The Arena. Volume 4, No. 24, November, 1891. Various
consumer in protected articles, a fact which is the cause of much satiric laughter to the free trader because he can neither deny nor explain it.
The practical question now before the people of the United States is twofold: shall we protect new and nascent industries, and shall we continue to guard existing industries and existing rates of wages against an undue competition? John Stuart Mill admits the soundness of the former policy, and with that admission protectionists may be content. In fact, it may be doubted whether any intelligent man would argue to-day that it would have been wiser for the United States never to have built up any industries, but to have remained a purely agricultural community, dependent on Europe for everything in the way of manufacture. I think we may assume that the wisdom of protecting nascent industries in a country with such capacities and resources as the United States can hardly be questioned.
Nevertheless, the most hotly contested feature of the McKinley bill was that which continued the policy of protecting nascent industries in certain products, and notably that of the manufacture of tin plate. If the protection of nascent industries at the beginning of this century was a sound policy, then it is a sound policy to industries of that description to-day. Whether we have tin mines or not (and it now appears that we have) there is no reason on the surface why we should not buy our Straits tin and manufacture tin plate as well as England. Some Democratic newspapers appear to have an idea that the tin mines of Cornwall and Wales make a monopoly in this direction for England. They forget that to-day the tin used by England comes chiefly from the Straits, and she can buy it there on no better terms than the United States. If the policy of protection to nascent industries is sound, then the tariff of 1890 is sound in this direction, and we should seek its results in the new industries which have been started since it became a law.
In the second branch, the question of whether we should continue protection to industries already established is one largely of degree and of discretion. Where a removal of the duty would mean either a heavy reduction of wages or a stopping of existing industries with the rise of prices consequent upon the withdrawal of the United States from the world’s competition, then the removal of the duty would be a misfortune. It would be a misfortune not only to the industry which was ruined and to the wage earners who were reduced to idleness or poverty, but it would be an injury to the consumer because it would in a short time raise the price of the world’s production diminished by our withdrawal. In industries where no such results could possibly be feared, or where the production of the article is not possible in the United States, it would certainly be wise to remove duties, and this has been the purpose of the protectionists and of the Republican party.
The policy of protection has received its most recent expression in this country in the tariff of 1890. It is a truism that no tariff bill, whether passed by free traders or protectionists, can hope to be perfect. It is sure to have defects in detail and some inequalities. The McKinley bill was not exempt from error, but the question for the people to decide now is whether it is well to abandon the protective policy and substitute that of free trade. In 1888 the cry was that we must get rid of the surplus revenue and that that necessity made a revision of the tariff imperative. The Republican party since it has been in power has taken two hundred and forty-six millions of the accumulated surplus and paid off the bonded indebtedness of the country to that amount. It has also, by the removal of the duty on sugar and other articles, reduced the annual surplus revenue some fifty or sixty millions. The danger from the surplus, therefore (and it was a very real danger), is at an end. No party need be called upon now to dispose of the annual surplus which was taking so many millions out of the channels of trade. The question between the parties and before the country on this issue is very much simpler than it was. It is whether we shall repeal the tariff of 1890, abandon the protective system and take up free trade, or whether we shall maintain the protective system, making such amendments to the law as may from time to time seem necessary.
I have tried to state the general argument upon the question of free trade or protection in its broadest way. It only remains to bring forward so far as possible the facts which show, in part at least, the results of the tariff of 1890, for upon those results as a whole its justification or condemnation must rest. It is important to know first whether the new industries which the McKinley bill was designed to encourage have begun to start, and second, whether the bill has had the disastrous effect in raising prices which was so loudly asserted and prophesied by its opponents at the last election.
I will give first a table showing comparative prices before and after the tariff of 1890 of some of the cotton fabrics most commonly used. They are all protected industries and ought to have been advanced in price if any part of the assertions made by the advocates of free trade during the last campaign were true.
I give now a table comparing the market quotations for 1890 of the articles which enter most largely into the cost of living, with those for the same period in 1891:—
If the articles given in the foregoing table be classified we find the following results as to the rise and fall of prices before and after the tariff of 1890.
From these tables it is obvious that there has been, in the first place, no general rise of prices such as was confidently predicted by the panic-mongers of last year. On the contrary, the large majority of prices show a downward tendency. But more important than this is the fact made obvious by these tables that the price of the protected product has not risen. The foreign goods have advanced in some instances and been shut out in consequence, but domestic goods have taken their places, the price being kept down by domestic competition. In a word these tables prove that except for the enormous reduction in the cost of sugar, the new tariff has had but slight effect if any on the course of prices of the necessaries of life, and that the statements of the free traders as to a general rise of prices was entirely false.
The following extract is from a letter from one of the largest wholesale clothing firms in Boston. It tells its own story:—
“In reply to yours of the 10th inst., would say that we sold clothing in every grade in August, 1891, at fully 10 per cent. less in prices than in August, 1886; for instance, a cassimere suit sold then for $12.00 which we sell now for $10.50, and one sold for $13.50 and we sell the same now for $12.00. An overcoat sold then for $11.50 which we sell now for $10.00. Another grade sold then for $16.50 and sells for $15.00 now. This difference will run through all grades in proportion to prices. The difference in prices between August, 1890, and ‘91, is very little, if any; less rather than more in ‘91.”
As to the development of manufacturing under the McKinley bill I will quote first the opinion of a disinterested witness. The British Consular General at New York, in his report of May 8, 1891, speaks as follows:—
“Influenced by the new and higher duties afforded for the benefit of American manufacturing interests, new life has been imparted to the cotton, worsted, woollen, and knit underwear industry. Everywhere, especially in the Southern States, new textile mills have been going up with surprising activity, and all the old corporations have been operated on full time….
“As a rule, all the cotton mills have had a year of unusual activity. The production has been of larger volume than in any previous year, and the goods have found a ready sale generally but at comparatively low prices, considering the high prices which prevailed during the first six months of the year for cotton. Market prices, except in a few cases, did not vary with the price of cotton. Opening generally at low rates, cotton goods have been steady, the home and export demand being sufficient to absorb the supply of all standard and staple makers of brown, bleached, and colored goods, if we except printing cloths and calicoes….
“The worsted goods industry has been marked by fresh life since the new tariff has, to a great extent, cut off the importation of the lowest grades