Total Exports of British Manufactured or Partly Manufactured Goods to the Principal Protected Foreign Countries.

The table which follows, from the British Blue Book, shows the exportation of manufactures from free-trade United Kingdom and protected United States, respectively, at quinquennial periods from 1860 to 1900, and in 1902, stated in millions of pounds sterling for the United Kingdom and in millions of dollars for the United States. It will be seen that exports of manufactures from the United Kingdom increased from 124.9 million pounds sterling in 1860 to 227.6 millions in 1902, having thus less than doubled, while those from the United States increased from 40.3 million dollars in 1860 to 403.6 millions in 1902, being thus ten times as great in 1902 as in 1860.

Exportation of manufactures from United Kingdom and United States, respectively, at quinquennial years, 1860 to 1902. [From official statistics of the respective governments ]

The table which follows, also from the British Blue Book, shows the importation of manufactures into free-trade United Kingdom and protected United States, respectively, at quinquennial years from 1860 to 1900, and in 1902, stated in millions of pounds sterling for the United Kingdom and in millions of dollars for the United States. It will be seen that imports of manufactures into the United Kingdom grew from 29.3 million pounds sterling in 1860 to 148.9 millions in 1902, while the importation of manufactures into the United States only grew from 212.3 million dollars in 1860 to 344.8 millions in 1902. Thus the importation of manufactures into free-trade United Kingdom increased 400 per cent during the period in question, while those into protected United States increased only 64 per cent.

Importation of manufactures into United Kingdom and United States, respectively, at quinquennial years, 1860 to 1902. [From official statistics of the respective governments.]

Meantime the domestic manufactures of the United Kingdom, subjected as they thus were to the enormous pressure from manufacturers of other countries and the rapid growth in imports of foreign manufactures, grew, according to Mr. Mulhall, from 2,808 million dollars' value in 1860 to 4,263 millions in 1894, while those of the United States, under protection, grew, according to this same authority, from 1,907 millions in 1860 to 9,498 millions in 1894. From 1860 to 1894, therefore, British manufactures, subjected to fierce competition with all other parts of the world, increased but 51 per cent, while those of-protected United States increased 396 per cent. To sum up in a single sentence the contrast between the prosperity of manufactures in free-trade United Kingdom and protected United States, during the period from 1860 to 1902 imports of manufactures into the United Kingdom increased 400 per cent., into the United States 64 per cent.; exports of manufactures from the United Kingdom increased 51 per cent, those from the United States 900 per cent, while production of manufactures in the United Kingdom increased, from 1860 to 1894, 51 per cent, and in the United States 396 per cent.

Importation of Raw Material for Manufacturing Under the Wilson and Dingley Laws, Respectively.

One point worthy of special attention in a comparison of the work of the Wilson low tariff and the Dingley protective tariff acts is that the importation of raw material for use in manufacturing has been very much greater under the Dingley than it was under the Wilson act. "Free raw materials" was the Democratic cry during their campaign and during the preparation of the tariff act; yet the demoralization of the home market which resulted from low tariff rates on manufactured articles so reduced the demand upon the manufacturers for finished goods that they had little occasion to use the free raw materials which the Wilson act gave them. The Dingley act also placed a very large proportion of the raw materials on the free list, levying, however, a duty on certain articles which come in competition with those produced at home, especially wool and hides; but in no case was this sufficient to prove embarrassing to the manufacturers, while the domestic industry was meantime stimulated. The Statistical Abstract of the United States shows that the value of articles in a crude condition which enter into the various processes of domestic industry imported in the years 1895, 1896 and 1897, in which the Wilson low tariff was in operation, aggregated $596,601,396, or an average of 199 millions per annum; while the imports of this class of articles in the fiscal years 1901, 1902, and 1903 aggregated $982,842,401, or an average of 328 millions per annum.

Thus the net result of the application of the two principles of free raw materials and low duties on manufactured articles on the part of the Democratic measure, and free raw materials and protective duties on manufactured goods under the Republican measure, is shown in the fact that the importation of raw material for use in manufacturing during the three years in which the Wilson law was in operation averaged 199 million dollars per annum, while in the last three years under the Dingley law the importation of raw material for use in manufacturing averaged 328 million dollars per annum. Despite the assertion of the Democrats that they were going to give to the manufacturers of the country free raw material, the disadvantages to the business community of their low tariff rates which they coupled with it were so great that the manufacturers had little use for the free raw materials; while under the protective measure which gave the manufacturers free raw materials in most of their required articles and an enormous demand in the home market by reason of the protection to manufactures, the importation of raw material under the Dingley law in the last three years has been 65 per cent. in excess of that under the Wilson law in a like number of years.

Under the Wilson law, with all of its boasted "free raw materials" for the manufacturers of the country, articles in a crude condition for use in manufacturing averaged but 26 per cent. of the total imports; while under the Dingley law articles in a crude condition for use in manufacturing formed 31.8 per cent. of the

total imports in 1899; in 1901, 331⁄2 per cent.; in 1902, 361⁄2 per cent., and in 1903, 38 per cent. of the total imports. This justifies the above assertion that the low tariff rates on manufactures which accompanied the free raw material of the Wilson law destroyed the home demand for those raw materials, while the protective duty on manufactures under the Dingley law so stimulated the home demand for manufactures that our manufacturing establishments increased their share of the total importations from 26 per cent. under the Wilson act to 38 per cent. under the Dingley act.

A table on page 129 shows the total value of "articles in a crude condition which enter into the various processes of domestic industry" imported and the percentage which they formed of the total imports in 1895, 1896, and 1897 under the Wilson act, and in 1899, 1900, 1901, 1902, and 1903 under the Dingley act :

Does Protection Cause an Increase of Prices in the Home Market?

Experiences in the United States do not justify the assertion made by the free traders that a protective tariff results in an advance of prices or in high prices in the country adopting it. Certainly this has not been the case in the United States. With an area equal to that of all Europe, and producing practically all articles other than tropical which are required for use in manufacturing and for food, with a population of 80 millions, with nearly a half million separate and competing manufacturing establishments, with perfect freedom of interchange between all parts of the community in which these manufacturing establishments are located, and with the cheapest transportation facilities which the world affords, the competition among our own producers is an absolute assurance against excessive prices or against possible combinations by which artificial prices can be maintained. The census of 1900 shows the number of manufacturing establishments whose product exceeds in each case $500 per annum. It gives the number as 296,440, and of those having a product of less than $500 each, 127,419, and these figures do not include the hand trades in which the number of establishments is given at 215,814. That natural competition among such a large number of producers, located with especial reference to proximity to materials and power, or markets, or both, should produce the keenest competition and consequently the lowest possible prices consistent with a fair rate of profit is apparent. That it does so happen is evidenced by the fact that the price of tin plate, as above indicated, has fallen from $5.15 per box of 100 pounds in 1890, the year of the enactment of the McKinley law which placed a high rate of duty on that article, to $3.65 in the same market April 29, 1904. True there was a time during that period when prices of tin plate returned to a figure nearly as high as that of 1890, but this was due solely to a great increase in the price of the material used in its manufacture and in the price of labor. During that period of high prices pig tin advanced 174 per cent. above its lowest record price, and steel slabs, the material from which the plates are made, advanced 193 per cent above its lowrecord prices, while tin plate and Bessemer pig iron advanced 174 per cent above their low-price record, and steel tank plate advanced 161 per cent. above its low record. In all of these cases the advance in prices of the material was greater than that of the finished product, while today with the reducing prices in the raw material tin plate has again fallen to $3.65 per box, or 30 per cent. below the price in 1890, the year in which the duty was placed upon that article.

THE CASE OF STEEL RAILS.

Another and even more striking illustration of the reduction in home prices of articles upon which a high rate of duty is placed is found in the case of steel rails. A duty of $28 per ton was levied on steel rails in 1870. In the immediately preceding year the quantity of steel rails produced in the United States was only 8,616 tons. In 1871, the year following that in which the duty was placed upon steel rails, the production was 34.152 tons; by 1881 it had reached 1,210,285 tons; in 1887 it was over two million tons, and in 1902 was 2,947,933 tons. In 1870, the year in which the

duty was placed on steel rails, the currency price of steel rails in the United States, as shown by the Statistical Abstract, was $106.75 per ton; by 1880 the price had fallen to $67.50 per ton; by 1890 to $31.75, and in 1903 the average price was $28 per ton. Meantime the duty had been reduced to $17 per ton in 1883; $13.44 per ton by the McKinley act of 1890; to $7.84 by the Wilson-Gorman act, and this rate of $7.84 per ton was continued under the Dingley act.

DUTY ON HIDES DID NOT INCREASE PRICES OF BOOTS AND SHOES.

Prices of boots and shoes following the imposition of a tariff of 15 per cent. ad valorem on hides of cattle imported did not advance. Prior to the enactment of the Dingley law hides had been for many years free of duty. By that act a duty of 15 per cent. was levied on raw hides and still remains. That act went into effect July, 1897. On January 1, 1897, the wholesale price of men's grain shoes was shown by tables quoted in Dun's Review, an accepted authority, at $1.071⁄2 per pair. Instead of advancing, the price fell from $1.021⁄2 on January 1, 1898, to 972 cents on January 1, 1899; $1.05% on January 1, 1901, and $1.05 on January 1, 1902. Men's calf shoes, which were $1.75 per pair at wholesale prices on January 1, 1897; by January 1, 1899, were $1.70, and on January 1, 1902, were $1.75. Men's kip boots, which were $1.33 on January 1, 1897, before the duty had been placed on hides, were, on January 1, 1899, $1.30. Women's grain shoes, which were 872 cents per pair at wholesale on January 1, 1897, were on January 1, 1899, the year after the addition of the rate of duty on leather, 35 cents per pair. It is true that prices of boots and shoes of all grades have advanced slightly since 1902, due to an increase in the rices of raw material and prices of labor; but the fact that there was a steady fall in the price of practically all grades of shoes during the two years following the enactment of the Dingley law which placed a duty on hides, shows that the duty placed on hides produced no advance in the prices of boots and shoes. That the recent advance in prices is due to causes other than the tariff, which has not been changed since 1897, is evidenced not only from the general advance in prices of labor, but from the fact that the average import price of hides in 1903 was about 20 per cent higher than that of 1899, as shown by the official statements of quantity and valuation of hides imported in those years, while in the domestic markets prices of hides and leather also show a corresponding advance as compared with 1899.

Upon this subject of the effect of a protective duty upon the prices of articles produced at home, attention is especially called to the fact that a very large proportion of the material required by manufacturers for production of the articles which enter into the home markets are imported free of duty. The total value of material imported for manufacturing in 1903 was 380 million dollars. Of this 280 millions came in free of duty and 100 millions was dutiable. Upon this the amount of duty collected was 32 million dollars, which amounts to less than one-fourth of one per cent. of the gross value of the manufactures of the United States as reported by the census of 1900. Even if we take the entire amount of duty collected on finished manufactures and manufacturers' materials in 1903, we should get a total of but 200 million dollars, or a fraction over one per cent. of the gross value of the domestic manufactures of that year, an advance easily and almost certainly more than offset by the reduction naturally resulting from competition among the large number of manufacturers producing and seeking a market for this enormous quantity of manufactured material.

Trusts not Able to Fix Prices.

The assertion that the great combinations are able to fix and maintain prices is amply refuted by the experiences of the present year. A table recently published by the Bureau of Statistics and printed on another page of this work (see index) shows a large fall in prices of nearly all classes of articles produced by the great manufacturing combinations of the United States during the past year, in which the trusts have been supposed to be at the very height of their power, while the chief articles in which an increase of price is reported are the products of the farm or those imported from other countries, in neither of which are the articles in quesion produced by trusts.

Coal Prices Advanced After the Coal Tariff was Removed.

A recent illustration of the fact that prices in the United States are not affected by presence or absence of tariff duties is found in a study of the results of the removal of the duty on coal, made in the closing months of 1902. It will be remembered that in view of the then existing coal strike and the shortage of coal resulting from that strike, urgent demand was made for a removal of the duty on bituminous coal. In response to this demand Congress enacted a law suspending the duty on coal for one year beginning with January 1, 1903. The rate of duty on bituminous coal under the then existing law was 67 cents per ton, and if the theory that this duty is added to the price in the home market were true, the removal of this duty of 67 cents per ton should have caused a corresponding fall in the selling price of coal in the United States. Instead of this, however, the annual average price per ton of bituminous coal, as shown by the official reports of the Bureau of Statistics of the United States Government, was $3.75 in 1903, against $2.50 in 1902, 1901, and 1900, respectively; $2.00 in 1899, and $1.60 per ton in 1898. This price of $3.75 per ton which existed in 1903 in the absolute absence of any tariff duty on coal was higher than that quoted in these official reports at any time since 1881.

Reciprocity.

Reciprocity is another form of tariff revision which has been suggested at various times by various people and by people belonging to various political parties. It was suggested by President Arthur, James G. Blaine and William McKinley; was put into operation in the McKinley tariff law; was destroyed by the Democratic Wilson-Gorman tariff law; and now the Democratic party is charging that the Republican party is not willing to give the country "genuine reciprocity." There are two distinct kinds of legislation which have been designated as reciprocity legislation.

THE DEMOCRATIC PLAN.

The first of these was enacted by the Democratic party in 1854, taking effect in 1855. It was reciprocity with Canada, and provided that certain articles, the growth or produce of Canada or the United States, should be admitted into each country, respectively, free of duty. These were articles of common production in the two countries, and included grain, flour, animals of all kinds, fresh, smoked, and salted meats, cotton, seeds, vegetables, fruits, fish, poultry, eggs, hides, furs, stone, slate, butter, cheese, tallow, lard, ores, coal, pitch, turpentine, ashes, timber, lumber, flax, hemp, tobacco, and rags. These were all, with the single exception of cotton, articles of mutual production, and Democratic reciprocity simply provided for free trade in these competing articles. Under that treaty, which went into effect March 16, 1855, and terminated March 17, 1866, exports from the United States to Canada fell from $27.741,808 in the fiscal year 1855 to $23,439,115 in the fiscal year 1866, a reduction in our exports to Canada of over 4 million dollars during this period of Democratic reciprocity, while imports into the United States from Canada increased from $15.118,289 in 1855 to $48,133,599 in 1866, an increase of 33 million dollars. In our trade with all other countries during that same period our imports increased 60 per cent. while those from Canada were increasing 220 per cent., and our exports to all other countries increased 70 per cent while those to Canada under this reciprocity were decreasing 15 per cent. It was simply free trade in articles of common production and with no barrier to protect the domestic producer-the result being a much greater increase in our imports from Canada than in those from other countries, and a decrease of exports to that country, while to other countries exports were increasing.

THE REPUBLICAN PLAN.

A later form of reciprocity with which the country has had experience is illustrated by the plan formulated in the McKinley tariff law and expressed by William McKinley in his much-quoted speech at Buffalo, quoted in full on page 446, in which he said: "By sensible trade arrangements which will not interrupt our home production we shall extend the outlets for our increasing surplus. **