The Americans

by Hugo Münsterberg

But the masses could hardly be stirred up to such a powerful agitation merely on the basis of the specious arguments spread about by ignorant fanatics, or even with the substantial support of the indebted farmer. In the middle nineties the literature of the silver question swelled enormously. A mere appeal to the passions of those who hated capital would not have been enough, and even the argument that the amount of money in a country alone regulates prices could have been refuted once for all. A financial and an intellectual impetus were both necessary to the agitation, and both were to be had. Distinguished political economists saw clearly certain unfairnesses and evils in a simple gold standard, and urged many an argument for bimetallism which the masses did not wholly follow, but which provided material for general discussion. And financial aid for the silver side flowed freely from the pockets of those who owned silver mines. Of course, there was no doubt that these mine-owners would be tremendously prospered by any radical legislation for silver. In the days of the Bland Bill even the poorest silver mines were in active operation, whereas now everything was quiet. The discussions which ostensibly urged the right of the poor man against the rich said nothing at all of the deep schemes of the silver-mine owners. These men did not urge their claims openly, but they paid their money and played the game shrewdly.

We have already fully compared the political traits of the two parties; and it will be understood at once that the contest for silver, as a movement for the rights of the poor man against those of the capitalist, would have to be officially waged by the Democratic party, while the Republican party would, of course, take the other side. The nation fought out the great battle in two heated Presidential campaigns; and in 1896 as well as in 1900, the contest was decided in favour of the gold currency. The currency legislation of the Republican Congresses has held to a conservative course. In March, of 1900, the treasury was instructed, on demand, to redeem all United States notes in gold, so that all the money in circulation came to have absolutely the same value. The old silver certificates, of which to-day $450,000,000 are in circulation, can at any time be exchanged for gold coin, and the Secretary of the Treasury was entirely right in showing in his last annual report that it was this wise provision alone which obviated a panic at the time when stock market quotations dropped so suddenly in the year 1903. Thus the finances of the country are definitely on a gold basis.

But, as we have said, we are not interested in the material aspects of the currency situation, and still less shall we undertake a profound discussion of bimetallism, as scientific circles are to-day considering it. The significance of a limited double standard, especially in view of the commerce with the East, and of the effect it will have in quieting the international struggle to get the yellow metal, is much discussed by thoughtful persons. The United States have sent a special commission to visit other countries in order to persuade them that some international agreement as to the monetary recognition of silver is desirable.

All this does not interest us. We care for the silver question only as a social movement. No other problem has so profoundly moved the nation; even the questions of expansion and imperialism have so far aroused less general interest. It is only too likely that if hard times return once more, the old craze will be revived in one form or another. The silver intoxication is not over to-day, and the western part of the country is merely for the moment too busy bringing its tremendous crops to harvest, and carrying its gold back home, to think of anything else.

The Tariff Question

The silver question, which was of such great significance yesterday, was very complicated, and only very few who discussed it knew all the difficulties which it involved. This is not true of the tariff question, which may at any time become the main political issue. As the problem of protective tariff is generally discussed, it involves only the simplest ideas.

The dispute has come from a conflict of principle and motive, but not from any difference of opinion as to the effect of protective measures. Here and there it has been maintained, as it has in other countries, that the foreigner pays the tariff; and this argument has, indeed, occasioned keen and complicated discussions. But, for the most part, no academic questions are involved, rather conditions merely which are obvious to all, but toward which people feel very differently, according to their occupation, geographical position, and political convictions. The struggle is not to be conceived as one between protective tariff and free trade, but rather as between more or less protective tariff—since, in spite of variations, the United States have, from the very outset, enacted a tariff greater than the needs of the public treasury, with the idea of protecting domestic labour from foreign competition.

Indeed, it can be said that the policy of protection belongs even to the prehistory of the United States, and that it has contributed measurably to building up the Union. While America was an English colony, England took care to suppress American industries; agriculture and trade were to constitute the business of the colonists. The War for Independence altered the situation, and native industries began to develop, and they had made a brave start in many states before the war was ended. But as soon as the ties with England had been broken, the separate states manifested diverse interests, and interfered in their trade with one another by enacting customs regulations. It looked as if a tariff war on American soil would be the first fruits of freedom from the common oppressor. There was no central power to represent common interests, to fix uniform revenues for the general good, and uniform protection for the industry of the country. And when one state after another was persuaded to give up its individual rights to the Federation, one of the main considerations was the annulment of such interstate customs, which were hindering economic development, and the establishment of a uniform protection for industry. The tariff law of 1789 contained, first of all, such provisions as ensured the necessary public revenue, tariff on goods in whose manufacture the Americans did not compete; and then other tariffs which were meant to protect American industries.

So, at the outset, the principle of protective tariff was made an official policy by the United States; and since, through the highly diversified history of more than eleven decades, the nation has still held instinctively to this policy, we can hardly doubt that the external and internal conditions under which the country has stood have been favourable to such a policy. The tremendous natural resources, especially of iron, copper, lumber, fur, cotton, wool, and other raw materials, and the inexhaustible supply of energy in the coal-fields, oil-wells, and water-falls, have afforded the material conditions without which an industrial independence would have been impossible. The optimistic American has found himself in this land of plenty with his energy, his inventive genius, and his spirit of self-determination. It was predestined that the nation should not only till the fields, produce raw materials, and engage in trade, but that it should set stoutly to work to develop its own industries. Therefore, it seemed natural to pass laws to help these along, although the non-industrial portions of the country, and all classes which were not engaged in industry, were for a time inconvenienced by higher prices.

Once launched, the country drifted further and further in the direction of protective duties. In 1804 a tariff was enacted on iron and on glassware, with unquestionably protective intent. It is true that, in general, the principal increases in the beginning of the century were planned to accelerate the national income. The War of 1812 especially caused all tariffs to be doubled. But this war stirred up patriotism and a general belief in the abilities of the nation. Native industries were now supported by patriotic enthusiasm, so that in 1816 the duties on cotton and woollen goods and on manufactured iron were increased for the sake of protection. And the movement went on. New tariff clauses were enacted, and new friends won over, often in their own selfish interests, until the early thirties. The reaction started in the South, which profited least from the high tariff. Compromises were introduced, and many of the heaviest duties were taken off. By the early forties, when the movement lapsed, duties had been reduced by about 20 per cent.