FRANK H. HURD,
OF OHIO. (BORN 1841, DIED 1896.)
A TARIFF FOR REVENUE ONLY; HOUSE OF REPRESENTATIVES, FEBRUARY 18, 1881. MR. CHAIRMAN:
At the very threshold it is proper to define the terms I shall use and state the exact propositions I purpose to maintain. A tariff is a tax upon imported goods. Like other taxes which are levied, it should be imposed only to raise revenue for the government. It is true that incidental protection to some industries will occur when the duty is placed upon articles which may enter into competition with those of domestic manufacture. I do not propose to discuss now how this incidental protection shall be distributed. This will be a subsequent consideration when the preliminary question has been settled as to what shall be the nature of the tariff itself. The present tariff imposes duties upon nearly four thousand articles, and was levied and is defended upon the ground that American industries should be protected. Thus protection has been made the object; revenue the incident. Indeed, in many cases the duty is so high that no revenue whatever is raised for the government, and in nearly all so high that much less revenue is collected than might be realized. So true is this that, if the present tariff were changed so as to make it thereby a revenue tariff, one fifth at least could be added to the receipts of the Treasury from imports. Whenever I use the phrase free trade or free trader, I mean either a tariff for revenue only or one who advocates it.
So far as a tariff for revenue is concerned, I do not oppose it, even though it may contain some objectionable incidental protection. The necessities of the government require large revenues, and it is not proposed to interfere with a tariff so long as it is levied to produce them; but, to a tariff levied for protection in itself and for its own sake, I do object. I therefore oppose the present tariff, and the whole doctrine by which it is attempted to be justified. I make war against all its protective features, and insist that the laws which contain them shall be amended, so that out of the importations upon which the duty is levied the greatest possible revenue for the government may be obtained.
What, then, is the theory of protection? It is based upon the idea that foreign produce imported into this country will enter into competition with domestic products and undersell them in the home market, thus crippling if not destroying domestic production. To prevent this, the price of the foreign goods in the home market is increased so as to keep them out of the country altogether, or to place the foreigner, in the cost of production, upon the same footing as the American producer. This is proposed to be done by levying a duty upon the foreign importation. If it be so high that the importer cannot pay it and sell the goods at a profit, the facilities of production between this and other countries are said to be equalized, and the American producer is said to be protected. It will be seen, therefore, that protection means the increase of price. Without it the fabric has no foundation on which to rest. If the foreign goods are still imported, the importer adds the duty paid to the selling price. If he cannot import with profit, the American producer raises his price to a point always below that at which the foreign goods could be profitably brought into the country, and controls the market. In either event, there is an increase of price of the products sought to be protected. The bald proposition therefore is that American industries can and ought to be protected by increasing the prices of the products of such industries.
There are three popular opinions, industriously cultivated and strengthened by adroit advocates, upon which the whole system rests, and to which appeals are ever confidently made. These opinions are erroneous, and lead to false conclusions, and should be first considered in every discussion of this question.
The first is, that the balance of trade is in our favor when our exportations exceed our importations. Upon this theory it is argued that it cannot be unwise to put restrictions upon importations, for they say that at one and the same time you give protection to our industries and keep the balance of trade in our favor. But the slightest investigation will show that this proposition cannot be maintained. A single illustration, often repeated, but never old in this discussion, will demonstrate it. Let a ship set sail from Portland, Maine, with a cargo of staves registered at the port of departure as worth $5,000. They are carried to the West India Islands, where staves are in demand, and exchanged for sugar or molasses. The ship returns, and after duty paid the owner sells his sugar and molasses at a profit of $5,000. Here more has been imported than exported. Upon this transaction the protectionist would say that the balance of trade was against us $5,000; the free trader says that the sum represents the profit to the shipper upon his traffic, and the true balance in our favor.
Suppose that after it has set sail the vessel with its cargo had been lost. In such case five thousand dollars' worth of goods would have been exported, with no importation against it. The exportation has exceeded the importation that sum. Is not the balance of trade, according to the protection theory, to that amount in our favor? Then let the protectionist turn pirate and scuttle and sink all the vessels laden with our exports, and soon the balance of trade in our favor will be large enough to satisfy even most advocates of the American protective system. The true theory is that in commerce the overplus of the importation above the exportation represents the profit accruing to the country. This overplus, deducting the expenses, is real wealth added to the land. Push the two theories to their last position and the true one will be clearly seen. Export every thing, import nothing, though the balance of trade may be said to be overwhelmingly in our favor, there is poverty, scarcity, death. Import every thing, export nothing, we then will have in addition to our own all the wealth of the world in our possession.