which constitutes the earmark of an ordinary protective' duty. The Hawaiian planters are now sheltered by the mantle of protection which we draw around all our sugar producers. So far as they can produce sugar as cheaply as their foreign competitors, the rise in price due to the duty (now roughly 14 cents a pound) is a clear extra profit. Such is the case with probably the larger part of the Hawaiian product; the American consumer here pays a plain bonus. The old-fashioned free-trader would say it was a case of robbing Peter to pay Paul. So far as the Hawaiian planter pushes his land to extra yield by expensive cultivation, or turns to land where the yield is by nature light, he may make little or no extra profit. Then the higher price simply enables him to carry on sugar-growing where he could not do it otherwise. The old-fashioned free-trader would say that in this case Peter was robbed in order to pay Paul for carrying on an industry that was not worth while. The only consolation this old-fashioned person would find in the situation lies in the probability that the operations have reached their term. It is said, apparently with good ground, that the sugar-growing capacity of the islands has been taxed to its limit, and that no considerable increase of output is to be expected in the future.

Still another aspect of the Hawaiian experience is instructive, — its labor problem. Cane-sugar-growing calls for hard labor in the hot fields. The lighthearted, easy-going Kanaka proved poor material for this sort of thing. Indeed, he has withered away in the contact with civilization. The number of the native Hawaiians—even if those of mixed blood be included has steadily declined for the last half-century, and they now form less than a quarter of the total population of the islands. The Chinese coolie was soon resorted to, and was brought into the islands by the thousand. He came in under a "penal labor contract." That contract doubtless was devised and administered with as much humanity as

such things permit. But, as an agent of our Department of Labor remarked in a recent official report, it had "all the advantages of slavery without its disadvantages." 3." Some experiments in bringing Portuguese from the Azores had had no appreciable results; but the contractheld Chinamen supplied the planters with the labor needed for growing their sugar. But behold! Annexation, which solved one part of the planters' problem, brought troubles of its own. The immigration of Chinese into American territory was prohibited by our laws; and the "penal" features of the old Hawaiian labor contract those which enabled the planter to hold his coolies to the work, willy-nilly, throughout the stipulated term of years were also void under American law. Therefore other laborers, hired under less rigorous agreements, had to be resorted to. The Japanese are available, — plentiful in numbers and tough workers. But they are, from the planters' point of view, too intractable. They "make trouble;" they ask for higher wages; they even strike. And they push their way farther, using Honolulu as a stepping-stone toward our Pacific coast,

a movement equally unwelcome for the community which they leave and for that which they join.

There is a new ferment in the islands among the laborers, and a new uneasiness among the planters. These latter have a strong wish to get the Chinaman again, by securing from Congress a relaxation for the islands of the prohibition against him. Our Department of Labor has proposed, on the other hand, that the immigration of real farmers be encouraged, men of European blood who will settle on plots of land of their own. Both proposals are futile. Congress would not admit the Chinaman, irrespective of any solid merit in the proposal for doing so. The American or European laborer, even if he could secure Hawaiian land, could find nothing comparable in attractiveness to what our own United States can offer. The islands

no longer have the apathy of servitude, yet their unrest is not the healthy unrest of a true democracy.

These social conditions obviously are not consonant with the ideals and traditions of democracy. A great mongrel mass of sugar-plantation laborers, -Chinese, Japanese, the wasting Hawaiians, a very few Portuguese; above them an oligarchy of rich planters, with their bankers and shipping agents and other associates, and a few hangers-on; all dependent on a single industry puffed to unnatural dimensions by legislative favor,

this is not a congenial addition to the American Commonwealths. Nor does there appear any prospect of improvement. The situation is not unlike that of the South before the war. It is much less promising than that of the present South, grave as this may be; for the present South has industries inherently strong, and in its race problem finds among the negroes at least hope and ambition to become worthy citizens of a democracy.

Most people think of an addition to a nation's dominions as they do of an addition to an individual's possessions. John Smith is more prosperous if he acquires more real estate; and the United States are supposed to be more prosperous if they acquire more territory. Hence we are willing to pay twenty millions for the Philippines, and think we do well to get Hawaii of its own offering and Porto Rico by right of conquest. In truth, they are doubtful boons. If indeed new acquisitions serve to open, for settlement and utilization by a vigorous race, territory that otherwise would have lain fallow, there is a real gain. Such was the result of the Louisiana purchase, and of the acquisition of Texas and of the Pacific coast. These expansions, too, made possible a great extension of the geographical division of labor. How much has the beneficent influence of unfettered trade between the different parts of our nation been increased by the vast area over which it is in effect! And even if there be no possibility of true colonization, the

acquisition of tropical or semi-tropical countries may bring a gain if it promotes the free exchange of products under conditions of real advantage. But no such gains have come from our newly acquired dependencies. I see little in the whole Hawaiian episode but one long course of error. The American consumer has paid for thirty years (barring the brief respite while the McKinley Tariff Act was in force) a tidy sum annually to the Hawaiian planters. In recent times this tribute has amounted to twelve or fifteen millions of dollars a year. For this we have nothing of any real value to show, - unless it be that we have a steppingstone to the Philippines, another dependency hardly less unprofitable.

I have referred to Porto Rico. The situation is obviously the same so far as that island's sugar is concerned. That, too, comes in free of duty, and that, too, sells at a higher price, just as if duty were imposed on it. The American consumer pays virtually a bounty to the Porto Rican planter also. This bounty has been in operation but a few years; yet its influence will be seen in the rapid growth of our imports of sugar from the island. In 1900 they were but seventy-two millions of pounds; in 1906 they were already four hundred and ten millions. Here, as in Hawaii, it is not the laborer delving in the canefields, but the capitalist planter, who chiefly pockets the bonus. And that capitalist, as in Hawaii, is usually one of our own money-makers. "Interests closely associated with the American Sugar Refining Company” such is the sort of polite phrase the financial journals use have invested in Porto Rico sugar plantations, and profit handsomely thereby.

Turn now to the Philippines. Under the legislation at present in effect, imports from the Philippines are admitted with a reduction in duties of twenty-five per cent; that is, they pay three-quarters of the ordinary rate of duty. They get a bonus, in other words, of one-quarter of the duty, or about of a cent a pound. This

is modest as compared with our largess to the Hawaiian and Porto Rican planters; but it might be a neat source of profit. As yet, nevertheless, it has had no appreciable effect on our imports of sugar from the Philippines. This may be due to the unsettled industrial conditions which

unhappily persist in so many parts of the archipelago. It is probably due still more to the special adaptation of the islands for growing their hemp, which seems to offer possibilities greater than those of sugar with only a moderate bounty.

Not a few persons to whom the Philippines present an unwelcome problem nevertheless maintain that, so long as we have them on our hands, we should deal with them generously. Their people are knocking at our doors: let us throw the doors wide open! Secretary Taft has pleaded steadily for complete free trade with this dependency. The hold which this proposal has obtained among both the opponents and the advocates of colonial expansion is probably due in large part to the notion, so long dinned into our ears by the protectionists, that an import duty is a tax, not on the domestic consumer, but on the foreign producer. So considered, the duties on Philippine products are reprehended as unfair now that the Philippines are part of ourselves. Rightly considered, however, the question is not whether we should tax them. The question is whether we should tax ourselves; and whether, in remitting duties, we really free ourselves, or maintain the burdens of taxation in such a way as to give the Philippines special favors. So far as the imports which they would send us free of duty are of the sort which they can supply in quantity sufficient for all our needs, remission of duty means complete remission. This brings benefit to the American consumer as well as to the Philippine producers. Such is the situation as to Manila hemp, which, as it happens, already comes in free. But why admit Philippine sugar free-retaining our general sugar duty — and so extend

the policy which has brought such ill results in Hawaii?

There are those, doubtless, to whom the altruistic side of a Philippine policy appeals, and who might be willing to pay a bonus on their sugar and other imports as one step toward the fulfillment of our moral obligation to do our best by the people of the islands. This is the only side of the case that appeals to me. I can see no economical or political or social gain from our ownership of the archipelago. But having forcibly secured possession, we are bound to do all that in reason we can toward uplifting the inhabitants. Good government, good education, good roads, a good monetary system, and, not least, examples of good character and morals, these we can and should provide. And, unwelcome and unprofitable as the dependency may be, it is to be said that our administration of its affairs has been on the whole wise and helpful, and has supplied these things; a balm to our conscience for which we are indebted above all to Secretary Taft. But to give the islands favors by special privileges to their products, to put their industries on an artificial basis, — this is not only costly for us, but in the long run bad for them. It is much better that they should develop industries that can stand on their own bottom. Hence indiscriminate free admission of all Philippine imports, irrespective of their relation to competing imports, and regardless of their effect on our own consumers, is not sound policy.

Finally, our relations with Cuba deserve consideration. After what has been said of the other regions, this one can be disposed of briefly. By the reciprocity treaty concluded with Cuba in 1903, we admit Cuban sugar with a reduction in duty of 20 per cent. It pays four-fifths of the full duty. It is thus put in nearly the same favored position as Philippine sugar. But, unlike the Philippines, Cuba, as has already been noted, sends us great and growing quantities. Its climate, especially on the southern side, its soil, its

$101,000,000

- cannot be stated with precision. Our duty on sugar is a very complex one, graded according to color and saccharine content. It ranges from less than a cent a pound on the cheapest and dirtiest sugar to nearly two cents a pound on sugar completely refined. The grade most largely imported-comprising, in fact, two-thirds of the imports is chargeable at 1.65 cents per pound. have tried to take a fair average, and have figured out a charge on the consumer such as is stated in the account. It is not perfectly accurate, but it is near enough.

I

And similar allowances need to be made on the other side of the account. The amount received by the sugar producers depends upon the higher price of their sugar due to the duty; which again depends on the quality of what they supply. The Cuban and Hawaiian planters send us raw sugar of excellent quality, and get the full benefit of the 1.65 cent rate of duty. Philippine sugar is much dirtier, is subject to lower duty, and is less raised in price. There is probably some allowance to be made also for the fact that, at certain seasons of the year, the Cuban crop dominates the market, and that for a while this is not raised in price by the full duty. Something also ought to be reckoned on both sides for the extra duty on refined sugar; though this, effective as it may be in swelling the profit of the sugar trust, is a very modest item compared with the burden from the duties on raw sugar.

But all these corrections would not affect the significance and the essential truthfulness of the account. The broad unquestionable fact is that our sugar duties cause the consumers to pay in the way of taxes one hundred millions of dollars, and that only one half of this goes into the Treasury as revenue, while the other half goes to the sugar producers. We hand over to the sugar planters and producers in Hawaii, Porto Rico, Louisiana and the Western States, Cuba, the Philippines, a round sum of fifty millions

a year. All of this is not extra profit to them. A good part, to be sure, is really extra profit; it is so for those among them who could produce the sugar with sufficient profit even without the bonus. For some of the producers it serves as inducement to enter on an industry which they could not maintain except for the bonus. Whether it is worth while to give the inducement in such a case raises the essential question at issue between protection and free trade.

On mere fiscal grounds there is something to be said in favor of a duty on sugar, not at the present comparatively high rate but at perhaps one-half that rate. But on mere fiscal grounds the tax should be collected on all sugar. Then the sums paid by the consumers would bring just so much revenue into the public treasury. This, in my judgment, would be the statesmanlike policy, to be adopted if our hands were free. But our political and international relations being what they are, it seems not within the bounds of the practicable. Next best, and almost as good, would be the cutting of the Gordian knot by admitting all sugar free of duty once for all. No doubt in view of the large capital investment, especially among the Louisiana factories, some mercy should be shown to the strictly domestic producers, perhaps by a bounty, such as the McKinley Act gave, for a term of years long enough to enable them to accommodate themselves to the new régime. Even a permanent bounty to them would be much cheaper for the community than the present arrangement, and would have some advantages as a clarifying lesson on the true meaning of protection.

I am no devotee of natural laws in economics. Those who appeal in our day to natural law, or natural liberty, are apt to have in mind freedom from wholesome regulation, or license to prey on some one else. Nor am I unwilling to admit that public aid, by protective duties or otherwise, sometimes has good results. Inquiry in each particular case is to