THE LIBRARY 
 
 OF 
 
 THE UNIVERSITY 
 
 OF CALIFORNIA 
 
 LOS ANGELES
 
 REVIEW 
 
 OF 
 
 PROFESSOR SUMNER'S SPEECH 
 
 THE TARIFF COMMISSION. 
 
 BY 
 
 GEORGE BASIL DIXWELL. 
 
 CAMBRIDGE: 
 JOHN WILSON AND SON. 
 
 (Hntbcrsttg ^rcss. 
 1882.
 
 Copyright, 1882, 
 By George Basil Dixwell.
 
 HF 
 
 TARIFF COMMISSION. 
 
 PHILADELPHIA, PA., OCT. 14, 1882. 
 
 Prof. W. G. Sumner, of ISTew Haven, Conn., addressed the 
 Commission as follows : — 
 
 " I have noticed that in the discussions which have taken place before 
 this Commission there has been a constant reiteration of some false doc- 
 trines of theoretical political economy about wages. If there is to be any 
 theoretical political economy admitted, it is Avorth while to have it correct. 
 I have therefore thought that it might be proper for me, as a professional stu- 
 dent of political economy, to appear here and read a j)aper setting forth the 
 true relations between protective taxes and wages." 
 
 Mr. Sumner assumes that, being a professor of political econ- 
 omy in a great institution of learning, he is competent to correct 
 what he alleges to be a gross error in the public mind in regard 
 to the relation between protection and wages. His reasons shall 
 be carefully examined ; but we must first ascertain how much 
 deference we ought to pay to his opinions on the ground of his 
 being a professor. What guarantee does that fact give of the 
 accuracy of his doctrines ? Let us see how it has been with oth- 
 ers over whom I\Ir. Sumner could hardly claim superiority. 
 
 First let us take Prof. Adam Smith, the very distinguished 
 author of the " Enquiry into the Nature and Causes of the Wealth 
 of Nations." He was as certain as Mr. Sumner of the correctness 
 of his opinions ; indeed, he was not the least bashful about inti- 
 mating that the " notions " of all statesmen and lawgivers were 
 childisli in comparison with his. 
 
 But Prof. J. K. McCulloch (equally positive) declared that Adam 
 Smith was in error upon more than eighty points, many of them 
 of great importance. 
 
 9315*2
 
 4 TAKIIF COMMISSION. 
 
 j\Ir. John Stuart Mill, also, who was so distinguished a thinker 
 and reasoner as to be ranked perhaps almost upon an equality 
 with the professors of political economy, declared that tlie work 
 of Adam Smith was "in many parts obsolete and in all parts 
 imperfect " ! and Mr. Mill could not agree with Malthus, Chalmers, 
 or Carey. 
 
 But Professor Cairnes dissents in very important points from 
 Mr. Mill, although declaring himself to be a humble follower ; 
 while Professor McLeod, in a work which has had an immense 
 success upon the Continent of Europe, maintains that Mr. ]\Iill 
 and all his school are in error as to the very metliod of studying 
 political economy, — they declaring that it should only be studied 
 by the deductive, he that it can yield correct results only when 
 investigated by the inductive, method. 
 
 Professor McLeod also, in his Dictionary, falls foul of other 
 professors upon various points, especially upon their doctrine that 
 absenteeism is no injury to a country ; and he presses his own 
 views with such vigor and warmth as might lead a hasty reader to 
 infer that his opponents were little better than blockheads. But 
 it would be a very precipitate reader who would draw such a con- 
 clusion. Each of these great thinkers made inestimable contri- 
 butions to political economy, notwithstanding that each contradicts 
 others and himself as well. To examine these contradictions and 
 ascertain wherein and to what degree each was right, is a work to 
 which plodding conscientious mediocrity is quite competent. The 
 critic needs not the genius and insj)iration of the author, but only 
 the diligence which brings the author to the bar of his own 
 methods of reasoning. Mr. Mill's great works upon Logic and 
 Political Economy will furnish the tools by which to detect the 
 few errors into which even Mr. ]\Iill liimself may have fallen ; 
 but tliey will never be discovered by one wlio, like Professor 
 Sumner, draws his inspiration from Bastiat, Mr. D. A. Wells, and 
 the Col)den Club Essays, and who from inability to understand 
 Mr. Mill's methods is quite incompetent to distinguish between 
 the propositions which are and those which are not consistent 
 with those methods. Professor McCulloch's paradox regarding 
 absenteeism passed for science for thirty years without, however, 
 making any impression upon the popular mind ; but at last the
 
 TARIFF COMMISSION. 5 
 
 error in his reasoning was recognized, and his position abandoned 
 by several even of the free-trade writers. 
 
 We see, then, that we cannot safely indulge our laziness in al- 
 lowing a professor to think for us. He has no sources of infor- 
 mation which are not equally open to statesmen and educated 
 business men, all of whom have been pupils of the professors and 
 afterwards pupils in the great school of practical life, where they 
 often learn first to doubt and then to discard much which had 
 been learned at college. 
 
 The professor, in fact, stands at some disadvantage. He is 
 obliged to teach the same old propositions year after year, until 
 they root themselves in his mind too deeply to be torn up ; in 
 short, he is very liable to fall into that condition which is 
 described by Carlyle as being " possessed by Fixed Idea." 
 In ordinary life he has nobody to challenge his opinions, and 
 he must therefore be more likely than others to become dog- 
 matic, and to be prone to wrath whenever he does encounter 
 opposition. 
 
 Like Professor McCulloch in the matter of absenteeism, Mr. 
 Sumner comes forward to sustain a paradox, and to prove by 
 dialectics that wages are not higher by reason of protection ; 
 that is, he has set himself the task of proving that an opinion 
 generally entertained upon both sides of the Atlantic during all 
 past time is entirely erroneous. It was necessary in the interest 
 of the free-trade party and of the Cobden Club that somebody 
 should make the attempt, and it was perhaps judicious that he 
 should be one who would carry before him the shield of a great 
 institution of learning ; but we have said enough to show that 
 this, after all, amounts to very little, and that the reasons of a 
 professor must be brought to the test as rigidly as those of any 
 other individual. Let us now examine them. 
 
 " I learn, from the reports of the proceedings before this Commission, that 
 some people believe that protective taxes make wages high, and at the same 
 time that high wages make protective taxes necessary. If the Commission 
 should act on these two doctrines, it woiild first raise taxes in order to raise 
 wages in obedience to a delegation of workmen, and then raise taxes again 
 in order to offset the previous increase, in the interest of a delegation of 
 employers, and so on forever. These two notions, therefore, contradict each 
 other and produce an absurdity. They are both ftdse. Protective taxes
 
 6 TARIFF COMMISSION. 
 
 lower waj:;cs, .iiul high wages are a reason for free trade, not for protection. 
 These two propositions confirm and sustain each other, and so ratify the truth 
 of each." 
 
 The logical deception in this paragraph consists in the substi- 
 tution of a universal for a limited proposition. ]\Ien who inves- 
 tigate cases in political economy, whetlier by the deductive or 
 inductive methods, embody their conclusions in a set of words 
 which, taken with the circumstances of the case known to all the 
 world, are limited with sufficient exactness tci prevent anybody of 
 ordinary caution from falliug into error. 
 
 Thus Adam Smith, Fisher Ames, Mr. John Stuart Mill, and 
 many others have noticed that where cheap land is to be had men 
 will flock to it, unless drawn to other pursuits by wages high 
 enough to overcome the attraction of the land. Adam Smith, 
 speaking of the Colonies, says : " From artificer a man becomes a 
 planter, and neitlier large Avages nor the easy subsistence which 
 that country affords can bribe him rather to work for other people 
 than for himself. He feels that an artificer is the servant of his 
 customers, fi'om whom he derives his subsistence; but that a planter, 
 who cultivates his own land and derives his necessary subsistence 
 from the labor of his own family, is really a master, and inde- 
 pendent of all the world." 
 
 Here the inclinations of the individual are opposed to the in- 
 terests of his class and to those of the whole community, which 
 tends to become disproportionately agricultural, to depend more 
 and more upon distant nations for everything except food, and to 
 become poorer and poorer as it increases in numbers. The de- 
 mand of the outer world for the food and raw materials of the 
 United States cannot increase as fast as the home population ; 
 for the outer world can take payment for the conversion of raw 
 into finished products only in a few articles of comparatively easy 
 transportation, while the home artificer and manufacturer take 
 payment in every sort of product and every sort of service. Let 
 the producers of food and raw materials allow to the other classes 
 such emoluments as are sufficient to induce a portion of the com- 
 nnmity to abstain from becoming farmers, and tlie nation will 
 grow symmetrically. The daily increasing numbers and skill of 
 the other classes will give the market which will enable agricul-
 
 TARIFF COMMISSION. 7 
 
 ture to avail itself of better tools, machines, drainage, and other 
 improvements. The emoluments of the other classes, mean- 
 while, can never exceed the limit named, — to wit, that which 
 balances the disposition of an individual to become an inde- 
 pendent landowner. If it goes beyond this for a while, more 
 persons will abstain from farming, and the balance will be re- 
 stored. But before the introduction of manufactures there is 
 not only the difficulty of high wages but also that of want 
 of skill. Without a protective duty adequate to shut out the 
 foreign article nothing can be done. The duty being laid on 
 raises the price, but not to the extent of the duty, for the for- 
 eign price declines under the reduced demand. If, however, the 
 duty be sufficient, the manufacture is introduced at a certain 
 price which covers the higher wages and also the want of skill. 
 This rise in price is for the moment a disadvantage to the por- 
 tion of the community who before obtained a sufficiency of fin- 
 ished products; but the articles come at once within the reach of 
 a wider circle, who before could not obtain them at aU, or not in 
 sufficient quantity, on account of the low price or unsalableness of 
 their crops. The duty removes those who were causing an agri- 
 cultural glut, and whose labor therefore produced less than nothing, 
 and puts them upon the construction of finished products which are 
 pure gain to the community. The gross annual product is increased 
 by their whole value. There is more to divide, and demand and 
 supply ultimately distribute the increase throughout the commu- 
 nity. The farmer and planter are the first to feel it. Tlieir occu- 
 pation becomes more remunerative ; and from this movement 
 there follows a rise of wages in the non-agricultural portion of the 
 community. The working of the economic forces is progressive, 
 not simultaneous or instantaneous. The protective law first re- 
 lieves the agricultural glut and apathy, and this in turn causes 
 an increased demand for finished products. Wages in all de- 
 partments will gradually advance, but they can augment no farther 
 nor faster than the gross annual product. The protective tax, 
 as Professor Sumner likes to call it, simply removes an obsta- 
 cle which prevents the best and the natural distribution of tlie 
 population. As skill increases, the price falls under home com- 
 petition until it covers only the difference in the cost of labor ;
 
 8 TARIFF COMMISSION. 
 
 and the skill may increase so as to cover this also, and give the 
 community the article as cheaply as it could be imported with- 
 out any duty. Such is the case with regard to tools, locomo- 
 tives, agricultural machinery, and many other goods, including the 
 greater part of the cottons consumed in the country. Such ap- 
 pears to be nearly the case with regard to the woollens used by 
 the bulk of the people. The tine cottons and woollens which are 
 objects of ostentation are still mostly imported. The duty on 
 them gives a large revenue to the Government, and in reality 
 comes out of nobody, as their higher price only fits them the bet- 
 ter to enable A to appear as rich as B. It is these duties, however, 
 — the duties upon objects of luxury and ostentation, — wdiich 
 irritate some of the salaried classes who do not understand po- 
 litical economy, and even some professors of the subject. They 
 think themselves oppressed, they hate the manufacturers who 
 live more showily than they can, and they make every effort to 
 persuade the bulk of the people that they also are the victims of 
 oppression. 
 
 If they understood the subject they profess, they would know 
 that if its present objects were cheapened to ostentation, it would 
 reject them and fly to others ; and they would also know that 
 whatever social necessity there may exist for such indulgences 
 must surely in the long run be considered in the salaries paid 
 them. But this necessity does not go a great way. The high 
 respect which they and their families command on account of 
 their much honored office relieves them from such necessity. 
 The wise, temperate, truthful, benevolent, right-hearted professor 
 is as welcome in homespun as is Croesus in broadcloth ; and if any 
 individual fail to command respect, it can only be because he is 
 an exception to the rule, and wanting in the high intellectual 
 and moral qualities usually exhibited by professors. But to re- 
 turn to the price of manufactured goods. It must be sufficient 
 to pay tlie wages of labor and the profit on capital usual in the 
 comnmnity. Higher than this it cannot be for any long time, 
 and it cannot be long lower. Monopoly has had no place in 
 political economy since the discussion upon that point between 
 Say and Eicardo. 
 
 It will be seen, then, that the propositions of the protection-
 
 TARIFF COMMISSION. 9 
 
 ists, — 1. That a duty raises wages gradually as the annual prod- 
 uct increases ; 2. That high wages (so far as wages affect the 
 cost, and are not overmastered by greater efficiency) make pro- 
 tection necessary, — are limited. Within the limits naturally 
 and necessarily attaching to them they are not contradictory, and 
 they do not produce an absurdity. 
 
 But for these limited propositions Mr. Sumner substitutes two 
 universal propositions, — 
 
 1. That a duty always raises wages, and raises them in propor- 
 tion to its magnitude. 
 
 2. That high wages always make protection necessary, and 
 necessary in proportion to their height. 
 
 These universal propositions he endeavors to impute to the 
 protectionists, depicting the Commission first raising the duty in 
 order to raise wages, and then raising it again to compensate the 
 manufacturer for the hicrher wages, and so on. It is an ingenious 
 sophism, well calculated to impose upon those whom a technical 
 education has deprived of their natural intuitive judgment, while 
 only half teaching them how to reason by propositions ; but it 
 would never impose upon any thoroughly educated person nor 
 upon any practical man. The latter would put it aside at once 
 as nonsense, and I fear would even think me a fool for spending 
 time in showing it to be so. 
 
 What would the Commission have answered to a deputa- 
 tion of either workmen or employers asking for an advance of 
 the duty for such purposes ? Why, that if the industry already 
 existed, and upon an average of years was paying the rate of 
 profit usual in the community, then the duty had done all that 
 it could do, — it had excluded the foreign product, and left the 
 price and the wages to be arranged, as they must be, by the 
 internal demand and supply. Higher duties, the Commissioners 
 would have said, cannot raise your wages any more, nor raise 
 your profits. An additional amount would positively have no 
 effect. 
 
 To this the committees might say, Why not, then, raise the 
 duties ? And the only answer that could be given them would be, 
 Because, if we raised the duties, it would be a handle for dema- 
 gogues to use with those uninformed about such matters. It
 
 10 TARIFF COMMISSION. 
 
 would be represented that the additional ten or twenty per cent 
 was added to the price. 
 
 The "Boston Transcript," "Globe," "Herald," and even such 
 high-toned papers as the "Advertiser," and the "New York 
 Times " admit articles based upon this economic absurdity. The 
 " Herald " even published an article which declared that the 
 manufacturers of woollens could make the common goods suitable 
 for the general consumption as cheaply as they could be made 
 abroad, and yet took one hundred and thirty-five per cent profit 
 to the detriment of the liod-carrier and poor sewing-girl ! All 
 business men who were in vain trying to find investments to pay 
 six per cent were amused, but uninformed people were misled. 
 
 The next two paragraphs read as follows : — 
 
 " The interests of the man who pays wages and those of the man who re- 
 ceives wages are antagonistic. The one wants wages low and the other wants 
 wages high. The protectionist legislator pretends to step in between them 
 and satisfy both at once. He pretends to make both parties happy at once. 
 ' I am going to make your wages high/ says he to the wage receiver. * What, 
 then, will become of me ? ' says tlie wage payer. ' I will make wages low 
 for you,' he replies. * How is that ? ' cry the laborers and all their friends ; 
 * you are going to make wages low?' *No,' replies the legislator, * I mean 
 that I will make the price of the products high, which will have the same 
 eflfect for the employer.' ' But how is that ? ' cry the consumers ; ' you mean 
 to make prices high by law ? ' ' No,' replies the legislator, * I do not really 
 make prices high ; it only looks so. My measures really make prices low.' 
 We have here, then, the greatest miracle that has ever been accomplished. 
 We have heard of making something out of nothing, but here we have crea- 
 tion and destruction in one and the same act. Certainly the problem of uni- 
 versal happiness is solved if we have found out how those who buy need 
 pay little, and those who sell may at the same time receive much ; how prices 
 may be raised for the producer and lowered for the consumer both at the 
 same time. As we are all producers and all consumers, we may all sell at 
 the high prices and all buy at the low ones, and all get rich together. This 
 is why it is that the protected manufacturers are found bulling what they 
 are short of (that is, labor) and bearing what they are long of (that is, 
 products). They have discovered this wonderful system by which all are 
 to bull everything and bear everything at the same time, and win a big 
 difference out of nothing. No wonder the protectionists are enraged at the 
 economists who are still stupidly teaching that we can produce nothing ex- 
 cept by applying labor and capital to land. 
 
 " Who is the beneficent genie, now, who works all the magic of the protec- 
 tionist system ? It is tax. If taxes are only rightly adjusted, says the pro-
 
 TARIFF COMMISSION. 11 
 
 tectionist, they make wages high and low and prices high and low both at 
 the same time. When one hears this kind of nonsense, one is forced to he- 
 lieve that the sum of superstition in the world is a constant quantity. Su- 
 perstition is a defective sense of causation. The savage who wears a bone 
 tied to his arm as a fetich to ward off misfortune believes that there is a 
 connection of cause and effect where there is none. The astrologer thought 
 that the relations of the planets to each other aflfected the fate of persons 
 born at a certain time. He saw a connection of cause and effect where there 
 is none. The protectionist legislator lays a tax and goes home secure in the 
 faith that wages will be high, prices low, and prosperity stable, as if there 
 were a fixed, direct, and inevitable law of nature connecting taxes with social 
 welfare and nothing else. This superstition is more wild than fetichism or 
 astrology." 
 
 As Mr. Sumner says, " When one hears this kind of nonsense,^ 
 one is forced to believe that the sum of superstition in the world 
 is a constant quantity ; " but if superstition be a defective sense of 
 causation, then Mr. Sumner certainly is the most superstitious 
 man on earth, for he shows an unparalleled inability to appreciate 
 the action and reaction of economic causes. 
 
 General Jackson, writing in 1824, said : " The American farmer 
 has neither a foreign nor a home market, except for cotton. Does 
 not this clearly prove that there is too much labor employed in 
 agriculture, and that the channels of labor should be multiplied ? 
 Common sense points out at once the remedy. Draw from agri- 
 culture the superabundant labor, and employ it in mechanism 
 and manufactures, thereby creating a home market for your bread- 
 stuffs, and distributing labor to a most profitable account, and 
 benefits to the country will result. Take from agricultiu-e in the 
 United States six hundred thousand men, women, and children, 
 and you at once give a home market for more breadstuffs than all 
 England now furnishes." 
 
 Benjamin Franklin, writing in 1771, said : " Every manufac- 
 turer encouraged in a country makes a part of a market for pro- 
 visions within ourselves, and saves so much money to the country 
 as must otherwise be exported to pay for the manufactures he 
 supplies. Here in England it is well known and understood 
 that, wherever a manufacture is established, it raises the value 
 
 ^ The nonsense is Sumnerian nonsense exclusively, and is founded on a mis- 
 statement. No protectionist ever pretended to " make wages high and low and 
 prices high and low both at the same time."
 
 12 TARIFF COMMISSION. 
 
 of the land in the neighboring country all around it. It seems, 
 therefore, the interest of our farmers and owners of land to encour- 
 age our young manufactures rather than foreign ones." 
 
 The condition of affairs described by General Jackson was a 
 verification of the deductions made from Adam Smith's remarks 
 about the attractiveness of plentiful land. Reasoning led us to 
 the conclusion that the tendency was to become unduly and un- 
 profitably agricultural. Our country tried the experiment, and 
 found it was so. Mr. John Stuart ]\Iill also recognized this ten- 
 dency, and he recognized it as a dilliculty out of which the efforts 
 of individuals to benefit themselves cannot extricate a commu- 
 nity : that laisscz fairc is entirely impotent, and government 
 assistance — that is to say, the combined action of the whole 
 community — imperatively necessary.^ Mr. Sumner lingers be- 
 hind Mr. Mill about a hundred years, and knows, or appears to 
 know, no more upon the subject than Adam Smith knew in 
 1755, when he gave his lectures, which were afterwards pub- 
 lished under the title of an " Enquiry into the Nature and Causes 
 of the Wealth of Nations." How long will Harvard and Yale 
 insist upon being the Sleepy Hollows of Political Economy, from 
 which pupils emerge with ideas that have been obsolete for a 
 century ? 
 
 What Jackson recommended was done by the tariff of 1824. 
 The people, removed or retained from the land where they could 
 only add to a surplus already unsalable, produced finished pro- 
 ducts, aud the whole value of their labor was just so much 
 added to the gross annual product of the country, which, being 
 distributed by demand and supply, could produce no other possi- 
 ble effect than to increase all incomes, — rent, profits, and wages. 
 The price at which the new products sold may have been at first 
 thirty, forty — if you please, even fifty — per cent higher than 
 they could be imported for; but we got the commodities, and 
 did not have to export money or commodities to pay for them. 
 The totality of consumers may have had to pay one hundred' and 
 fifty millions for what before cost one hundred millions, aud so 
 lost fifty millions ; but they had the commodities, and in their 
 capacity of producers, or livers upon the rent or profits of pro- 
 1 See Book V. Chap. XI. § 12 of his " Political Economy."
 
 TARIFF COMMISSION. 13 
 
 ductive instruments, or upon salaries drawn from the general 
 prosperity of the country, they gained the one hundred millions 
 which would otherwise be sent abroad ; and as increasing skill 
 produced the articles with less and less labor, the legislator's 
 " little tax " became less and less. 
 
 Paragraphs 5 and 6 are as follows : — 
 
 " In discussing the effects of taxation, ambiguity is often introduced by not 
 distinguishing carefully the alternatives which may be imagined. If we 
 could imagine a state of society in which vice, passion, and other destructive 
 forces no longer existed, government could be dispensed with, or it would 
 sink into some low form of co-operation for common purposes. Taxes could 
 then be dispensed with. If we compare our present condition with any 
 such ideal .state of things, all taxes are minus quantities, reducing by so 
 much the available wealth and attainable comfort of the community. But 
 such an ideal is a mere poetic dream. If we had no government we should 
 have vice and passion running triumphantly through society, wasting and 
 destroying on every side. Comparing our present condition with that state 
 of thing.s, the taxes which we pay for security, peace, and order as products 
 of civil government are a small loss incurred to prevent a great one. Such 
 is the only sensible and correct view of taxes. They are never anything but 
 loss and diminution of wealth, and it is as impossible to convert them into 
 productive forces as it would be to make destruction create, or waste save. 
 Every tax is on the defensive, so to speak. It is necessary to justify every 
 cent which is drawn from the community by taxes, and to show that all the 
 capital thus consumed is necessary, under the existing order of things, to se- 
 cui'e the protection of society, on the cheapest terms, against the forces which 
 would disturb securitj^, peace, and order. If the taxes were large enough, 
 they might, as in Egypt or Turkey, almost take the place of the evils against 
 which governments pretend to guard society. Every unnecessary cent of 
 taxation is, therefore, a pure evil. Government in Egypt and Turkey, and 
 in much of Asia, is not an organization to defend society against evils. It is 
 only an organization by which some plunder all the rest, and taxes are the 
 means by which they do it. Wherever any taxes are laid for any other pur- 
 pose than to provide civil order, peace, and security, government approaches 
 by just so much towards the Turkish pattern. Such is the case whenever 
 protective taxes are laid. 
 
 " Taxes which ward off greater evils at the lowest practicaljle cost are eco- 
 nomical. They do not lessen the average comfort of the people. Taxes which 
 do not conform to this description do lower the average comfort of all classes 
 of the people. The wages class has no separate interest in the matter which 
 either can be or ought to be considered by itself. It is pure demagogism to 
 say that it is the business of the government to make wages high. If I dis- 
 cuss the effect of taxes on wages, it is only by way of meeting the question 
 in the form in which it is raised. Protective taxes do not aim to produce
 
 14 TARIFF COMMISSION. 
 
 good government, or to accomplish any civil purpose at all. Their aim is 
 industrial. They are planned to help some people to get a living. They 
 interfere, on behalf of certain persons, with the conditions of production and 
 the relations of competition. A man who engages in a protected industry has 
 some other reliance in his business than his own capital, energy, enterprise, 
 prudence, &c. The man who is in an unprotected industry has something 
 more to guard against and contend with than the problems of his industry 
 and the ditliculties of the market. One of these parties has a special advan- 
 tage created by law at the expense of the other party, who is therefore under 
 a special disadvantage. These protective ta.xes, therefore, cannot be defended 
 or justified under a sound view of the function and justifiability of taxation. 
 They waste labor and capital, and keep the wealth of the country less than 
 it might be for the labor and capital which have been expended. Let us 
 examine in particular their effect on wages." 
 
 In these Mr. Sumner lays down several propositions which are 
 incorrect in fact, and several which have been repudiated by Mc- 
 Culloch, Mr. John Stuart Mill, and the other great authorities in 
 political economy. He implies that the only permissible functions 
 of government are tlie providing of security, peace, and order. 
 This contradicts all the great economists who affirm that govern- 
 ment has many other duties. He then draws attention to the 
 fact that taxes which are levied in Egypt, Turkey, and Asia are 
 squandered without giving the security, peace, and order under 
 pretence of giving which they are collected ; that they are an 
 organization by which some plunder the rest. Then he says that 
 wherever there are protective taxes the case is similar. 
 
 PROTECTIVE TAXES. 
 
 This was the title of an article, by Mr. Suumer, in the March 
 number of the " Princeton Review " of 1881, As it was calcu- 
 lated to mislead the public, backed as it was by the weight of a 
 great institution of learning, I replied to it in those terms of stud- 
 ied respect which were due to the office of teacher. In my reply 
 I said : " A protectionist cannot even pass by the title without 
 objection. A tax is not necessarily a burden. If the money be 
 well and economically expended, and gives us good roads, good 
 water-works, good police, and good government for what they 
 ought to cost, then a tax is a great blessing and saving ; but, un- 
 fortunately, the money is often expended recklessly and foolishly, 
 and so, through abuses, the very name of tax becomes offensive.
 
 TAEIFF COMMISSION. 15 
 
 The free-trader, who writes about " protective taxes," avails him- 
 self of this existing prejudice, with the effect of disgusting the 
 reader with protection in advance of all argument in respect to 
 it. The word tax also gives two false impressions : first, that 
 all protected articles cost the consumer more than they would 
 if not protected ; and second, that when they cost more, the 
 consumer gets no counterbalancing or greater overbalancing 
 advantage." 
 
 The effect of the taxes which are paid for government services 
 press with double weight when doubled, with treble weight when 
 trebled. A duty laid on for protection has, and can have, no 
 such effect. If thirty per cent would shut out the foreign article, 
 all is done which can be done by the tariff. Forty or fifty or 
 sixty per cent can do no more. I also pointed out that, even if 
 our cottons, woollens, and iron cost the consumers one thousand 
 millions, while they could be imported for seven hundred mil- 
 lions, still we have our cottons, woollens, and iron, and we keep 
 seven hundred millions annually at home, which would other- 
 wise have gone abroad, and could not have been balanced by any 
 alternative occupation upon the land, since the land even now 
 cannot sell to advantage all that it can produce. 
 
 Mr, Sumner, however, continues to avail himself of the catch- 
 word of " protective taxes;" and the whole of his address to the 
 Tariff Commission assumes and presupposes that the pressure of 
 a tariff upon the consumer is in proportion and equal to the rate 
 of duties imposed, and that these duties inure to the benefit — 
 in fact, go into the pockets — of the protected manufacturers who, 
 according to him, hold a monopoly. 
 
 In pursuing this line of argument, after full notice of its inap- 
 plicability, Mr. Sumner proves one of two things. He is either 
 ignorant of the political economy of the latter half of the nine- 
 teenth century, and incapable of comprehending the reasoning of 
 Say, Eicardo, McCuUoch, and Mr. John Stuart Mill, or else he 
 shuts his eyes to the truth under the influence of personal or 
 party passion. He is welcome to either horn of the dilemma. 
 It is no satisfaction to me, or to any fair-minded American, to 
 see him in such a position ; but, on the contrary, it is a source 
 of mortification and humiliation. To us professor connotes all
 
 16 TARIFF COMMISSION. 
 
 that is honorable, dignified, temperate, benignant, and wise. 
 "When he condescends to enter the arena of politics, the passions 
 of the crowd stand overawed by the calm and majestic presence. 
 The bandying of libellous crimination and recrimination, the 
 unjust imputation of base motives, the giving and taking of the 
 lie, — all are hushed. So would Harvard's Kirkland, or Everett, 
 or "Walker, or Sparks, or Peirce, or many others in such a posi- 
 tion, calm and sway and elevate the people. We have come to 
 expect this ; and the opposite action of Mr. Sumner affects us 
 like some horrible discord in music, or some frightful want of 
 harmony in colors. 
 
 In short, tliere are proprieties attaching to every position in 
 life, and we could not tolerate an actor who, in the garb of Soc- 
 rates, should, upon the appearance of a fierce mastiff, descend 
 upon all fours and endeavor to outbark and outbite the ferocious 
 animal. 
 
 When a professor appears we feel that he should be able to 
 show propositions to be unsound, if they really be so ; and when 
 he denounces them as " lies " we can only distrust his ability to 
 make good his assertions. In paragraph 7 he says : — 
 
 " Anything which lessens the number of persons competing for wages, or 
 which increases the amount of capital which may be divided in wages, in- 
 creases wages. In a new country in which there is an immense amount of 
 unoccupied land, and in which the amount of capital required for tilling the 
 soil is small, any man who has a pair of stout hands, although he has no skill 
 and very little capital, may become a landowner and agriculturist. He is then 
 withdrawn from the wages class ; he lessens the supply of labor in the labor 
 market; and, as an independent producer, he contributes all the time to the 
 capital of the country. Every man of the unskilled labor class, therefore, has 
 an alternative offered to him. He is never driven by starvation into a desper- 
 ate competition with others in the same predicament to work for low wages. 
 He is on the right side of the market. Supply and demand are in his favor. 
 He owns a thing for which there is a high demand in the market. The com- 
 fort he could Ann on the land fixes a minimum belnw which wages cannot fall. 
 If they do temporarily fall below that minimum, the laborers take to the land, 
 as they did in the hard times a few years ago. Since the comfort obtainable 
 from an abundance of cheap and fertile land is high, the minimum of wages 
 is high. This makes the average wages of the country high. High wages, 
 therefore, simply mean that the soil of this continent is rich, the climate is 
 excellent and well varied, the rivers are large and convenient, the mountains 
 are full of metal and coal, the people are industrious and energetic and are
 
 TARIFF COMMISSION. 17 
 
 eager to accumulate, the public order is fairly secure, and the general intel- 
 ligence is good. The conditions of production are, therefore, good, and we 
 produce a great deal. We accumulate capital far naore rapidly than any other 
 people in the world." 
 
 I beg the reader to look again at this paragraph. He will see 
 that Mr. Sumner admits that what a farmer can make from his 
 laud is equal to the minimum of wages. When skilled artisans 
 and manufacturers from any cause fail for a length of time to ob- 
 tain this miniinu7n, they take to the land. He does not seem, 
 however, to perceive what was so plain to Adam Smith, to wit, 
 that the normal condition of agriculture, where there was plenty 
 of land, was less profitable than the non-agricultural industries, 
 because the farmer's position is more independent, and one in 
 which the mere possession of food is certain. Those greater ad- 
 vantages are counterbalanced by a smaller profit, just as the high 
 dignity of a professor causes his salary to be less than that of 
 just the same sort of man employed as a treasurer to a mill. 
 Adam Smith has an interesting chapter upon this point, which 
 has been accepted by all subsequent economists, and which I rec- 
 ommend to Mr. Sumner's attention. 
 
 The word minimum presupposes and admits a normal some- 
 thing greater than the minimum. It concedes the point that in a 
 community like ours the non-agricultural industries are more pro- 
 ductive than the agricultural ; that under the action and reaction 
 of demand and supply among ourselves, the man who works at a 
 trade or carries on a manufacture adds more to the gross annual 
 product than the farmer does. Tlie latter takes out the difference 
 in feelings of independence and perfect security. But here Mr. 
 Sumner would object that he has nothing to do with the play of 
 industrial forces among ourselves ; that he refuses to consider 
 them ; that political economy regards the whole world ; that there 
 is a country called Great Britain which will take our agricultural 
 products and give us in exchange finished products at a mucli 
 better bargain than our artisans or manufacturers can or will give. 
 And this position he immediately demonstrates in the following 
 manner. He picks out some article such as iron or fine woollens, 
 and shows that at the present prices for cotton or for wheat here, 
 and the present prices for iron and woollens there, the imported
 
 18 TARIFF COMMISSION. 
 
 article without duty would be a good deal cheaper than the do- 
 mestic product. But this argunieut assumes that if we had occa- 
 sion to sell more largely abroad we should obtain as liigh a price 
 as now, and that if we had occasion to buy more largely abroad 
 we should buy as cheaply as now. If Mr. Sumner will propound 
 the propositions embodying these assumptions to any merchant 
 he will be set right, or he can be set right without going out of 
 Yale, by turning to Mr. John Stuart Mill's chapters upon Inter- 
 national Trade. 
 
 Our non-agricultural industries add at least three thousand 
 millions to the value of the materials they deal with. We now 
 find a market abroad for some seven hunch-ed millions of raw 
 products ; but we find it with difficulty, and only when the food 
 crops of all Europe are short. 
 
 The idea of selling three thousand millions more at any price, 
 or one thousand millions more without a reduction of forty to 
 fifty per cent in our prices, is an idea which no well-informed 
 merchant and no well-informed economist would entertain for a 
 moment. 
 
 His premises do not lead to his conclusion that " high wages 
 simply mean that the soil of the continent is rich, the climate is 
 excellent and varied," &c. These things do not, by his own show- 
 ing, account for the high wages that exist, but only for a high 
 minimum of wages, high as a minimum, but a good deal less 
 than what we enjoy. His observation that " we accumulate capi- 
 tal far more rapidly than any other people in the world " is prima 
 facie evidence that our present organization of industries, as 
 brought about by a protective policy, is better than that of any 
 otlier nation ; but it is totally irrelevant with regard to an entirely 
 different arrangement such as Mr. Sumner would prefer. 
 
 It is tedious to be obliged to refute such sophistries. Para- 
 graph 8 says : — 
 
 " It is one of the humors of the tariff that the politician appears at this stage 
 and say.s, ' Oh, no 1 you are quite -vvrong in attributing the prosperity of the 
 country to those causes. Tt was I who did it, with my little taxes. The 
 country has prospered because I taxed it vigorously. If I had not put on my 
 taxes the country would have been ruined.' He argues that an industrious 
 people on a fertile soil could not have got food and clothing out of it if they 
 had not had the right taxes. A further touch of the ridiculous, however, is
 
 TARIFF COMMISSION. 19 
 
 added by those politicians who declaim about the dignity of the American 
 laborer. To listen to the speeches and read the editorials, one would think 
 politicians formed a standard of comfort which they thought suitable for the 
 American laborer, and then just passed the right laws to get it for him. It 
 is said that our laborers ought not to be on the standard of comfort of Euro- 
 pean paupers. It must be, then, that the American sovereign can formulate 
 his demands on nature. He makes up his mind what is suitable to his own 
 majesty, and serves notice on nature to provide it. His attorney, the politi- 
 cian, justly indignant that nature does not respond, passes a law to secure the 
 becoming thing for his noble client, the American laborer. In this view of 
 the matter certain persons are ' nature's noblemen ' in a sense not heretofore 
 used. A little examination shows us, however, that we are only dealing with 
 an old fraud under a new face. The old-fashioned nobleman drew his drafts, 
 not on nature but on his fellow-citizens, and, as his fiiends were in control of 
 the government, they got payment for him. The American sovereign can 
 get nothing from nature which he does not earn. If the politician meddles 
 in the matter, he can only rob one sovereign to favor another. That is all 
 that he ever has done. That process has never made us any richer, but only 
 poorer." 
 
 The protectionists do not argue that an industrious people on 
 a fertile soil could not get food and some clothing out of it, &c. 
 They argue that fifty millions of people, situated like those of the 
 United States, could not have got food, and anything like their 
 actual present quantity of clothing, and all other conveniences, 
 had the foreign products been left free to come in. 
 
 The American sovereign, it is true, can get nothing from nature 
 which he does not earn ; but he will earn twice or three times as 
 much under a rational distribution of industries as he can if 
 confined to the production of raw products, for which there is no 
 adequate foreign demand, and for which the growth of a domestic 
 demand is prevented by the constant presence of foreign products 
 ready to be sold for money. Mr. Sumner is in error in alleging 
 that if the politician — say rather statesman — meddles in the 
 matter he can only rob one sovereign to favor another. The 
 statesman who promotes measures which bring about a suitable 
 diversity of employments can cause, and in the United States 
 has caused, the total annual product per head to be doubled and 
 trebled, thereby doubling and trebling the aggregate of all wages, 
 all profits, and all rents. He can cause and has caused a pros- 
 perity which shall endow great institutions of learning and fill 
 them with instructors whose salaries are vastly higher than they
 
 20 TAKIKF COMMISSION. 
 
 could have been under a free-trade policy. Mr. Sumner's argu- 
 ment could be buried out of sight by evidence drawn from all 
 recognized authorities, M'hether those on the protectionist or free- 
 trade side of the question. But Mr. John Stuart ]\Iill will suffice. 
 Although breathing every day an atmosphere surcharged with free 
 trade and consequently prejudiced in that direction, his " Political 
 Economy " is full of passages the reasonings of wliicli followed 
 out to their full consequences prove all that any protectionist 
 maintains. As to I\Ir. Sumner's dogma that any change wrought 
 in society by the united action of the whole must be injuri- 
 ous, let the reader consult Book I. Chap. VIII. §§ 2, 3, and also 
 Book V. Chap. XI. § 12, of Mr. John Stuart Mill's " Political 
 Economy." Paragraph 9 says : — 
 
 " Under the conditions of the United States, a tax on immigrants would prob- 
 ably lower wages, not raise them. The country is underpopulated. So long 
 as there is an immense amount of unoccupied land, the immigrants do not go 
 to swell the wages class ; they go upon the land ; they open it up, win wealth 
 from it, and contribute to the capital of the country. Each new-comer who 
 is industrioiTS counts more as a pair of new hands to produce than as another 
 mouth to consume ; and he may well add to the average wealth per head. 
 Taxation has not even, therefore, in this country the field which it might 
 have in some countries, if it were used to keep competitors out of the labor 
 market." 
 
 I agree that under the present condition of the United States 
 a tax upon immigrants would not raise wages, but not for the 
 reason given by Mr. Sumner. The immigrants from European 
 countries quickly assimilate themselves to us. They distribute 
 themselves throughout the industries, and speedily produce and 
 consume as much as others. The country simply grows symmet- 
 rically like a crystal or a tree, and so it will be until in the far 
 distant future there comes to be a scarcity of land, mines, &c., in 
 comparison witli the population. Paragraph 10 reads: — 
 
 " If a tax on laborers could not raise wages, certainly no tax on commodities 
 can do so. Protective taxes aim to keep certain foreign commodities out of 
 the country. An army of custom-house officers must therefore be supported, 
 not to collect revenue, but to prevent revenue from being collected. This 
 device is kept up in order to secure the home market to the home producer. 
 The home producer carries on his business at a loss. He says that he would 
 lose capital if it were not for the tariff. His industry, he says, would not ex- 
 ist if it were not for the tariff. It is therefore conducted at a loss all the time.
 
 TARIFF COMMISSION. 21 
 
 only that the loss is not borne by the persons carrying on the business, but by 
 the consumers of the goods. The protective system, therefore, involves the 
 following expenditures : The pay of all the custom-house expenditures to keep 
 up the system ; wages and profits to all those who are carrying on the pro- 
 ductive industries ; the losses incurred by the protected industries. All these 
 outgoes must be borne by the non-protected in order that there may be less 
 goods of all kinds in the country than there might be under free trade. How 
 then can protection increase wages, or the average amount of these goods 
 which can be obtained by each laborer in the country ? There could, not be 
 a more flagrant error. If there is anything cheap anywhere, the protectionists 
 spring into activity to keep the American people from getting it. If there is 
 an abimdance of food, clothing, furniture, and other supplies which is off"ered 
 to the American people on easy terms, the protectionists call it an ' inunda- 
 tion,' and run to set a barrier against it. A few weeks ago I saw a hundred 
 women waiting for hours on the sidewalk for the opening of a store at which 
 some fire-damaged goods were to be sold cheap. A protectionist must hold 
 that those women were insane, or that they were selfishly ruining the country. 
 It is impossible to raise wages by opposing cheapness and abundance. The 
 protective system lessens wealth ; and until somebody invents an arithmetic 
 according to which 10 will go in 70 more times than it will in 100, it is cer- 
 tain that a smaller dividend will give a smaller share to each person. The 
 protective system, therefore, lowers wages." 
 
 This whole paragraph is based, as already pointed out in my 
 former reply to Mr. Sumner, upon the fallacy of division. Under 
 our present industrial organization we have our own food and 
 raw materials, and export, at present prices, say seven hundred 
 millions of raw products. Our farmers sell these seven hundred 
 millions abroad, and they sell twelve hundred millions at home. 
 Mr. Sumner's microscopic vision sees only the present. He as- 
 sumes that if our farmers had to sell nineteen hundred millions 
 abroad instead of seven hundred, they would get the same price. 
 With the seven hundred millions of raw products, we now buy 
 abroad say three hundred and fifty millions, which we could not 
 produce, of tropical products, and a like quantity of the finer 
 manufactures which we cannot yet produce under existing duties. 
 If we did not produce finished products for ourselves, we should 
 have to buy not only what we now buy, but many times that 
 quantity. Mr. Sumner assumes that under such circumstances 
 the price of imports would be the same as now! Or, leaving out 
 the reference to price, he assumes that whereas now we exchange 
 three hundred and fifty million dollars worth of raw products
 
 22 TAIUFF COMMISSION. 
 
 for the like ainonnt of tiiiishcd commodities, we could exchange at 
 the same advantage, if we were under the necessity of selling 
 and buying abroad, four times as much ! Neither Mv. Jolm 
 Stuart ]\Iill, nor any other economist of capacity to take in the 
 whole problem, would maintain such a proposition. Under the 
 supposed change we not only should obtain our finished products 
 at a much less advantageous exchange for raw products than we do 
 now, but, over and beyond this, we should not be able to obtain 
 more than probably a third part as many. Our total gross annual 
 product would not be 100 to 70, as Mr. Sumner deduces, but as 
 70 to 100 rather ; and until somebody invents an arithmetic by 
 which 10 will go into 70 more times than into 100 it is certain 
 that a smaller dividend under free trade will give a smaller 
 share to each person. Free trade, therefore, would lower wages. 
 Paragraph 11 says : — 
 
 " Let us next look at the effect of protective taxes on the alternative which is 
 open to the American laborer to go upon the land. The protective taxes en- 
 hance the cost of all articles of clothing, furniture, crockery, utensils, tools, 
 and machinery. They also increase the cost of fuel and transportation. 
 They therefore reduce the amount of all the commodities mentioned which a 
 farmer can get for a certain amount of farm products. They therefore lessen 
 the profits of agriculture in all its forms, and lessen the attractiveness of the 
 land. Whatever lessens the attractiveness of the land lowers the minimum 
 gain of all manual laborers, increases the number of competitors in the labor 
 market, and reduces the amount which the employer needs to bid in order to 
 counteract the advantages of the land. Protective taxes, therefore, take 
 away from the hiborer the advantage which he has by nature in this country ; 
 that is to say, they take away from him part of his advantage in the labor 
 market. Consequently they lower wages." 
 
 Underneath the whole of this paragraph lies the above fallacy, 
 which assumes that present prices of exports could be obtained 
 if we had need to sell four times as much, and that imports could 
 be obtained as cheaply if we had occasion to buy four times as 
 much. Theory, as laid down by the greatest economists, nega- 
 tives this assumption, as can be seen by reference to the passages 
 in Mr. Mill's work already indicated. Experience contradicts this, 
 as shown by the quotation already made from Andrew Jackson. 
 The truth is as follows : Protection prevents a vast number of 
 people from flying to the land, and makes them consumers in-
 
 TARIFF COMMISSION. 23 
 
 stead of producers of raw products. It diminishes the aggregate 
 of the farmer's products, and increases the demand. They there- 
 fore increase the profits of agriculture in all its forms, and in- 
 crease the attractiveness of the land. Whatever increases this 
 increases the minimum gain of all manual laborers, and increases 
 the number of competitors for labor, and increases the amount 
 which the employer needs to bid in order to counteract the 
 advantages of the land. Protection therefore secures to the 
 laborer the advantage which he has by nature in this country, 
 and increases it by diversifying employments. Consequently it 
 raises wages above what they could be under foreign competition. 
 At the same time it hastens the moment when increasing skill 
 may compensate for the higher moneyed cost of labor ; for high 
 wages lead to greater efforts and intelligence on the part of oper- 
 atives, and to greater care in selecting the most skilful on the 
 part of employers, and to a more extensive use of the very best 
 machinery. 
 
 For the theory of this I appeal to Mr. Mill. For the verification 
 of the theory I appeal to the experience of the United States, where 
 the growing efficiency of labor has already in some cases overcome 
 the effect of its greater cost per man, as is shown by the very many 
 manufactured goods which we export, and by the approximation to 
 a similar cheapness in nearly all which are used by the great bulk 
 of the people. Champagne, fine broadclotli, silks, satins, gloves, 
 feathers, &c., the objects of ostentation and luxury, are much 
 dearer. Is it desirable to change our legislation in order to 
 cheapen these ? I beg the reader to carefully compare this reply 
 with the paragraph to which it is an answer. Paragraphs 12 
 and 13 read : — 
 
 " It has been affirmed l)y protectionists that their system increases cai^ital. 
 Two ways have been alleged in which it does this, — (1) by improving the 
 organization of labor, (2) by bringing capital into use which would otherwise 
 be idle. 
 
 " 1. The people of this country are all the time exercising their utmost in- 
 genuity to organize their industry to the highest advantage. Partly they do 
 this by instinct. Plenty of people never heard of the ' organization of indus- 
 try,' but they are constantly arranging their business to save labor, and so 
 gain time and prevent waste. They are also constantly laboring intelligently 
 to secure a better organization of industry. But, after they have exhausted
 
 24 TARIFF COMMISSION. 
 
 their ingenuity, the protective system assumes that some other persons, viz. 
 politicians and legislators, can see some better organization than the persons 
 engaged in industry have themselves been able to devise. If one part of 
 the American people have not invented the best organization of labor, we 
 have no one else to call upon than some other portion of the American peo- 
 ple, and we must appeal from the men of business to the politicians. The 
 politicians, then, as an incident to their own occupations, rectify the errors 
 and shortcomings of the business men. The mode they employ is taxes. 
 It is the same old magic. But the business men have to bring intelligence 
 to bear on the organization of labor, while the protectionist legislator never 
 has brought any intelligence at all to bear on the problem, and he never 
 can. Protective taxes have never been laid in view of any true knowledge 
 of the industrial circumstances, and they never can be. A thousand com- 
 missions, sitting for ten years, and actually engaging in a real study of the in- 
 dustries of this country, could not win a knowledge of our industrial system ; 
 and if they could acquire such knowledge of the industrial system as it 
 exists on a given day, their knowledge would not be good for anything the 
 day after, on account of the new inventions, discoveries, processes, lines of 
 transportation, financial arrangements, and so on." 
 
 Here we have the antique doctrine that a man must know his 
 own business better than any statesman can know it, and that 
 the interests of the man are identical with the interests of the 
 state. This was entirely refuted by John Eae (see pp. 1-32) some 
 fifty years ago ; moreover, as pointed out by Mr. Mill, there are 
 cases in which the interests of the whole nation and that of the 
 individual coincide only when all can be made to act in a certain 
 
 way. 
 
 The case of bankers is in point. Every intelligent banker sees 
 that it is for the public interest and for his own that all bankers 
 should keep a sufficient reserve ; but if some do and some do not, 
 the reckless in fair weather take away the business of the others, 
 and when a storm comes their failure tlirows a portion of the 
 consequent loss upon those who have been prudent. 
 
 Protection is still more in point. Fifty millions of people 
 may believe, and believe truly, that it is better for them to buy of 
 one another, — that by such means a greater annual product can 
 be reached, and hence a great benefit to all classes ; that there will 
 be more produced, and hence more to divide. But the recipients 
 of rents, profits, and fixed salaries see that after they have got 
 their incomes, — after, in short, they have got the profit arising out 
 of protection, — it would be an excellent thing if they could get
 
 TARIFF COMMISSION. 25 
 
 their commodities abroad. A and B and C wish to be paid very 
 high profits or salaries by the rest of the alphabet, but not to give 
 any employment in return. They do not see that under such an 
 arrangement the rest of the alphabet would be quite unable to 
 pay tlieir profits and salaries. If a protective law binds the 
 whole to the profitable course, it will be followed ; otherwise, not. 
 Each will say to himself, " The action of one individual can have 
 no appreciable effect upon fifty millions ; and whether it has or 
 not, I want my fine broadcloth to be cheap : those bloated manu- 
 facturers are robbing, cheating, swindling, pillaging me," &c. 
 
 There are cases in which the intelligence of the statesman can 
 promote the public good in a way that is unattainable in any 
 other manner. This is admitted by Adam Smith in passages 
 where he is not arguing for free trade, and is distinctly laid down 
 by Mr. Mill. The argument, then, of Mr. Sumner is too obsolete 
 to be repeated in the year 1882. Paragraphs 14 and 15 say : — 
 
 " We have here now fifty millions of people spread over a continent with 
 great varieties of climate and soil, and we constitute the most energetic, rest- 
 less, and indefatigable nation which has ever existed. To try to plan a sys- 
 tem of artificial relations of industry for such a nation is the most ridiculous 
 undertaking that could be proposed. Any one who talks of reaching a per- 
 manent adjustment of the tariff" to fit the needs of all interests and do injus- 
 tice to none is talking the wildest nonsense. Nothing less than the impersonal 
 forces of nature can adjust interests under such conditions, and there is only 
 one thing which can be predicated of any steps taken by the statesman, that 
 is, that he will make mischief. A man who is running a railroad easily sees 
 what crude nonsense people talk about railroading when they know nothing 
 of the business. A banker makes the same observation. So does every 
 other man in his own line. What chance is there, then, that politicians can 
 deal wisely with the thousands of industries and interests in this country in 
 all their manifold and complex relations to each other 1 We might as well 
 try to establish, by legislation, a system of health which would prevent the 
 people of the United States from ever being sick any more. 
 
 " Furthermore, the politicians never try to deal with the whole combina- 
 tion of industrial interests. They listen only to the most clamorous. They 
 heed only those who win influence and so secure the position of favorites. 
 They never bring any intelligence to bear on the question. How much as- 
 sistance is needed ? There never is any adjustment of means to ends. No 
 tests are ever applied ; no guarantees are ever given ; no subsequent reports 
 are ever made by the recipients of favor to show results for the expenditure. 
 Each interest comes forward and asks for favor, and gets it for no reason save 
 because it asked for it. The petitioner thinks that about so much per cent
 
 26 TARIFF COMMISSION. 
 
 will do, and does not himself know or ever try to calculate what will be the 
 effect of that much protection to him when offset by all the taxes to which he 
 must submit in behalf of others in order that the system may be completed. 
 Mr. Peter Cooper says that the tariff ought to just about offset the difference 
 between American and European wages. If that could be done and were 
 done, it would just take away from the American laborer those superior ad- 
 vantages which made him or his ancestors come across the ocean. Now, from 
 this tangle of absurdities and contradictions and ignorances and guesses, it 
 is expected that guidance Avill come which shall lead the American pro- 
 ducer to a better organization of industry than he could arrive at if left alone, 
 so that greater accommodation of capital and larger wages Avould follow. 
 From such causes no result, save waste and loss, can ensue with reduction of 
 capital and lowering of wages." 
 
 According to Mr. Sumner, the politician — say rather statesman 
 — has never brought any intelligence to bear upon the question of 
 how to deal with the whole combination of industrial interests ! 
 "Well, now, let us order out an immense pair of scales. Into 
 one we will put Franklin, Washington, Jefferson, Madison, 
 Monroe, Jackson, Webster, after he had studied the subject, — 
 in short, we will put a large majority of the statesmen of the 
 United States for a hundred years ; and into the other we will 
 put Mr. Sumner, backed by theories which all the great econo- 
 mists repudiate. Is it easier to believe that all these great in- 
 telligences were ignorant and corrupt, or to believe that Mr. 
 Sumner's dialectics have led him, and tend to lead others, into 
 fatal error ? Let any one who desires the truth peruse their 
 speeches, messages, and letters ; or let him read Mr. Hamilton's 
 report on manufactures, and compare its prophetic wisdom with 
 Mr. Sumner's production now under review. Let him note the 
 objects for wliich Hamilton recommended the protection, and 
 then let hiin look at the United States and see whether those 
 objects have or have not been attained ; let him compare ]\Iassa- 
 chusetts with the more fertile Canada, — Canada, too, which has 
 been aided by our protective policy, wliich has prevented the 
 foreign markets from being overwhelmed by the immense mass 
 of our raw products which are similar to hers. Paragraphs 16 
 and 17 read : — 
 
 " 2. It is alleged, in the second place, that protection brings capital into 
 use which would otherwise be idle. Every one of us who has any capital is 
 anxious to put it to productive use without delay. It is impossible, in the
 
 TARIFF COMMISSION. 27 
 
 nature of things, to keep all capital all the time employed. Improvements 
 (such as a better credit system) which make this more fully realizable are 
 eagerly adopted. The argument I have c[uoted means that in spite of this 
 eagerness, and in spite of the chances for employing capital on a new con- 
 tinent, some portion of the capital now in protected industries would not be 
 in use if it were not for protection. Such a notion is beneath discussion. 
 
 " There is, then, no way in which protective taxes can produce capital. 
 Every analysis shows that they waste it. Not a cent can come to A by the 
 action of the tariff which does not come from B. The consecpence of uni- 
 versal borrowing, or stealing, or gift-making, however, is not to increase capi- 
 tal but to waste it. Hence protective taxes lower wages. The laborers have 
 been exhorted to vote for protection, lest their wages should be reduced to 
 European rates. I have shown that the rate of wages obtained here is due 
 to the economic forces at work in this country. There is only one thing 
 which could reduce American wages to European standards, and that is pro- 
 tective taxes applied long enough and with sufficient weight." 
 
 In Mr. Sumner's article in the " Princeton Review," already al- 
 luded to, he said : " The rest is all phrases intended to occupy atten- 
 tion while the thimhlerig is going on. If this is not so, let some 
 protectionist analyze the operation of his system, and show by 
 reference to undisputed economical principles where and how it 
 exerts any effect upon production to increase it." 
 
 He himself. threw down the glove; I picked it up, and, shut- 
 ting my eyes to the imputation of dishonesty, I replied in an 
 article which was, at all events, courteous. Mr. Sumner says 
 that it is beneath discussion. I am content to reaffirm my ar- 
 guments, and to leave it to competent judges to decide whether 
 or not they are beneath discussion. Possibly they are not so 
 much beneath discussion as above refutation. In the article in 
 question, which can be found in all the great libraries of the 
 United States in a volume entitled " Free Trade and Protection," 
 I pointed out the precise manner in which, in a country already 
 possessed of a great variety of industries, the floating capital, 
 converted to a fixed form, was almost instantaneously repro- 
 duced, so that the nation became owners of the fixed capital, 
 either merely by calling out more labor or by turning to the 
 production of capital what otherwise would have gone into new 
 carriages, furniture, houses of luxury, &c., and that the result 
 came about generally by the former rather than by the latter 
 means ; the fixed capital resulting from a fuller employment
 
 28 TARIFF COMMISSION. 
 
 of the people, and not by a mere diversion from one work to 
 another. 
 
 Mr. Sumner thought he had me alone to deal with, but he 
 has another infinitely more formida])le antagonist in JMr. John 
 Stuart Mill. Let any one turn to Book IV. Chap. V. of Mr. 
 Mill's " Political Economy." Mr. Mill had in mind, to be sure, 
 the effect of an abstraction of capital by government for purely 
 unproductive purposes ; but the reader will see at once that the 
 argument is much stronger with regard to measures leading to 
 the construction of fixed capital, which would forever after be 
 productive of commodities. A does not get his capital from B, 
 for A can, upon the average of years, obtain only the profits 
 current in the community. A gets his capital out of his own 
 abstinence. If the manufactured article at first costs more, it 
 must, with increasing skill, cost less and less, and b)^ necessity, 
 enforced by competition, be sold for less and less. If B, whose 
 wages or salary is in money, pays more, C, D, and the rest of 
 the alphabet, practically pay less, for they can pay with commod- 
 ities they produce, and for which the new industry occasions an 
 additional demand and a better price. Even B is compensated, 
 and more than compensated, by an augmentation in his salary 
 or his jDrofits, growing out of the general increased prosperity of 
 the country. 
 
 It is easy to call this " thimblerigging," or a " bungle of absurd- 
 ities, contradictions, ignorances, or guesses ; " but calling names 
 is not economical reasoning. If there be anything wrong in the 
 deductions, some one can show with precision and courtesy the 
 exact point in which they are wrong. It is not the protectionists 
 who shrink from brinjrinfr doctrines to the test of the methods 
 of economic reasoning laid down by the greatest recognized 
 authorities. 
 
 Mr. Sumner says he lias shown that tlie rate of wages now ob- 
 tained here is due solely to economic forces at work in this coun- 
 try. In this he is in error. He has only shown that the minimum 
 of wages cannot be less than food and such small modicum of 
 clothing and otlier conveniences as a nation producing raw pro- 
 ducts could obtain from foreign markets eternally glutted with 
 such products. He has not shown, nor can he (witliout admitting
 
 TARIFF COMMISSION. 29 
 
 the effects of protection) show, how the much higher existing rate 
 of wages has come about. The intimation that higher or long- 
 continued protection could reduce wages involves the economic 
 absurdity which supposes that, in a population of fifty millions, 
 under free competition, the profits upon protected industries can, 
 upon an average of years, be higher than upon others. Upon this 
 point I appeal from Mr. Sumner to Adam Smith, Eicardo, Mr. 
 John Stuart Mill, to the universally accepted conclusions of 
 economic reasoning, and to common sense. They are all upon 
 one side, and all against Mr. Sumner. Paragraphs 18, 19, and 20 
 read thus : — 
 
 " There is, however, another argument which must be considered in this con- 
 nection. It is said that under free trade all our population would go into 
 agriculture, and that wages and all other remuneration for labor would be re- 
 duced until we should all be in jDOverty together. Hence the agriculturists, 
 and the mechanical laborers, too, are exhorted to support a wide protective 
 system in order to diversify industry and prevent ruinous competition. 
 
 " We have seen above that the direct cost of keeping up the protective sys- 
 tem consists of three items : (1) payment of custom-house officers to keep 
 goods out ; (2) support of laborers, and profit on capital in protected indus- 
 tries ; (3) the losses of the protected industries. These costs must be paid to 
 buy off competition. 
 
 " In the first place, it can pay no one to buy off competition imless he has 
 a monopoly. Protected industries have done it sometimes. American farmers 
 share the world's market with a number of strong competitors. If they buy 
 off the competition of American manufacturers they must bear all the cost of 
 it ; and they must share the gain, if any, with all the agriculturists in the 
 world. That means that if they try it they will put themselves at a great 
 disadvantage with their own competitors in the world's market." 
 
 The expense of custom-house officers is too trivial to be consid- 
 ered. The support of laborers and profit on capital in protected 
 industries is paid out of the exchangeable value of their products : 
 the losses of the protected industries consist of the higher cost of 
 their products, calculated upon present prices here and abroad. 
 It amounts even now to very little. The gain to the nation is 
 the whole value of what must have been sent abroad to purchase 
 those products. The gain to the agriculturists is a certain home 
 market, already twice as great, and destined in twenty years to 
 be four times as great, as the market of the world affords him. 
 They now sell abroad say seven hundred millions, and twelve
 
 30 TARIFF COMMISSION. 
 
 hundred millions at home, or nineteen hundred millions. This 
 is the market required by half the population. The whole popula- 
 tion employed on the soil would require a market for forty-eioht 
 hundred millions. Nowhere on this planet is there a market for 
 one half the amount; and in twenty years the case would be 
 twice as bad. But it is not necessary to take an extreme case, 
 although Mr. Sumner challenges it. We need only inquire into 
 the effect of offering abroad twice as much as we do now, to 
 be convinced that the purchasing power of raw products would 
 be vastly less than it is now. The farmer does not lose, but 
 gains, and gains immensely, by that better distribution of the 
 community which the necessities of his argument compel Mr. 
 Sumner to describe as " buying off the competition of the manu- 
 facturers." By favoring such a distribution they have not put 
 themselves at a disadvantage, as compared with their competitors 
 in the foreign market. On the contrary, the resulting wealth of 
 the whole nation has overflowed upon them, and given them 
 much more and better clothing, tools, and machines than they 
 could possibly have obtained under a regime of free trade. The 
 arrangement has helped other agricultural countries, doubtless ; 
 but that need not distress us. It has helped ourselves vastly 
 more. Paragraph 21 says : — 
 
 " In the second place, all the protected industries of this country are now 
 parasites on the naturally strong industries. Agriculture now supports itself 
 and all the rest and all their losses. Therefore, even if it were true that all 
 the population would, under free trade, take to agriculture, it is mathemati- 
 cally certain that agriculture could support them aU better directly than under 
 the present arrangement." 
 
 To this I must add a sentence already quoted in paragraph 3. 
 
 It is this : — 
 
 " No wonder the protectionists are enraged at the economists who are stiU 
 stupidly teaching that we can produce nothing except by applying labor and 
 capital to land." 
 
 There is nothing in this to enrage, but there is much to as- 
 tonish and amuse. The doctrine is that of the Physiocrats of 
 France, and has been supposed to have been disposed of by Adam 
 Smith in his lectures one hundred and thirty years ago.^ All the 
 1 See Wealth of Nations, Book IV. Chap. IX. § 28, &c.
 
 TARIFF COMMISSION. 31 
 
 world thought it had been decently buried, but Mr. Sumner with 
 sacrilegious hand has disinterred it. 
 
 Let us add a word to what Adam Smith says. As already 
 pointed out, the United States produce annually seven thousand 
 millions worth of finished products. Agriculture and mining fur- 
 nish the raw materials, worth three thousand millions ; manufac- 
 tures and the mechanical arts bring these into a shape suitable for 
 consumption, and trade and transportation place them where 
 they can be consumed. Each class is indispensable to the 
 production of the vast aggregate. It is in vain to argue that the 
 other industries could do nothing without raw materials ; for 
 it is equally true that agriculture and mining, such as they are 
 to-day, could not exist without the machines, the admirable tools, 
 the clothing, the barns and stores and dwellings, and the trans- 
 portation afforded by the other industries. Nor will it do to 
 affirm that these fifty millions engaged in agriculture could pro- 
 ciu'e those things cheaper and better from abroad. 
 
 No such conclusion can be arrived at either by the theoretical 
 deductive reasoning of any recognized political economy of to-day 
 or from the inductive reasoning of practical men. Mr. John 
 Stuart Mill, were he alive, would feel for it as little respect as is 
 felt by statesmen and business men. It not only is not practical 
 wisdom or a guide to practical wisdom, but it is not political 
 economy of any school, save one which has been forgotten for more 
 than a hundred years. 
 
 Agriculture, then, does not support itself and all other industries, 
 and therefore it is not mathematically certain that it would sup- 
 port us all better directly than under the present arrangement. 
 It is, on the contrary, as certain as anything can be made by 
 means of economical reasoning or by reasoning from observation, 
 that a reversion to agriculture and trade alone would reduce by 
 one half the amount of necessaries, conveniences, and luxuries 
 now enjoyed by the people of the United States. Paragraphs 22- 
 28 read : — 
 
 " The farmers would indeed gain a great deal if the protected people would 
 keep still and not do anything, for then they would at least waste nothing. 
 The earnings of fai'mers and the wages of laborers would then not be reduced 
 so much as they are now. The protectionist theory, however, is that it in-
 
 32 TARIFF COMMISSION. 
 
 creases wages to keep on an occupation which wastes capital and lessens all 
 the time the goods within reach of the population. It is interesting to apply 
 this theory to some other cases. 
 
 " On the protectionist theory it would be a means of raising wages to keep 
 up a big standing army. All the soldiers would be withdrawn from competi- 
 tion in the labor market, and would consume while producing nothing. In 
 time of peace they would not be destroying anything ; but in time of war they 
 would be just like a protected industry, — they would be wasting cajiital all 
 the time. In that case, then, they would raise wages all the more. 
 
 " On the protectionist theory a leisure class of idle, rich people make wages 
 higher than they would be if the same people should go to work. By the 
 same reasoning women who now consume without producing would lower 
 wages if they should go to work, and while consuming, as they now do, should 
 compete in the labor market. Indeed, this view of the matter is very often 
 taken, and perhaps the popular view is that the rich make wages high, if they 
 not only keep out of the labor market, but also consume luxuriously, and do 
 not save anything. 
 
 " On the protectionist argument paupers living in an almshouse raise wages 
 as compared with what wages would be if the same persons should no longer 
 consume unproductively, but should come out and compete in the labor mar- 
 ket while consuming as before. On the same argument paupers who produce 
 something, though less than they consume, lower wages compared witli what 
 would be the case if the paupers did nothing ; still more as compared with the 
 case in which the paupers should destroy. 
 
 " On the protectionist argument, convicts in the state prison raise wages by 
 consuming the product of taxation in idleness, and lower wages if they go to 
 work, and, while consuming as before, produce something, because in the latter 
 case they compete in the labor market. In fact, criminals out of state prison 
 would satisfy the protectionist reasoning still better. They always destroy 
 far more than they produce, and they do not compete with laborers. They 
 would, therefore, raise wages by their operations. It would be a limitation 
 of their beneficent action to put them in prison as consumers in idleness, still 
 more so to set them to work at a useful industry. 
 
 " On the protectionist view of the matter tlie trade-unionists are right when 
 they adopt wasteful processes, practise shiftlessness and neglect, study not to 
 be skilful or effective, and try to make work, as they call it, believing that 
 they thus raise wages. The protectionist and the trades-unionist both mistake 
 toil for wages. They think that when they increase the difficulties which 
 intervene between us men and goods they increase wages, and that to make 
 goods abundant is to lower wages. 
 
 " On the protectionist theory those men in the riot at Pittsburgh, who ex- 
 ulted in the destruction of the city because they thought that it would make 
 work, which they confused Avith making wages, were right from their point 
 of view. No man wants work ; that is, toil, or irksome exertion. Least of 
 all does the man who has no capital want toil. He supplies toil. He cannot
 
 TARIFF COMMISSION. 33 
 
 supply and demand the same tking. He demands capital on which to live. 
 When capital is destroyed and toil is necessary to reproduce it, the ratio ia 
 which toil must be given for capital is rendered more unfavorable to the la- 
 borer ; that is, wages fall. If they do not fall on the spot where the destruc- 
 tion took place they must fall elsewhere whence the capital is drawn to replace 
 the capital destroyed. If Pittsburgh had to be rebuilt other cities could be 
 built up just so much less. If Pittsburgh had not been burned up the capital 
 which went to replace it would have been used to employ laborers in adding 
 so much more to the comfort and possessions of the country. The country is 
 poorer for all time by the capital there destroyed, with all its accumulations. 
 Just so every year that this nation, on account of the protective system, attains 
 to the possession of a less amount of goods than it could have obtained under 
 freedom, the eifect is the same as if we had produced a city and had seen it 
 burn up ; and anybody who believes that the protective taxes raise wages 
 must believe that to burn up cities raises wages. All these notions are mis- 
 erable fallacies, which sin against the first elements of common sense. He who 
 believes that the way to raise wages is to hinder people from getting at things 
 easily and cheaply, or to refrain from the most profitable modes of obtaining 
 goods, must believe that workmen raise wages when they stop working and 
 go out on strikes, and lower wages when they go to work again. Trades-union- 
 ism and protectionism are falsehoods. The way of prosperity for human so- 
 ciety is by industry, economy, thrift, skill, energy, painstaking, excellence, 
 liberty, abundance, and not by some crafty and artificial devices to produce 
 scarcity and bad work. The protectionist system requires a new set of prov- 
 erbs which have never yet found their way into any popular philosophy, such 
 as these : Want makes wealth ; destroy and prosper ; taxes are wages ; to have 
 much produce little ; blessed are the bad workman and the foolish capitalist, 
 for they shall get abundance." 
 
 I have already shown that according to the protectionist theory 
 the whole amount which would be sent out of the country to buy 
 the goods now made in it by protected industries, — this whole 
 amount less the amount by which home-made goods exceed in 
 cost the foreign, is a gain to the country, even taking prices at 
 their present point ; for the labor now employed would, if 
 transferred to the laud, reduce the exchangeable value of the 
 totality of raw products, — it would be a minus quantity. Pro- 
 tection therefore increases capital, and increases all the time the 
 goods within reach of the population. The theory of protection, 
 then, is absolutely the reverse of what Mr. Sumner alleges it to 
 be, and it is a theory in perfect accord with methods of reasoning 
 always adopted by the great economists excepting when they are 
 arguing for a preconceived opinion. It is a theory also which is 
 
 3
 
 34 TARIFF COMMISSION. 
 
 in harmouy ^vith facts. It explains the past and the present. It 
 explains "with precision and in au intelligible manner the poverty 
 of Ireland and Portugal and Turkey and India, and why all purely 
 or disproportionably agricultural nations and states are poor, &c. 
 It is not necessary, then, to follow Mr. Sumner into the side issues 
 of paragraphs 22-28. They all fail to he analogies in every 
 point but one, and it would require many pages to examine them 
 in detail. I will notice only one sentence. Mr. Sumner says 
 that " the way of prosperity for human society is by industry, 
 economy, thrift, skill, energy, painstaking, excellence, liberty, 
 abundance.'" But abundance in political economy is prosperity. 
 The way of prosperity then, according to Mr. Sumner, is by j)ros- 
 perity. This is an identical proposition. But, abstaining from 
 taking advantage of this, let us strike out the word abundance. 
 The other means he enumerates would certainly not lead to 
 abundance or prosperity if we insisted upon producing only or 
 even more largely the raw products with which the world is al- 
 ready oversupplied, and abstained from producing the finislied 
 products we ourselves require, and which can be had in abun- 
 dance only through our own labor. The new set of proverbs 
 wdiich Mr. Sumner offers to protection are borrowed from Bastiat's 
 " Sophisms of Protection," a book which a great lawyer once said 
 to me was in his opinion the most sophistical work he had ever 
 read. The new proverbs are totally inapplicable, and protection 
 declines to accept them. 
 
 The precise point in which Mr. Sumner's reasoning is faulty is 
 the assumption that prices of finished products abroad would re- 
 main the same under a vastly increased demand, and that the 
 prices of raw products abroad would remain the same under a 
 vastly increased supply. None of the great economists would 
 indorse such an assumption ; on the contrary, the metliods of rea- 
 soning adopted by them all justify the protectionist conclusions, 
 and warrant them in affirming that the exchangeable value of the 
 annual product of the United States is vastly increased by pro- 
 tection. But we have the authority of Adam Smith and Say 
 and Mr. ^Mill for the conclusion that the exchangeable value of 
 the annual product is precisely equivalent to the totality of the 
 individual incomes. Protection then raises all incomes, and wages
 
 TARIFF COMMISSION. 35 
 
 among the others. There does not appear to be a particle of 
 doubt that, according to the accepted economical reasoning, we 
 ought in the United States to have high wages in consequence of 
 protection ; and experience shows that we have high wages which 
 bring to us annually three fourtiis of a million of people from 
 almost every country of the earth. Paragraph 29 runs : — 
 
 " Let us now look at the other dogma : High wages make protective taxes 
 necessary. It is the very opposite of the truth. If wages are high, that is the 
 reason why no jorotective taxes are needed, even if they might be in some 
 other case. In Germany the protectionists generally allege that lower wages 
 in Germany than in England are a proof that Germany is industrially in- 
 ferior, and needs protection against England. The protectionist argument 
 never flags on account of any little variation in the facts." 
 
 This argument is, I believe, borrowed from Mr. David A. Wells, 
 and is thus answered by a free-trade writer, Professor Cairnes : 
 " Mr. Wells shows that labor in England, though much higher 
 than in most European countries, and in particular than in Eussia, 
 is still so much more efficient here than there, that the high Eng- 
 lish rates are practically cheaper for the English capitalist than the 
 lower continental rates for the capitalist of the Continent. What 
 is the bearing of this upon the American demand for protection 
 against England ? Will Mr. Wells maintain tliat, as the efficiency 
 of English labor is to that of Eussia, so is the efficiency of Amer- 
 ican labor to that of English ? If not, how does his objection to 
 the protectionist criterion of costs, founded upon the different 
 degrees of industrial efficiency, affect the argument ? " 
 
 In short, Mr. Wells's argument was this : If in the case of Eng- 
 land a high rate of wages is the result of greater skill or other 
 greater advantages in the iron and textile industries, then a still 
 higher rate of wages in America is a proof of still greater skill or 
 other advantages in the iron and textile industries, or generally 
 in the conversion of raw into finished products ! It is this ab- 
 surdity which his words suggest and insinuate, although when 
 confronted with it he would say, " Oh, no ! I only mean that if 
 high wages are paid it must be because the products of the coun- 
 try find a market at home and abroad wliich makes it possible to 
 pay such wages. If the liberal wages now paid in the United 
 States to the iron and the textile industries could not be paid
 
 36 TARIFF COMMISSION. 
 
 under free trade, tbis only proves that those industries are car- 
 ried on at a loss, which loss must fall upon the unprotected in- 
 dustries." The answer to this is, that the industries in question 
 produce about seven hundred and fifty millions, or one tenth of the 
 annual product, and so support directly and indirectly one tenth 
 part of the population. Were it not for these industries our pro- 
 duction of raw materials must be increased by one tenth, that is 
 to say, by an amount equal at present prices to three hundred 
 millions, and the demand for iron and textiles in the outer world 
 would be increased by seven hundred and fifty millions. There 
 would be, then, an advance in finished products and a sharp de- 
 cline in raw products, and the exchangeable value of what we 
 had to offer would be diminished enormously. Agriculture not 
 only would not gain, but it would lose immensely. Paragraph 30 
 reads : — 
 
 " In the arguments under this head of the subject, it is constantly assumed 
 that wages are the controlling condition in production, or that there is some 
 direct connection between the wages paid and the vahie of the product or 
 the profits of the capitalist employer. These assumptions are false. Sup- 
 pose that an individual comes forward and claims that he cannot compete 
 because he pays higher wages than a foreign producer. When has any 
 examination ever been made to find out whether such person has an adeqiiate 
 capital, or has a competent knowledge of the business, or diligently attends 
 to his business, or has located his establishment wisely, or has organized his 
 business economically, or has bought his raw material judiciously, or has kept 
 up with improvements in machinery, or has not speculated with his product 
 unsuccessfully, or has not violated some one of the other conditions of suc- 
 cess ? The wages paid are but one, and often one of the least important 
 conditions of production. If it is alleged, as it constantly is in this contro- 
 versy, in a sweeping way, that American industries need protection because 
 American wages are higher than foreign wages, it is a case of joining a very 
 wide inference to very inadequate premises. What are the comparative con- 
 ditions of industry in America and elsewhere as regards convenience and 
 cost of raw materials, quality and cost of machinery, rent of land used, 
 character of the climate as affecting the requirements of various industries, 
 national character as respects industry, diligence, sobriety, intelligence, &c., of 
 laborers, distance from the market or convenience and cost of transportation, 
 convenience and cost of natural agents (coal or water), taxes and tax system, 
 the security afforded by the excellence or other\\-ise of the government, &c. ? 
 Surely it is jjlain that these things are the conditions of production ; and the 
 comparative money rates of wages, taken apart from the purchasing power of 
 money, or the efficiency of labor, to say nothing of all the other conditions
 
 TARIFF COMMISSION. 37 
 
 enumerated, are by no means a criterion for a decision whether an industry 
 can be carried on successfully or not. The lists of comparative wages which 
 have been made, and which are relied upon by protectionists, and are often 
 accepted by free-traders as pertinent to the issue, and perhaps as decisive of it, 
 have no value at all for the purpose. The employer alleges that he can make 
 no profits because he pays high wages. He assumes, apparently, that wages 
 and profits displace each other. It is certain that they do nothing of the 
 kind. There is no ascertainable relation between wages and profits. Wages 
 are paid out of the capital during the period of production. The employer 
 tries to keep wages down, just as he tries to keep down cost and waste of raw 
 material or wear of machinery, because he wants to economize on his outlay. 
 He, of course, tries to minimize every outlay, because that is the road to suc- 
 cess in the competition of the market, and to maximum profits. The price 
 of his product, when he gets it done, will be determined by supply and de- 
 mand on the market. He must replace his capital, and then he will find out 
 what profit he has. No law whatever can be established between this profit 
 and the wages which were paid to the- men while they were making the 
 article. Profits and wages may both be high or both low at the same time, 
 or one may be high and the other low. The fact is, that instead of one being 
 displaced by the other, they most always go together, both high or both low 
 at the same time." 
 
 In this paragraph Mr. Sumner succeeds very well in confusing 
 the reader by enumerating a great many other things which affect 
 the cost of commodities, perplexing the subject by using the very 
 reverse of the method employed, when we seriously desire to as- 
 certain the plus or minus effect of a certain cause. 
 
 The true method is to isolate the cause, and see how it must 
 act when taken alone, or with other things equal. Well, then, 
 a commodity being produced is offered in the market and sold 
 at a certain price. From this price F, the foreigner, has to de- 
 duct the cost of materials and x wages, and what remains is 
 profit. From this price A, the American, has to deduct the cost 
 of materials and say x plus y for wages. The additional y in- 
 capacitates A from contending with F. Higher wages, then, are 
 indisputably a reason for protection, especially when we recollect 
 that they enter into the cost of forming fixed capital and into the 
 cost of repairing fixed capital, as well as into the sums paid di- 
 rectly for the work performed in shaping the commodities. It is 
 of course necessary to success " that a man should have adequate 
 capital, a competent knowledge of his business, must diligently 
 attend to his business, must organize his business judiciously.
 
 38 TARIFF COMMISSION. 
 
 must have kept up with improvements in machinery, have ab- 
 stained from speculating with his product unsuccessfully, and 
 have not violated some one of the other conditions of success ;" in 
 short, he must be well enough to get out of bed and sane enough 
 to keep out of the lunatic hospital. But all these things are as 
 necessary to F as to A. They have nothing to do with the ques- 
 tion of the effect of a higher price of labor, into the discussion of 
 which they are brought. 
 
 If Mr. Sumner means that we cannot contend with England 
 in manufactures because we do not attend to our business, it may 
 be noted that we are the same race of men as beat the pauper 
 farm-laborers of Europe in their own market. It is fair to sup- 
 pose that we should use as mucli diligence in the one occupation 
 as tlie other. If he says no, because protection makes the pro- 
 tected manufacturer careless, the answer again is that all, or very 
 nearly all, protected articles are very much cheaper, upon an 
 average of years, than the foreign article with duty added ; and 
 in not a few the domestic article is cheaper than the foreign arti- 
 cle without any duty. If the duty made the protected indus- 
 tries thriftless, in spite of internal competition, we should have 
 prices remaining continually only very slightly below the point 
 at which they can be imported and pay duty. If, on the con- 
 trary, he means that we are more careful, more skilful, or rap- 
 idly becoming more skilful, than the foreigner ; that our general 
 high rate of wages causes a careful selection of the most skilful, 
 and great attention to have the best machinery, &c. ; and that 
 this being so, we ought to be able to manufacture as cheaply as 
 the foreigner in spite of the difference of wages, — the answer is, 
 that the fact of prices being already much less than the foreign 
 commodity with duty added, is sufficient proof that the duty is not 
 preventing our advance in the desired direction ; that we have 
 already reached the goal in common cottons, locomotives, agri- 
 cultural machinery, tools, &c., and nearly reached the goal in 
 such woollens as are used by the great mass of the people. The 
 duty troubles nobody much except the users of the finer cottons 
 and w^oollens and other luxuries. The men who get their one, 
 two, or three dollars a day feel the tariff only through its benefi- 
 cent effects upon their wages ; it is the men who get their ten
 
 TARIFF COMMISSION. 39 
 
 and twenty and thirty dollars a day who are very erroneously 
 thinking themselves oppressed. If they really were oppressed, it 
 might be reason even for class legislation ; but they and their 
 families would spend just as much in ostentation were there no 
 custom-house in the country. ParagTaph 31 says : — 
 
 " It is much more to the point to notice that profits are higher in this coun- 
 try than in Europe. We ought not to take too low views of human nature ; 
 but when an employer pretends to bull wages, we shall not believe him with- 
 out examination. When we notice that profits are high in this country, we 
 can understand the applicants for tariff favors, without assuming any dis- 
 interestedness. No capitalist will go into a business which gives less profit 
 than some other which is open to him. The American producer does not 
 want to put up with the rates of profit which his European competitor is 
 satisfied with. He wants the rate which he could get if he went into one of 
 the industries which are favored by nature in this country. Instead of going 
 where he could get it on a natural basis, he wants the law to tax his fellow-citi- 
 zens to give it to him. The talk about wages is all for effect. It is only so 
 much smoke and noise imported into the contest to obscure the issue. It has 
 had no little effect, because no one has taken the trouble to expose it in de- 
 tail. The competitor whom we fear most is England, in which country 
 wages are higher than anywhere else in Europe. How does England pay 
 high wages and beat all the others, if high wages are the controlling con- 
 sideration? And if she pays higher wages than the continental countries and 
 beats them all, because other considerations come in, why may we not pay 
 higher wages than she and beat her, at least in our home market, because 
 other considerations come in ? The nearest approach to pauper laborers in 
 Europe are agricultural laborers. Our farmers send their products, raised by 
 men remunerated at American rates, and pay transportation, and beat the 
 pauper laborers in their own home market. How can this be done if the cri- 
 terion of possible competition is the comparative rate of wages 1 " 
 
 Mr. Sumner here intimates that the manufacturer who tells 
 the workingman that the tariff sustains and tends to increase 
 wages is deluding the latter with a statement he does not be- 
 lieve, because his own interest is to have wages low. Yes ; but 
 it is also his own interest to sustain a policy which makes his 
 industry possible in spite of the high wages. But the manufac- 
 turers are not the only men whom Mr. Sumner accuses of dis- 
 honesty in this matter. The highest statesmen of the land he 
 believes to be simply telling lies when they speak in the manner 
 he disapproves. He cannot believe that there are any men who, 
 looking forward to the time when population must begin to press
 
 40 TARIFF COMMISSION. 
 
 upon subsistence, feel it to be of the greatest possible importance 
 that higli wages should continue from now till then, and that the 
 change should find a people so long used to good living as to re- 
 fuse to descend into beggary. I am sorry he thinks such senti- 
 ments to be hypocrisy. He differs from Mr. Mill in this as much 
 as he does in political economy. 
 
 Mr. Sumner asks, If England can pay higher wages than the 
 Continent and beat the Continent, why cannot we pay higher 
 wages than England and beat England ? Answer : Because 
 England's superiority in skill more than counterbalances the 
 lower wages of 'the Continent, while we have not a similar supe- 
 riority over her. He also asks how our farmers compete with 
 European, if the criterion of possible competition is the compar- 
 ative rate of wages. The answer is, that nobody ever said that 
 wages were the criterion, but only one of the elements. The 
 English farmer has to pay three times as much in rent as the 
 American farmer pays for wages, and he has to use vastly more 
 labor per acre, and he has to use fertilizers. When manufactures 
 and the mechanical arts have a similar advantage, they certainly 
 will need no protection. Paragraph 32 reads : — 
 
 " If it is said that we cannot compete, what is meant ? These phra-ses are 
 allowed to pass without due examination. I cannot compete with my infe- 
 riors or with my superiors. I cannot compete with an Irish lahorer at digging a 
 ditch, and I could not compete with the late Mr. Scott in running a railroad. 
 Could any taxes enable me to run a railroad as Mr. Scott did, and to earn such 
 remuneration as he earned ? Certainly not. No taxes can possibly enable a 
 man to compete with a superior. Could any taxes enable me to compete 
 with an Irish laborer at digging a ditch ? Indeed they could. They might 
 interfere between me and the laborer, and prevent me from getting his ser- 
 vices, and I might be forced to dig my own ditch, turning away from other 
 and better paid occupations to give my time to an inferior occupation. That 
 would impoverish me. Such is the only way in which protective taxes can 
 make competition possible. They drive us do^vm to compete with those 
 who are far worse off than we instead of allowing us the full use of our nat- 
 ural advantages." 
 
 If the condition of things were such that, without a protective 
 law, so many persons would crowd into professorships as to de- 
 press the exchangeable value of their services below tliose of ditch- 
 diffsers, then a law which should cause some of those would-be
 
 TARIFF COMMISSION. 41 
 
 professors to dig ditches would increase the annual product, and 
 raise the rate of wages. Paragraph 38 says : — 
 
 " If we have high wages, then they are a proof of industrial superiority. 
 They prove that there are some lines of industry open to us, as a nation in 
 which great returns for both labor and capital may be obtained. To argue 
 from high wages that we need protection is like arguing that a man needs 
 charity because he is rich, or needs help because he is strong." 
 
 If we have high wages, they are a proof that we have a wisely 
 distributed variety of industries ; that we have not, by overdoing 
 the production of raw products, thrown away our natural advan- 
 tages, so as to go half clad in the midst of fertile fields. To 
 argue from high wages that we do not need protection is like 
 arguing that a man's methods of business must have been bad 
 because he has become rich, or that the organization of a victo- 
 rious army had been pernicious, and that greater success would 
 have come if each man had waged the war by himself. Paragraph 
 34 says : — 
 
 "A true analysis of the facts therefore shows us that protective taxes 
 lower wages, and that high wages are not a reason why protective taxes are 
 necessary. We get the remuneration of labor by using our natural advan- 
 tages. The remuneration of labor is high because the advantages are great. 
 It will be highest if the laborer is let alone to use the advantages without 
 any restraint or interference. If we get a high remuneration by the use of 
 our advantages, our strength in competition will come from the very advan- 
 tages of nature which gave the high rewards of industry. Thus every aspect 
 of the matter is consistent and straightforward, clear and natural. The more 
 we study the case in all its aspects, the more thoroughly is the free- trade 
 solution of it confirmed ; for, instead of entangling oiu-selves in ridiculous 
 absurdities, we find that all the relations are simple and consistent." 
 
 He who studies Hamilton's report upon manufactures will see 
 that he expected general prosperity — that is, high wages — to flow 
 from protection, and why he expected it. He who studies the 
 United States to-day will see that the event has justified his theory, 
 and he will see that his theory accords with the wisest thought of 
 the great writers upon political economy. We get a great remu- 
 neration to our labor by using and not throwing away our natural 
 advantages. The remuneration of labor is high because we do 
 not press those advantages beyond the ability of the world to 
 absorb their products. We should entirely throw away those
 
 42 TARIFF COMMISSION. 
 
 advantages if £he laborers, instead of acting in concert for the 
 greatest good of all, had each acted independently. If we get a 
 high remuneration under protection, that is evidence that pro- 
 tection was needed, and will be needed until we gain a skill so 
 much greater than others as to overbalance the greater cost per 
 man of our labor. 
 
 Thus every aspect of the matter is consistent, straightforward, 
 clear, and natural. We are not, like the free-traders, confounded 
 by the presence of prosperity in the United States in spite of and 
 in contradiction of all our theories, nor by the presence of the 
 direst poverty in Ireland, Portugal, Turkey, and India. Para- 
 graph 35 reads : — 
 
 " The application of these ideas to the matter in hand is simple and direct. 
 I have spoken wholly as a political economist whose business it is to study 
 theoretical questions. If it is proper to do anything about wages, the right 
 thing to do is to abolish all protective taxes, and that will let them rise 
 where they ought to be." 
 
 The author of this review of Professor Sumner's paper has 
 written wholly as a political economist whose business it has 
 been for many years to study theoretical questions. It is of the 
 utmost consequence to sustain wages, and this wiU be done by 
 continuing the protective policy. Otherwise the growth of our 
 non-agricultural industries will be checked, and the country will 
 become disproportionately addicted to farming, with a constant 
 diminution of the profits of that occupation and of wages and 
 profits in all occupations. 
 
 We have now finished Mr. Sumner's paper. He had after- 
 wards a loni3: conversation with the Commissioners, in which he 
 repeated that protection lowered wages, declared tliat New Eng- 
 land would have been greatly richer had there never been any 
 tariff, and that the South was about to greatly harm herself by in- 
 troducing manufactures ; and he scoffed at the theory of Franklin, 
 Adam Smith, and ]\Ir. ]\Iill which teaches the great advantages of 
 frequent industrial centres to the farming population. This he 
 dismissed by calling it the famous Truck Farm argument. It is 
 not necessary to go through those conversations, as they evolved no 
 new point, and as the positions above referred to are not warranted 
 by any reasoning in accordance with the political economy of the
 
 TARIFF COMMISSION. 43 
 
 latter half of the nineteenth century as set forth by Mr. Mill and 
 by many authors on the protectionist side. I believe there is 
 not a particle of doubt that protection sustains and gradually 
 raises wages; that New England and the whole country is greatly 
 richer by reason of it ; that the South is doing very wisely in in- 
 troducing manufactures ; and that the " Truck Farm argument " is 
 sufficiently justified by the authorities I have named, by all sound 
 economic reasoning, and by common sense. 
 
 University Press : John Wilson and Son, Cambridge.
 
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