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The Pamphlet Collection of Sir Robert Stout: Volume 51

Chapter II. — How Much is Actually Taken (Yearly) out of the Pockets of the American Farmers by Compelling them to Buy Dear, Instead of Allowing them to Buy Cheap, Goods

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Chapter II.

How Much is Actually Taken (Yearly) out of the Pockets of the American Farmers by Compelling them to Buy Dear, Instead of Allowing them to Buy Cheap, Goods.

By the census of 1870 the population of the United States was found to be 38,600,000; and the number over ten years of age was 28,229,000. Of these, 12,506,000 were engaged in various kinds of occupations, the rest being women, young persons of both sexes, idlers, &c. What were the respective employments of these 12.506,000 workers? According to the census returns there were—
5,922,000 persons engaged in agriculture.
2,685,000000 persons engaged in professional and personal service.
1,191,000000 persons engaged in trade and transportation.
654,000000 persons engaged in mechanical trades and mining.
2,054,000000 persons engaged in manufactures.

In round numbers, there were two millions of persons engaged in manufactures, and these were exclusively privileged to supply nearly all the physical wants (except food and lodging) of the other ten and a half millions of workers and their families.

As in these pages we only profess to represent the case of the American farmer, we must confine our attention to the six millions of persons and their families who are engaged in the cultivation of the soil. It is quite true that the remaining four and a half millions engaged in professions, in trading, in mining, and in personal service, are sufferers to page 8 quite a proportionate extent, but they do not come within the scope of the present inquiry.

Now let us see what is the actual amount which the farmers (that is, soil-workers generally) spend yearly on the goods produced by the manufacturers.

In the first place, the six millions of agriculturists of 1870 must by this time have increased to at least 7,500,000, as will no doubt be seen by this year's census. To be within the mark we will call them 7,000,000, nearly all of them having wives and children. Now, what is the average annual expenditure on all articles of consumption, except food and drink, of each of these families? On careful investigation, and consultation with conscientious inquirers and with persons most competent to judge, we feel confident that we are within the mark in computing such annual expenditure at 200 dollars per family, including within that average the small minority of unmarried men among the 7,000,000 agriculturists. It must be borne in mind that this amount includes:—1. Woollen, cotton, linen, and silken fabrics, and, therefore, every species of clothing for male and female, as also sheets, curtains, blankets, carpets, &c. 2. Iron and steel manufactures, and therefore all iron-work, wire, cutlery, tools, farming implements, farriery, agricultural machinery, as well as railway conveyance on iron, which cost very much more than it would have cost had it been imported from abroad. 3. Leathern fabrics, and therefore boots and shoes, saddlery, gloves, &c. 4. Earthenware and crockery, tinware and glass, and numberless other household necessaries, all of which come under the price-inflating influence of the Customs tariff. It is on these objects that the greater portion of the agriculturist's outgoings is expended, for he is but at little expense for his food. Moreover, this yearly average of 200 dollars per family comprises a large number of rich and well-to-do persons, and it may safely be assumed as rather under than over the reality.

Having now cleared the way thus far, it is easy to calculate the total sum annually spent on manufactured goods by page 9 the farmers and agriculturists generally of the great Central and Western States. The amount being 200 dollars to 7,000,000 families, is, therefore, 1,400,000,000 dollars in the aggregate.

The next step is to ascertain what portion of that amount the Western farmers would save if, by the abolition of import duties, they were left free to suply their wants from the cheapest market, wherever that might be, whether in America or in Europe, whether in New England or in Old England. This question is easily solved, as, fortunately, we have the guidance of positive facts supplied by the official returns of the United States Government. From these we learn that prices are so high in America and so low in Europe, that, in spite of the enormous duties levied on them, considerable quantities of European goods are imported into the United States, where they must, of course, leave a profit to the senders, or they would not be sent. Let us enumerate some of the leading articles imported in the year 1878, stating their amounts and the rate per cent, of duties which they had to pay:—
Articles Imported. Amount in Dollars. Ad valorem Import Duties paid on them, according to sorts.
Woollen Manufactures $24,604,000 54, 57, 66, 70, and 77 per cent.
Cotton Manufactures 15,458,000 35, 45, 57, and 63 per cent.
Linen Manufactures 14,384,000 30, 35, and 40 per cent.
Silk Manufactures 20,103,000 50 and 60 per cent.
Iron and Steel Manufactures 6,554,000 30, 35, 45, 48 and 50 per cent.
Leather Manufactures 6,906,000 20, 25, 35, and 50 per cent.
Earthenware and Crockery 3,978,000 40 and 45 per cent.
Tin Plates and Ware 9,874,000 27 per cent.
Hemp and Jute Fabrics 1,005,000 40 per cent.
Window Glass 675,000 68 and 72 per cent.

What do these figures mean? They mean that the prices page 10 which the Western farmers (and the American people generally) now pay for their woollen cloths and stuffs are so excessive that the British woollen manufacturers can afford to pay from 54 to 77 per cent, import duties for the admission of their goods into the States, and still get a profit. That is to say, that (taking the average duty at 66 per cent.) the Western farmer could, if he were allowed to buy where he could buy cheapest, get the same quantity and quality of woollen and worsted stuffs for 12 dollars for which he now has to pay 20. Eight dollars out of twenty thrown away!

They mean that the prices which the Western farmers now pay for their cotton and linen goods are so excessive that the British makers of the same goods can afford to pay from 30 to 63 per cent, import duties for the admission of their manufactures into the States, and still get a profit. That is to say, that (taking the average duty at 50 per cent.) the farmer's wife could, if she were allowed to buy where she could buy cheapest, get the same articles for 6 dollars for which she now has to pay 9. Three dollars out of nine thrown away!

They mean that the American railways are constructed of iron which cost so clear that the British makers can afford to pay 30 to 50 per cent import duties for the admission of their goods into the States, and still get a profit; so that the railway companies are compelled to charge the Western farmer a proportionately excessive rate for the conveyance of his produce to a market. The burden of the difference, of course, falls on the patient back of the Western farmer!

Those figures mean, in short, that the same enormous artificial inflation of natural prices runs through every article (except food) with which the farmer has to provide his family.

The American has extraordinary advantages over the British farmer. He has, first, a soil so fertile as to produce freely with cheap tillage and no manure; second, a climate highly favourable to agricultural operations; third, abundance of land so cheap that the fee-simple costs less than is annu page 11 ally paid for rent in England. But, on the other hand, the British farmer enjoys for the present one decided advantage : he sells his produce in the dearest, and buys his clothing, implements, &c. &c., in the cheapest market in the world.

Let us, however, continue our inquiry as to the total annual amount taken out of the pockets of the Western farmers by exorbitant protective duties. These duties have a very wide range. They are as low as 10 per cent, on diamonds which the Western farmer does not use, and as high as 93 per cent, on cleaned rice which he does use. They are levied on no less than 1,600 different articles, some of them yielding less revenue than it costs to collect it, and the whole producing a complexity which gives comfortable employment to swarms of clerks, &c., at every seaport. The heaviest percentage rates are those imposed on articles of general and necessary consumption by the people, which accordingly contribute very nearly three-fourths of the total amount collected. But let us strike an average. By a careful comparison of the total value of the chief dutiable foreign articles imported in the year 1878, with the total amount of duties levied in that year on the same articles, it has been clearly ascertained that the average rate of duties paid on their value was 42¾ per cent. Were the average confined to the articles named in the table at p. 9, it would no doubt much exceed 42¾ per cent, but, to be within the mark, we will adopt the general average. This average, then (42¾ per cent.), is the measure of the difference between the prices which the Western farmers now pay for what they consume, and those which they would pay were foreign articles admitted duty free. The prices which the manufacturers in the Eastern States make the American people pay for their goods are not, and cannot be, less, but are, and must be, something more than 42¾ per cent, in addition to British prices, or else how could the Britisher pay an average of 42¾ per cent, duties, and still make a profit on what he sends to America? If the prices paid by the Western farmer to the manufacturers of the Eastern States only exceeded British prices by, say 25 per cent., no page 12 British goods, having to pay 42¾ per cent, import duties, could possibly be sent to the United States. The very fact of large imports being poured in, year after year (as shown in table at p. 9, for 1878), in spite of the 42¾ per cent, duty for admission, makes it clear that the prices in America must be at least 50 per cent, in excess of those current in England, or else those sendings would leave a loss, and would be discontinued. Those importations, be it noted, are not fitful or intermittent, but are, though fluctuating in amount, constant in their recurrence. The continuous overflow, however slight, of a tank is clear evidence of its being full; and, in the same way, the continuous importation of goods burdened with 42¾ per cent, duty is clear evidence that the ordinary prices of such goods in the importing country must keep sufficiently high to make such importations profitable.

However, to err on the side of caution, we will instead of 50 per cent, or 42¾ per cent., take 40 per cent, as the overcharge which the Western farmers have to pay for the goods which they require to supply their wants. Now, we have shown at p. 9 that their annual expenditure on the supply of those wants amounts in the aggregate to 1,400,000,000 dollars. Let us see what proportion of that sum is unnecessarily squandered. If the American farmers were allowed to buy, as they could buy, for 100 dollars what they are now compelled to pay 140 dollars for, it is clear that they could buy for 1,000 million dollars what they now pay 1,400 million dollars for, and consequently they would save 400,000,000 dollars every year. In other words, by being left free to buy where they could buy cheapest, they would benefit to the extent of 400 million of dollars, which they now lose by the operation of the protective duties.

Truly a startling sum! A stupendous sum! That such a pile of wealth should year after year be unnecessarily and wantonly flung away and wasted seems utterly incredible, and yet it is literally true. "What!" we can imagine a Western farmer exclaiming, "do you mean to say page 13 that we farmers, our class alone, are every year, out of our hard earnings, needlessly and heedlessly throwing away 400 millions of dollars, and that we could, if we would, save in our yearly expenses a sum large enough to defray the whole of the national expenditure nearly twice over?" "Yes, sir," we reply, "it is a fact. We have clearly shown that the same articles of consumption that you could get from the Britisher for 100 dollars, you have now to pay 140 for. Now, if you, one with the other, rich and poor, spend 200 dollars a year on such articles, the common rule of three shows that but for your heavy Customs duties you need only spend 143 dollars for the same things instead of 200, and that, while living just as comfortably, you would on an average save fifty-seven dollars a year. Now, as there are 7,000,000 of you agriculturists, multiply that number by the fifty-seven dollars which each would save, and you will find it comes to 400,000,000 dollars. The fact is, that you never realised the amount of your loss—never put it into figures. It is so mingled up in small doses with your daily spendings that, though enormous in the gross, it does not strike you in the detail. You go on paying thirty cents for a knife instead of twenty; or fifty cents for a piece of canvas instead of thirty; or ten dollars for woollen clothing instead of six; or your wife buys a printed calico gown for three dollars instead of two, and so on throughout the whole range of your requirements; but you do not stay to inquire how much you are overcharged at each step. Now, this has been calculated for you. For every seven dollars which you now spend you ought only to spend five; the other two dollars are simply thrown away in consequence of your import duties."

It has been said the American farmers actually prefer paying seven dollars to the Eastern State manufacturers to paying five dollars for the same thing to the Britisher, especially as the extra two dollars do not go out of the country. Well, if the two dollars do not go into another country, they at all events go into another pocket, and surely the farmers can hardly be persuaded that it is the same thing page 14 to them whether they pay seven dollars to a man in Massachusetts, or five dollars for the same article to a man in Lancashire. We believe, on the contrary, that the hardworking Western farmer prefers getting as much as he can for his money. But if we are wrong, and if it be really true that the farmers are content, knowingly and voluntarily, to pay out of their pockets a yearly contribution of 400,000,000 dollars as a free gift to the Eastern States manufacturers, to enable them to carry on a losing business, which, without that assistance, would have to be given up, we can only admire and wonder. And we wonder all the more as this immense sacrifice is made in vain, and is of very little or no benefit to anyone. This we shall show in the next chapter, when we examine what becomes of the 400,000,000 dollars which the farmers lose.

At all events the farmers ought surely to have a voice in the question, whether they really do (as it is stated they do) prefer losing, or whether they prefer saving, the $400,000,000.

Again, it is said that the American farmers have flourished and prospered; that they have profitably extended, and are still extending, their operations, and that therefore they cannot have suffered the yearly loss alleged. That does not at all follow. No one contends that an average loss of $57 per annum sustained by each agriculturist could turn the scale and make farming a losing business. It does not destroy the farmer, but it sweeps away so much of his profits. By the census of 1870, the total value of (cereal) farm productions amounted to $2,448,000,000. Out of this farmers could afford to throw away a certain portion, and still thrive and make money. But that is no reason why they should persist in throwing that portion away. A man with an income of $2,500 may live on $1,000, muddle away $500 on rotten speculations, and still lay by $1,000 a year, but he would certainly be richer if he did not muddle away the $500. A waste of $57 a year multiplied 7,000,000 times does none the less amount to $400,000,000 in the aggregate.

Again, it is said that the prices of some of the Eastern page 15 States' manufacturers are not so much higher than those of the foreigner as we make out. But, if so, why keep up such heavy import duties. And, again, if so, how it is that, in spite of those heavy duties, foreign goods can still afford (see p. 9) to come in? The Western farmer might say, "Come, I do not mind paying 10 per cent, dearer to you than to the foreigner. Reduce the import duties therefore from an average of 42¾ per cent, to 10 per cent. If your prices are, as you say, moderate, surely, with a bonus of 10 per cent., besides freight and charges, you can withstand foreign competition! But if not, and if the condition of your existence as manufacturers is an import duty of 42¾ per cent., which means that we farmers, as a class, are to subscribe out of our earnings $400,000,000 a year to keep you gentlemen of the East pegging away at a losing business, we protest against it. It is paying far too dear 'for a whistle.' We will withdraw from a game in which we are to find the stakes (and heavy ones too) for others to win, and we will go in for buying where we can buy cheapest."

It should further be observed that the more freight the Western farmer has to pay to get his produce delivered into the European markets, the smaller the net residue that comes to him; for the European buyers' prices include freight. Cheap freights from America to Europe, therefore, mean large profits to the farmer, and dear freights small profits. But as the enormous American import duties prevent heavy and bulky goods, such as iron, coal, &c., from being freely sent from Europe to the United States, and as ships must make a certain amount of freight on the round or cease running, what happens? They make up for getting little or no freight from Europe to America by charging nearly double freight on the cotton, grain, and other farmer's produce which they convey from America to Europe. This surcharge of freight from, to compensate for the absence of freight to, American ports, amounts in the aggregate to a very large sum, which comes out of the pocket of the Western farmers, and constitutes another heavy burden inflicted on them by the present oppressive tariff.

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But the mischief done to the American farmers by heavy import duties is not confined to the immense direct losses inflicted on them. Their interests are also vitally injured in another way. The very essence of their prosperity depends upon their having large and increasing outlets abroad for the large and increasing amount of their produce. They grow far more grain, meat, cotton, &c., than their own country can consume, and must look to their foreign customers to take off the surplus. But the protective duties step in to thwart, cripple and restrict the farmers' dealings with their foreign customers. How are the farmers to export if the manufacturers will not allow of imports? "What is the foreigner to pay you in," we would say to the farmers, "if you refuse to take his goods? Will it be in gold and silver? No such thing. It is now well established and universally admitted that debts between nation and nation are not paid in specie (beyond the merest fraction), but in commodities, and that all commerce is substantially barter. If you will only take from the foreigner such of his goods as he can make a profit on after paying 42¾ per cent, import duty, you limit his power of buying from you, and consequently your own power of selling to him. It becomes a necessary condition of your dealing with him that you should get so low a price for your produce and give him so high a price for his goods, that the margin shall make up for the 42¾ per cent, import duties. These, therefore, cut against you both ways. Not only you pay more for what you consume, but you get less for what you produce. You may not feel the pinch so much just now, but average harvests in Europe would make it absolutely necessary for the United States to secure free sales by making free purchases. If you aspire to feed the world you must take in payment what the world can give you."

Let us now look at another branch of the subject.