The Online Library of Liberty

A project of Liberty Fund, Inc.

• Introduction.
• Taxation and Work.
• Chapter I.: Occupations. Distribution of Products.
• Chapter II.: Taxation Measured By Work.
• Chapter III.: Taxation Measured In Money.
• Chapter IV.: Principal Sources of Revenue.
• Chapter V.: How the Tariff Should Be Reformed.
• Chapter VI.: Taxation Which the Government Does Not Receive.
• Chapter VII.: British Tariff Reform.
• Chapter VIII.: Beggarly Compensation of United States Officials.
• Chapter IX.: What Is Protection?
• Chapter X.: Occupations That Cannot Be Protected By Duties On Imports.
• Chapter XI.: Method of Tariff Reform.
• Chapter XII.: Protection By Exemption From Taxation.
• Chapter XIII.: Free Trade the Objective Point.
• Chapter XIV.: Attempted Definition of the Principle of Protection By Senators Sherman, Hoar, and Aldrich.
• Chapter XV.: Hamilton’s Policy.
• Chapter XVI.: Tariff Protection Does Not Raise Wages.
• Chapter XVII.: Protection Promotes War; Free Trade Promotes Peace.
• Chapter XVIII.: Does Tariff Protection Promote Liberty?
• Chapter XIX.: Progressive Reduction of Duties.
• Chapter XX.: Cost of a High Tariff.
• Chapter XXI.: Development By Free Commerce.
• Chapter XXII.: High Wages and Low Cost.
• Chapter XXIII.: The Use of Machinery By Nations.
• Chapter XXIV.: The Waste of Armies.
• Chapter XXV.: Senator Morrill’s Report On Canada Received. Food and Wages.
• Chapter XXVI.: In the Matter of Silver, Bi-metallism, and Free Coinage.
• Chapter XXVII.: Volume of Trade.
• Chapter XXVIII.: Taxation By Bad Money.
• Chapter XXIX.: How to Maintain Silver Equal to Gold.
• Chapter XXX.: The Issue Joined.
• Chapter XXXI.: Personal Observations—conclusion.

CHAPTER XXV.

Senator Morrill’s Report on Canada Received. Food and Wages.

After Chapter XIX. of this series had been completed, a report made to the Senate of the United States by Senator Morrill and Senator McPherson, upon the effect of the McKinley tariff upon our commerce with Canada, was published.

The report is written by Senator Morrill; his colleague concurs in the statement of facts given therein, but does not concur in the conclusions that are drawn from them by Senator Morrill. One cannot greatly wonder at his reserve—he may soon perhaps give his own conclusions. No document has yet been published which gives such conclusive testimony in regard to the grave injury done not only to the people of Canada, but also of the United States, by the tariffs of 1883 and 1890. It was hardly to have been expected that Senator Morrill would read the true lesson on which he himself has become a most satisfactory witness. Senator Morrill labors under the delusion which is now shared by only a very small number of the older members of the Senate and of the House, that one of the effects of a duty imposed in this country upon a given import is to depress the price of that article in the country in which it is produced, and that by such reduction the burden of our tax is put upon that country.

It is difficult to deal seriously with this misconception. If it were true, it would be manifestly for our interest to transfer all our taxes to our neighbors; it would also be manifestly as much for the interest of our neighbors to put all their taxes upon us.

Again, if we could thus shift the burden of our taxes, on what ground could the remission of our tariff taxes upon tea, coffee, and sugar be justified? Why should we not put eighty to one hundred million dollars’ worth of the cost of our government upon the producers of tea, coffee, and sugar, which at the instance of a Republican administration, with the support of Senator Morrill, have been made duty free?

There are, however, some conditions under which the effect of a duty upon imports into this country is to depress the price of a dutiable article in the producing country; this is one of the most evil effects of a high tariff system that can be conceived. Our duties upon the products of Canada have unquestionably had that effect, because a very large portion of the products of Canada are of such a nature that if they cannot be exported to the United States they cannot be sold for export to any other point.

We will now take up the testimony of Senator Morrill. After reporting upon the lessening population of the border towns of Canada, he says:

Elsewhere Senator Morrill proves that the duties on pine boards had a similar influence on Canadian prices. Here we have a complete admission that when trade is obstructed by high duties imposed by a country of very great purchasing and consuming power, like the United States, the prices of the taxed articles must be reduced in the producing country. What is the effect of that reduction? Under a treaty of reciprocity with Canada the Canadians bought from us goods, wares, and products of various kinds, to the full extent of the full value of their sales to us before the reduction in price. By reducing the receipts for their products in the measure of our taxes upon imports, we have therefore cut down the purchasing power of the Canadians; by our own act we have reduced their capacity to buy our products in that measure or even in greater measure. Who loses most?

Why in greater measure? Because the margin of profits upon Canadian products was probably in many cases so small as to be within the line of taxation. By reducing the prices of their products to the full measure of our taxes upon them we have destroyed their profit, and we have therefore forced them in some places to give up the entire product. This is proved by the increase of immigration from Canada to the United States, which will be subsequently treated. Having deprived Canadians of their work at home, they come here; Senator Morrill is a good witness to this.

Let him, however, carry his investigations further and deal with the same principle applied in other countries. Our tax upon pig-iron has depressed the price of iron in Great Britain and Germany; our tax upon wool has depressed the price of wool in Australia, South America, Antwerp, and London, precisely as our tax upon beans, potatoes, butter, and eggs has depressed the price of these articles in Canada. A country of huge purchasing power like the United States cannot withdraw in part or be wholly excluded from any market anywhere, without in some measure depressing the price of the article which we are forbidden to purchase in that market. What then ensues? The consumers of the lessening product of Canada have been enabled to purchase food supplies for the operatives in their factories and in their workshops at a lower cost, and thus have perhaps been enabled to supply the Canadian markets with goods that might otherwise have been purchased in this country. In the same manner our taxes upon pig-iron and wool have depressed the price of these most important crude materials in Europe. Senator Morrill perceives the effect in Canada, and he may perhaps say that we have thus put our tariff tax upon iron and wool upon the producers; but when one looks a step beyond that first plausible but somewhat shallow conception, it at once appears that we have thereby given the consumers of pig-iron and wool in Europe a huge advantage over our own factories and workshops.

The Senator next very naïvely relates the evil effect upon ourselves of our duties upon Canadian products: “Formerly,” he says, “in the absence of all duties the Canadians sold their white winter wheat in our market, and took in return some of the cheaper spring wheat, bearing a less price. At that time Oswego, N. Y., milled about ten thousand barrels of flour a day, and now mills only about twenty-six hundred. The abrogation of the Canadian reciprocity treaty rendered Oswego elevators of comparatively little use.”

What more damning evidence of injury to ourselves could be given than this? Senator Morrill goes on with his testimony: “When this traffic in flour was broken up, the Oswego elevators were devoted in part to storing Canadian barley,” which is of better quality than the barley grown farther South, for malting and converting into beer. But again, Senator Morrill testifies in a perfectly straightforward manner that “although a higher rate of duty was placed on malt through the act of 1890 than in 1883, yet the higher rate on barley tended to exclude Canadian barley also. . . . Notwithstanding Oswego has less milling and lumber business than in former years, and since 1890 having its malting business threatened or wholly suspended, yet its citizens are by no means wanting in courage, and have started new and prosperous enterprises,” among which Senator Morrill names “shoddy-cloth mills.” The people of Oswego must be very grateful to Senator Morrill and Representative William McKinley, Jr. These gentlemen and their coadjutors have decided that the people of Oswego were incapable of choosing the right investment for their capital or the right employment for their workmen, and having destroyed their capital and stopped the work of their laborers in milling wheat and malting barley, they now heartily commend their courage and enterprise in attempting to convert their old clothes into new garments by establishing “prosperous shoddy-cloth mills.” Since this was written, the elevators, which had been in part destroyed by our tariff, have been wholly destroyed by fire. Does the Senator commend the fire?

We will now cite Senator Morrill’s testimony upon the labor question. The declared purpose of the policy advocated by himself and his coadjutors is to maintain the rates of American wages while he deprives the laborer of the hard wheat, the better barley, the potatoes, the fish, the eggs, and the other foreign luxuries with which Canada might flood us. In order to maintain the rate of wages of the American farmer, lumberman, mechanic, and factory operative he has taken the most effective measures to promote immigration from Canada.

It will be observed that he bears witness to the fact that by taxing Canadian products we have depressed the prices, and that by so doing we have depressed the rates of Canadian wages. Manifestly this must be the result, because all wages are derived from the sale of the products of labor. To the extent that we have depressed the prices of Canadian products we have destroyed the power of Canadian employers to hire Canadian labor. Hence it follows, as Senator Morrill testifies, that “wages are much less in the Canadian Dominion, ranging in amount from fifteen to thirty-three per cent., and in some cases even to fifty per cent. . . . The average difference of all kinds of labor may be reckoned at rather more than less than twenty-five per cent. It was remarked that the wages of the laboring man in Nova Scotia and New Brunswick were twenty-five per cent. less than in Maine.”

Having thus converted the flour mills of Oswego into shoddy-cloth mills, having deprived the people of Canada of profitable work in supplying some of our wants, having reduced the rates of Canadian wages below the level of a comfortable living, what comes next? Again Senator Morrill, with unconscious integrity, bears witness. “Commencing in April it was stated that there was a daily average of about eight hundred Canadian and foreign immigrants who passed through Newport, Vermont, on their way to New Hampshire, Massachusetts, and elsewhere to obtain employment, many of them brickmakers. In the fall of the year they mostly return. Another class comes in the fall and returns in the spring, but all come in consequence of higher wages. Some are destined to go as far as Savannah, Ga., and as the same parties appear, year after year, it may be presumed that employment has been promised.” The evidence taken in Detroit was to this effect: “Many Canadian laborers come here, of course because of better wages, and because they can always find work here. . . . Some of the workingmen, although citizens of Detroit, rent houses in Windsor for the reason that rentals are much less there.” This testimony in regard to what has been called “the pauper labor” of Canada coming in competition with our workingmen in New England and other sections may be commended to the especial attention of those who wish to regulate immigration. May not immigration from Canada be regulated by making it more profitable for Canadian workmen to stay at home and supply us from there with their products in exchange for our manufactures,—rather than by inducing them to come here, year by year, to work for a season, sending their wages back to Canada for the support of their families, while they themselves compete each season for a share of the work that is to be done here?

I may also venture to commend this statement to Senator Dawes, whose definition of the principle of Protection I will now give: “It is the principle, as I understand it, which leads one man to erect a fence between his pasture and that of his neighbor that he may the better enjoy his own.”

It would perhaps be well for Senator Dawes to repair the fence between Massachusetts and Canada which keeps out wool but lets in the shepherd,—keeps out potatoes but lets in the farmhand,—keeps out lumber but lets in the carpenter,—that keeps out the bricks but lets in the brickmaker. Perhaps the workingmen of Massachusetts will build that fence in another way. They will take off all the top bars and some of the lower ones; they will make some gates in the fence so as to facilitate commerce with Canada, and so as to induce the Canadians to stay at home where they may earn good wages by supplying us with fish, potatoes, eggs, barley, hay, oats, lumber, and other Canadian products, of which they will send us an ample abundance in exchange for the manufactured goods and wares of our own States.

So much for this admirable report of Senator Morrill. Since this series of treatises was undertaken we have also been furnished with preliminary reports giving the data that have been secured by Col. Carroll D. Wright, in respect to wages and the cost of subsistence in foreign countries. The facts which have been given in these reports wholly sustain me in my own deductions made from my limited investigations, and also sustain some of my a priori and hypothetical conclusions in the most convincing manner.

Time and space will not permit a complete analysis of this report. For present purposes it may only be referred to in order to sustain certain propositions previously given in regard to the relative earnings of the people of different countries, and also in support of my theory of the ratio of earnings to the food supply. I avail myself in part of the analysis of this report made by the Daily Commercial Bulletin of New York. From this it would appear that information has been obtained by Commissioner Wright from 5,284 families, representing 27,577 persons, an average of 5.20 per family. The normal family under the instructions given by the Commissioner was to be selected under the following provisions:

1. Both husband and wife.

2. An expenditure for each of the following items: rent, fuel, lighting, clothing, food, and other purposes.

3. Must rent the house in which it lives.

4. Must not have more than five children, none over fourteen years of age.

5. Must not have any boarders or tenants.

One can only guess at what the normal family of this country really is, or what the normal income of the average working family of this country may be. From my own investigations I am very certain that it would substantially cover five persons, father, mother, and three children, and that the normal or average income of working people in the strictest use of that term would be found on the line of $500 a year to each family; there may be a substantially equal number spending between $400 and $500, and between $500 and $600. There would also be a much greater number between $600 and $1,200 than there would be found below the $400 limit.

The normal family among all classes is substantially five, but relatively few families are supported by one member. The group of which one is at work for gain consists of three persons, one of whom supports the other two.

When the full report of Col. Wright’s investigations is printed, together with the data now being gathered for the Senate Finance Committee, we shall probably be able to determine the relative income and expenditure of many classes of working men and women in this and in other countries more surely than we now can.

Assuming that the analysis given in the Daily Commercial Bulletin is accurately computed, we find that, according to Commissioner Wright’s figures, in the normal family of 5.20 persons, as given by him, of which the working members are occupied in the cotton industry, in the woollen and worsted industry, in the production of pig-iron, and in the conversion of pig-iron into bar-iron (the latter being a class of high-priced workmen),—

The advantage in this country is somewhat greater than my proportionate estimates.

The earnings of these specific groups in this country are:

The relative proportion of expenditure may vary in other occupations; our present purpose is to determine the relative purchasing power of that proportion of the income which is devoted to the purchasing of food in this country, Great Britain, France, and Germany by working people in these specific classes.

The relative incomes of the three classes and the per cent. of money spent for food in the classes previously given are as follows:

Recalling the fact that a ration equal to that of a German soldier in active service can now be purchased in Boston at twelve and one-half to thirteen cents per day,—in Great Britain at sixteen,—in France at seventeen,—in Germany and Belgium at twenty to twenty-three,—we then have the purchasing power of the income devoted to nutrition in its relation to food supplies.

The purchasing power of $296, spent in New England in daily rations at an average of thirteen cents, yields 3,277 rations; $256, spent in Great Britain at sixteen cents, yields 1,601 rations; $200, spent in France, at seventeen cents, yields 1,176 rations; $143, spent in Germany at twenty cents, yields 702 rations; all for one year.

We may rightly assume that the normal family, estimated by Commissioner Wright to contain 5.20 persons, possesses the consuming power of four adults. Divide the rations per family by four and we then find that the average sum expended per adult in the United States for 365 days will give him 569 full rations. He spends his money for a higher price and quality. The average expenditure per capita in Great Britain yields 400 full rations for 365 days, or a good subsistence with a margin over, which corresponds to the condition of the well-fed prosperous English artisan or mechanic. In France the per capita expenditure yields only 294 full rations for 365 days, which is consistent with the lack of meat and the relative lack of energy among the French. The purchasing power in Germany of that part of the meagre income devoted to food is only 176 rations for 365 days; all facts, observations, and figures indicate the underfed condition of the great body of German workmen.

It may be urged that the data are not yet sufficient for such a conclusion. Let it be remarked, however, that so far as these data prove anything they sustain the a priori theory derived by myself from broad and general averages, and they are sustained by the reports of special investigations. They correspond also to the observations of acute scientific observers who have witnessed in Germany the exact conditions named. These results are in themselves deductions from the widest, closest, and most scientific investigation of figures and facts combined that has ever been made in this or any other country.

The conditions in Italy are worse and the increasing deficits are now forcing the government to diminish armaments under penalty of starvation.

Reference has been made to proportionate incomes. From an advance sheet kindly furnished me by Commissioner Wright from the Seventh Report of the Department of Labor now in press, I am permitted to give the proportionate incomes of 2,562 families, being only a part of those previously considered. In the United States,

The proportionate expenditures of these families are:

I have given these latter details as matters of general interest, and as examples of the studies now in progress from which we may soon be in possession of such adequate knowledge of the relative conditions of labor in this and other countries as will remove many errors which now obscure the discussion of the tariff.