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The protective tariff in this country has, since the time it first made its appearance as a part of our national policy, acted as a check to the free importation of raw material or of manufactured goods from other countries. The Republican party, having from the first identified itself with a high protective tariff, has urged as its reason for this the necessity of building up manufactures and enabling Americans to make the articles they use in the place of being dependent on the manufacturers in England and Europe.
It is scarcely necessary to say that a protective tariff on any article stimulates the production of that article in the country levying the duty. As good an illustration of the result of the tariff as may be asked is to be found in the history of the attempt to make watches in Massachusetts. Three times, prior to the war, did a watch company start at Waltham only to fail. It was found impossible to compete with the watch manufacturers of England and the Continent. But with the duty levied soon after the civil war broke out, a fourth attempt was made. The result was, not only that a Waltham watch took the gold medal at the Paris Exposition in the seventies as against all competitors, but the American watches can to-day be sold in London and in Switzerland. The manufacture of them has reached a point where a duty is no longer necessary, and it has also reached a point where foreign markets are invaded.
The lesson of this is obvious. A protective tariff makes the manufacture of a particular article possible, but it also stimulates that manufacture until the men engaged in it so develop it as to make it possible to compete with their rivals in other countries. There also comes a time in the history of every manufacturing country when the home market is outgrown, whenunless new markets may be found—there is a surplus of manufactures.
It is an economic law that there may be no exports from a country unless there are imports also. The money of the world is used, so far as commerce is concerned, only to pay balances. This may be shown in a very simple way. The total amount of gold and silver in the United States in November, 1890, was $1,004,200,553. The total value of imports for the fiscal year ending June 1, 1890, was $823,286,735. Had this country paid in cash for those imports there would have been only $180,913,818 left, or enough to pay for imports for about a month and a half longer; at the end of which time we would have had no more money. But as the value of the exports during that year was $881,076,017, we had only the balance of $57, 789,282
This law, which makes it impossible for a country to export unless it imports as well, makes the protective tariff operate against the manufacturer so soon as the time comes when he is obliged to seek a foreign market or limit his production.
The election of General Harrison to the presidency stamped the Republican policy of protection with the people's seal of approval. Thus encouraged, Congress was enabled to pass the McKinley bill, in which the protective tariff was carried to a higher point than before. But by this time, under the stimulus of the tariff, the manufacturers of the country had reached the position where for many of them a foreign market was necessary if they would still develop. Mr. James G. Blaine saw that the natural markets of
the United States were to be found in the Spanish American countries of Central and South America. He had long been leading up to a closer union, commercial and friendly, between the Republics of the two Americas, and he had driven his scheme of a Pan-American Congress to a successful ending
He caused to be introduced in Congress what was called the Reciprocity amendment to the McKinley bill. Under this section the President, when he becomes convinced that any country which produces sugar, molasses, coffee, tea or hides, is imposing duties on agricultural products or manufactured articles produced in the United States, has the power to suspend the operation of the McKinley bill so far as sugar, molasses, coffee, tea or hides imported from such country are concerned. In other words, this gives the President the power to lessen the duty paid on these specified articles when he sees fit to do so. This in turn means that if Brazil will reduce her duties levied on agricultural products and manufactures of the United States, the President will reduce our duties on coffee, sugar and hides from Brazil.
The working of this amendment is almost apparent when one reads it. It is bringing the old principle of mutual concessions into international trade in order to increase the commerce of the United States, and in turn, that of the country to which the concession is made. In effect, reciprocity is free trade with this limitation: It trades off the reduction of duties at this end of the line for similar reductions at the other, and it is a form of free trade especially designed to foster the trade with a particular country. It provides a market for those manufactures which have outgrown the home demand, and it increases the market for the farmers. It is easy to see, from what has been written, that reciprocity is the natural outcome of a protective tariff. The tariff has fostered and stimulated American manufactures until the home market is no longer sufficient, and therefore a new market had to be found.
The introduction into Congress of the Reciprocity resolution produced some excitement. Senator Mitchell was the first to advocate it, but he was speedily followed by all the Republican Senators. The New York Produce Exchange held a meeting and passed resolutions in favor of the scheme, which action was repeated by nearly all the commercial bodies in the country. A vigorous fight was made against it in the House by Major McKinley and Speaker Reed, but when it became apparent that public sentiment was strongly in favor of it, the amendment passed. Since then a number of treaties have been begun, and some have been concluded, looking towards putting the plan into active operation. During the debate on the measure, an effort was made to enlarge the scheme sufficiently to bring Canada in, but this was defeated owing to the opposition of Representatives and Senators from the States along the Northern border.
TEXT OF THE RECIPROCITY SECTION OF THE MCKINLEY BILL.
Section 3. That with a view to secure reciprocal trade with countries producing the following articles, and for this purpose, on and after the first day of July, 1892, whenever, and so often as the President shall be satisfied that the government of any country producing and exporting sugars, molas. ses, coffee, tea and hides, raw and uncured, or any of such articles, imposes duties or other exactions upon the agricultural or other products of the United States, which in view of the free introduction of such sugar, molasses, coffee, tea, and hides into the United States he may deem to be reciprocally unequal and unreasonable, he shall have the power and it shall be his duty to suspend, by proclamation to that effect, the provisions of this act relating to the free introduction of such sugar, molasses, coffee, tea, and hides, the production of such country, for such time as he shall deem just, and in such case and during such suspension, duties shall be levied, collected, and paid upon sugar, molasses, coffee, tea, and hides, the product of or exported from such designated country, as follows, namely:
All sugars not above number thirteen Dutch standard in color shall pay duty on their polariscopic tests as follows, namely:
All sugars not above number thirteen Dutch standard in color, all tank bottoms, syrups of cane juice or of beet juice, melada, concentrated melada, concrete and concentrated molasses, testing by the polariscope not above 75 degrees, seven-tenths of one cent per pound; and for every additional degree or fraction of a degree shown by the polariscopic test, two-hundredths of one cent per pound additional.
All sugars above number thirteen Dutch standard in color shall be classified by the Dutch standard of color, and pay duty as follows, namely: All sugar above number thirteen and not above number sixteen Dutch standard of color, one and three-eighth cents per pound.
All sugar above number sixteen and not above number twenty Dutch standard of color, one and five-eighth cents per pound.
All sugars above number twenty Dutch standard of color, two cents per pound.
Molasses testing above fifty-six degrees, four cents per gallon.
Sugar drainings and sugar sweepings shall be subject to duty either as molasses or sugar, as the case may be, according to polariscopic test.
On coffee, three cents per pound.
Hides, raw or uncured, whether dry, salted, or pickled, Angora goatskins, raw, without the wool, unmanufactured, asses' skins, raw or unmanufactured, and skins, except sheepskins with the wool on, one and one-half cents per pound.*
* For most recent developments as to Reciprocity treaties, up to the moment of going to press, see Addenda, preceding Index.