To illustrate the cost of protection to the consumer, consider its operation in increasing the price of two or three of the leading articles protected. Take paper for example. The duty on that commodity is twenty per cent. ad valorem. Most of the articles which enter into its manufacture or are required in the process of making it are increased in price by protection. The result is that the price of paper to the consumer is increased nearly fifteen per cent.; that is, if the tariff were taken off paper and the articles used in its manufacture, paper would be fifteen per cent. cheaper to the buyer. The paper-mills for five years have produced nearly one hundred millions of dollars' worth of paper a year. The consumers have been compelled to pay fifteen millions a year to the manufacturer more than the paper could have been bought for without the tariff. In five years this has amounted to $75,000,000, an immense sum paid to protection. It is a tax upon books and newspapers; it is a tax upon intelligence; it is a premium upon ignorance. So heavy had the burden of this tax become that every newspaper man in the district I have the honor to represent has appealed to Congress to take the duty off. The government has derived little revenue from the paper duty. It has gone almost entirely to the manufacturer, who himself has not been benefited as anticipated, as will presently be seen. These burdens have been imposed to protect the paper manufacturer against the foreigner, in face of the confident prediction made by one of the most experienced paper men in the country, that if all protection were taken off paper and the material used in its manufacture, the manufacturer would be able to successfully compete with the foreigner in nearly every desirable market in the world.
Take blankets also for example. The tariff on coarse blankets is nearly one hundred per cent. ad valorem. They can be bought in most of the markets of the world for two dollars a pair. Yet our poor, who use the most of that grade of blankets, are compelled to pay about four dollars a pair. The government derives little revenue from it, as the importation of these blankets for years has been trifling. This tax has been a heavy burden upon the poor during this severe winter, a tax running into the millions to support protection. Heaven save a country from a system which begrudges to the shivering poor the blankets to make them comfortable in the winter and the cold!
Secondly, protection has diminished the income of the laborer from his wages. The first factor in the ascertainment of the value of wages is their purchasing power, or how much can be bought with them. If in one country the wages are five dollars a day and in another only one dollar, if the laborer can in the one country with the one dollar, purchase more of the necessary articles required in daily consumption, he, in fact, is better paid than the former in the other who gets five dollars a day. Admit for a moment that protection raises the wages of the laborer, it also raises the price of nearly all the necessaries of life, and what he makes in wages he more than loses in the increase of prices of what he is obliged to buy. As already stated, a head of a family who earns $400 per year is compelled to pay $100 more for what he needs, on account of protection. What difference is it to him whether the $100 are taken out of his wages before they are paid, or taken from him afterward in the increased price of articles he cannot get along without? In both cases he really receives only $300 for his year's labor. The statistics show that the average increased cost of twelve articles most required in daily consumption in 1874 over 1860 was ninety-two per cent., while the average increase of wages of eight artisans, cabinet-makers, coopers, carpenters, painters, shoemakers, tail-ors, tanners, and tinsmiths, was only sixty per cent., demonstrating that the purchasing power of labor had under protection in thirteen years depreciated 19.5 per cent. But protection has not even raised the nominal wages in most of the unprotected industries. I find that the wages of the farm hand, the day laborer, and the ordinary artisan are in most places now no higher than they were in 1860.
But it is confidently asserted that the wages of laborers in the protected industries are higher because of protection. Admit it. I have not the figures for 1880, but in 1870 there were not 500,000 of them; but of the laborers in other industries there were 12,000,000, exclusive of those in agriculture, who were 6,000,000 more. Why should the wages of the half million be increased beyond their natural rate, while those of the others remain unchanged? More—why should the wages of the 18,000,000 be diminished that those of the half million may be increased? For an increase cannot be made in the wage rate of one class without a proportionate decrease in that of others. But the wages of labor in protected industries are not permanently increased by protection. Another very important factor in ascertaining the value of wages is the continuance or the steadiness of the employment. Two dollars a day for half the year is no more than a dollar a day for the whole year. Employment in most protected industries is spasmodic. In the leading industries for the past ten years employment has not averaged more than three fourths of the time, and not at very high wages. Within the last year manufacturers of silk, carpets, nails and many other articles of iron, of various kinds of glassware and furniture, and coal producers have shut down their works for a part of the time, or reduced the hours of labor. Production has been too great. To stop this and prevent the reduction of profits through increasing competition, the first thing done is to diminish the production, thus turning employes out of employment. Wages are diminished or stopped until times are flush again. With the time estimated in which the laborers are not at work, the average rate of wages for the ten years preceding 1880 did not equal the wages in similar industries for the ten years preceding 1860 under a revenue tariff. Indeed, in many branches the wages have not been so high as those received by the pauper labor, so-called, in Europe. But it is manifest that the wages in these industries cannot for any long period be higher than the average rate in the community, for, if the wages be higher, labor will crowd into the employments thus favored until the rate is brought down to the general level. So true is this, that it is admitted by many protectionists that wages are not higher in the protected industries than in others.
Thirdly, the effect of protection is disastrous to most of the protected industries themselves. We have seen that many of them have in recent years been compelled to diminish production. The cause of this is manifest. Production confines them to the American market. The high prices they are compelled to pay for protected materials which enter into the manufacture of their products disable them from going into the foreign market. The profits which they make under the first impulse of protection invite others into the same business. As a result, therefore, more goods are made than the American market can consume. Prices go down to some extent through the competition, but rarely under the cost of production, increased, as we have seen, by the enhanced price of material required. The losses threatened by such competition are sought to be averted by the diminution of production. Combinations of those interested are formed to stop work or reduce it until the stock on hand has been consumed. Production then begins again and continues until the same necessity calls again for the same remedy. But this remedy is arbitrary, capricious, and unsatisfactory. Some will not enter into the combination at all. Others will secretly violate the agreement from the beginning. Others still, when their surplus stock has been sold, and before the general price has risen, will begin to manufacture again. There is no power to enforce any bargain they have made, and they find the plan only imperfectly curing the difficulty. They remain uncertain what to do, embarrassed and doubtful as to the future. They have through protection violated the natural laws of supply and demand, and human regulations are powerless to relieve them from the penalty.
Take, as an illustration of the operation of the system, the article of paper. One of the first effects of the general tariff was to increase the price of nearly every thing the manufacturer required to make the paper. Fifteen mil-lions of dollars a year through the protection are taken from the consumer. The manufacturer himself is able to retain but a small part of it, as he is obliged to pay to some other protected industry for its products, they in turn to some others who furnished them with protected articles for their use, and so on to the end. The result is that nominal prices are raised all around; the consumers pay the fifteen millions, while nobody receives any substantial benefit, because what one makes in the increased price of his product he loses in the increased price he is obliged to pay for the required products of others. The consumer is the loser, and though competition may occasionally reduce prices for him to a reasonable rate, it never to any appreciable extent compensates him for the losses he sustains through the enhanced price which the protective system inevitably causes.
It is not to be disputed that many of the protected manufacturers have grown rich. In very many cases I think it can be demonstrated that their wealth has resulted from some patent which has given them a monopoly in particular branches of manufacturing, or from some other advantage which they have employed exclusively in their business. In such cases they would have prospered without protection as with it. I think there are few, except in the very inception of a manufacturing enterprise, or in abnormal cases growing out of war or destruction of property, or the combinations of large amounts of capital, where protection alone has enriched men. The result is the robbery of the consumer with no ultimate good to most of the protective industries.
At a meeting of the textile manufacturers in Philadelphia the other day, one of the leading men in that interest said: "The fact is that the textile manufacturers of Philadelphia, the centre of the American trade, are fast approaching a crisis, and realize that something must be done, and that soon. Cotton and woollen mills are fast springing up over the South and West, and the prospects are that we will soon lose much of our trade in the coarse fabrics by reason of cheap competition. The only thing we can do, therefore, is to turn our attention to the higher plane, and endeavor to make goods equal to those imported. We cannot do this now, because we have not a sufficient supply either of the culture which begets designs, or of the skill which manipulates the fibres."
What a commentary this upon protection, which has brought to such a crisis one of the chief industries protected, and which is here confessed to have failed, after twenty years, to enable it to compete even in our own markets with foreign goods of the finer quality! What is true of textile manufacturing is also true of many other industries. What remedy, then, will afford the American manufacturer relief? Not the one here suggested of increasing the manufacture of goods of finer quality, for, aside from the impracticability of the plan, this will only aggravate the difficulty by adding to the aggregate stock in the home market. * * * The American demand cannot consume what they produce. They must therefore enlarge their market or stop production. To adopt the latter course is to invite ruin. The market cannot be increased in this country. It must be found in other countries. Foreign markets must be sought. But these cannot be opened as long as we close our markets to their products, with which alone, in most instances, they can buy; in other words, as long as we continue the protective system.
I say, therefore, to the American manufacturer, sooner or later you must choose between the alternatives of ruin or the abandonment of protection. Why hesitate in the decision? Are not Canada and South America and Mexico your natural markets? England now supplies them with almost all the foreign goods they buy. Why should not you? Your coal and iron lie together in the mountain side, and can almost be dropped without carriage into your furnaces; while in England the miners must go thousands of feet under the earth for those products. * * * The situation is yours. Break down your protective barrier. All the world will soon do the same. Their walls will disappear when ours fall. Open every market of the world to your products; give steady employment to your laborers. In a little while you will have the reward which nature always gives to those who obey her laws, and will escape the ruin which many of your most intelligent opera-tors see impending over your industries.