The Pamphlet Collection of Sir Robert Stout: Volume 51
Protection and Prices
Protection and Prices.
Q. Does protection tend to cheapen manufactured products?
A. One answer to this is, that if protection is to be recommended because it leads ultimately to cheapness, it were best to begin with cheapness. Another answer is to be found in the circumstance that not a single instance can be adduced to show that any reduction has ever taken place in the cost of production in the United States under a system of protection which would, through the agencies of new inventions, discoveries, and economies, not have taken place equally soon under a system of free trade; while, on the contrary, many instances can be referred to which prove that protection, by removing the dread of foreign competition, has retarded not only invention, but also the application and use of improvements elsewhere devised and introduced.
Q. But how about the tables which are constantly presented showing the increased purchasing power of "farmers' articles," and of mechanics' wages since the establishment of the protective policy in the United States in 1860, as compared with a lesser purchasing power of the same articles, in former years under much lower tariff?
A. All such tables are defective, and intended to deceive, because they omit to show the reduction of prices which have occurred during the same period in free-trade countries. If the reduction of prices in the United States since 1860 is to be traced to the protection of the tariff, then the prices of like articles in England, where there has been no protection, ought to be higher. But, on the contrary, prices are lower in England: so the cause of the recent reduction of prices, or the increased purchasing power of farmers' articles and wages, must be due to some cause common to all countries.
Q. What is the cause?
A. Mainly the great improvements in the machinery of production and transportation. For example, the improvement in textile machinery in the past twenty-five years has been as important as it was in the previous fifty years, and the only thing the tariff has done has been to enhance greatly the cost of machinery; thus depriving the United States of the full advantage of the inventions of this most inventive age.page 29
Q. It is constantly asserted, by the advocates of protection, that a tariff on imports "obliges a foreigner to pay a part of our taxes." Is this true?
A. No. The point itself involves an absurdity; for if there were any plan or device by which one nation could thus throw off its burden of taxation in any degree upon another nation, it would long ago have been universally found out and recognised, and would have been adopted by all nations to at least the extent of making the burden of taxation thus transferred in all cases reciprocal. Taxes on imports are paid by the persons who consume them; and these are not foreigners, but residents of the country into which the commodities are imported.
Q. What plain, practical test of this matter is available to every one?
A. Inquire of any dealer, what is the price of any dutiable imported article (the production and sale of which is not absolutely controlled by a monopoly) in bond, or free of duty, and out of bond or with duties paid. Sugar, for one example, has been selling for American use at 3¼d., while foreigners could buy it in bond for export at 1¾d. per pound, the difference being the exact measure of the increase of price occasioned by the duty, which in this case is 1½d. per pound.
Q. The advocates of protection assert that it is impossible to "point to a single monopoly in the United States that has been created or fostered by the protective system." Is this true?
A. No, and note the proof that it is not. The owners of the copper mines on Lake Superior (which a few years ago were public property, and were subsequently sold for a pittance), under a duty so prohibitory of all imports of foreign copper, that in 1878, only one pound of copper (paying a revenue of five cents) was imported, have for years fixed and controlled the price of this essential article in the United States, at a rate higher than is paid in any other country; and after exhausting every demand of the domestic market, have exported and sold the surplus product of their mines to foreigners, twenty per cent, less than they would permit it to be sold to their own countrymen.
Again, the action of our great iron lords, protected from page 30 foreign competition by duties ranging from 30 to two per cent, in uniting and publishing monthly price lists of their products which consumers must pay or go without, is also well known; while of other monopolies, these of quinine, bi-chromate of potash, wood-screws, barbed iron wire, and steel rails, are familiar.