The Forgotten Man, and Other Essays

by William Graham Sumner

38. Suppose that we create an industry even in this sense—What is the gain of it? The people of Connecticut are now earning their living by employing their labor and capital in certain parts of the industrial organization. They have changed their “industries” a great many times. If it should be found that they had a new and better chance hitherto undeveloped, they might all go into it. To do that they must abandon what they are now doing. They would not change unless gains to be made in the new industry were greater. Hence the gain is the difference only between the profits of the old and the profits of the new. The protectionists, however, when they talk about “creating an industry,” seem to suppose that the total profit of the industry (and some of them seem to think that the total expenditure of capital) measures their good work. In any case, then, even of a true and legitimate increase of industrial power and opportunity, the only gain would be a margin. But, by our definition, “a protective duty has for its object to effect the diversion of a part of the capital and labor of the people out of the channels in which it would otherwise run.” Plainly this device involves coercion. People would need no coercion to go into a new industry which had a natural origin in new industrial power or opportunity. No coercion is necessary to make men buy dollars at ninety-eight cents apiece. The case for coercion is when it is desired to make them buy dollars at one hundred and one cents apiece. Here the statesman with his taxing power is needed, and can do something. What? He can say: “If you will buy a dollar at one hundred and one cents, I can and will tax John over there two cents for your benefit; one to make up your loss and the other to give you a profit.” Hence, on the protectionist’s own doctrine, his device is not needed, and cannot come into use, when a new industry is created in the true and only reasonable sense of the words, but only when and because he is determined to drive the labor and capital of the country into a disadvantageous and wasteful employment.

39. Still further, it is obvious that the protectionist, instead of “creating a new industry,” has simply taken one industry and set it as a parasite to live upon another. Industry is its own reward. A man is not to be paid a premium by his neighbors for earning his own living. A factory, an insane asylum, a school, a church, a poorhouse, and a prison cannot be put in the same economic category. We know that the community must be taxed to support insane asylums, poorhouses, and jails. When we come upon such institutions we see them with regret. They are wasting capital. We know that the industrious people all about, who are laboring and producing, must part with a portion of their earnings to supply the waste and loss of these institutions. Hence the bigger they are the sadder they are.

40. As for the schools and churches, we know that society must pay for and keep up its own conservative institutions. They cost capital and do not pay back capital directly, although they do indirectly, and in the course of time, in ways which we could trace out and verify if that were our subject. Here, then, we have a second class of institutions.

41. But the factories and farms and foundries are the productive institutions which must provide the support of these consuming institutions. If the factories, etc., put themselves on a line with the poorhouses, or even with the schools, what is to support them and all the rest too? They have nothing behind them. If in any measure or way they turn into burdens and objects of care and protection, they can plainly do it only by part of them turning upon the other part, and this latter part will have to bear the burden of all the consuming institutions, including the consuming industries. For a protected factory is not a producing industry. It is a consuming industry! If a factory is (as the protectionist alleges) a triumph of the tariff, that is, if it would not be but for the tariff (and otherwise he has nothing to do with it), then it is not producing; it is consuming. It is a burden to be borne. The bigger it is the sadder it is.

42. If a protectionist shows me a woolen mill and challenges me to deny that it is a great and valuable industry, I ask him whether it is due to the tariff. If he says “no,” then I will assume that it is an independent and profitable establishment, but in that case it is out of this discussion as much as a farm or a doctor’s practice. If he says “yes,” then I answer that the mill is not an industry at all. We pay sixty per cent tax on cloth simply in order that that mill may be. It is not an institution for getting us cloth, for if we went into the market with the same products which we take there now and if there were no woolen mill, we should get all the cloth we want. The mill is simply an institution for making cloth cost per yard sixty per cent more of our products than it otherwise would. That is the one and only function which the mill has added, by its existence, to the situation. I have called such a factory a “nuisance.” The word has been objected to. The word is of no consequence. He who, when he goes into a debate, begins to whine and cry as soon as the blows get sharp, should learn to keep out. What I meant was this: A nuisance is something which by its existence and presence in society works loss and damage to the society—works against the general interest, not for it. A factory which gets in the way and hinders us from attaining the comforts which we are all trying to get—which makes harder the terms of acquisition when we are all the time struggling by our arts and sciences to make those terms easier—is a harmful thing, and noxious to the common interest.

43. Hence, once more, starting from the protectionist’s hypothesis, and assuming his own doctrine, we find that he cannot create an industry. He only fixes one industry as a parasite upon another, and just as certainly as he has intervened in the matter at all, just so certainly has he forced labor and capital into less favorable employment than they would have sought if he had let them alone. When we ask which “channels” those are which are to be “favored or created by law,” we find that they are, by the hypothesis, and by the whole logic of the protectionist system, the industries which do not pay. The protectionists propose to make the country rich by laws which shall favor or create these industries, but these industries can only waste capital, so that if they are the source of wealth, waste is the source of wealth. Hence the protectionist’s assumption that by his system he could correct our errors and lead us to greater prosperity than we would have obtained under liberty, has failed again, and we find that he wastes what power we do possess.

(F) Examination of the Proposal to Develop our Natural Resources.

44. “But,” says the protectionist, “do you mean to say that, if we have an iron deposit in our soil, it is not wise for us to open and work it?” “You mean, no doubt,” I reply, “open and work it under protective help and stimulus; for, if there is an iron deposit, the United States does not own it. Some man owns it. If he wants to open and work it, we have nothing to do but wish him God-speed.” “Very well,” he says, “understand it that he needs protection.” Let us examine this case, then, and still we will do it assuming the truth of the protectionist doctrine. Let us see where we shall come out.

The man who has discovered iron (on the protectionist doctrine), when there is no tax, does not collect tools and laborers and go to work. He goes to Washington. He visits the statesman, and a dialogue takes place.

Iron man.—“Mr. Statesman, I have found an iron deposit on my farm.”