Imágenes de páginas
PDF
EPUB

that protects, but it is worth paying something to keep industries in continuous operation.

(5) This brings us to the argument against "dumping." By dumping is meant the sale of products abroad at prices lower than those charged at home. Dumping arises in a variety of ways. Export bounties may be granted by the home country for the specific purpose of encouraging foreign trade; or a monopoly may find it profitable to dispose of a surplus abroad at prices which would be needlessly low in the highly protected home country; and, indeed, there is good reason to believe that many manufacturers for the export trade make it a practice to sell abroad at unusually low prices whenever they believe that their foreign market is threatened. As was stated above, the custom of "coddling" the export trade seems to be very general.

Now if the reduction of prices were permanent, the country in which the products are dumped would have no real cause for complaint. On the contrary, it might logically regard itself as the beneficiary of the costly bounties of the other nation. But real dumping is not, and in the nature of things cannot be, permanent. So far as it may be said to have a rational object, it aims to suppress competing industries by selling temporarily below cost; and when those industries are forced out of business, prices will be raised. So true is this that economists have generally indorsed import taxes and other temperate retaliatory measures designed to abolish dumping. Canada, for instance, has authorized the levy in such cases of a special dumping duty "equal to the difference between the selling price of the article for export and the fair market value thereof for home consumption." A few years ago the beet-sugar industry of France and Germany was so stimulated by bounties that even England, the principal dumping ground of the product, was forced to threaten reprisals in the shape of countervailing import duties. England's resolute attitude, it may be added, led finally to the virtual abolition of sugar bounties at the International Sugar Conference of 1903. In general, there seems to be ample justification for protective duties that are honestly used to ward off destructive attacks upon home industries which, if subjected only to legitimate competition, would be able

to maintain themselves in the long run. It is evident that we have here returned to the substratum of truth contained in the infant industry and home market arguments.

Dumping has been more productive of arguments against protection than of arguments for protection, in the United States; and the opponents of protection have laid great emphasis upon the fact that many articles of American manufacture are sold abroad more cheaply than at home. That this is a fact is now generally admitted. But the protectionists maintain that most of this can be explained by the rebates allowed to American exporters under our drawback laws. Ex-Secretary of the Treasury Shaw estimates that in 1906, owing to these drawbacks, about $140,000,000 of American manufactures might have been legitimately sold abroad at less than domestic prices.1

(6) Intimately related to the arguments which we have been considering is the claim that the distribution of labor and capital of a free-trade nation is subject to the control, and indeed, one may say, to the whim and caprice of foreign nations. Industries differ in their effect upon the physique and character of the people who pursue them. The builder, the skilled engineer, the electrical worker, are benefited intellectually, physically, and morally by their occupations. But the tailor, the maker of ready-made clothing, and the sweat-shop worker are probably harmed rather than elevated by the nature of their employment. Now if foreign nations subsidize by protection and bounty the desirable industries, they may leave to the free-trade nation only those industries which the protected nations do not wish to maintain.

(7) Finally, protectionists appeal to the wage-earning classes with the argument that protection increases wages by diversifying industry and thus stimulating the demand for labor. Indeed the typical protectionist goes farther than this, and maintains that every American industry is entitled to an amount of protection equal to the difference between the wages which it pays and the wages paid by its most efficient foreign competitor. The latter variety of this argument seems to be plainly absurd, or at least obviously inconsistent with the initial assertion that protection raises wages. For, taken together, and they are frequently advanced in company, they result in this magnificently cumulative plea for ever increasing tariffs: protection raises wages, but high wages

1 Leslie M. Shaw, Current Issues, Chap. XXI.

put the American manufacturer at a disadvantage in competing with foreign producers, and the home producer must be protected to the extent of the difference in wages, therefore every

advance in protective duties laid for the benefit of the wage earner must be accompanied by an additional advance for the benefit of the manufacturer, and so ad infinitum.

[ocr errors]

Arguments of Free Traders. — In the first place, we may dismiss a number of arguments which are so extreme as to weaken rather than strengthen the cause of free trade. (1) For instance, it is frequently alleged that protective tariffs violate the assumed natural right of every man to buy his goods where he will and sell his products wherever he sees fit, untrammeled by human laws. The futility of arguments based upon an assumption of natural rights has been sufficiently exposed elsewhere, and needs no elaboration at this point.

(2) It has also been claimed that protective tariffs in the United States are unconstitutional, but this argument is idle; it would be most unfortunate and anomalous if nowhere in our country were lodged the power to pass such regulations regarding international commerce as might appear to be required for the promotion of the public welfare. Furthermore, the charge of unconstitutionality does not correspond to the opinion of our best jurists, and it is very certain that we shall never see a supreme court in the United States which will venture to pronounce protectionism unconstitutional.

(3) In a similar vein protectionism has been called socialism, but this epithet is so generally applied to whatever a person incompetent to argue a cause does not like that it will scarcely terrify any one.

The really able arguments of free traders are those which aim to show either that protection actually does positive harm, or that it fails to accomplish its ends, or that those ends may be better accomplished without protection.

(4) The natural starting point of the free-trade argument, and the goal to which it inevitably returns is the theory of comparative costs laid down on page 285, the proposition that, so long as there are relative, not necessarily absolute, differences in the cost

of producing cheaply portable articles in various countries of the world, so long will there be international trade in those articles. Protective tariffs, therefore, merely divert capital and labor from intrinsically more productive to intrinsically less productive industries. To revert to our simile of the lawyer and his stenographer, protection aims to induce the lawyer to write his own letters, on the general grounds that lawyers are more intelligent people than stenographers, and if sufficient encouragement be held out to them they may, in the course of time, be educated up to the point of operating their own typewriting machines better than the stenographers whom they have previously hired.

Temperate advocates of "freer trade" do not contend that this law of comparative costs demonstrates the desirability of complete free trade under all circumstances. They admit that it may occasionally be profitable for a country to pay enormous bountiesthis is what protection amounts to for the development of certain industries. But they do contend that it establishes free trade as the general rule, every departure from which should require the most positive justification. More particularly, they hold, that at the present time, after a century of industrial development that obviates any military necessity for a further diversification of industry, capital and labor should be freely allowed to take themselves to those employments in which they can reap the largest natural reward, a reward, that is to say, which is not artificially enhanced by subsidies wrung from the general body of

consumers.

(5) Moreover, it is not clear that protection is necessary to diversify industry in a country with such varied natural resources as the United States. The claims of the protectionists at this point may be tested by examining conditions within the wide borders of our own country, within which trade is wholly free. Now, if protection were necessary to foster infant industries and bring them to maturity, the manufacturing industries of this country would still be concentrated in the northern states of the Atlantic seaboard where they first gained a foothold. But they have not been so confined. The early establishment of the textile industries in New England has not prevented their recent development

in the South. Indeed, the so-called "center of manufactures " moved steadily west from south-central Pennsylvania in 1850 to central Ohio in 1900; and the increase, at the present time, is much more rapid in the South and West than in older sections of the country. Internal free trade has not prevented the diversification of industry in the United States, and has not delayed it longer than was desirable. For who shall say that the Dakotas and other typical agricultural states of the Union have greatly suffered from the absence of grimy factory towns and the slums which almost inevitably accompany them?

(6) The inevitable spread of manufactures throughout the United States suggests the essential weakness of the home market argument. International trade expands just as inevitably as the manufacturing area. It might be desirable to confine domestic producers to the more certain home market, which cannot be destroyed by tariff wars or international complications. But, as a matter of fact, home producers will seek foreign markets, and the nation that sells abroad must buy abroad. Since the Civil War we have protected home producers with extremely high tariffs. But in the last twenty-five years our foreign trade has increased at a rate unequaled by any of the other great commercial countries of the world.1 Protective tariffs can cripple and harass and distract foreign trade, but they cannot permanently suppress it. No tariff can make the costs of producing all the articles common to commerce precisely proportional in all quarters of the globe.

(7) The protectionistic appeal to the wage earner seems particularly inconclusive. One reason for distrusting it is the doublefaced way in which it is manipulated to suit the particular requirements of time and place. France wants protection in order to protect her low-paid workmen against the greater skill and efficiency of America's highly paid workers. The United States, on the other hand, must have protection in order to shield her highly paid employees from competition with the "pauper labor of Europe." When first used in the United States, the argument was that wages were already so high in this country as compared

1 Special Reports of the Census Office, "Manufactures," 1905, Part I, p. ccc. The specific period referred to is the twenty-five years, 1880-1905.

« AnteriorContinuar »