1861 to 1873 the Vermonters paid their share of a national, state, and local taxation which amounted to about $850,000,000 a year, or $21.25 per capita for 40,000,000 people. As the head of a family at the average supports seven persons, this amounted for such an one to $150 a year. The Canadians, during the same period, were part of a nation of 3,692,461 inhabitants, who paid in taxes £3,534,760 per year, or about $4.50 per capita, or for a head of a family of seven persons about $31. For twenty years, the Vermonters were paying about fourteen per cent. of their earnings in taxes, while the Canadians were paying 3.1 per cent. Hence a tax of eleven per cent. on the proceeds of any sales, made by Canadians in this country, would have to be laid, to neutralize the lower rate of taxation prevailing for so long a period in Canada. 203. The Profit Argument : Protection Profits a Nation or Nations Would Not Protect. - Prof. Perry makes a supposed argument for free trade because trade is profitable to the individual, which applies equally in favor of protection, provided it be true, as all protectionists believe, that protection is profitable to the aggregate of individuals constituting the nation. The two parallel arguments would run thus : PERRY FOR FREE TRADE. Men do not engage in foreign trade for fun. They engage in it for the sake of the mutual gain desirable by both parties. They desist from it as soon as that mutual gain disappears. And there is no mutual gain in any series of exchanges unless each party has a superior power in producing that which is rendered compared with his power in producing that which is received. We will suppose a trade between England and France in cottons and silks. England sending cottons to France and France sending silks in return. When and how long will this be a profitabie trade Y THE SAME LOGIC TRANSFERRED They lay protective duties for the sake of the increased general prosperity it imparts to all their people. They desist from it as soon as there are no longer any industries whose expansion by its means would promote the general prosperity. And there is no national gain in any protective tariff unless the state levying it has such natural resources for producing the article it professes to protect that the entire cost of bringing it into a state of profitable production will be far exceeded by the profits of its production. We will suppose a rivalry between England and America in the manufacture of clothing. England desiring the profits of making American clothing, and Americans preferring to make these profits themselves, by the aid of a protective tariff. When and how can these profits be profitably transferred to American producers ! PROTECTION PROFITS. PERRY FOR FREE TRADE. Then when efforts bestowed in France upon silks will procure through exchange with England more of cottons than the same amount of effort bestowed in France upon cottons will produce of cottons directly. And then when efforts bestowed upon cottons in England will procure more of silks than the same amount of efforts bestowed in England upon silks will produce of silks directly. 577 THE SAME LOGIC TRANSFERRED Then when American producers of clothing, through the stimulus imparted to their efforts by the assured control of at least the American market, have so brought the artificial facilities of production, such as dimensions, division of labor, capital, machinery, skill, aud credit, alongside of the natural resources which they had at the start, that they are superior in both, for when this happens they will excel their competitors in quality of goods, dispatch in turning them out, credits in selling them, and cheapness. And then when efforts bestowed upon transferring the place of production from England to America through protection result in a more abundant and cheaper production per capita in America than the same amount of effort bestowed on the expansion of the production of clothing in England would have produced of abundance and cheapness in America. It is not true in fact that the exchange of commodities is necessarily profitable to either party, any more than it is true that production or legislation is necessarily profitable. People may make trades in which both parties lose, or in which one loses and the other gains, or in which they both gain. Legislation itself is an exchange, in one form. It is the exchange, or trade, of the old law for the new one. Hence, to assert that all exchanges are profitable, would include that all laws are profitable, and hence that protective laws are profitable. We use these illustrations, merely, to point out that plausible phrases must not be mistaken for substantial proofs. Prof. Perry seems honestly to believe that when he has once established that international traders trade at a mutual profit, and not at a loss to each other, the doom of protection is sealed. He elaborates, with painful assiduity, his demonstration that traders trade at a profit, ergo no taxes should be collected on imported goods! It is difficult to doubt that such financiers and publicists as Colbert, Napoleon, Bismarck, Beaconsfield, Von Beust, Thiers, Mazzini, Alexander Hamilton, and even Clay, Webster, Lincoln, and Dr. Henry C. Carey himself, are competent to suspect that traders often trade at a profit. If so simple a clue as this could solve the question, the tariff question would come in just after mumble-peg, or marbles. All industries are unprofitable at the beginning, in proportion to their complexity and ultimate value. When the first glass bottle was made in Pittsburg, its maker, O'Hara, charged its cost on his books at $30,000. But the second glass bottle cost but a cent. Now, if O'Hara had known that the science of society consists in profitable swapping, instead of introducing a new industry, he could have learned from Prof. Perry where he could get his first glass bottle cheaper, by $29,999.99, than by making it. There was a time when the French could not make silks in competition with Genoa. France would never have begun to make silks, had she not removed by her tariff the disadvantage and loss her people would incur, until their works acquired the dimensions to rival the Italians. The more complicated the conditions of success in production, the greater the loss by the first swap of the old industry for the new. A farmer who sends his boy to school loses the value of his labor for the time, and submits to a tax for his tuition, in the hope that he may be a better and more rapid and skillful producer, through the knowledge he will there acquire. All shrewd business is a wise sinking of present advantage for a far greater future gain. Why may not a city, state, nation, take this course as well as an individual? Prof. Perry might have explained to the New Yorkers, that the first glass of pure water they could get from the Croton River would cost them $10,000,000, while they could get it elsewhere at two cents a glass. But they did not hesitate to tax themselves heavily, to bring water by aqueducts, to build docks for ships, to pave and light the streets, to lay out parks for the amusement of the people -in short, to do any and every thing, which could attract residents to New York, and make business thrive. According to Perry's barren doctrine, they should have confined the duties of government to simply keeping the peace. But why keep the peace, thus discriminating against those who would break it? And how can peace exist when work can not be had? Suppose that at present the country could raise the wheat, cotton, and petroleum to pay for 500,000 tons of foreign bar iron per year, with less labor than they could produce the bar iron. That forms no reason why we should not strive to place ourselves in a position to make the iron next year cheaper than we can import it. As we have already quoted, the same amount of effort or labor which, in England will make one ton of pig iron, will here make two tons. If half the iron-workers in England, therefore, could be set at work here, they would produce as much as the whole now do. As their places would be supplied from the surplus and unemployed English paupers, the tendency would be WHEN TAKING MORE LEAVES MORE. 579 to add to our product the whole product of England, and leave her product unimpaired. Three-fourths of the cost of iron consists of agricultural products, raw or manufactured. American iron represents our own crops consumed by laborers in making it. English iron represents mainly European crops. Hence the increase of our bar iron manufacture by 500,000 tons, worth, say, $35,000,000, would not only furnish American farmers with a market for the crops which pay for this iron, but also for the crops consumed in making the iron, which are as much more. In other words, if we buy $35,000,000 of bar iron from England, we export products of the farm and plantation, and so find a market for $35,000,000 worth of crops. But if we buy the same amount of American iron we find a market, first for the $35,000,000 required to pay for the iron, and, in addition, for $31,000,000, or thereabouts, of American crops consumed in making the iron. 204. Cost of Labor in America and Europe.-In all research we are certain to arrive at false conclusions, if we adopt our theory first and insist that facts shall agree with it. In the following statement of the relative dearness of labor in this country compared with its cost in Europe, Prof. Perry is misled by a too trustful confidence in, and misapplication of, one of Ricardo's half-truths. He says (p. 422): "The cost of labor must be lower in this country than in Europe, because the rate per cent. of capital is higher. Labor and capital alone conspire in production. Profits are the leavings of the cost of labor. If, therefore, on every hundred invested the rate of profit is higher, the conclusion is unavoidable that the cost of labor is lower." This assumes that the ratio of the joint product of labor and capital, to the principal invested, and the effort made, is the same in Europe as here, whereas it is four times greater here than there. If $1,000, and 1000 days' works combined, earn four times more here than in Europe, capital would get higher interest here, without its following that labor would get lower wages. On the contrary, if capital got only a two-fold higher interest, labor might get a six-fold higher wage. Thus, if the two combined earn $10,000 here in a given period, and only $3,000 in the same period in Europe, and in Europe wages might take $1,000, and here $6,000, its leavings for capital would still be $4,000 here, against $2,000 in Europe. After paying six times as high wages, it might still pay a two-fold higher interest. No schedule of relative wages here, and in Europe, would sustain Prof. Perry's error. He plainly does not mean by "cost of labor" the cost of machine labor, or of production, but of human labor time. The four hundred thousand emigrants coming from Europe to this country every year are the best proof that wages are higher, relatively to cost of living, here than there. On the next page he says: "Our bureau of statistics gives the wages of fourteen classes of operatives in woolen mills in England, and the corresponding wages here reduced to gold. Our average is only 21.89 per cent. higher than theirs." This would seem to refute his previous position that the cost of labor is less here than in Europe. But doubtless in Prof. Perry's view the proof that American labor costs only 21.89 per cent. more than that of Europe, fully sustains his own statement that it costs less! Prof. Perry may even, so differently are we constituted, regard a statistic showing that wages are 22 per cent. higher in America than in Europe, as proof that the cost of labor is 22 per cent. lower, since capital must get more here or it would not pay such high wages, and if capital gets more-Presto-labor must get less! One could as well reverse the proposition and prove that our rates of interest are lower by assuming that our wages are higher. If capital and labor can earn in conjunction about twice as much here as in England, because of the greater general productiveness of industry, they will have twice as much product to divide, both will get twice as much-the one in wages and the other in interest. Assuming that the rates of wages in certain industries are only 21.89 per cent. higher here than in England, that would render a tariff of 21.89 per cent. on the importation of the product of that labor from England, necessary in order to place the producers of the same product here in a position to compete on equal terms with those in England. How much more shall we allow for difference in rates of interest on capital, and for our more burdensome taxation to pay off the public debt? These three causes together would be very likely to make a difference of 35 per cent., to which extent our tariff of duties on imports would be merely a compensation for difference in rates of wages and capital. In 1868-9 the following were the relative rates of wages in nineteen principal industries in the United States, and in two of the countries with which our manufacturers principally compete, both in our home and foreign markets: |