Democratic Sentinel, Volume 14, Number 36, Rensselaer, Jasper County, 3 October 1890 — HOME MARKET FALLACY [ARTICLE]

HOME MARKET FALLACY

HOW IT FAILS TO PAN OUT FOR THE FARMER. •A Specimen Humbug; with Which Protection Bamboozle* the Farmer amt Obtains Goods Under False Pretenses —the Theory Briefly Stated. Here, let us say, Is a farmer located on A bit of land a hundred miles away from the nearest city. That city is his market There are farmers all about him; he cannot sell to them either his staple products or the occasional surplus of fruit or garden stuff which unusually good seasons may bring upon his hands. He must carry everything to the city. 'The cost of transportation is so much taken from his profits. Here steps in the protectionist. There ds in this region, say, a stream capable of abundant water power. “Let us put up a woolen mill here,” the protectionist •urges; “let us agree to pay something more than we pay now for woolen stuffs, and so make it an object for some one to -come here and start a manufactory. Hundreds of hands will be employed; the .railway will be put through. We will build up a town right in the midst of our farms, and have a market at our very 'doors. Good prices then for everything. ” It is done. The mill is built; the railway is laid; the town grows up. And the farmer —what of him? Strange to say, we presently find him getting poorer! Where is the mistake? It is just here — in the agreement to “pay something more than we pay now” for manufactured goods. In the protectionist’s theory that •“something more” is put away in a quiet ■corner; in the actual practice it conies out and plays the mischief. If the farmers of this locality want a woolen mill, those in that locality want a cotton mill, and those in the next county an iron furnace, and so on. The result is that . the farmers everywhere pay “something more” for everything they buy., But this is not all. The promise for higher prices for wheat in the “Homo Market” calls for scrutiny. The appeal, sifted down, comes to this: “Pension a number of corn consumers to, come and buy of you. Subsidize an army of artisans to settle at the farm gate. Pay them for making goods at a loss, and out ■of their profits they will purchase your abundance.” This, however, is not the worst. It is but fair to admit that though the protectionist logic was always at fault and the farmer never helped by “protection,” yet that, in fact, the farmer did use to have the “home market” for which ho bargained—paltry as might be the whistle for which he had paid so dear. But nowadays these is no such thing as a ■“home market” for any considerable portion of his produce. The farmer in the ■Genesee Valley, New York, not merely sees the train run past him to Rochester, laden with Hour rolled in Minneapolis from Dakota wheat, but. uses the same flour in his own household, and his village butcher sells fresh meat from beeves killed at Kansas City. No manufacturing town dreams nowadays of looking to the locality about it for any supplies, except only the cheapest part of its “garden truck. ” The labor markets of the world are open to the American manufacturer, who thus has free trade in the one thing he buys most of—labor. He lives in a land where transport facilities are so developed that he need not depend upon the locality about him —and ho does not—in a country whoso surplus of food products is so great that their first price-fixing markets are found at Liverpool, a free-trade city; and so he gets them, too, at freetrade rates. The American farmer’lias sold his birthright and has lost his pottage to boot. The home market theory may be briefly stated as follows: If you farmers will only give us manufacturers enough money to enable us to go into business, and will consent to pay prices high enough to make it possible for us to continue business at extraordinary profits, we will agree to buy our supplies—what we must have from some source—from you at low and steadily diminishing prices—if we can’t get them cheaper elsewhere. ’ That is all there is to it. What the American farmer most needs is a “homo market” in which he can purchase his supplies as cheaply as his competitors purchase theirs; and if he cannot secure this, then he should have the poor privilege of making his purchases where he is compelled to make his sales, and bo permitted to bring his goods home without being compelled to pay unreasonable taxes and fines for carrying on legitimate business.

The Next Struggle. The new tariff bill will soon become a law, and then will come the process of finding out in the courts just what it means. It is one of the beauties of protective tariffs that they cannot be so constructed as to shut off all doubt as to their meaning, and in this way there is always a long process of litigation to find out just what the law is. Thus the McKinley bill, which is now about to go into operation, may be so torn to pieces by the courts within a tew years that McKinley himself will not be able to recognize it. Horace Greeley, the great protectionist, said once: “The longer a tariff continues the more weak spots are found, the more holes are picked in it, until at last, through the influence of successive evasions, constructions, decisions, its very father would not discern its original features in the transformed bantling that has quietly taken its place.” An interesting case of this kind has been seen since the present administration came into power. The present tariff, which was made in 1883, divides ■cloths made of wool into the two classes ■commonly recognized in the dry-goods trade. Those classes are woolens and worsteds, the latter being made of wool, but differing from woolens in the manner of manufacture. In the law of 1883 these worsteds bore a lower rate of duty than woolens. But the manufacturers of woolens were not satisfied and went before the present Treasury authorities last year and got a decision that worsteds were woolens and that the same duties should be collected on them as on woolens, notwithstanding the fact that it stood plainly written in the law-that worsteds should pay the lower duty. On this poiut the importers made a fight in tho United States courts, and after a long trial they won their case, and the Government had to refund all the extra duties collected in the meantime, amounting to some §6,000,000. In this instance the attempt was made by the Treasury Department to revise the tariff laws in the interest of the manufacturers; but, as it turned out, the courts overruled the Treasury decision

am* forced the law to be appjien as it Was plainly intended. Now will come the struggle over the McKinley bill; for it may be assumed that all persons benefited by it who 9ee a way of securing a still greater benefit ou; of it are going to fight for every inch of advantage in the courts.

TARIFF LETTERS TO FARMER BROWN. NO. 8. Tli* Nature oT a Protective Tariff. Dear Farmer Brown: There is not much difficulty in giving such a definition of a protective tariff as will be accepted by the plain, honest people of the country who have no private ax to grind. Abraham Lincoln was right in holding fast to his confidence in the good sense and general fairness of those whom he was in the habit of calling “the plain people. ” To such people I turn with confidence and appeal to them whether this ]9 not a fair definition of the expression, “A Protective Tariff.” A protective is one In which duties are collected on certain articles, when imported, in order that the price of these articles may be 90 increased that individuals in the protected country may go into the business of manufacturing like articles and make a profit which was not possible without such duties. It is of the very essence of a protective duty that it should raise prices; and a duty which does not do this is not protective. Protectionists admit this themselves, and do not hesitate to speak 6f protective duties and revenue duties. To speak of a protective duty that does not raise prices is the same kind of absurdity as to speak of a squaro wheel, of water that is not wet, or of a fire that is not hot. I have just said that protectionists admit the claim here made, but there is such a mass of doubled and twisted contradictions in the talk of protectionists—even the most eminent ones—that I shall have to qualify my language I should say that many protectionists admit that duties raise prices, but oftentimes you will find the same man protesting quite the contrary. Others will argue by the hour in favor of protection, with the one thought running through every sentence that protection raises prices; but they wiil avoid saying this in so many words, and if you ask them whether protection raises prices, they are quick to protest that it does not. I connection with this subject I wish to call your attention to one fact which I think quite significant as showing the real opinions of the protectionists. Have you over observed that they have a habit of crying down cheap prices as a thing to be resisted? Do you not remember that when President Harrison was a candidate for his present high office he said in one of his speeches that a cheap coat usually covers a cheap man? Maj. McKinley, too, defends his high tariff bill by saying that “where merchandise is cheapest men are poorest;” and again, speaking for himself and his political associates, he says: “We want no return to cheap times in our own country. ” All this talk means, of course, that a tariff is a good thing because it makes goods dearer. Now, I am confident that you and all your neighbors have your opinion of such talk. Neither you nor I have ever seen the day when we did not have to practice the most rigid oconomy in all our buying; and if" at any time wo bought anything of superior quality, we did so only because wo thought it would be cheaper in the long run. There are many men, I know, who get what they want, cost what it may; but you and I are not of that number. If you keep down the interest on your mortgage, and if I let no board bills accumulate behind ine, we must be content.

This strange position of President Harrison and Major McKinley, it may be said in passing, is directly opposed to'the progress of American civilization, it is everywhere recognized that the men who are doing most to put the world forward in industrial development are the great inventors. How? By producing laborsaving machinery, by the use of which we have a more complete control over the forces of nature. What for? In order to supply tho needs of humanity at the cheapest possible price. For all men, except tariff-makers and those who thrive on tariffs, acknowledge that cheapness is the great end and aim of all man’s strivings in the field of industry. Tho thinkers and the workers everywhere are engaged in the struggle to produce commodities in new and better ways, in order that we may get what we want more easily, in order that we may have to labor less. According to the ideas of our President and of Mr. McKinley, all this struggle should be abandoned; for dearness is better than cheapness; or, in other words, toil is better than rest; and the more you, Farmer Brown, are compelled to sweat tho better for you. You do not believe it, eh? Neither did Moses when ho got his quails and manna in the desert without any labor at all. A long gap between Moses and Maj. McKinley! But let us return, as the French say, to our sheep. If there is any wavering in the minds of protectionist politicians as to whether protection raises prices, there is none at least in tho minds of the tariff beneficiaries. They flock to Washington in great numbers whenever a tariff bill is to be made, pay big bills for railway fares and at hotels, all in order to get before the committee to ask for duties. Then, in many cases, they hire an expensive lobby to look out for their interests while the bill is going through. Do you think they do all this, and pay out all this money*, in order that the articles they manufacture may be made lower? I trow- not. It is true that these men have a great deal to say about their labor —protection must bo given in order that the laborer may have bettor wages. And these better wages, of course, are to come out of the increased tariff prices of their goods. A clear case. Notwithstanding this fact and tho words of President Harrison and Major McKinley above quoted, it is a recognized protectionist dootrine that protection lowers prices. Mr. Blaine says that the general effect of a protective tariff is to lower prices, putting himself thus at variance with the two eminent men just quoted. But I have no time here to keep on pitting eminent protectionists against each other. Much could be done in that line and curious results would be obtained. We come back, then, to the bed-rock principle that protection can protect only by raising prices. There is absolutely no other way. When that is said, however, a further question is at once suggested: How much does it raise them? As this letter, however 1 , has already extended to too great length, I thall reserve that question for my next. Meanwhile let me say that if any man who reads these letters wishes to ask a question or to make a suggestion I should be most happy to have a letter

from him. I can be addressed at 271 Franklin street, Chicago. Farmer Brown and I are not a close corporation, ars we? Yours truly, Richxrd Knox.

I A Rush lor Money. An event has just happened in New York which throws a flood of light on the stale protectionist cry that it is the foreigner who pays the tariff tax. When the Senate passed the McKinley bill il added a provision that the law should go into effect on October 1, and that the imported goods brought into the country before August 1 and placed under bond in the Goverment warehouses should be snbjoct to the McKinley duties, unless the duties are paid and the goods thus removed from bond by November 1. Under the present law a merchant Is allowed to import goods and leave them in the Government warehouse one year, by placing himself undor bond to pay the legal duty when the goods are removed. The effect of this is to allow the merchant to order large shipments of goods, and the.n place them upon the market gradually as he may wish, distributing the payment of the duties in this way even a longer time, much to his relief. Now, however, that the Senate has said that all goods brought into the country before Aug. 1 must pay McKinley duties if these goods are not removed from bond before November, fears of a panic have been felt in New York. Why? Because merchants have been hurrying Into the country during the summer enormous quantities of foreign goods in order to escape the now McKinley duties. They did so undor the belief that they would have several months in which to pay the duties and place these goods into their stores. Under these circumstances the action of the Senate, as just described, fell like a bombshell among New York merchants. As soon as it was known that they were to have so short a time in which to pay these duties there was a hurrying and scurrying among the merchants to borrow monoy to the present duties and removo their goods rather than leave them in the warehouse to pay the highor McKinley duties. There was already a great stringency in the money market, it being extremely difficult to make loans; but the now need for money drove an unprecedented number of borrowers into Wall street, and there was groat excitement. One day money was borrowod at a rate equivalent, to more than 90 per cent. These facts are stated here In order to set them over f against an assertion of Maj. McKinley in a recent speech in Maine. He said that “by putting our duties on foreign products, the like of which we can produce in the United States, wo make these competing foreign producers bear the burden and supply the revenue totho public treasury." In other words, that the foreigner pays the tax. Now, if this claim be true, how would Maj. McKinley explain the fact that these New York merchants are crowding into Wall street to borrow money i f enormous rates of Interest in order tha they themselves may have the where withal to pay these same dutios? Let him explain that. Mr. Claflin, the representative-of the great Republican Claflin firm, of New York, said that the merchants of that city would need about $15,000,000 to pay the duties on their bonded goods, and he thought that the withdrawal of this large sum from circulation, at a time when there is already a scarcity of money, would have a serious effect. This good Republican merchant evidently takes no stock in McKinley’s foolish talk about the foreigner paying the duty. What poppycock these protectionist “statesmen” are talking nowadays, anyway! Scotched tha Snake—Not Killed Him. It was supposed that the recent action of the Senate with reference to tho duty on binding-twine would take tho sting out of the binding-twine trust, but it now appeal's that that opinion was too hasty. This fact has been pointed out in the following terms by a member of the firm of James F. White & Co., linen merchants of New York:

“Another evidence of tho underlying current .of trickiness that has marked the entire arrangements of tho schedules is to be found in the manipulation of j,lie binder-twine clause. It is the general opinion that all binding-twine is placed on the free list, but a careful examination will disclose the fact that the word jute has been omitted, and that it is only twine manufactured from manila or sisal grass that is on the free list, and that, as a consequence of the omission, binding-twine manufactured from jute ' (which is more largely used than any otlior) Is still subject to the duty on jute goods not otherwise provided for in the bill—4o per cent. —which protects the jute trust.” It is more likely, however, that binding twine made of jute will fall under section 250 of the bill, which reads in part: “Cables, cordage and twine, except binding twine, composed wholly of manila or sisal grass, one and one-half cents per pound.” When you except “binding twine composed wholly of manila or sisal grass,” you leave only one kind, and that is jute twine; and this, according to tho provision just quoted, must pay a duty of one and one-half cents per pound, which is equal to §3O per ton of 2,0C0 pounds. From these facts it appears that the farmers have not yet escaped the clutches of tho binding twine trust, unless an amendment is still put into the bill making jute twine free also. It is a noteworthy fact, aU the same, that fifteen Republican Senators from the Northwest could bo found to voto with the Democrats to put any kind, of binding-twine on the free list for the purpose of squelching tho trust. In voting thus they indorse the Democratic position that trusts are encouraged by the tariff, and that tho greatest blow you can strike at a tariff trust is to put the competing product on the free list. Let jute twine go on tho free list now, and the snake is not oniy scotched but killed. The trusts continue to multiply. Now it is a window-glass trust. McKinley’s day is the heyday of trusts. Of course the window-glass manufacturers deny the existence of a trust; but they say that “undue competition must be done away with.” Only a trust of another color. If protection is to give a benefit to ,anybody, where is the benefit to come from? Who creates it? The Government docs not create anything, and neither does protection. Is it not clear that the consumer is the man who gets left. Property to the value of $123,000,€OO was consumed by lire in the United States during 1889, an increase of $12,000,000 over the preoeding year.