Democratic Sentinel, Volume 16, Number 19, Rensselaer, Jasper County, 27 May 1892 — Wages and Labor Cost. [ARTICLE]

Wages and Labor Cost.

It was Henry Clay who clearly pointed out the fact, which modern protectionists seem to have lost sight of, that low wages did not mean low cost of production. As an instance of this fact he cited the case of Asia and Europe. Wages in Europe, he said, were many times higher than wages in Asia, but, because of the great use of machinery in Europe and of the greater intelligence and skill of the workmen, particularly in Great Britain, manufactured articles, which require any considerable amount of labor, are manufactured “infinitely cheaper thun they can be manu* factured by the natural exertions” of the countless millions of unskilled, poorly paid and poorly fed laborers of Asia. The rapidly increasing use of machinery since Clay’s time has made this fact even more manifest now than it was then. It is the low-wage countries of the globe that supply the agricultural products and the raw materials of manfacture to the high-wage countries, and it is the high-wage countries that manufacture these raw materials into all kinds of articles—machinery, clothing, ships, furniture, farm and household

implements—with which to supply themselves and to sell back to these highwage countries. Hence, it would seem that if the tariff on manufactured articles is needed to protect labor, the countries most in need of such a tariff are the low-wage countries. This, in fact, is the rule. Italy, Russia, Spain, and the other low-wage countries of Europe are heavily protected against Great Britain, France, Germany, Belgium, and the other comparatively high-wage countries of Europe. Great Britain, the United States, France, Germany, and Belgium, the high-wage countries of the earth, are the greatest exporters of manufactured articles. There is but one explanation—it is cheaper to make costly articles where wages are high than where they are low. This has been demonstrated in detail by many statistical experts. Edward Atkinson has recently given us' a long list of articles for which the laijof cost to manufacture is if§6 IP the United States than in any country of Europe, e.g., a pair of shoes which it costs 58 cents to make in Massachusetts costs from 60 to 75 cents to make in foreign countries of Europe. He expresses the opinion that the labor cost in nine-tenths of the manufactured articles is less in the United States than in Europe. To the question that may be asked here by protectionists, “Why, then, do we not supply more of the manufactured articles of the world than Great Britain?" it may be replied our failure to do so is not because of the difference in labor cost of the produot, but because of the excessive taxes levied by the United jjtates upon the raw materials and the machinery of production. Remove this tax and the restrictions upon our shipping, and we will soon be exporting more manufactured articles than Great Britain. In view of these facts let us notice the woolen industry in this country. | During the last thirty years we have I had a duty on woolen goods that has averaged nearly 90 per cent. The ostensible purpose of about half of this duty has been compensatory —that is, to reward the manufacturers for that part of the cost of raw wools, which is due to the duty on wool—and of the other half to make good the difference in labor cost between this country and Great Britain.

One of the first effects of this heavy “protection” which we will observe is the decline in the number of woolen mills in the United States from 2,391 in 1870, to 1,190 in 1880, and to 1,312 in 1890. The value of the goods manufactured increased from $267,252,913 in 1880 to $338,231,109 in 1890. It is apparent then that the exorbitant duty on i raw materials tends to drive out small ■ capitalists and to leave the business in ' the hands of monopolists. The next effect has been to make the price of woolen goods in the United States nearly double what they would have j been without such protection. This ad- ! ditional cost to the 65,000,000 of people j in the United States is not now less ! than $100,000,000 per year. But even j with these high prices the woolen industry cannot be said to be in a flourishing condition —the increased value of the \ product being only about equal to the increase in population since 1880. The weight of taxation upon the raw materials is sufficient to prevent the growth of the indnstry even with these exceptionally high prices. Another curious effect is that, while the duties have increased the price of raw material for manufacture, it has not apparently increased the price of domestic wools. As pointed out by John Sherman in 1883, the price of domestic wools declined from 51 cents in 1867 to 46 cents in 1870; 43 cents in 1876 to 36 cents to 40 cents in 1883. But that part of the tariff to which we here wish especially to call attention is the part levied for the benefit of labor. Under the McKinley bill this part varies fronx3o_to 50 per cent., and will average about 45 per cent. As this duty is levied to cover the difference of labor cost in this and other countries, it may be well to inquire what this difference actually is. The Hon. Carroll D. Wright, Commissioner of Labor, has for some time been making special investigations into the cost of textiles in Europe and America. Advance sheets, showing this cost, were prepared for and used by the Hon. A. B. Montgomery in his speech in the House March 11, 1892. As explained by Commissioner Wright, the labor cost in this country includes all the processes of manufacture from the raw wool, while in Great Britain and on the continent of Europe it often does not include all of these processes—the cost of spinning the yarn and dyeing and finishing the cloth often being done in separate factories. Yet, notwithstanding this fact, an Inspection of the labor cost of making the 217 samples—ls 2 from our own and

85 from foffltga factories— makes it evif dent that this difference is very slight. For example, the labor coat in fourteen samples of cashmere on the continent of Europe ranges from 15.20 per cent, to 22.08 per cent., the average being about 19 per cent.; of forty-six samples from the United States from 17.36 per cent, to 31.20 per cent., the average being 24 per cent. The labor cost for six samples of worsted goods made in Enrope varies from 12.92 per cent, to 43.11 per cent., the average being about 22 per cent.; of thirty-six samples from the United States from 13.49 per cept. to 37.57 per cent., the average being about 21 per i cent.; the labor cost in seven samples of ladies’ dress goods from the United States varies from 15.41 per cent, to 23.54 per cent., the average being 20 per cent.; of five samples from Europe from 13.02 per cent, to 29.31 per cent!, the average being 23 per cent As, however, no two samples from this and from any foreign country are exactlv alike, it is impossible to rely strictly upon these comparisons. It is, however, safe to assert that the difference, if any exists, in the labor cost of textiles in this and in foreign l countries does not exceed 6or 8 per cent. There is, then, no just basis for a protection of more than 10 per cent, to cover this difference, and the 45 per cent, granted by McKinley for this purpose is an outrage upon the American people. In the Springer free wool bill an ad valorem duty of, from 25 to 35 per cent, is left on manufactured woolens. This, as Congressman Montgomery shows, gives an average of 12 per cent, more protection than the entire labor cost in the production of 165 home-manufactured articles covered by Wright’s table. This would then, except for the tariff tax on machinery, put our woolen manufacturers on an equal footing with those of Europe and leave them a margin of about 25 per cent, for profits. The claim by thoughtless protectionists that this 35 per cent tariff would leave our woolen manufacturers unprotected and drive half of them out of the country is utterly without foundation.