gay
Conservative ,
II ,
lower rates. On the other hand whore
money is scarce , prices go down , pro
ducts seek higher markets in other
localities and the money is thus
brought back ; thus the vibration con
tinues from side to side until a prac-
f tical equilibrium has been estab
lished.
This is exactly what has happened
' in this country. The gold which was
carried to foreign countries has been
brought back by the reduction of the
prices of our commodities to rates so
low as to successfully meet compe
tition in all the markets of the world ;
and the impetus thus obtained has
continued until in the year 1900 the
excess of exports over imports ex
ceeded the sum of $500,000,000. In
the meantime gold has accumulated
in the United States beyond the ne
cessities of business , and has thup
greatly tended to advance the price
of commodities.
Second : When war was declared
with Spain , bonds to the amount
of over $200,000,000 were issued by the
government , and purchased as a
basis for new bank circulation , so that
the National bank note circulation
has increased from $285,000,000 to
$868,000,000.
Third : The currency has been
further expanded by the coinage of
silver heretofore stored in the treas
ury , to. the amount of over $100,000-
000.
000.Under
Under these conditions money ,
when compared with commodities ,
has become the most plentiful and
cheap thing owned by the commun
ity , its purchasing power has decreased -
creased , and all products have either
advanced in price , or have main
tained prices higher than warranted
by increased production in particular
lines of industry. When money is
cheap and plenty , commodities al
ways tend toward higher prices ; and
when prices have advanced to a
higher stage than normal rates , other
markets are sought , money flows to
the cheaper markets , production in
the home market decreases and prices
fall until they reach the lower stage
at which homo products can favorably
compete in common markets. This
is the general law , but as will here
after bo shown , it can , in action , bo
greatly modified by the regulations
and burdens which communities im
pose upon trade.
4. A few weeks ago the present
writer had the pleasure of listening
to an address before the American
Economic Association in Washington ,
upon a subject entitled "Some Theo
retical Possibilities of a Protective
Tariff , ' ' in which the speaker tried
to prove that under certain conditions
a protective tariff might increase both
the wages of labor and the profits of
capital. ( Probably few would doubt
j . m
the truth of this proposition under
exceptional conditions. The prog
ress of mankind has been based upon
the ability of the race , not to change
natural laws , which are immutable ,
but to direct and modify their action.
Thus in agriculture and horticulture ,
through the destruction of weeds and
noxious plants , the forces of nature
are concentrated upon those products
which are beneficial to man. Thus
dangerous animals are destroved and
useful animals preserved and im
proved ; and thus also the mountain
torrent is turned aside to run a miller
or irrigate a meadow. The forces re
main the same but are subjected to his
use.
use.This
This principle applies to' taxation.
Every tax upon commodities has its
incident. It either raises the cost of
production and increases prices , or ,
when it falls upon the payer alone ,
which is seldom , impairs his ability
to purchase other commodities. In
this way the burden of taxation is
finally diffused through the commun
ity. It has been well said that the
power to tax is the power to destroy ,
and perhaps no evil has been more in
jurious than the abuse of the taxing
power.
Tariffs for "protection" are based
upon this incident of taxation. In
this country they take the form of
duties upon imports from foreign
countries , with the purpose , by add
ing the tax to the value of the ar
ticles imported , and thus enhancing
the price to the home consumer , of
enabling the home producer of the
same class of articles to successfully
meet foreign competition. They maybe
bo , and usually are placed so high as
to shut out foreign competition. In
that event homo consumers are at the
mercy of home producers , and the
only protection loft to the consumer
against inordinate prices is possible
competition among home producers.
If this oompotition is so intense and
efficient as to reduce the prices of the
protected product to a level with that
of the foreign product , the ' tariff is
useless both for "protection" and
revenue , and can only become effect
ive for "protection" by a combina
tion among producers which shall
supersede the laws of supply and de
mand , and create a monopoly in pro
duction. In every case the imme
diate effect 'is to raise the price to the
consumer ; otherwise there would be
no "protection. "
The great abuse of powers of gov
ernment , and the far greater efficiency
of individual enterprise in controlling
and directing the action of the
forces of nature , has for
many years tended to limit the
functions of government to national
defense and police regulation , and to
the removal of obstacles which iudi-
vidual enterprise , cannot overcome ,
such as the improvement of harbors
and rivers , the erection of light-houses ,
education on certain lines , surveys of
the ocean ; and as the writer believes
the construction of a canal to connect
the Atlantic and Pacific oceans and
thus accommodate the commerce of
the people living on different sides of
the continent. Even the exercise of
such power is liable to , and has been
the instrument of flagrant abuse.
Social philosophy long ago discarded
the idea of parental government ; and
in this country from its earliest
origin , all the governments were con
secrated to liberty , dependent on the
people and limited in their powers ,
and this was especially true of the
national government. Freedom in
all directions was the principle ; and
no infringement thereof was permit
ted except so far as was "necessary for
social safety and individual liberty
and happiness. No power was grant
ed to interfere with freedom of trade.
A power , however , was granted to
levy taxes for revenue , and for rev
enue only. By construction , stop by
stop , this power has been so extended
that revenue has become the incident
and "protection" the principle of
government. Both in nature and in
the spirit and letter of our institu
tions , freedom is the primary princi
ple , which can only bo so far modi
fied as ultimately to preserve free
dom.
The Diugley tariff act became a Jaw
in 1898. Its purpose was both revenue
and protection , but the fundamental
idea which permeates every clause of
tlm law was "protection , " and the
average of duties on imported articles
is about fifty' per cent of the appraised
value. In many cases it is prohibi
tive. The conditions were peculiarly
favorable for its immediate success.
The reinstatement of credit , the ex
pansion of cnrroucy and the stimulus
afforded by the Spanish and South
African wars had created an unusual
prosperity in the staple industries.
Hope and confidence everywhere
abounded. The ultimate effects
of the protective taxation were not
only not appreciated , but their
immediate effects were still
further stimulative to business.
The purpose and effect of this taxa
tion was to raise prices , and the sec
ondary effect was to increase cost in
nearly all lines of production. In
process of time , the burden of taxes
upon commodities is diffused through
all branches of industry. There is
but one partial exception : where a
monopoly is so complete that without
limit , the producer can compensate
himself for increased cost by an ad
ditional price for the article pro
duced.
At first increased cost was not no