important of all, perhaps, is entirely within the control of the American people as a whole.

There can be no question that Europe must be helped through our industry and thrift. At the present time the spirit of the American people is marked by a degree of extravagance which seriously complicates the problem of helping Europe.

If Europe were completely restored our extravagance would be a blessing to her manufacturers and to her peo

ple generally. Today, however, she is far more interested in the promotion of a measure of thrift among the people of the United States which will enable them to extend to her the benefits of their savings. During the war we proved our friendship for the allied countries by making many sacrifices, even to a reduction in the amount of food we consumed. rope expects of us now that we should assist her by saving some of the money which we are now spending so extravagantly.

America has had the largest and the most varied experience of the effects of tariff legislation of any country in the world. It was not through protective legislation, but by the high protection furnished by war, that our manufacturing industries made a great stride forward during the period 1775-1783. In almost every part of the colonies, but especially in Boston, Philadelphia and Baltimore, the monotony of agriculture had given place to a variety of industry, which contributed to the welfare of all classes even in the turmoil and the waste of war. Nobody expected that this advance would be lost with the return of peace; but the wholesale importations of British goods, in most cases to the loss of the exporters, sufficed to wipe out these industries. Most of them went into the hands of the sheriff, and it was his

Eu

activities and that of the courts that drove the common people into such revolts as "Shay's Rebellion," and also hurried on the adoption of the Constitution for the "protection of American industries."

The duties of the first tariffs were very low, but were assisted by the disturbances of commerce by the Napoleonic wars. The war of 1812-15 renewed the high protection afforded by war, and many American industries forged to the front, especially those of cotton and woolen goods. Most people believed that these new gains would be permanent, especially as a higher tariff was enacted at the close of the war-higher but not high enough to check the huge exportation of manufactures from Great Britain to America, again at a loss to the exporters. Once again, as in 1783-1789, the sheriff was the busiest but not

the best beloved of American officials from 1816 to 1824, and farming became almost the only employment of the people.

THE EFFECTS OF AN ANTI-PROTEC

TIVE POLICY.

From 1824 until 1833 the country began to flourish under the protective policy; but the disappointment of the South at not getting what she thought her fair share of the new industries, and the propaganda of free trade notions from England, wrecked the fabric of protected industry. A tariff was introduced and carried through Congress which cut down most duties heavily at once, and provided for the graduation of all the rest to 20 per cent in 10 years. The cotton manufacturers of New England at first feared the ruin of that great industry, and hurried to Washington to oppose the law. But Henry Clay persuaded them that by virtue of their recent improvements in machinery they could hold their own, and they acquiesced. Before 1842 was reached their worst fears were realized. The country was in the depths of a great panic; manufactures stopped; banks broke; and the Treasury was refused a loan by the money-lenders of Europe.

General Harrison and the Whigs came into power in 1841 after the most spirited political campaign ever waged, and enacted the Tariff of 1842. The country rose to prosperity and contentment with a rapidity which converted one hardened free trader to protection - Henry C. Carey. But the propaganda of the Anti-Corn Law Party in England affected the western grain grower

and the southern cotton-grower. In 1846 the Democratic Party, although pledged to "the Tariff of 1842," proceeded to cut it down along the whole line, seriously injuring many Ameri can industries, especially that of irc and steel. And as if this was not enough, Congress in the expiring hours of the Pierce administration cut down all the duties further by 25 per cent. The panic of 1857 followed, wiping out many industries and crippling others.

As in 1833, it was expected that most would survive in spite of reduc tions; but the convert of 1842 fore saw what was coming. "It is of co use to oppose any longer, the world has gone after Free Trade," said Horace Greely. "If you will wait a little," Mr. Carey replied, "you will see the world come back again.”

That return to sanity began with the enactment of the Morrill tariff in the closing weeks of Mr. Buchanan's administration. This introduced the longest period of fairly consistent protection the country ever enjoyed: and the period of the highest national prosperity. But in 1882 the woolen men of New England at the instigation of Edward Atkinson, conceived the idea that their business would be immensely prosperous if they could get foreign wool free of duty. Sc they traded with the South for a great reduction of the duties on wool ens in return for "free wool." Within about nine months' time every woolen mill in New England was either suspended or running on hali time.

I have spoken of the era beginning in 1861 as one of "fairly consistent

exception

protection." One grave exception must be noted, the neglect of our shipping.

After the revival of our shipbuilding by the enactment of the Navigation Laws in Washington's administration our shipbuilding rose from its depths of prostration and took the foremost place in the world. By 1829 we felt able to stand any possible competition in building and sailing ships; and our government offered to remove all restrictions on shipping to any other country that would do as much for us.

Great Britain ignored the offer until the shift from sail to steam and from wood to steel, gave her especial advantages in the competition. Then she repealed the Navigation Laws of 1662, accepted our offer of 1829, and by subsidies and favors to her shipping, proceeded to drive our flag from the sea.

She found an ardent co-operator in Mr. Jefferson Davis, who used his position in the Senate to stop all subsidies to American ships. Mr. Carey predicted that within ten years no ship would be carrying our flag across the Atlantic; and this was fulfilled to the letter. And from this humiliating defeat, growing out of our over-confidence, we did not recover until the recent war, and then only after a fashion.

EUROPE ALSO SUFFERED FROM THE

ABANDONMENT OF PROTECTION. But it is not only in America that these disastrous disappointments have followed the reduction or the abandonment of protection. Most parts of Europe have had this experience, but one will suffice here. The Con

gress of Vienna in 1815-16 was a grand field for free trade propaganda from Great Britain. The superiority of that policy was pressed upon the assembled monarchs and their diplomats, with the assurance that no domestic interests of their people would suffer, and the grandest benefits would result. France turned a deaf ear to this persuasion. Her diplomats recalled with what a rapture her Treaty of 1785 with Great Britain had been hailed as bringing in a new and golden age of peace and prosperity for both countries, and what an impetus was given to revolutionary discontent by the ruin of French industries under that treaty. So she continued a protectionist country until 1860, when Napoleon III sold French prosperity for the support of Great Britain.

But Russia took the bait at Vienna and Alexander I with his passion for vague philanthropies, introduced free trade into Russia. But before a decade had passed, the Russian Government threw free trade overboard as ruinous and went back to protection.

More striking is the experience of Ireland. Under the tariff enacted by the National Parliament in 1782 Irish manufactures grew and flourished. That Parliament rejected the first approaches of the scheme for the Union because it would sacrifice those manufactures. So the Act of Union of 1801 provided for a very gradual reduction of the duties in that Irish tariff, and multitudes of Irishmen believed the native industries were strong enough to stand alone after this reprieve. By 1820 the duties. were gone, and by 1826 the manufac

Ireland

tures had gone after them. settled down to farming and famine.

All these cases show the danger there is of over-confidence as to our power to face unrestricted competition, before our manufactures reach their maturity. I will not say that none of ours have reached that point.

My friend Mr. Alba Johnson, so long and honorably known in connection with the management of the great locomotive works founded by Matthias Baldwin, has been gratifying many by an utterance favorable to a reduction of our tariff duties. He does not propose any general recourse to free trade, but he thinks the time is come when we can remove or reduce many protective duties, because the industries they affect are strong enough to stand foreign competition. Also that the removal or reduction of these duties would enable us to expand our commerce, to the great advantage of ourselves and other countries.

A firm which cut the English out of their monopoly of Japanese trade, supplied the locomotives for the Japanese war with Russia and furnished the first for the use of the new Mid

land Railroad in England itself, besides many similar achievements, may have good reason for its confidence. But I think very few lines of manufacture in America have reason for such confidence.

Mr. Johnson's tariff reduction has been welcomed with the same assurance that the ranks of the protectionists are breaking, and that radical alterations in our national policy may be expected. It is, therefore, worth while to remind all who believe in national care for industrial interests that we need to move slowly-very slowly, in making any change in our laws on the subject.

I have been asked quite often what term I would fix at whose conclusion our "infant industries" might be treated as having come of age and no longer requiring protection. When an Englishman asks me that I say that we will not ask so much as 510 years, the length of the protective period in his country (1226-1846). To anyone else I say that it requires the lapse of three generations for ordinary industries to outgrow the perils of infancy. and that with less than that we should be taking needless risks in making a change in our policy.

The existing tariff law of October 3, 1913, was enacted at a time when foreign exchanges were normal, and the rates of duty prescribed by that act were based on the conditions necessarily existing at that time. Tariff schedules of the United States, it is

well known, provide for the assess ment of ad valorem duties in many instances on merchandise imported from abroad on the basis of its open foreign market value in the country of exportation at the time of shipment to the United States; and in or

der that this assessment may be made in terms of United States money it is provided by Section 25 of the Act of August 27, 1894, as follows:

That the value of foreign coin as expressed in the money of account of the United States shall be that of the pure metal of such coin of standard value; and the values of the standard coins in circulation of the various nations of the world shall be estimated quarterly by the Director of the Mint, and be proclaimed by the Secretary of the Treasury immediately after the passage of this Act, and thereafter quarterly on the first day of January, April, July, and October each year. And the values so proclaimed shall be followed in estimating the value of all foreign merchandise exported to the United States during the quarter for which the value is proclaimed, and the date of the consular certification of any invoice shall, for the purposes of this section, be considered the date of exportation.

This estimate of the value of foreign coins contemplates a value under normal conditions based on standard coin values with exchanges at par. Consequently, under those conditions a merchant in the United States buying woolen clothing in Great Britain in 1913 paid duties at the rate of 35 per cent ad valorem under paragraph 291 of the Underwood tariff act on every dollar's worth of goods imported, the pound sterling being estimated at a value of $4.866, thus carrying a protection to home industry of 35 per cent ad valorem on the actual foreign value of the goods. With the fall in exchange, however, and the pound sterling valued at $3.80 or less, the American merchant buying woolen clothing in Great Britain at the pres

ent time would pay for the same approximately 20 per cent less in United States money, providing that there had been in the meantime no compensating advance in the foreign price of such goods.

It is of course obvious that under such conditions the ultimate cost of landing such goods in the United States would be materially decreased, thus lowering the protection carried by paragraph 291 of the tariff act on importations of clothing wholly or of chief value of wool importations. For example: Foreign purchase price per £ in

It will be observed that at the present time there is a two-fold reduction in the ultimate cost of landing the goods in the United States; the first growing out of a drop in the rate of exchange and the second due to the assessment of duties on the decreased value of the foreign goods expressed in terms of the money of the United States. It has been pointed out that under Section 25 of the Act of August 27, 1894, above cited, duties are assessed on the open foreign market value of imported merchandise at its exchange value at par. It is provided, however, by Section 2903 of

the Revised Statute that:

The President may cause to be established fit and proper regulations