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The Pamphlet Collection of Sir Robert Stout: Volume 41

A Challenge to Free Traders

A Challenge to Free Traders.

A Challenge to Free Traders decorative feature
The following letter, written by Mr Thomas H. Dudley, late American consul at Liverpool, to Mr Charles Edward Rawlins, of Liverpool, has found its way into print, and merits careful perusal:— Camden, N. J.,

To Charles Edward Rawlings, Esq.,


Dear Sir,—Your letter of the 8th ultimo was duly received. I noted its contents, and read with attention all you said about the tariff system and your ideas with regard to Free Trade. I do not see these questions as you do; indeed, I entertain views directly opposed to yours, and I have no doubt that, if you should ever visit this country, you would at least modify your views upon these questions, if you did not entirely agree with me before you left us. You would see what Protection is doing and has done for us; that under its fostering and benign influence we, in almost every branch of manufactures and human industry, are supplying ourselves with products quite equal in finish and quality to those made anywhere, and in very many branches are now in the market with our goods and products competing with the world. Our cotton goods are largely exported, and we are your competitors in cotton fabrics everywhere. We are sending clocks, watches, dental instruments, edge-tools, and other manufactured commodities to England, locomotives to Russia and Brazil, and carpets to Norway and Sweden. With every variety of climate and soil, and almost unbounded mineral resources, in a few years, if our tariff system should remain as it is, we will become independent of Europe in almost everything, and in very many, if not most, branches of industry, be actual competitors with you in all markets of the world. In this small State of New Jersey more than 10,400 persons are now engaged in the manufacture of silk. The fabrics we are making equal those made in France, while our sewing silk is said to be the best made anywhere. We expect next year to export the last-named product to England, and before two years have passed to supply Europe with sewing silk. I single out and refer to the silk business among many other and vastly larger and more important branches of industry because it is new—the growth of the last seven or eight years—and clearly and entirely the child of Protection; and I have confined it to my own small State because I have not the statistics of this industry in any of the other States. Our census, which is to be taken this year, will show a condition of things with regard to our products, manufactures, and industries which will astonish Europe. We are making rapid—most rapid—progress in every branch of human industry. With regard to commerce, I do not see how Free Trade will ever help us to build ships, though I am ready to concede that Free Trade will create a demand for ships. Protection moans that the people are to be transported to where the food and the products for manufactures are produced, and that there the commodities shall be manufactured. Free Trade means the reverse of this: the people are to remain where they are, and the food to feed them and the material to be manufactured are to be taken to them. To transport the raw material (cotton) across the ocean, and the food to feed the operatives, requires ship3 and costs money, and the consumer of the manufactured product, whoever and wherever he may be, has to pay this cost. Fortunately for us, our people in the West have already seen this, and are now largely engaged in maunfacturing, while the people at the South are beginning to see it, and consequently are building manufactories: and the coming census will show an advance in the South and West that will astonish you. Chicago will appear as one of the largest manufacturing towns in the country, and the State of Ohio and these States to the west of it will soon equal the Fast—if not in kind, at least in quantity and value of the commodities they manufacture. You build ships; we build and equip railroads, and steamers for our rivers and lakes. Your commerce is mainly on the sea, and ours more on the land. I presume we put more money into railroads, locomotives, cars, and steamers for our rivers and lakes than you put into your 3hips. When we find it more profitable to build steamships for the ocean than to build railroads and steamers for our inland navigation we shall do it; and the day I may come, and is not probably very far! distant, when even without the subsidies: which you give your line of steamers (and which to this extent is only Protection in another form), you may again find us your competitors upon the ocean as well as on the land.

Agricultural Products of this Country.

The Agricultural Department at Washington has just published an estimate of, some of the agricultural products of our page 4 country for the year 1870. Their value is put down at 1,904,480,659doL I suppose this to be a great under-valuation; but, taking it as stated, let us examine it, and make an estimate as to what we consume at home and what we sell abroad:—
Grain or corn, all kinds, is valued at 1,247,112,000
The hay crop at 326,851,280
Cotton at 231,000,000
Potatoes at 78,971,000
Tobacco at 21,545,591

In 1878 the corn which you imported from all countries amounted in value to £58,064,875. This, I suppose, is its computed value when landed in England, and not the value at the place from whence it was imported. Of this quantity only a fraction more than one-half was from the United States—say what we received for it in value in our money, 142,936,995 dol.—and if other foreign countries took 60,000,000dol. more in value, then, as compared with our crop for 1879, you would leave at home for domestic consumption an amount valued at 1,044,178, 005dol. The hay crop is nearly all consumed at home, and so is the potato crop. The one is valued at 325,851,280 dol, the other at 78,97l,000dol. The value of cotton imported by you is stated to be £33,519,549. Supposing that two thirds of this was from the United States, the value of what you imported from our country would then amount in our money to 108,156,41 Idol; and if we shipped to other foreign ports 10,000,000dol in value, there would be left for home consumption an amount worth 112,843,589dol. The value of manufactured tobacco imported into England is stated at about £2,500,000. Now, if two-thirds of this came from the United States—say 8,066,666dol.—there was left over 13,000,000dol worth for home consumption. The result in respect to the article named is this:—We, in our manufactures at home, used or consumed, as the figures stand, over 1,575,000,000 dol in value. While I have given you, as I think, full credit for all if not more than you took of what we exported, 1 am satisfied the amount we consumed at home was at least one-fifth more than is stated, owing to under-valuation of our production, and that our consumption of these five agricultural products amounted in value to over 1,900,000,000dol, as against less than 330,000,000 which we exported or sold abroad. Now this estimate of the agricultural products of our country is limited to the five named articles, and does not include meat, hogs, cattle, sheep, or horses; or the vegetable crop (excepting potatoes), which in this country, both in variety and quantity, is enormous, and constitutes a large item in the food of our people; or the fruit crop, including the apple, peach, pear, and grape, and the smaller fruits that are raised by the ton; or the fish, poultry, eggs, rice, butter, or cheese. None of these are included, and when taken together they amount in value to many millions of dollars. Now of the agricultural products which we raise I do not suppose one-fifteenth part is exported abroad, certainly not more than this quantity, while the remainder remains at home, and is consumed or used by our people who are engaged in manufacturing and commercial pursuits, &c.

The Home Market of Most Value.

The home market is therefore more important to us than the foreign; and the more we stimulate it and increase it the better it is for the agricultural as well as every other interest in the country. Protection does this: it sustains the manufactories, thereby making a market for the farmers. It even does more, for it encourages new enterprises. But for our protective tariff we should not have had the silk manufacture. The 10,400 persons in the State of New Jersey engaged in this business are all fed by our farmers. The nation is benefited as well. It gives employment to our people, and the profits to the manufacturers on the 13,000,000dols in value of silk goods produced yearly are saved here; that is, whatever they make is made in this country, and goes towards the increasing wealth of the nation; and the capital thus saved or accumulated here is employed in developing the country and its numerous resources and industries. One manufacturer in the silk business at Paterson, in New Jersey, is said to have made a million of dollars. I am informed he has invested all this money, whatever it may be, in the town where he lives, in building houses and other improvements. Now who is injured by this? Not the people, because the duty on silk is just the same now that it was when imposed years ago as a mere revenue duty; for silk goods are cheaper at the present time than they were when the duty was imposed; the fact in this, as in many other instances of production, being that there is a reduction in price of the goods produced by reason of domestic competition. Steel rails a few years ago, and before we began to manufacture them, cost us in England 140dol. per ton. We are now manufacturing them here for 60dol., and within the past two years the price has been 40dol. per ton. So with cotton fabrics; they are cheaper than ever they were—indeed, so cheap that they are sending them to England by the million of yards, and competing with you in your own market. It is no page 5 answer to say of some of these commodities—steel rails, for instance—that they are cheaper in England than they are in America. So far as the mills are concerned, this at the present time may be true; but it is not so with regard to cotton goods, watches, clocks, and many other kinds of protected goods which we are sending to your market; the are cheaper here, and cheaper when exported to England than those which you manufacture; hence we are competing with you in your own market. And with regard: to steel rails, everyone knows that, if we were to stop manufacturing them and to rely upon you for what we require, the price in England would not remain where it is, but would immediately advance to an extent probably more than the difference now existing between the price hero and in England, so that the end would be that we should have to pay you more than we are now paying for those made here. This is the natural consequence of trade, and follows just as surely as the night follows the day. You may ask why, if we can produce cotton fabrics, edge-tools, clocks, and watches cheaper than you, we require I protection for these commodities, &c. My answer is that it is quite probable that in some particular descriptions of cotton fabrics and manufactured products we cannot compete, and require protection to enable us to work up to the production of them; but in those branches where we can compete and are competing we require protection to keep our market steady and to maintain the domestic competition. It is a fact in the commercial world, of which we do not require an example, that foreign competitors, when there are no impediments will, in order to disturb markets and break down competition, sometimes combine to flood the foreign market. They will sell without profit to accomplish their purpose, in the hope that in the end, with the confusion in business and destruction in trade, and breaking down domestic competition, they can make up more than they lose. I myself have known a foreign manufacturer to sell his goods in America for a less price than you could buy them in England, and for less than he was selling the same kind of goods for there. While Consul at Liverpool, numerous instances came to my knowledge in which there were two prices—one for the goods to be consumed in England, and another and lower price for those that were to go abroad, and the manufacturer's profits were made up on j the average price of the goods sold at home and those sold abroad. There is gambling in trade as well as in stocks. Our tariff checks if it does not entirely prevent this, at least so far as foreign competition is concerned, and enables our small capitalists freely to enter, with their limited means, our markets and become domestic competitors where they would not—indeed dare not—if exposed to the large foreign capitalists. It is our policy to encourage these and all such, for everyone who starts in this way helps to cheapen the article produced, while he increases our home market for our agricultural products, and assists in creating and accumulating capital here at home, and in this way in increasing our national wealth.

Price, and not the Balance of Trade, the Controlling Agent.

There is another point to which I must call your attention, an error which most of you Englishmen fall into when discussing this matter with your people, viz., that what you buy from us depends on what we purchase or take of you; in other words, if we do not purchase your manufactured goods you will not buy agricultural products from us. Our friend Thomas Bayley Potter, in his recent visit to this country, fell into this error, and in almost all of his speeches laid great stress upon it. He told our people in substance that this result would follow if we persisted in retaining our tariff. You, like all other sensible people, buy where you can buy cheapest, and sell where you can obtain the best prices for what you sell. If you can buy your grain and breadstuff's in Russia cheaper than you can in America, you buy them there. If, on the other hand, we can sell to you at a cheaper rate than Russia, you buy of us. It is price that regulates and controls, and not the balance of trade between the two countries. Do you suppose that any grain dealer in England ever looks to see whether the balance of trade is for or against his country when he is about to make a purchase? He buys wherever he can obtain the grain for the lowest price. As proof of this, take the trade of your own country with Russia for the last 20 years. There has not been one single year during this period in which you have not purchased off her greatly in excess of (and in most years more than double in value) what she bought of you. Take the year 1878, the last for which you have made up the figures, and they stand as follows:—Your imports from Russia were £17,808,752, and your exports to Russia £9,458,729; and for the year before (1877) your showing is still worse. You imported from her £22,142,422, while you exported or sold page 6 to her only £6,243,973—less than one-third of what you imported. Your trade with Russia for the last 20 years was, in the aggregate, as follows:—Your imports were £369,782.059, and your exports £158,436,122. In other words, you buy of Russia more than double what i she buys of you. And if you will examine the statistics of your trade with other foreign countries you will find the same results. The same inequalities exist as in your trade with Russia, proving what I have said, that what you buy of a nation is not dependent on what she buys of you; that it is price and not the balance of trade that regulates and controls the business you do.

A Radical Difference between England and America.

In the discussion of the question of Protection and Free Trade, your people do not take into consideration the difference between our country and yours with regard to land and population. You have a scarcity of land and a redundancy of population, and in consequence cannot raise sufficient food to feed your people. We in the United States have a redundancy of land and a scarcity of population, and in consequence can not only raise sufficient food to feed our own people, but a very large surplus for export. There is scarcely one article of food that you can raise or produce in sufficient quantity to supply or feed you own people, while with us there is not one of the staples which we cannot raise in abundance, and with a large surplus. Of course I do not mean to include in this category articles of foreign production, such as tea and coffee, but domestic articles, and in most instances those common to both countries. It is admitted that your agricultural production varies in quantity in different years; a good harvest yields more than a bad; but there is no year when your produce is sufficient to feed your people. You do not and cannot raise enough. Now let us look at this for a moment, and see to what extent; this deficiency exists, and we will take as an example the year 1878, which is not an exceptional one. You paid during this year as follows for the following articles:—
Cattle, calves, sheep, and lambs alive £7,252,606
Meat, including beef and pork, &c. 12,838,898
Butter 9,954,053
Cheese 4,946,686
Breadstuffs, including corn, flour, wheat, &c: 59,064,875
Eggs 2,511,09 6
Fish 1,541,830
Lard 1,787,874
Potatoes 2,386,143
Rice 3,200,843
Total £105,484,905

This table shows for the ten articles above-named, in our money, over 510,000,000dol. Now, this being your condition, and since you have every year to buy these staples and indispensable articles of food, it is your interest to get them as cheaply as possible; hence your policy is to induce other nations, including the United States, to devote themselves to agricultural pursuits; for the more foreign nations you can persuade to engage in this industry the cheaper the food will be which you are compelled to buy, and to this extent you are, or will be, the gainers by the operation.

England's Search for Good Markets.

But you not only want cheap food to feed your people, you also want good or dear markets in which to sell your manufactured commodities. Now if you can induce the United States or any other country to give up manufacturing and devote itself to agricultural pursuits, you not only thereby to this extent cheapen the price of food, but you accomplish another result, which also works to your advantage—you check foreign competition and create another market for your manufactured products. You are doubly benefited, and must necessarily grow rich. It is gain to you on both ends of the stick. You buy for less and sell for more. But how is it with the nation that is weak enough to be misled by such delusive arguments? It loses all that, indeed more than you gain, and if you thrive and grow rich it starves and grows poor; and it requires not much reasoning to demonstrate that bankruptcy and ruin must soon follow if this policy is persisted in. We think we understand these questions, and what our true interest is so far as they apply to our people and our country, and we do not regard ourselves as benighted because of the policy we have adopted, or behind any other country in the world, even England, in civilisation and progress. Indeed, we look with great satisfaction, if not pride, upon the rapid advance we have made as a people, and as a nation, in population, wealth, and intelligence, and think that history, either ancient or modern, does not show a parallel example. You will permit me to say, in conclusion, that we attribute no small share of this progress and development to the American system of Protection, in contradistinction to your so-called system of Free Trade.

—Very truly yours,

Thomas H. Dudley.