Since low wages are not a cause of low prices in the country itself, so neither do they cause it to offer its commodities in foreign markets at a lower price. It is quite true that, if the cost of labor is lower in America than in England, America could sell her cottons to Cuba at a lower price than England, and still gain as high a profit as the English manufacturer. But it is not with the profit of the English manufacturer that the American cotton-spinner will make his comparison; it is with the profits of other American capitalists. These enjoy, in common with himself, the benefit of a low cost of labor, and have accordingly a high rate of profit. This high profit the cotton-spinner must also have: he will not content himself with the English profit. It is true he may go on for a time at that lower rate, rather than change his employment; and a trade may be carried on, sometimes for a long period, at a much lower profit than that for which it would have been originally engaged in. Countries which have a low cost of labor and high profits do not for that reason undersell others, but they do oppose a [pg 463] more obstinate resistance to being undersold, because the producers can often submit to a diminution of profit without being unable to live, and even to thrive, by their business. But this is all which their advantage does for them; and in this resistance they will not long persevere when a change of times which may give them equal profits with the rest of their countrymen has become manifestly hopeless.
§ 5. Low profits as affecting the carrying Trade.
It is worth while also to notice a third class of small, but in this case mostly independent communities, which have supported and enriched themselves almost without any productions of their own (except ships and marine equipments), by a mere carrying-trade, and commerce of entrepot; by buying the produce of one country, to sell it at a profit in another. Such were Venice and the Hanse Towns.
When the Venetians became the agents of the general commerce of Southern Europe, they had scarcely any competitors: the thing would not have been done at all without them, and there was really no limit to their profits except the limit to what the ignorant feudal nobility could and would give for the unknown luxuries then first presented to their sight. At a later period competition arose, and the profit of this operation, like that of others, became amenable to natural laws. The carrying-trade was taken up by Holland, a country with productions of its own and a large accumulated capital. The other nations of Europe also had now capital to spare, and were capable of conducting their foreign trade for themselves: but Holland, having, from the variety of circumstances, a lower rate of profit at home, could afford to carry for other countries at a smaller advance on the original cost of the goods than would have been required by their own capitalists; and Holland, therefore, engrossed the greatest part of the carrying-trade of all those countries which did not keep it to themselves by navigation laws,[292] constructed, like those of England, for the express purpose.
In the United States, early in the century, a retaliatory policy against England gave us a body of navigation laws copied after the mediæval statutes of England and the Continent, which still remain on the statute-book. They do not permit an American to buy a vessel abroad and sail it under our flag without paying enormous duties; a provision which is intended to foster ship-building in the United States. Even with this legislation, ships, as a fact, are not built here for the foreign trade; and our ship-builders practically supply the coasting-trade only (which is not open to foreigners). The ability to buy ships anywhere, and enter them to registry under our flag free of duty, is what is meant by the demand for “free ships.” This, however, has to do with ship-building. But ship-owning or ship-sailing, is quite distinct from it. The ability to get as great a return from capital and labor invested in a ship as from other occupations open to Americans is another thing. Even if we had “free ships,” the higher returns in other industries in our country, particularly as regards profits, might cause capitalists naturally to neglect a less for a more productive business. In 1884 Congress has very properly taken away many vexatious restrictions upon ships, which diminished the returns from ship-sailing, and it remains to be seen whether we can thereby regain any of our foreign carrying-trade. At present we have a very small tonnage even in that part of the shipping engaged in carrying our own goods.