clared purpose. If the protection policy is to be the continuing policy of the Government it will be and ought to be intrusted to its friend, the Republican party. THE OLD, OLD STORY. Every argument in support of the protective policy is based on the assumption that any considerable tariff modification, especially a modification to the revenue basis, will destroy manufacturing industries, compel the abandonment of shops and mills and force those now engaged in them to other employments. This is an old, old story. It was told of manufacturing industries in their infancy, it will be told when protection brings them to decay. Eight years ago I introduced the first bill for free quinine and providing for untaxed alcohol for use in making it. At once it was insisted that quinine making would become a lost art among us if such a bill should pass into a law, and it did not then pass. Later on, when the story of free quinine got among the people, another placed the bill before the House, omitting the free alcohol provision, and the bill became a law, protectionists themselves feeling obliged to vote for it. The great Philadelphia house did not go into decline, but continued its business of quinine making successfully as the second largest quinine establishment in the world. So every legitimate industry would go on with a revenue tariff. DIFFERENCE IN WAGES. It is insisted that wages are so much higher here than in the countries seeking our markets that revenue duties will not equalize the difference in the cost of production. Conceding the truth of what is not true, that the foreign rival must pay for the privilege of selling in our markets a sum equal to the difference in wages to enable the home producer to sell with reasonable profit, let us see if revenue rates will compensate for that difference. The census value of manu factures for 1880 was $5,369,579,191. The wages paid in making them were $947,953,795. The difference in cost of goods is said to be the difference in the cost of wages. But suppose the difference between the cost here and the cost abroad amounts to all the wages paid there then these manufactures would cost abroad $4,421,625,396. Suppose the average rate of duty which the bill before the House leaves at thirty-three per cent. were reduced to twenty-two per cent. and at that rate this $4,421,625,396 in value of goods was imported, it would cost the importer, at that rate of twenty-two per cent., $972,757,587, which not only makes. up for the difference in wages, but exceeds all the wages paid for making all the goods. If those who claim especial friendship for manufacturing industries will insist on their going into decay and then dying some other apology must be found for their taking off than the removal of unnecessary taxes. CHAPTER XXXIII. BUSINESS DEPRESSION AND REVENUE REFORM. A LETTER ADDRESSED BY ABRAM S. HEWITT TO THE NEW YORK, December 26, 1883. EAR SIR: I am in receipt of your letter in which you DEA say: "The Argus is now engaged in an inquiry into the causes and effect of the present depression of the iron industry. It is especially desired to be known what relation this state of thing bears to existing tariff conditions." You ask my opinion in reference to these points. I answer that the proximate cause of the present depres sion of the iron industry is to be found in the fact that the capacity for producing iron is in excess of its actual consumption, not only in this country, but in those foreign countries which are large producers of iron and steel. When the supply exceeds the demand prices fall. Establishments which cannot produce at the current prices without loss are compelled to suspend operations, and thus comes the actual depression to which you refer. The ultimate causes of such a state of things are unusually manifold; sometimes they are too obscure to be discovered with certainty. For example: The influence of abundant harvests, or of a failure of crops, upon the general condition of industry is unquestioned. Yet these very causes may produce prosperity in some branches of business while they produce depression in others. So in regard to the influence of tariff legislation. If duties are suddenly raised at a time when there is a demand for the foreign product, prices will go up and the iron business will be prosperous. If, on the other hand, duties are reduced, so as to admit of a larger supply of the foreign product, the domestic business will be, for the time being, unfavorably affected, and depression will result. These, however, are only immediate and temporary effects. As a matter of fact, prior to 1878, under the highest tariff ever known in this county, we had a long period of depression in the iron business. But about that time railway enterprises were undertaken on a large scale, producing a sudden demand for more iron and steel than the world was prepared to supply. Prices advanced all over the world, and to these prices was added the very high rate of duty then prevailing upon foreign iron brought into this country. The profits of the domestic business became excessive, and the owners of existing works proceeded to enlarge their capacity to the utmost, in order to gather this harvest of great profits, while new capital was attracted into a field in which the returns were known to be abnormally large. The business being thus overdone, a glut of iron resulted, and the reaction has brought about a state of things even worse than that which existed prior to 1878. The evil from which we now suffer is, therefore, largely due to the fact that the war tariff imposed higher duties than were needed for protection, thus giving excessive profits to the manufacturers in a period when the profits would have been large enough without such high protective duties. We are suffering from unnatural stimulation, which aggravated the excitement when the public interest required that it should be allayed, and now aggravates the depression by the excessive capacity for production which it engendered. How long this depression will continue no man can predict. But inasmuch as eras of prosperity and depression succeed each other in cycles, it is certain that sooner or later we shall come again to the period when the demand for iron will exceed the supply. Unless our revenue legislation be meanwhile reformed, we shall then have a repetition of the experience through which we passed since 1878, an experience which shows that excessive profits are, in reality, of no real benefit either to the manufacturers, except in rare instances, or to the country at large, while the evils resulting from them are serious. They are especially injurious to the workingmen of the country, who are the chief sufferers when the inevitable re action to unnatural expansion narrows the field of employ ment for labor. The lesson to be derived from this experience is that the duties on all kinds of iron should never exceed the lowest possible point which, in time of depression, will protect the domestic market from the flood of foreign iron which otherwise might be poured into its lap. Such rates of duty, provided they are specific, will on the average yield the largest. amount of revenue, because when the price rises and the producer no longer needs protection, the consumer, who does. need protection, can then supply his wants at a fair price in the foreign market without paying an increased duty, if he cannot get equally fair terms at home. Moreover, the experience of all commercial nations has shown that moderate specific duties afford the only safeguard against frauds in the revenue, as well from smuggling as from undervaluation in the invoices. The blind adherence to ad valorem duties in our existing tariff has only served to throw the importing trade into the hands of foreigners and to drive our reputable American houses from this business. The reduction of extra-protective duties to a reasonable standard of specific duties is therefore the only practicable means of avoiding an unhealthy expansion of business when |