people on both sides of the water.

The appeal of the champion whose call has brought me into the field is very properly made “to the wage-earners of the United States.” He exhibits the deplorable condition of the British workingman, and asks whether our commercial supremacy is not upheld at his expense. The constant tenor of the argument is this: High wages by protection, low wages by free trade. It is even as the recurring burden of a song. Now, it sometimes happens that, while we listen to a melody presented to us as new, the idea gradually arises in the mind, “I have heard this before.” And I can state with truth that 1 have heard this very same melody before; nay, that I am familiar with it. It comes to us now with a pleasant novelty; but once upon a time we British folk were surfeited, nay, almost bored to death, with it. It is simply the old song of our squires, which they sang with perfect assurance to defend the corn laws, first from within the fortress of an unreformed Parliament, and then for a good many years more, with their defences fatally and fast crumbling before their eyes, after Parliament had been reformed. Mr. McKay and protection, now made vocal in him, terrify the American workman by threatening him with the wages of his British comrade, precisely as the English landlord coaxed our rural laborers, when we used to get our best wheats from Dantzig, by exhibiting the starvation wages of the Polish peasant.

But there is also a variation in the musical phrase. Our low wages, it is said, form the basis of our cheap production. So it is desired, as Mr. McKay apprises me, to “get some relief from the American government” ; by which I understand that he calls for more protection. For example: I have learned that turfs are occasionally sent from Ireland to America to supply the Irish immigrant with a rude memorial of the country he was forced to leave, but has not ceased to love; and that these turfs are dear to his affectionate patriotism, and have been bought by him at prices relatively high. But they are charged (I am told) as unenumerated articles, at 15 per cent. on the value. I hope there is no strong turbary interest in America, for I gather that, to secure high wages to the diggers, you would readily, and quite consistently, raise this, say, to 25. The protective argument, however, at this stage rather is, How can the capitalist engaged in manufacture compete with his British rival, who obtains labor at half the price? But this also is to us neither more nor less than the repetition of an old and familiar strain. The argument is so plausible that, in the early days of our well-known corn-law controversy, it commended itself even to some of the first champions of repeal. They pointed out that during the great French war the [443] trade of our manufacturers was secured by our possession of the sea; but that when, by the establishment of peace, that became an open highway, it was impossible for our manufacturers, who had to pay their workmen wages based upon protection prices for bread as the first necessary of life, any longer to compete with the cheap bread and cheap labor of the Continent. And, in truth, they could show that their trade was at the time, to a great extent, either stationary or even receding. These arguments were made among us, in the alleged interest of labor and of capital, just as they are now employed by you; for America may at present be said to diet on the cast-off reasonings of English protectionism. They were so specious that they held the field until the genius of Cobden recalled us from conventional phrases to natural laws, and until a series of bad harvests (about 1838-41) had shown the British workman that what enhanced the price of his bread had no corresponding power to raise the rate of his wages, but distinctively tended to depress them.

Let me now mark the exact point to which we have advanced. Like a phonograph of Mr. Edison, the American protectionist simply repeats on his side of the Atlantic what has been first and often, and long ago, said on ours. Under protection our wages were, on the whole, higher than those of the Continent. Under protection American wages are higher than those of Great Britain. We then argued, post hoc, ergo propter hoc. He now argues (just listen to his phonograph), post hoc, ergo propter hoc. But our experience has proceeded a stage further than that of the American people. Despite the low wages of the Continent, we broke down every protective wall and flooded the country (so the phrase then ran) with the corn and the commodities of the whole world; with the corn of America first and foremost. But did our rates of wages thereupon sink to the level of the Continent? Or did it rise steadily and rapidly to a point higher than had been ever known before?

That the American rate of wages is higher than ours I concede. Some, at least, of the causes of this most gratifying fact I shall endeavor to acknowledge. My enumeration may be sufficient or may be otherwise. Whether it be exhaustive or not, the facts will of themselves tend to lay upon protectionism the burden of establishing, by something more than mere concomitancy, a casual relation between commercial restraint and wages relatively high. But what if, besides doing this, I show (and it is easy) that wages which may have been partially and relatively high under protection, have become both generally and absolutely higher, and greatly higher, under free trade?

That protection may coexist with high wages, that it may not of itself neutralize all the gifts and favors of nature, that it does not as a matter of course make a rich country into a poor one— all this may be true, but is nothing to the point. The true question is whether protection offers us the way to the maximum of attainable wage. This can only be done by raising to the utmost attainable height the fund out of which wages and profits alike are drawn. If its tendency is not to increase, but to diminish, that fund, then protection is a bar to high wages, not their cause; and is, therefore, the enemy, not the friend, of the classes on whose wages their livelihood depends. This is a first outline of the propositions which I shall endeavor to unfold and to bring home.

Mr. McKay greatly relied upon a representation which he has given as to the rate of wages in England. It is only incidental to the main discussion, for the subject of this paper is not England, but America. Yet it evidently requires to be dealt with; and I shall deal with it broadly, though briefly, asking leave to contest alike the inferences and the facts which he presents. My contention on this head will be twofold. First, he has been misled as to the actual rate of wages in England. Secondly, the question is not whether that rate is lower than the rate in America, nor even whether the American workman (and this is a very different matter) is always better off than the workman in England. It is, What are English wages now under free trade, compared with what they formerly were under protection?

And first, as to the actual rates in [444] particular cases to which he has referred, I must draw a line between the case of the English chain-makers, on which he has dwelt, and the case of the great coal industry, of which he has taken the town of Wigan as a sample.

In an old society like this, with an indefinite variety of occupations, there are usually some which lie, as it were, out of the stream, and which represent the traditions of a former time, or peculiarities of circumstance, not yet touched by that quickening breath of freedom in trade and labor under which I shall show it to be unquestionable that an overwhelming proportion of our population have found their way to a great and, indeed, extraordinary improvement. In particular, we may expect to find a lamentable picture in those cases where hand labor is destined to be supplanted by machinery, but where the transition, though at hand, has not yet taken effect. These chain-makers are represented as earning, man and wife together, $4 per week. Small as is this amount, it would not have drawn on that account the least notice in the days when humanity took its standards from the facts supplied by protection. Under the present circumstances, it happens to have attracted marked attention in Parliament, and elsewhere, and I believe that it is at this very time the subject of public inquiry. But the true answer to the argument from isolated cases is that there is no relation whatever between the condition of this or that small, antiquated, and solitary employment, and the general condition of our wage-earning population.

It is otherwise, however, with reference to Wigan. Employment at this important centre is subject to the economical currents of the time, and undoubtedly the facts it may exhibit must be held to bear upon the general question of the condition of the people. But it so happens that I have the best means of obtaining information about Wigan, and I had better state at once that I am at issue with Mr. McKay's report upon the facts. The statements made by him have doubtless done their work; but it is still a matter of interest to clear up the truth. The steeple, of which he declares that the parish church has been denuded, never, as I am assured, had any existence. The temperature in Rosebridge mine, which he states at 93°, does not exceed 70°. The wages of men are not 3s. a day, but vary from a minimum of 3s. 3d. up to the sum of 4s. 6d. The minimum for women on the bank is not 1s., but 1s. 6d., and the maximum not 1s. 9d., but 2s. Yards such as he estimates at 45 inches wide are forbidden by by-laws of the local board issued in 1883, and similar laws issued in 1860 require that cottages shall have an open space, at the rear or side, of not less than 150 square feet. Barrows are not in use for wheeling coal underground. In a word, so far as the only place I have been able to make the subject of examination is concerned, the accuracy of the supposed statements of fact is contested all along the line by persons on the spot, whom I know to be of the highest trustworthiness and authority.

We are, however, happily in a condition to bring upon the arena evidence of far higher moment than assertions or denials founded upon a few rapid glances of a traveller, even had he not been laden with a foregone conclusion, or than denials offered against those assertions. So far as Great Britain is concerned, it is obvious enough to what point we should address our inquiries, if they are to be of any serious force in determining by results the controversy upon the respective merits of protection and free trade. We must endeavor to ascertain the general rate of wages now, in comparison with what it was under the protective system, and with constant regard to the cost of living as exhibited by the prices of commodities.

And, in order to try the question for this country at large, whether free trade has been a curse or a blessing to the people who inhabit it, I shall repair at once to our highest authority, Mr. Giffen, of the board of trade, whose careful and comprehensive disquisitions are before the world, and are known to command, in a very high degree, the public confidence. He supplies us with tables which compare the wages of 1833 with those of 1883 in such a way as to speak for the principal branches of industry, with the exception of agricultural labor. The wages of miners, we learn, have increased [445] in Staffordshire (which, almost certainly, is the mining district of lowest increment) by 50 per cent. In the great exportable manufactures of Bradford and Huddersfield, the lowest augmentations are 20 and 30 per cent., and in other branches they rise to 50, 83, 100, and even to 150 and 160 per cent. The quasidomestic trades of carpenters, bricklayers, and masons, in the great marts of Glasgow and Manchester, show a mean increase of 63 per cent. for the first, 65 per cent. for the second, and 47 per cent. for the third. The lowest weekly wage named for an adult is 22s. (as against 17s. in 1833), and the highest 36s. But it is the relative rate with which we have to do; and, as the American writer appears to contemplate with a peculiar dread the effect of free trade upon shipping, I further quote Mr. Giffen on the monthly wages of seamen in 1833 and 1883, in Bristol, Glasgow, Liverpool, and London. The percentage of increase, since we have passed from the protective system of the navigation law into free trade, is, in Bristol, 66 per cent.; in Glasgow, 55 per cent.; in Liverpool (for different classes), from 25 per cent. to 70 per cent.; and in London, from 45 per cent. to 69 per cent. Mr. Giffen has given the figures in all the cases where he could be sufficiently certain of exactitude. No such return, at once exact and comprehensive, can be supplied in the case of the rural workman. But here the facts are notorious. We are assured that there has been a universal rise (somewhat checked, I fear, by the recent agricultural distress), which Caird and other authorities place at 60 per cent. Mr. Giffen apparently concurs; and, so far as my own personal sphere of observation reaches, I can with confidence confirm the estimate and declare it to be moderate. Together with this increase of pay, there has been a general diminution of the hours of work, which Mr. Giffen places at one-fifth. If we make this correction upon the comparative table, we shall find that the cases are very few in which the increment does not range as high as from 50 and towards 100 per cent.

In a later essay, of January, 1886, Mr. Giffen touches the case of the unskilled laborer. He observes that the aggregate proportion of unskilled to skilled labor las diminished—a fact which of itself forcibly exhibits the advance of the laboring population as a whole. I will not enter upon details; but his general conclusion is this: the improvement is from 70 to 90 per cent. in the wages of unskilled non-agricultural labor. And again, comparing the laborer with the capitalist between 1843 and 1883, he estimates that, while the income from capital has risen in this country from £ 190,000,000 to £ 400,000,000, or by 210 per cent., the workingclass income, below the standard which entails liability to income-tax, has risen from £ 235,000,000 to £ 620,000,000, or at the rate of 160 per cent. Within the same period the prices of the main articles of popular consumption have not increased, but have certainly declined. The laborer's charges, except for his abode, have actually diminished as a whole. For his larger houserent he has a better house. To the government he pays much less than he did, and from the government he gets much more; and “the increase of his money wages corresponds to a real gain.”

Such, then, have been the economical results of free trade as compared with protection. Of its political, moral, and social results, at least so far as they regard the masses of the people, an account in no way less satisfactory could be given, were this the proper occasion for entering on the subject. If it be said that the tale I have told is insufficient, and that wages ought still to rise, this may be so; and rise I hope they will; but protection had no such tale to tell at all. For the working population at large it meant stagnation, depression, in many cases actual and daily hunger and thirst, in some unquestionable and even gross degradation. I will venture to say that, taking the case as a whole, it would be difficult to match in history the picture which Great Britain now presents of progress, achieved mainly through wise laws, from stinted means and positive want towards comfort and abundance for the people.

With a view to presenting the argument for leaving trade to the operation of natural laws in the simplest manner, I shall begin with some postulates which I suppose to be incapable of dispute. [446]

International commerce is based, not upon arbitrary or fanciful considerations, but upon the unequal distribution among men and regions of aptitudes to produce the several commodities which are necessary or useful for the sustenance, comfort, and advantage of human life.

If every country produced all commodities with exactly the same degree of facility or cheapness, it would be contrary to common-sense to incur the charge of sending them from one country to another.

But the inequalities are so great that (for example) region A can supply region B with many articles of food, and region B can in return supply region A with many articles of clothing, at such rates that, although in each case the charge of transmission has of necessity been added to the first cost, the respective articles can be sold after importation at a lower rate than if they were home-grown or home-manufactured in the one or the other country respectively.

The relative cost, in each case, of production and transmission, as compared with domestic production, supplies, while all remain untrammelled by state law, a rule, motive, or main-spring of distribution which may be termed natural.

The argument of the free-trader is that the legislator ought never to interfere, or only to interfere so far as imperative fiscal necessity may require it, with this natural law of distribution.

All interference with it by a government in order to encourage some dearer method of production at home, in preference to a cheaper method of production abroad, may fairly be termed artificial. And every such interference means simply a diminution of the national wealth. If region A grows corn at home for 50s. with which region B can supply it at 40s., and region B manufactures cloth at 20s. with which region A can supply it at 15s., the national wealth of each is diminished by the 10s. and the 5s. respectively.

And the capitalists and laborers in each of these countries have so much the less to divide into their respective shares, in that competition between capital and labor which determines the distribution between them of the price brought in the market by commodities.

In my view, and I may say for my countrymen in our view, protection, however dignified by the source from which it proceeds, is essentially an invitation to waste, promulgated with the authority of law. It may be more violent and prohibitory, or it may be less; but, up to the point to which it goes, it is a promise given to dear production to shield it against the competition of cheap production, or given to dearer production to hold it harmless against cheaper; to secure for it a market it could not otherwise hold, and to enable it to exact from the consumer a price which he would not otherwise pay.

Protection says to a producer, Grow this or manufacture that at a greater necessary outlay, though we might obtain it more cheaply from abroad, where it can be produced at a smaller necessary outlay. This is saying, in other words, waste a certain amount of labor and of capital; and do not be afraid, for the cost of your waste shall be laid on the shoulders of a nation which is well able to bear it. So much for the waste unavoidably attaching to dearness of production. But there are other and yet worse descriptions of waste, as to which I know not whether America suffers greatly from them, but I know that in this country we suffered from them grievously under the sway of protection. When the barrier erected by a protective duty is so high that no foreigner can overleap it, that duty enables the home manufacturer not only to charge a high price, but to force on the consumer a bad article. Thus, with an extravagant duty on foreign corks, we had for our own use the worst corks in Europe. And yet again, protection causes waste of another kind in a large class of cases. Suppose the natural disadvantages of the home producer to equal 15 per cent., but the pro– tective duty to be 30. But cheapness requires minute care, economy, and despatch at all the stages through which production has to pass. This minute care and thrift depend mainly on the pressure of competition. There were among us, and there may be elsewhere, many producers whom indolence tempts to neglect; who are not sufficiently drawn to resist this inertia by the attraction of raising profit to a maximum; for whom the prospect of advantage is not enough without the sense of [447] necessity, and whom nothing can spur to a due nimbleness of movement except the fear of not being able to sell their articles. In the case I have supposed, the second 15 per cent. is a free margin whereupon this indolence may disport itself: the home producer is not only covered for what he wastes through necessity, but for what he wastes from negligence or choice; and his fellow-countrymen, the public, have to pay alike for both. We suffered grievously from this in England, for oftentimes the rule of the producer is, or was, to produce not as well as he can, but as badly as he can, and as well only as he must. And happy are you if, through keener energy or more troublesome conscience in production, you have no similar suffering in America.

If protection could be equally distributed all around, then it would be fair as between class and class. But it cannot possibly be thus distributed in any country until we have discovered a country which will not find its interest in exporting some commodity or other. For the price of that commodity at home must be determined by its price in foreign or unprotected markets, and therefore, even if protective duties are inscribed on the statute-book at home, their effect must remain absolutely null, so far as this particular article is concerned. It is beyond human wit and power to secure to the cotton-grower, or to the grower of wheat or maize in the United States, the tenth part of a cent per bale or per bushel beyond what the price in the markets of export will allow to him. If, under these circumstances, he is required to pay to the iron-master of Pennsylvania, or to the manufacturer at Lowell, an extra price on his implements or on his clothing, for which he can receive no compensation whatever, such extra price is at first sight much like robbery perpetrated by law.

If such be the ugly physiognomy presented, at the present stage of our inquiry, by this ancient and hoary-headed wizard in relation to the claim for equal dealing between class and class, the presumptive case is not a whit better in regard to the aggregate wealth of the nation. Wealth is accumulation; and the aggregate of that accumulation depends upon the net surplus left by the prices of industrial products after defraying out of them the costs of production. To make this surplus large is to raise national wealth to its maximum. It is largest when we produce what we can produce cheapest. It is diminished, and the nation is so far impoverished, whenever and wherever and to whatever extent, under the cover of protective laws, men are induced to produce articles leaving a smaller surplus instead of articles leaving a larger one. But such is the essence of protection. In England (speaking roughly) it made us produce more wheat at high prices instead of more tissues at low prices. In America it makes you produce more cloth and more iron at high prices instead of more cereals and more cotton at low prices. And your contention is that by making production thus costly you make wages high. To this question let us pass onward; yet not without leaving behind us certain results which I think you will find it hard to attack, unless it be in flank and rear. Such as these: First, that extra price imposed on class A for the benefit of class B, without compensation, is robbery, and robbery not rendered (in the abstract) more respectable because the state is the culprit. Secondly, that protection means dear production, and dear production means, pro tanto, national impoverishment.

But the view of the genuine protectionist is the direct opposite of all this. I understand his contention to be that protection is (as I should say freedom is) a mine of wealth; that a greater aggregate profit results from what you would call keeping labor and capital at home than from letting them seek employment wherever in the whole world they can find it most economically. But if this really is so, if there be this inborn fertility in the principle itself, why are the several States of the Union precluded from applying it within their own respective borders? If the aggregate would be made richer by this internal application of protection to the parts, why is it not so applied? On the other hand, if the country as a whole would by this device be made not richer, but poorer, through the interference with the natural laws of production, then how is it that by similar [448] interference the aggregate of the States, the great commonwealth of America, can be made, in its general balance-sheet, not poorer, but richer?

What is the value of this argument about keeping capital at home, by means of protection, which, but for protection, would find its way abroad? The contention seems to be this: capital which would be most profitably employed abroad ought by legal inducement to be inveigled into remaining here, in order that it may be less profitably employed at home. Our object ought to be, not to pursue those industries in which the return is the largest when compared with the outlay, but to detain in this country the largest quantity of capital that we can. Now, here I really must pursue the argument into its hiding-places by testing it in extremes. If the proper object for the legislator is to keep and employ in his country the greatest possible amount of capital, then the British Parliament (exempli gratia) ought to protect not only wheat but pineapples. A pineapple is now sold in London for 8s. 6d., which before we imported that majestic fruit from the tropics, would have sold for £ 2. Why not protect the grower of pineapples at £ 2 by a duty of 400 per cent.? Do not tell me that this is ridiculous. It is ridiculous upon my principles; but upon your principles it is allowable, it is wise, it is obligatory—as wise, shall I say? as it is to protect cotton fabrics by a duty of 50 per cent. No; not as wise only, but even more wise, and therefore even more obligatory. Because according to this argument we ought to aim at the production within our own limits of those commodities which require the largest expenditure of capital and labor to rear them, in proportion to the quantity produced; and no commodity could more amply fulfil this condition.

If protection be, as its champions (or victims) hold, in itself an economical good, then it holds in the sphere of production the same place as belongs to truth in the sphere of philosophy, or to virtue in the sphere of morals. In this case, you cannot have too much of it; so that, while mere protection is economical good in embryo, such good finds its full development only in the prohibition of foreign trade. I do not think the argument would be unfair. It really is the logical corollary of all your utterances on the high wages which (as you believe) protection gives in America, and on the low wages which (as you believe) our free trade, now impartially applied all round, inflicts upon England. But I refrain from pressing the point, because I do not wish to be responsible for urging an argument which tends to drive the sincere protectionist deeper and deeper into, not the mud, but (what we should call) the mire.

But now I suppose the answer might be that the case which I have put is an extreme case; and that arguments are not well judged by their extremes. In some matters, for instance in moral matters, where virtue often resides in a mean, this may be so. But the laws of economy, which we are now handling, approach much more to the laws of arithmetic; and if your reasoning is that we ought to prefer, among the fields for the investment of capital, what is domestic to what is profitable, it is at least for the protectionist to show—and he never has shown—why it is worth a nation's while on this account to lose 5s. in the pound, but not to lose (say) 10s. or 15s.

I will, however, instead of relying on an unanswered challenge, push the war into the enemy's country. I shall boldly contend that the whole of this doctrine— that capital should be tempted into an area of dear production for the sake or under the notion of keeping it at home— is a delusion from top to bottom. It says to the capitalist, Invest (say) $1,000,000 in mills or factories to produce yarn and cloth which we could obtain more cheaply from abroad—that is, be it remembered, which could be produced abroad and sent here at a smaller cost of production, or, in other words, with less waste; for all expenditure in production beyond the measure of necessity—call it what we may—is simple waste. To induce him to do this, you promise that he shall receive an artificial instead of a natural price; and, in order that the foreigner may not drive him from the market, this artificial price shall be saddled, through the operation of an import duty, upon the competing foreign commodity; not in order to meet the wants of the [449] state, which is the sole justifying purpose of an import duty, but in order to cover the loss on wasteful domestic production, and to make it yield a profit. And all this in order, as is said, that the capitalist may be induced to keep his capital at home. But, in America, besides the jealously palisaded field of dear production, there is a vast open expanse of cheap production, namely, in the whole mass (to speak roughly) of the agricultural products of the country, not to mention such gifts of the earth as its mineral oils. In raising these, the American capitalist will find the demand of the world unexhausted, however he may increase the supply. Why, then, is he to carry his capital abroad when there is profitable employment for it at home? If protection is necessary to keep American capital at home, why is not the vast capital now sustaining your domestic agriculture, and raising commodities for sale at freetrade prices, exported to other countries? Or, conversely, since vast capitals find an unlimited field for employment in cheap domestic production without protection, it is demonstrated that protection is not required in order to keep your capital at home.

No adversary will, I think, venture upon answering this by saying that the profits are larger in protected than in unprotected industries. First, because the best opinions seem to testify that in your protected trades profits are hard pressed by wages—a state of things very likely to occur, because protection, resting upon artificial stimulants, tends to disturb and banish all natural adjustment. But, secondly, there can hardly be any votary of protection sufficiently quixotic to contend that waste ought to be encouraged in economical processes, and the entire community taxed without fiscal necessity, in order to secure to a particular order of capitalists profits higher than those reaped by another order—the public claim (such you hold it) of both resting upon exactly the same basis—namely, this, that they keep their capitals at home.

There is yet another point which I cannot pass without notice. I have not admitted that protection keeps at home any capital which would otherwise go abroad. But I now, for the moment, accept and reason upon the assumption that this is effected. And I ask—indeed, by the force of argument I may almost require—you to make an admission to me which is of the most serious character—namely, this, that there is a great deal of capital undoubtedly kept at home by protection, not for the purpose of dear production, which is partial waste, but for another kind of waste, which is sheer and absolute and totally uncompensated. This is the waste incurred in the great work of distributing commodities. If the price of iron or of cotton cloth is increased 50 per cent. by protection, then the capital required by every wholesale and every retail distributer must be increased in the same proportion. The distributer is not, and cannot be, in his auxiliary and essentially domestic work, protected by an import duty, any more than can the scavenger or the chimney-sweep. The import duty adds to the price he pays, and, consequently, to the circulating capital which he requires in order to carry on his traffic; but it adds nothing to the rate of profit which he receives, and nothing whatever to the employment which he gives. This forced increment of capital sets in motion no labor, and is compelled to work in the uncovered field of open trade. It has not the prima facie apology (such as that apology may be) which the iron-maker or the mill-owner may make, that he is employing American labor which would not otherwise be employed. If the waste under a protective duty of 50 per cent. be a waste of 50 per cent., the waste of the extra capital required in distribution is a waste of 100 per cent. on the cost of the operation; for it accomplishes absolutely nothing on behalf of the community which would not be accomplished equally if the commodity were 50 per cent. less in price; just as the postman distributing letters at 1s. performs no better or other service than the postman distributing letters at 1d. But of distributers the name is legion; they constitute the vast army of the wholesale and retail tradesmen of a country, with all the wants appertaining to them. As consumers, they are taxed on all protected commodities; as the allies of producers in the business of distributing, [450] they are forced to do with more capital what could be done as well with less.

Admitting that we see in the United States a coexistence of high wages with protection, but denying the relation of cause and effect between them, I may be asked whether I am prepared to broaden that denial into a universal proposition, and contend that in no case can wages be raised by a system of protection.

My answer is this: A country cannot possibly raise its aggregate wage fund by protection, but must inevitably reduce it. It is a contrivance for producing dear and for selling dear, under cover of a wall or fence which shuts out the cheaper foreign article, or handicaps it on admission by the imposition of a heavy fine. Yet I may for the moment allow it to be possible that, in some particular trade or trades, wages may be raised (at the expense of the community) in consequence of protection. There was a time when America built ships for Great Britain— namely, before the American Revolution. She now imposes heavy duties to prevent our building ships for her. Even my own recollection goes back to the period, between sixty and seventy years ago, when by far the most, and also the best part, of the trade between us was carried in American bottoms. Mr. McKay refers in his letter to a period before the war when she could compete with British labor, but when, as he informs us, your shipwright was paid 6s. a day, whereas now he has 14s.; which means that, as the profits of capital are not supposed to have declined, the community pays for ships more than twice as much as it used to pay, and your ship-builders do a small trade with a large capital, instead of doing (as before) a large trade with a (relatively) small capital.

I will not now stop to dilate on my admiration for the resources of a community which can bear to indulge in these impoverishing processes; nor even to ask whether the shipwright in the small trade has the same constancy of wage as he had in the large one, or whether his large receipt is countervailed by his large outlay on the necessaries and comforts of life. But I will look simply to the question whether protection in this case raises wages. I do not undertake to say it is, in a limited way, impossible. If it be true, the steps in the process are, I conceive, as follows: America absolutely requires for her own use a certain number and tonnage of vessels. Congress lays such duties upon foreign ships and materials that they shall not be obtained from abroad at less than double the price at which they are sold in the open market. Therefore the American shipbuilder can force his countrymen to pay him any sum, not exceeding two prices, for his commodity. The remaining point is the division of the amount between the capitalist and the workman. That is governed by the general state of the labor market in the country. If the labor market, although open to the world, is insufficiently supplied, then the wage-earner may possibly, in a given case, come in for a share of the monopoly price of ships. If the handwork be one requiring a long apprenticeship (so to call it), and thereby impeding the access of domestic competitors, this will augment his share. Then why not the like, some one will ask, in all cases? Because the community in the given case pays the price of the monopoly—that is to say, throws the price to waste, and because, while a trader in a multitude of commodities may lose upon one of them, and yet may have a good balance-sheet upon the whole, he must not and cannot lose upon them all without ceasing to be a trader; and a nation, with respect to its aggregate of production, is as a single trader.

Without, then, absolutely denying it to be possible that in some isolated and exceptional cases there may be a relation between protection (and all protection, so far as it goes, is monopoly) and high wages, I contend that to refer generally the high rate of wages in the United States to this cause would be nothing less than preposterous. And on this part of the case I desire to propound what appears to me to be in the nature of a dilemma, with some curiosity to know how the champions of protection would be disposed to meet it. Let me assume, for the purpose of trying the issue, that onehalf of the salable products of the United States are agricultural and one-half manufactured, and that the manufactured moiety are covered by protection, while [451] the agricultural half, since they are articles of large export, bear only such a price as is assigned to them by foreign competition in the markets where they are sold. I take this rough estimate for the sake of simplicity, and in the same view 1 overlook the fact that the sugar which you grow is still covered, as it used to be covered, by an operative protection. Onehalf, then, of American labor enjoys protective wages; the other half of the products of the United States is furnished by mere “free-trade toilers.” Now, I want to ask whether the wages of the agricultural half are raised by the existence of protective laws which cover the artisan half. This you cannot possibly affirm, because it is an elementary fact that (given the quantity of labor in the market) they are governed by the prices of the commodities they produce, and that those prices are free-trade prices. You have “free-trade toilers.” all over your country, and by their side you have protected artisans. I ask, then, next, this question: Is the remuneration of the “free-trade toilers,” all things taken into account, equivalent to that of the protected artisans? If it is not, why do not the agricultural men pass over into the provinces of demand for manufacturing and mining labor, and, by augmenting the supply, reduce and equalize the rate? Which is like asking, How comes it that a man is content with one loaf when two are offered him? The answer would be, He is not content; whenever he can, he takes the two and leaves the one. It follows that in this case there exists no excess of wage for him to appropriate. The loaf, meaning by the loaf not a mere money rate, but that money rate together with all its incidents of all kinds, is equal as between the protected and the unprotected laborer. The proportions of the two kinds of labor are governed in the long run (and perhaps in America more certainly and rapidly than anywhere else) by the advantages attaching to each respectively. In other words, the free-trade wages are as good as the protected wages; and (apart from small and exceptional cases) the idea that protection raises the rate of wages on any large scale or in any open field is an illusion.

But I proceed to consider the vast exceptional advantages which as a country the United States enjoy; which enable them to bear the process of depletion that, through the system of protection, it is their pleasure to undergo, and which for them cause the question to be one not of absolute retrogression, but only of hampered and retarded progress.

I hold that dear production, even if compensated to the producer by high price, is a wasteful and exhausting process. I may still be asked for a detailed answer to the question, “How, then, is it that America, which, as you say, makes enormous waste by protection, nevertheless outstrips all other countries in the rapid accumulation of her wealth?” To which my general answer is that the case is like that of an individual who, with wasteful expenditure, has a vast fortune, such as to leave him a large excess of receipts. But for his waste that excess would be larger still.

I will, then, proceed to set forth some of the causes which, by giving exceptional energy and exceptional opportunity to the work of production in America, seem to allow (in homely phrase) of her making ducks and drakes of a large portion of what ought to be her accumulations, and yet, by virtue of the remainder of them, to astonish the world.

1. Let me observe, first, that America produces an enormous mass of cotton. cereals, meat, oils, and other commodities, which are sold in the unsheltered market of the world at such prices as it will yield. The producers are fined for the benefit of the protected interests, and receive nothing in return; but they obtain for their country, as well as for the world, the whole advantage of a vast natural trade—that is to say, a trade in which production is carried on at a minimum cost in capital and labor as compared with what the rest of the world can do.

2. America invites and obtains in a remarkable degree from all the world one of the great elements of production, without tax of any kind—namely, capital.

3. While securing to the capitalist producer a monopoly in the protected trades, she allows all the world to do its best, by a free immigration, to prevent or qualify any corresponding monopoly in the class of workmen. [452]

4. She draws upon a bank of natural resources so vast that it easily bears those deductions of improvidence which simply prevent the results from being vaster still.

Let me now mention some at least among those elements of the unrivalled national strength of America which explain to us why she is not ruined by the huge waste of the protective system. And first of these I place the immense extent and vastness of her territory, which make her not so much a country as in herself a world, and not a very little world. She carries on the business of domestic exchanges on a scale such as mankind has never seen. Of all the staple products of human industry and care, how few are there which, in one or another of her countless regions, the soil of America would refuse to yield. No other country has the same diversity, the same free choice of industrial pursuit, the same option to lay hold not on the good merely, but on the best. Historically, all international trade has had its broadest basis in the interchange between tropical or southern commodities and those of the temperate or northern zone. And even this kind of exchange America possesses on a considerable scale within her own ample borders.

Apart from this wide variety, I suppose there is no other country of the whole earth in which, if we combine together the surface and that which is below the surface, Nature has been so bountiful to man. The mineral resources of our own Britannic Isle have, without question, principally contributed to its commercial pre-eminence. But when we match them with those of America, it is Lilliput against Brobdingnag. I believe that your coal-field, for example, is to ours nearly in the proportion of thirty-six to one. Now, this vast aggregate superiority of purely natural wealth is simply equivalent to the gift, say, of a queen in a game of chess, or to a start allowed in a race by one boy to another; with this difference: that America could hold her own against all comers without the queen, and that, like her little Lord Fauntleroy, she can, if she likes, run the race, and perhaps win it, upon equal terms. By protection she makes a bad move, which helps us to make fight, and ties a heavy clog upon her feet, so that the most timid among us need not now to greatly dread her competition in the international trade of the world.

Again, the international position of America may, in a certain light, be illustrated by comparing together the economical conditions under which coal has been produced in the different districts of this island. The royalty upon coal represents that surplus over and above estimated trading profit from a mine which the lessee can afford to pay the landlord. In England, generally, royalties have varied from about 6d. a ton to 9d. in a few cases; scarcely ever higher. But in Staffordshire, owing to the existence of a remarkable coal-measure, called the 10-yard coal, and to the presence of ironstone abundantly interstratified with the coal, the royalty has often amounted to no less than 3s. This excess has a real analogy to the surplus bounty of Mother Earth in America. And when I see her abating somewhat of her vast advantages through the trick of protection, I am reminded of the curious fact that (as it happens) this unusual abundance of the mineral made the getting of it in Staffordshire singularly wasteful, and that fractions, and no small fractions, of the 10-yard coal are now irrecoverably buried in the earth, like the tribute which America has—and has, as it seems, contentedly—been paying to her protected interests.

In most of the elements of cheapness, America wholly surpasses us; as, for example, in the natural, indefeasible advantages she enjoys through the vastness not only of the soils which produce, but of the markets which consume, her productions. I have lately seen a penny periodical, published by Messrs. Harper, of New York, which far surpasses all that the enterprise and skill of our publishers have been able to produce. But all these plus quantities she works hard to convert into Minuses through the devouring agency of protection.

There are two other particulars which I have to notice before quitting this portion of the subject. Each of them involves a compliment—the one to us, the other to yourselves. As there is an invidious element in all self-praise, I will get rid first of what touches us. It is [453] this: Trade is, in one respect at least, like mercy. It cannot be carried on without conferring a double benefit. Again, trade cannot be increased without increasing this benefit, and increasing it (in the long run) on both sides alike. Freedom has enormously extended our trade with the countries of the world, and, above all others, with the United States. It follows that they have derived immense benefit, that their waste has been greatly repaired, their accumulations largely augmented, through British legislation. We have not on this ground any merit or any claims whatever. We legislated for our own advantage, and are satisfied with the benefit we have received. But it is a fact, and a fact of no small dimensions, which, in estimating the material development of America, cannot be lost sight of.

My second point touches the circumstances of the national infancy and growth. It would be alike futile and unjust, in pointing out the singular advantages over the outer world which nature has given to America, not to take notice of those advantages which her people have earned or created for themselves. In no country, I suppose, has there been so careful a cultivation of the inventive faculty. And if America has surpassed in industrial discoveries the race from which her people sprang, we do not grudge her the honor or the gain. Americans are economists in inventions and do not let them slip. For example, the reaping-machine of modern times, I believe, was invented in Forfarshire, but did not pass into any general use. Stillborn there, it disappeared; but it was appreciated and established in America, and then came back among us as an importation from thence, and was at last appreciated and established here. The scarcity of labor has, in truth, supplied the great republic with an essential element of severe and salutary discipline.

The youth of America was, especially in New England, a youth, not of luxury, but of difficulty. Nature dealt somewhat sternly with your ancestors; and to their great advantage. They were reared in a mould of masculine character, and were made fit to encounter, and turn to account, all vicissitudes. As the country opened, they were confronted everywhere with one great and crying want, the scarcity of labor. So they were put upon the application of their mental powers to labor-saving contrivances, and this want grew as fast as, or faster than, it was supplied. Thus it has come about that a race endued with consummate ability for labor, has also become the richest of all races in instruments for dispensing with labor. The provision of such instruments has become with you a standing tradition, and this to such a degree that you have taken your place as (probably) the most inventive nation in the world. It is thus obvious enough that a remarkable faculty and habit of invention, which goes direct to cheapness, helps to fill up that gap in your productive results which is created by the wastefulness of protection. The leakage in the national cistern is more than compensated by the efficiency of the pumps that supply it.

America makes no scruple, then, to cheapen everything in which labor is concerned, and she gives the capitalist the command of all inventions on the best terms she can contrive. Why? Only because this is the road to national wealth. Therefore, she has no mercy upon labor, but displaces it right and left. Yet, when we come to the case where capital is most in question, she enables her shipbuilders, her iron-masters, and her millowners to charge double or semi-double prices; which, if her practice as to laborsaving be right, must be the road to national poverty. E converso, if she be right in shutting out foreign ships and goods to raise the receipts of the American capitalist, why does she not tax the reaping-machine and the American “devil” to raise the receipts of the American laborer? Not that I recommend such consistency. I rejoice in the anomalies and contradictions by virtue of which the applications of science everywhere abound through the States for the benefit of their populations, and, without doubt, though more circuitously, of ours also, and of the world at large.

I have still to notice one remaining point. It is this: I do not doubt that production is much cheapened in America by the absence of all kinds of class legislation except that which is termed [454] protection; an instance alike vicious and gigantic, but still an instance only. In our British legislation, the interest of the individual or the class still rather largely prevails against that of the public. In America, as I understand the matter, the public obtains full and equal justice. I take for example the case of the railroads; that vast creation, one of almost universal good to mankind, now approaching to one-tenth or onetwelfth of our entire national possessions. It is believed that in unnecessary parliamentary expenditure, and in abnormal prices paid for land, the railways of this country were taxed to between £ 50,000,000 and £ 100,000,000 sterling beyond the natural cost of their creation. Thus does the spirit of protection, only shifting its form, still go ravening about among us. Nothing is so common here as to receive compensation; and we get it not only for injuries, but for benefits. But while the great nation of the Union rightly rejoices in her freedom from our superstitions, why should she desire, create, and worship new superstitions of her own?

I am sorry to say that, although I have closed the economical argument, I have not yet done with the counts of my indictment against protection. I have, indeed, had to ask myself whether I should be within my right in saying hard things, outside the domain of political economy, about a system which has commended itself to the great American state and people, although those hard things are, in part at least, strictly consequent upon what has been said before. Indeed, the moral is so closely allied to the economical argument as to be intertwined with it rather than consequent upon it. Further, I believe the people of the United States to be a people who, like that race from which they are sprung, love plain speaking; and do not believe that to suppress opinions deliberately and conscientiously held would be the way to win your respect.

I urge, then, that all protection is morally as well as economically bad. This is a very different thing from saying that all protectionists are bad. Many of them, without doubt, are good, nay, excellent, as were in this country many of the supporters of the corn law. It is of the tendencies of a system that I speak, which operate variously, upon most men unconsciously, upon some men not at all: and surely that system cannot be good which makes an individual, or a set of individuals, live on the resources of the community and causes him relatively to diminish that store, which duty to his fellow-citizens and to their equal rights should teach him by his contributions to augment. The habit of mind thus engendered is not such as altogether befits a free country or harmonizes with an independent character. And the more the system of protection is discussed and contested, the more those whom it favors are driven to struggle for its maintenance, the farther they must insensibly deviate from the law of equal rights, and, perhaps, even from the tone of genuine personal independence.

In speaking thus, we speak greatly from our own experience. I have personally lived through the varied phases of that experience, since we began that battle between monopoly and freedom which cost us about a quarter of a century of the nation's life. I have seen and known, and had the opportunity of comparing, the temper and frame of mind engendered first by our protectionism, which we now look back upon as servitude, and then by the commercial freedom and equality which we have enjoyed for the last thirty or forty years. The one tended to harden into positive selfishness; the other has done much to foster a more liberal tone of mind.

The economical question which I have been endeavoring to discuss is a very large one. Nevertheless, it dwindles, in my view, when it is compared with the paramount question of the American future viewed at large. There opens before the thinking mind when this supreme question is propounded a vista so transcending all ordinary limitation as requires an almost preterhuman force and expansion of the mental eye in order to embrace it. Some things, and some weighty things, are clear so far as the future admits of clearness. There is a vision of territory, population, power, passing beyond all experience. The exhibition to mankind, for the first time in history, of free [455] institutions on a gigantic scale, is momentous, and I have enough faith in freedom, enough distrust of all that is alien from freedom, to believe that it will work powerfully for good. But together with and behind these vast developments there will come a corresponding opportunity of social and moral influence to be exercised over the rest of the world. And the question of questions for us, as trustees for our posterity, is, What will be the nature of this influence? Will it make us, the children of the senior races, who will have to come under its action, better or worse? Not what manner of producer, but what manner of man, is the American of the future to be?

I am, I trust, a lover of human advancement; but I know of no true progress except upon the old lines. Our race has not lived for nothing. Their pilgrimage through this deeply shadowed valley of life and death has not been all in vain. They have made accumulations on our behalf. I resent, and to the best of my power I would resist, every attempt to deprive us either in whole or in part of the benefit of those accumulations. The American love of freedom will, beyond all doubt, be to some extent qualified, perhaps in some cases impaired, by the subtle influence of gold, aggregated by many hands in vaster masses than have yet been known.

Aurum per medios ire satellites,
Et perrumpere amat saxa, potentius
Ictu fulmineo.

But, to rise higher still, how will the majestic figure, about to become the largest and most powerful on the stage of the world's history, make use of his power? Will it be instinct with moral life in proportion to its material strength? Will he uphold and propagate the Christian tradition with that surpassing energy which marks him in all the ordinary pursuits of life? Will he maintain with a high hand an unfaltering reverence for that law of nature which is anterior to the Gospel, and supplies the standard to which it appeals, the very foundation on which it is built up? Will he fully know, and fully act upon the knowledge, that both reverence and strictness are essential conditions of all high and desirable well-being? And will he be a leader and teacher to us of the Old World in rejecting and denouncing all the miserable degrading sophistries by which the arch-enemy, ever devising more and more subtle schemes against us, seeks at one stroke perhaps to lower us beneath the brutes, assuredly to cut us off from the hope and from the source of the final good? One thing is certain: his temptations will multiply with his power; his responsibilities with his opportunities. Will the seed be sown among the thorns? Will worldliness overrun the ground and blight its flowers and its fruit? On the answers to these questions, and to such as these, it will depend whether this new revelation of power upon the earth is also to be a revelation of virtue; whether it shall prove a blessing or a curse. May Heaven avert every darker omen, and grant that the latest and largest growth of the great Christian civilization shall also be the brightest and the best! See Morrill, Justin Smith; protection.

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