CHAPTER XXVI.
FOREIGN COMMERCE UNDER PROFITS; PROTECTION AND FREE TRADE, OR BETWEEN THEDEVIL AND THE DEEP SEA.
We arrived at the Arlington School some time before the beginning of therecitation which we were to attend, and the doctor took the opportunityto introduce me to the teacher. He was extremely interested to learn thatI had attended the morning session, and very desirous to know somethingof my impressions. As to the forthcoming recitation, he suggested that ifthe members of the class were aware that they had so distinguished anauditor, it would be likely to embarrass them, and he should thereforesay nothing about my presence until the close of the session, when heshould crave the privilege of presenting his pupils to me personally. Hehoped I would permit this, as it would be for them the event of alifetime which their grandchildren would never tire of hearing themdescribe. The entrance of the class interrupted our conversation, and thedoctor and myself, having taken our seats in a gallery, where we couldhear and see without being seen, the session at once began.
"This morning," said the teacher, "we confined ourselves for the sake ofclearness to the effects of the profit system upon a nation or communityconsidered as if it were alone in the world and without relations toother communities. There is no way in which such outside relationsoperated to negative any of the laws of profit which were brought outthis morning, but they did operate to extend the effect of those laws inmany interesting ways, and without some reference to foreign commerce ourreview of the profit system would be incomplete.
"In the so-called political economies of our forefathers we read a vastdeal about the advantages to a country of having an international trade.It was supposed to be one of the great secrets of national prosperity,and a chief study of the nineteenth-century statesmen seems to have beento establish and extend foreign commerce.--Now, Paul, will you tell usthe economic theory as to the advantages of foreign commerce?"
"It is based on the fact," said the lad Paul, "that countries differ inclimate, natural resources, and other conditions, so that in some it iswholly impossible or very difficult to produce certain needful things,while it is very easy to produce certain other things in greaterabundance than is needed. In former times also there were markeddifferences in the grade of civilization and the condition of the arts indifferent countries, which still further modified their respective powersin the production of wealth. This being so, it might obviously be for themutual advantage of countries to exchange with one another what theycould produce against what they could not produce at all or only withdifficulty, and not merely thus secure many things which otherwise theymust go without, but also greatly increase the total effectiveness oftheir industry by applying it to the sorts of production best fitted totheir conditions. In order, however, that the people of the respectivecountries should actually derive this advantage or any advantage fromforeign exchange, it would be necessary that the exchanges should becarried on in the general interest for the purpose of giving the peopleat large the benefit of them, as is done at the present day, when foreigncommerce, like other economic undertakings, is carried on by thegovernments of the several countries. But there was, of course, nonational agency to carry on foreign commerce in that day. The foreigntrade, just like the internal processes of production and distribution,was conducted by the capitalists on the profit system. The result wasthat all the benefits of this fair sounding theory of foreign commercewere either totally nullified or turned into curses, and theinternational trade relations of the countries constituted merely alarger field for illustrating the baneful effects of the profit systemand its power to turn good to evil and 'shut the gates of mercy onmankind.'"
HOW PROFITS NULLIFIED THE BENEFIT OF COMMERCE.
"Illustrate, please, the operation of the profit system in internationaltrade."
"Let us suppose," said the boy Paul, "that America could produce grainand other food stuffs with great cheapness and in greater quantities thanthe people needed. Suppose, on the contrary, that England could producefood stuffs only with difficulty and in small quantities. Suppose,however, that England, on account of various conditions, could produceclothing and hardware much more cheaply and abundantly than America. Insuch a case it would seem that both countries would be gainers ifAmericans exchanged the food stuffs which it was so easy for them toproduce for the clothing and hardware which it was so easy for theEnglish to produce. The result would appear to promise a clear and equalgain for both people. But this, of course, is on the supposition that theexchange should be negotiated by a public agency for the benefit of therespective populations at large. But when, as in those days, the exchangewas negotiated wholly by private capitalists competing for privateprofits at the expense of the communities, the result was totallydifferent.
"The American grain merchant who exported grain to the English would beimpelled, by the competition of other American grain merchants, to puthis price to the English as low as possible, and to do that he would beatdown to the lowest possible figure the American farmer who produced thegrain. And not only must the American merchant sell as low as hisAmerican rivals, but he must also undersell the grain merchants of othergrain-producing countries, such as Russia, Egypt, and India. And now letus see how much benefit the English people received from the cheapAmerican grain. We will say that, owing to the foreign food supply, thecost of living declined one half or a third in England. Here would seem agreat gain surely; but look at the other side of it. The English must payfor their grain by supplying the Americans with cloth and hardware. TheEnglish manufacturers of these things were rivals just as the Americangrain merchants were--each one desirous of capturing as large a part ofthe American market as he could. He must therefore, if possible,undersell his home rivals. Moreover, like the American grain merchant,the English manufacturer must contend with foreign rivals. Belgium andGermany made hardware and cloth very cheaply, and the Americans wouldexchange their grain for these commodities with the Belgians and theGermans unless the English sold cheaper. Now, the main element in thecost of making cloth and hardware was the wages paid for labor. Apressure was accordingly sure to be brought to bear by every Englishmanufacturer upon his workmen to compel them to accept lower wages sothat he might undersell his English rivals, and also cut under the Germanand Belgian manufacturers, who were trying to get the American trade. Nowcan the English workman live on less wages than before? Plainly he can,for his food supply has been greatly cheapened. Presently, therefore, hefinds his wages forced down by as much as the cheaper food supply hascheapened his living, and so finds himself just where he was to startwith before the American trade began. And now look again at the Americanfarmer. He is now getting his imported clothing and tools much cheaperthan before, and consequently the lowest living price at which he canafford to sell grain is considerably lower than before the English tradebegan--lower by so much, in fact, as he has saved on his tools andclothing. Of this, the grain merchant, of course, took prompt advantage,for unless he put his grain into the English market lower than othergrain merchants, he would lose his trade, and Russia, Egypt, and Indiastood ready to flood England with grain if the Americans could not bidbelow them, and then farewell to cheap cloth and tools! So down presentlywent the price the American farmer received for his grain, until thereduction absorbed all that he had gained by the cheaper imported fabricsand hardware, and he, like his fellow-victim across the sea--the Englishiron worker or factory operative--was no better off than he was beforeEnglish trade had been suggested.
"But was he as well off? Was either the American or the English worker aswell off as before this interchange of products began, which, if rightlyconducted, would have been so greatly beneficial to both? On thecontrary, both alike were in important ways distinctly worse off. Eachhad indeed done badly enough before, but the industrial system on whichthey depended, being limited by the national borders, was comparativelysimple and uncomplex, self-sustaining, and liable only to local andtransient disturbances, the effect of which could be to some extentestimated, possibly reme
died. Now, however, the English operatives andthe American farmer had alike become dependent upon the delicate balanceof a complex set of international adjustments liable at any moment toderangements that might take away their livelihood, without leaving themeven the small satisfaction of understanding what hurt them. The pricesof their labor or their produce were no longer dependent as before uponestablished local customs and national standards of living, but hadbecome subject to determination by the pitiless necessities of aworld-wide competition in which the American farmer and the Englishartisan were forced into rivalship with the Indian ryot, the Egyptianfellah, the half-starved Belgian miner, or the German weaver. In formerages, before international trade had become general, when one nation wasdown another was up, and there was always hope in looking over seas; butthe prospect which the unlimited development of international commerceupon the profit system was opening to mankind the latter part of thenineteenth century was that of a world-wide standard of living fixed bythe rate at which life could be supported by the worst-used races.International trade was already showing itself to be the instrumentalityby which the world-wide plutocracy would soon have established its swayif the great Revolution had tarried."
"In the case of the supposed reciprocal trade between England andAmerica, which you have used as an illustration," said the teacher, "youhave assumed that the trade relation was an exchange of commodities onequal terms. In such a case it appears that the effect of the profitsystem was to leave the masses of both countries somewhat worse off thanthey would have been without foreign trade, the gain on both the Americanand English side inuring wholly to the manufacturing and tradingcapitalists. But in fact both countries in a trade relation were notusually on equal terms. The capitalists of one were often far morepowerful than those of another, and had a stronger or older economicorganization at their service. In that case what was the result?"
"The overwhelming competition of the capitalists of the stronger countrycrushed out the enterprises of the capitalists of the weaker country, thepeople of which consequently became wholly dependent upon the foreigncapitalists for many productions which otherwise would have been producedat home to the profit of home capitalists, and in proportion as thecapitalists of the dependent country were thus rendered economicallyincapable of resistance the capitalists of the stronger country regulatedat their pleasure the terms of trade. The American colonies, in 1776,were driven to revolt against England by the oppression resulting fromsuch a relation. The object of founding colonies, which was one of themain ends of seventeenth, eighteenth, and nineteenth centurystatesmanship, was to bring new communities into this relation ofeconomic vassalage to the home capitalists, who, having beggared the homemarket by their profit, saw no prospect of making more except byfastening their suckers upon outside communities. Great Britain, whosecapitalists were strongest of all, was naturally the leader in thispolicy, and the main end of her wars and her diplomacy for many centuriesbefore the great Revolution was to obtain such colonies, and to securefrom weaker nations trade concessions and openings--peaceably ifpossible, at the mouth of the cannon if necessary."
"How about the condition of the masses in a country thus reduced tocommercial vassalage to the capitalists of another country? Was itnecessarily worse than the condition of the masses of the superiorcountry?"
"That did not follow at all. We must constantly keep in mind that theinterests of the capitalists and of the people were not identical. Theprosperity of the capitalists of a country by no means implied prosperityon the part of the population, nor the reverse. If the masses of thedependent country had not been exploited by foreign capitalists, theywould have been by domestic capitalists. Both they and the working massesof the superior country were equally the tools and slaves of thecapitalists, who did not treat workingmen any better on account of beingtheir fellow countrymen than if they had been foreigners. It was thecapitalists of the dependent country rather than the masses who sufferedby the suppression of independent business enterprises."
BETWEEN THE DEVIL AND THE DEEP SEA.
"That will do, Paul.--We will now ask some information from you, Helen,as to a point which Paul's last words have suggested. During theeighteenth and nineteenth centuries a bitter controversy raged among ourancestors between two parties in opinion and politics, callingthemselves, respectively, the Protectionists and the Free Traders, theformer of whom held that it was well to shut out the competition offoreign capitalists in the market of a country by a tariff upon imports,while the latter held that no impediment should be allowed to theentirely free course of trade. What have you to say as to the merits ofthis controversy?"
"Merely," replied the girl called Helen, "that the difference between thetwo policies, so far as it affected the people at large, reduced itselfto the question whether they preferred being fleeced by home or foreigncapitalists. Free trade was the cry of the capitalists who feltthemselves able to crush those of rival nations if allowed theopportunity to compete with them. Protection was the cry of thecapitalists who felt themselves weaker than those of other nations, andfeared that their enterprises would be crushed and their profits takenaway if free competition were allowed. The Free Traders were like a manwho, seeing his antagonist is no match for him, boldly calls for a freefight and no favor, while the Protectionist was the man who, seeinghimself overmatched, called for the police. The Free Trader held that thenatural, God-given right of the capitalist to shear the people anywherehe found them was superior to considerations of race, nationality, orboundary lines. The Protectionist, on the contrary, maintained thepatriotic right of the capitalist to the exclusive shearing of his ownfellow-countrymen without interference of foreign capitalists. As to themass of the people, the nation at large, it was, as Paul has just said, amatter of indifference whether they were fleeced by the capitalists oftheir own country under protection or the capitalists of foreigncountries under free trade. The literature of the controversy betweenProtectionists and Free Traders makes this very clear. Whatever else theProtectionists failed to prove, they were able to demonstrate that thecondition of the people in free-trade countries was quite as bad asanywhere else, and, on the other hand, the Free Traders were equallyconclusive in the proofs they presented that the people in protectedcountries, other things being equal, were no better off than those infree-trade lands. The question of Protection or Free Trade interested thecapitalists only. For the people, it was the choice between the devil andthe deep sea."
"Let us have a concrete illustration." said the teacher. "Take the caseof England. She was beyond comparison the country of all others in thenineteenth century which had most foreign trade and commanded mostforeign markets. If a large volume of foreign trade under conditionspractically dictated by its capitalists was under the profit system asource of national prosperity to a country, we should expect to see themass of the British people at the end of the nineteenth century enjoyingan altogether extraordinary felicity and general welfare as compared withthat of other peoples or any former people, for never before did a nationdevelop so vast a foreign commerce. What were the facts?"
"It was common," replied the girl, "for our ancestors in the vague andfoggy way in which they used the terms 'nation' and 'national' to speakof Great Britain as rich. But it was only her capitalists, some scores ofthousands of individuals among some forty million people, who were rich.These indeed had incredible accumulations, but the remainder of the fortymillions--the whole people, in fact, save an infinitesimal fraction--weresunk in poverty. It is said that England had a larger and more hopelesspauper problem than any other civilized nation. The condition of herworking masses was not only more wretched than that of many contemporarypeople, but was worse, as proved by the most careful economiccomparisons, than it had been in the fifteenth century, before foreigntrade was thought of. People do not emigrate from a land where they arewell off, but the British people, driven out by want, had found thefrozen Canadas and the torrid zone more hospitable than their nativeland. As an illustration of the fact that the w
elfare of the workingmasses was in no way improved when the capitalists of a country commandedforeign markets, it is interesting to note the fact that the Britishemigrant was able to make a better living in English colonies whosemarkets were wholly dominated by English capitalists than he had been athome as the employee of those capitalists. We shall remember also thatMalthus, with his doctrine that it was the best thing that could happento a workingman not to be born, was an Englishman, and based hisconclusions very logically upon his observation of the conditions of lifefor the masses in that country which had been more successful than anyother in any age in monopolizing the foreign markets of the world by itscommerce.
"Or," the lad went on, "take Belgium, that old Flemish land of merchants,where foreign trade had been longer and more steadily used than in anyother European country. In the latter part of the nineteenth century themass of the Belgian people, the hardest-worked population in the world,was said to have been, as a rule, without adequate food--to beundergoing, in short, a process of slow starvation. They, like the peopleof England and the people of Germany, are proved, by statisticalcalculations upon the subject that have come down to us, to have beeneconomically very much better off during the fifteenth and early part ofthe sixteenth century, when foreign trade was hardly known, than theywere in the nineteenth. There was a possibility before foreign trade forprofit began that a population might obtain some share of the richness ofa bountiful land just from the lack of any outlet for it. But with thebeginning of foreign commerce, under the profit system, that possibilityvanished. Thenceforth everything good or desirable, above what mightserve for the barest subsistence of labor, was systematically andexhaustively gathered up by the capitalists, to be exchanged in foreignlands for gold and gems, silks, velvets, and ostrich plumes for the rich.As Goldsmith had it:
"Around the world each needful product flies For all the luxuries the world supplies."
"To what has the struggle of the nations for foreign markets in thenineteenth century been aptly compared?"
"To a contest between galleys manned by slaves, whose owners were racingfor a prize."
"In such a race, which crew was likely to fare worse, that of the winningor the losing galley?"
"That of the winning galley, by all means," replied the girl, "for thesupposition is that, other conditions being equal, it was the more sorelyscourged."
"Just so," said the teacher, "and on the same principle, when thecapitalists of two countries contended for the supplying of a foreignmarket it was the workers subject to the successful group of capitalistswho were most to be pitied, for, other conditions being equal, they werelikely to be those whose wages had been cut lowest and whose generalcondition was most degraded."
"But tell us," said the teacher, "were there not instances of a generalpoverty in countries having no foreign trade as great as prevailed in thecountries you have mentioned?"
"Dear me, yes!" replied the girl. "I have not meant to convey anyimpression that because the tender mercies of the foreign capitalistswere cruel, those of the domestic capitalist were any less so. Thecomparison is merely between the operation of the profit system on alarger or smaller scale. So long as the profit system was retained, itwould be all one in the end, whether you built a wall around a countryand left the people to be exploited exclusively by home capitalists, orthrew the wall down and let in the foreigners."