EFFECTS OF PROTECTIVE DUTIES. 



statement made many years ago by the Hon. Charles Hudson, a 

 Representative in Congress from Massachusetts, as follows : 



An article now free from duty is selling in our market for $1.20. The ele- 

 ments which make up this price are these : Cost in foreign market, $i; cost of 

 importation, IO cents; importer's profits, 10 cents : making$i.2O. At this price 

 the article can be manufactured and sold in this country. Now, let one of our 

 citizens go into the manufacture of this article, and what will be the result ? 

 Why, the foreign manufacturer, who has heretofore enjoyed the monopoly of our 

 market, and who is enjoying large profits, will immediately put the article at 90 

 cents to the American importer; this being the cost of the article. He will wil- 

 lingly forego all profit for the time being, for the purpose of crushing the infant 

 establishment in this country; and the importer will give up one half of his pro- 

 fits rather than lose this portion of his business. This will reduce the price of 

 the article to $1.05. The American manufacturer finds the article in the market 

 at this reduced price, which is, in fact, less than he can manufacture the article 

 for. He must, therefore, abandon his business, give up his establishment at 

 great sacrifice, and yield the market to the foreign manufacturer, who, finding his 

 rival destroyed, will immediately demand the old price, $1 ; and the consumer 

 in this country will be compelled to pay $1.20, or perhaps $1.25, to make up the 

 loss which the importer and manufacturer sustained during the period of compe- 

 tition. This is the result when the article is free ofdufy. 



Now we will take the same article at the same price, both in Europe and 

 America, with a Protective duty. A duty of 1.5 cents is imposed upon the article 

 to encourage domestic manufactures. This, added to the former price, $1.20, 

 brings the article up to $1.35. The foreigner fears the loss of the American mar- 

 ket, and to prevent a surplus in his own market, and create a surplus here, he 

 will at once put his article at cost, 90 cents. The importer will forego half of 

 his profits, and take off 5 cents, which will bring the article down to $1.20, the 

 very price which it brought before the duty was imposed. In the meantime the 

 American manufacturer produces the article, which he can sell for the same 

 price. Here, then, the manufacturer is protected, and the consumer has no ad- 

 ditional price to pay. The importation will not be materially checked; and this, 

 with the domestic production, will create a surplus, which will tend to a reduc- 

 tion of the price. A sharp competition will ensue, and necessity, that mother of 

 invention, will bring out improvement in machinery; so that the article can be 

 procured at a cheap rate. The skill also, which is acquired, will enable the man- 

 ufacturer to turn off the article at less expense, and so afford it to the consumer 

 at a reduced price. Thus will discriminating duties protect the ^manufacture 

 and cheapen the article. 



Such is the process by which " the foreign producer forthwith 

 drops his price, and his product is offered in our market at the 

 same price as before;" and such is the process by which prices 

 are ultimately reduced to American consumers, while Protection is 

 secured to home industry. Under Protective duties we gradually 



