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"I Press the Button, They Do the Rest (ing)" [Cleveland and the Unemployed]

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D

INTRODUCTION

SOME MORAL ASPECTS OF TARIFF-MAKING1

IFFICULT as it would be for one to realize it who took up for the first time the present tariffs of the United States, they rest on a formula which, as it always has been understood by the majority of the people of the country, is not especially intricate or confusing. Put yourself back a hundred years or so, when the country was busy with agriculture and commerce and mining. We had an enormous advantage in these pursuits. We were at a disadvantage in manufacturing. To be sure, from the start we did a little. In the nature of things we would gradually do more, and what we did would be on a solid basis. But, obviously, only the born ironmaster, potter, weaver, was going to practice his trade in the new country with the foreigner importing goods cheaper than he as a rule could make them. And so we decided to encourage manufacturing by taxing ourselves.

The amount of the tax decided on was to be only enough to put our would-be manufacturers on an even basis with the foreigner. This meant what? By general consent it meant giving our people enough to cover the difference in the cost of labor. Plainly, Americans were not going to work for the same wages that Europeans did. There were too many ways in which they could earn more. The country was new and men could have land of their own on easy terms. Commerce called them, for, having

1 Adapted from the author's book, "The Tariff in Our Times," published by the Macmillan Company, New York, 1911.

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land; we were raising foods, and Europe and the Orient, worn and old and privilege-ridden, were crying for food. They could make everything we wanted, and far cheaper. They were eager to exchange. If we were to do our own manufacturing we were obliged to devise a scheme which would make the wages of operatives approximately equal to those which could be earned in our natural occupations. Thus protection was not adopted for the sake of producing generous wages for labor. It was adopted because the rewards to labor in the new country were already generous and promised to be more so.

There is another equally important point to remember, and that is that it was expressly understood that the duty was never to be prohibitive. It was to be one that would permit the man at home to compete with the man from abroad; no more. Sensible people have always agreed that we would injure ourselves if we allowed prohibitive duties, since they would cut us off from the stimulus of competition and also from models.

The old countries had been for centuries making the goods we wanted. They knew how to do it. We needed constantly before us in our markets the educational effect of their work.

There were few, if any, at the start to deny that this taxing of ourselves to establish industries was dangerous business, undemocratic, of course-probably unconstitutional and an obvious bait to the greedy; but they comforted themselves with the gains which they believed would speedily result. The list was tempting:

1. We were to build up industries which would supply our own needs.

2. The laborers attracted into these industries were to make a larger home market.

3. We were soon to out-rival the foreigner in cost of production, giving the people in return for the tax they had borne cheaper goods than ever the Old World could give.

4. We were to outstrip the Old World in quality and variety-another reward for taxation patiently borne.

5. We were to over-produce and with our surplus enter the markets of the world.

Nobody pretended to deny that if it was found on fair experiment that these results were impossible in a particular industry the protection must be withdrawn. Otherwise it amounted to supporting an industry at public expense an unbusinesslike, unfair, and certainly undemocratic performance.

But what has happened when the formula has not worked? Take the failure after decades of costly experiments to grow all the wool we use, to make woolens of as high a quality and at a price equal to those of the English. Fully sixty per cent. of the raw wool used in the United States is brought from other lands, and a tax of 11 or 12 cents is collected on every pound of it. Our high grade woolens cost on an average twice what they do in Europe. The fact is, the protective dogma has not, and probably never can, make good in wools and woolens. It is one of those cases where we can use land, time, labor, and money to better advantage. The doctrine of protection as well as common humanity and common sense orders the gradual but steady wiping out of all duties on everything necessary to the health and comfort of the people, unless in a reasonable time these duties can supply us better and cheaper goods than we can buy in the world market. That time was passed at least twenty years ago in wool, but Schedule K still stands. It is supported by an interpretation of the formula of protection, which, as one picks it out to-day, from the explanations and practices of the wool growers and wool manufacturers, is only a battered wreck of its old self. It ignores utterly the time limit, the "reasonable" period in which an industry was to make good. It ignores the condition that the duty should not destroy fair competition. Moreover, it stretches the function of the duty from that of temporarily protecting the cost of production to one of permanently insuring profits. The chief appeal of those who employ this distorted notion is not to reason at all, but to sympathy-sympathy for the American working-man. Call their attention to the inequalities of the duties on raw wool, and they will tell you of the difference in the labor cost of dress goods here and in England. Tell them the quality of our goods

land; we were raising foods, and Europe and the Orient, worn and old and privilege-ridden, were crying for food. They could make everything we wanted, and far cheaper. They were eager to exchange. If we were to do our own manufacturing we were obliged to devise a scheme which would make the wages of operatives approximately equal to those which could be earned in our natural occupations. Thus protection was not adopted for the sake of producing generous wages for labor. It was adopted because the rewards to labor in the new country were already generous and promised to be more so.

There is another equally important point to remember, and that is that it was expressly understood that the duty was never to be prohibitive. It was to be one that would permit the man at home to compete with the man from abroad; no more. Sensible people have always agreed that we would injure ourselves if we allowed prohibitive duties, since they would cut us off from the stimulus of competition and also from models.

The old countries had been for centuries making the goods we wanted. They knew how to do it. We needed constantly before us in our markets the educational effect of their work.

There were few, if any, at the start to deny that this taxing of ourselves to establish industries was dangerous business, undemocratic, of course-probably unconstitutional and an obvious bait to the greedy; but they comforted themselves with the gains which they believed would speedily result. The list was tempting:

1. We were to build up industries which would supply our own needs.

2. The laborers attracted into these industries were to make a larger home market.

3. We were soon to out-rival the foreigner in cost of production, giving the people in return for the tax they had borne cheaper goods than ever the Old World could give.

4. We were to outstrip the Old World in quality and variety-another reward for taxation patiently borne.

5. We were to over-produce and with our surplus enter the markets of the world.

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