Page:The New International Encyclopædia 1st ed. v. 16.djvu/532

* PBOTECTION. 464 PBOTECTION. of reconstruction, the ic.-uiuption of specie pay- ments, etc., and no change of importance was inade in the tariff except that it became increas- ingly protective as the internal revenue duties were one by one removed. When attention was ayain concentrated upon the tariff question the attitude of protectionists was that of conserva- tives desiring to continue a policy which had been tried and found successful, and upon advo- cates of free trade rested the responsibility of wishing to overturn an established institution. Po«-n to 1804 all of the important changes made in the tariff were in the direction of increased protection. The Wilson Act of the latter year ■was a reactionary measure, but was so garbled in its passage through Congress that the tariff- reform Trcsident of the period, llr. Cleveland, allowed it to become a law without his signature. The victory of the Republicans in 1890. although not connected with the tariff issue, involved as an incident a return to a highly protective policy. In fact, the Dingley Act of 1897 marks the ex- treme limit of protectionist policy in the United States down to date. During this last period only one new argu- ment of importance has been advanced in sup- port of protection, the 'wages argument.' Before protection was the settled policy of the country' one of the reasons urged in its favor was that since wages were liigher in the United States, some special encouragement was necessary to the establishment there of new industries in compe- tition with the low-wage labor of Eurojie. After protection became a settled fact, by an interesting inversion, the high wages of American labor began to be attrilnited to it. The wages argu- ment runs as follows : In protected industries higher wages arc paid in the United States than in similar industries abroad. Protection, it is concluded, causes the high wages, and its with- drawal would pauperize American laljor. This view overlooks several important facts. First, equally high wages are jiaid in unprotected in- dustries, and these industries, which include farming, mining, transportation, and many branches of manufacturing, vastly exceed in im- portance and magnitude the protected industries. Second, employers, whether jirotected or unpro- tected, desire to secure their labor as cheaply as they can, and there is nothing in a protective tariff which forces them to pay higher wages than are current in the conununity in which the protected industries are situated. In other words. employers in protected industries jiaj* the wages necessary to get the labor they require, and these depend not upon the protectne tariff, but upon general industrial conditions. Third, it is not true that high wages and protection always go together. For example, wages in protectionist Germany are di-tinctly lower than in free-trade England. For these reasons the wages argument, although effective for campaign purposes, has never enjoyed nuuli repute among trained econ- omists. It is, hiiwcver. urged in a more subtle way by some wri'.r~. and in this form merits consideration. It is argued that '■ e wealth produced in any country is divided ii vnges. profits, and rent, and that the amount • Mie last share depends upon the poorness of thi iiarginal land and other natural resources to whi' li report is made. Pro- tection, as applied in the United States, diverts labor and capital from farming and extractive industries to manufacturing. In consequence, it is claimed, the margin of cultivation to which resort is made is somewhat higher under a i^ro- tectionist than it would be under a free-trade policy and rents are lower, while wages and profits together are proportionate!}" higher. Hence, it is concluded, protection raises wages at the expense of rent and 'other monopoly in- comes.' In answer to this argument it need only be pointed out that the reasoning, if valid, proves merely that protection secures for labor a larger relalire share of the total product. If, in so doing, it diverts labor and capital from invest- ments in which they would afford larger returns, as advocates of free trade maintain, it may very well be that labor's larger share of the smaller product obtained under ^le regime of protection is actually less than would be labor's smaller share of the Uiryrr product that would be secured under the regime of free trade. Present-day advocates of protection in the United States may be divided into two classes — those who defend it as a temporary and those who defend it as a ))ermanent policy. Among the former it is beginning to be actively discussed whether protection has not done its greatest pos- sible service for the coiuitry and whether a grad- »ual transition to a free-trade policy would not be desirable. Writers answering these questions in the affirmative advocate the abolition of the protective duties on raw materials, trust-made manufactures, etc.. and emphasize the importance of allowing foreign goods to enter the country more freely in order that American industries capable of developing an export trade may find larger foreign markets for their products. Advo- cates of protection as a permanent policy urge it not only on economic grounds, but as a means of fostering the sentiment of nationality and of perpetuating those characteristics which distin- guish the United States from other countries. Free trade is characterized by them as a cosmo- )iolitan policy, which appeals to the 'foreign- hearted,' while protection is extolled as the na- tional system to the support of which all true lovers of country must rally. Strong as is the appeal which these 'higher considerations' make to the patriotic citizen, there is a certain vague- ness about their application to tariff problems which makes the shaping of a law by reference to them difficult. Appeals to patriotism in con- nection with protection are significant chietiy because they introduce a moral earnestness into discussions which would otherwise be narrowly commercial. Since Great Britain adopted a free-trade policy in 1840, the leading protectionist country of the world, next to the United States, has been Ger- many, There also the application of protection has been coincident with a remarkable develop- ment of manufacturing industries, which has seemed to justifv fully the expectations of advo- cates of the policy. Germany's success in domes- ticating manufacturing industries has led France, Austria-Hungary, and, more recently, Russia, to emulate her example. Europe is thus engaged in a war of ho.stile tariffs, in which each important country is trying to build up its own industries by discouraging importations from its neighbors. In each country there is vigorous opposition to the protectionist policy, just as there is in the United States, but it is doubtful whether this opposition is making much real headway. There