Mr. SHERMAN. We come now, Mr. President, to the duties on manufactures, and that for the 1st time presents the question of protection. In regard to the articles I have already discussed, although we do produce to bacco and wine in this country, the question of protection is not necessarily involved, and we looked upon them simply as a question of revenue. When you come to manufactures it is necessary in levying the duties to discriminate in favor of our own industry on all articles that can be ol. in this country by the ordinary application of skill and labor. It is man ifestly the duty of the country to protect American industry to that extent, not simply on account of the old fashioned argument that we used to have before the war, that as a policy it is better to diversify our industry and manufacture all that is necessary for our own consumption, but on other grounds. We must now protect American manufactures, not merely against foreign competition, but also against . effect of our own laws. This is really all the protection they now need. If you converse with intelligent men engaged in the business of manufacturing they will tell you that they are willing to compete with England, France, Germany, and all the countries of Europe, at the old rates of duty. If you reduce their products to a specie basis and put them upon the same footing they were on before the war, the present rates of duty would be too high. It would not be necessary for scarce any branch of industry to be protected to the extent of your present tariff law. They do not ask protection against the pauper labor of Europe, but they ask protection against the creation of your own laws. These are our po currency and our internal taxation. The American manufacturer comes to you and shows that foreign capital in Canada and elsewhere is not compelled to carry on business operations under the depressing influences that surround us. Manufacturers abroad pay no internal taxes; they do not have to buy with paper money at the inflated prices always produced by paper money. Take the case of the manufacturer of iron. If he was at liberty to hire his labor upon the gold basis and to buy his provisions upon the gold basis, and to buy on the gold basis all the necessary elements which enter into the production of iron, he could compete with the labor of Europe. The advantages of freight and other advantages would enable him to do it. But if you compel him to pay 200%, for his food and more than half the cost of all the iron produced in this country is food—if you compel him to pay largely increased prices for clothing for his laborers; if you add largely to the cost of everything that enters into the elements of his production, as a matter of course he cannot compete with those who are not subjected to similar burdens. It is not British or foreign competition that produces distress among the manufacturing interests of this country at this time; it is the effect of your own laws. The chief evil arises from a depreciated currency. The inevitable effect of paper money is to advance prices far beyond the difference between paper and gold, and indeed it is some times. to be one of the virtues of paper money that it does advance prices and give higher wages to labor. I do not wish now to enter into an argument on that question; but we know that the existence of paper money does tend to raise the prices of commodities in this country, and that the American manufacturer cannot, with paper money and with high prices caused by your taxation, compete with foreign productions. What, then, has he a right to ask? He has a right to ask that if your laws impose upon him additional burdens, your laws also should give him additional protection. That is the claim made by these gentlemen, and it is impossible to resist it. They generally ask that as your laws impose upon them burdens caused by the war, your laws also ought to make them a countervailing protection, so that they may stand on equal footing to compete with the productions of foreign countries. It may be said, then, why not withdraw our currency; why continue our present paper money; why continue our internal taxation? I wish we could do so; but certainly it is now impossible. If we could come back tomor row morning to the specie standard, and remove all the taxes that we have imposed upon our labor, we should all be glad to do it. I suppose there is not a Senator within the sound of my voice who will not admit that a specie basis is the natural condition of trade; that for a currency there ought to be something stable and valuable which is made valuable by its own weight and the labor necessary to produce it. Every body admits that gold and silver are the only real standard of value; that that which regulates exchanges must be the production of labor—something which can only be quarried out of the earth by labor—something which itself is labor personified. Gold and silver are the product of labor in its most permanent, convenient, and unchanging form, and is there. fore the best standard of currency. But, Mr. President, we were driven to the use of paper money; we could not have carried on the war without paper money. The circumstances by which we were surrounded compelled us to resort to these expedients; we had to adopt a system of paper currency; we did the best we could; we could not have got along without it; and I believe that every sensible man who examines our affairs, whether he is a for eigner or a native, must admit that without the free use of our credit, coined in the shape of money, we could not have carried on the operations of the war, because we should not have had a circulating medium with which to pay our soldiers for their services, and to feed their wives and children while they were away from them.. Our paper cirrency was a matter of necessity, but the effect of that currency is to raise the prices of commodities, the prices of labor, the prices of food—to raise the price of everything which enters into the articles of American manufacture. It is necessary for us to countervail that by some legal benefit or protection. It is sometimes said, and I have often heard the argument made, the foreigner has to pay his duties in gold, while the manufacturer pays his taxes in paper money, and also pays the additional cost of labor in paper money, and they say the difference between gold and paper money is a sufficient protection. That argument would be a very complete reply but for this important fact, that the price of labor and the price of commodities is far more advanced than the price of gold. Gold is the cheapest commodity in the market. The importer has the benefit of that condition of affairs; he has a discrimination in his favor, because while the increased cost of American manufactures has gone up about 100 %., the price of gold is only about 36%. above paper. To that extent the system of paper money is a discrimination in favor of the importer of foreign goods. That discrimination was made manifest in its effects by the enormous importation made during the past year by the fact that when gold went down to 25 importations increased, while the prices of domestic commodities and of labor did not materially fall during that time. While gold went down from 200 to 125, the price of labor was not materially affected. The large demand for foreign and domestic supplies kept up the market. The necessity of the case compelled the manufacturer to pay these large prices. He had no choice but to o pay high or close his shop. The result was that e met a competition, not growing out of foreign labor, but out of your own laws, which rescribed currency for him and gold for the importer. F. not know that I have made myself understood; but this is the real and leading reason why it is necessary to give to the American producer in all the different stages of production some countervailing protection to balance the effect of paper money. Another reason is, that the system of internal taxation which your necessities compelled you to adopt throws upon the American producer an enormous burden which the foreigner does not have to bear. Take a shop or a mill in Canada, along our frontier, where labor is 1/2 what it is here: do you suppose an American producer can compete with the Canadian manufacturer? More striking yet; take the case of England, where by a long system they have reduced the cost of production to the lowest possible limit, where by their system of taxation they favor all manner of production, where no tax is levied on any kind of produc.tion, where the cost of labor is reduced and yet the imposition imposed by the Government amounts to but little, and where the manufacturer gets all his raw material free: is it possible for the American manufacturer to compete with the English manufacturer when he has to contribute to $310,000,000 of internal taxation? It is o impossible. We were comby the necessities of the war to levy upon him directly a tax of 5%. on his productions; we levy a tax of 5%. on his income; we levy a large tax upon every element which enters into the cost of his labor. Indeed it has been estimated, and I think very correctly, that the actual taxes upon American manufactures, if you carry them out to their remote origin, amount to about 20%. on the capital employed. Mr. Wells, in his report, shows very clearly that the various taxes levied upon cotton manufactures amount to about 22%. upon the capital employed. this it possible for American manufactures to be maintained, for American workshops to be continued, unless the Government is willing to give some protection against its own laws? Can the manufacturer pay these enormous taxes upon the basis of paper money and yet compete with the unpaid or insufficiently paid labor in Europe, where the manufacturer pays no taxes, where he has his raw materials free, where every element is in his favor? I think it is impossible. If, therefore, we would protect our American industry against our own laws we must give the benefit of duties on foreign goods commensurate with the imposition we | | impose upon our manufacturers and thus ena.ble them to continue the competition that has been carried on for years. It is not necessary for me to go into familiar facts to show that the effect of dogmestic com. betition is to cheapen the price of products. nder the stimulus of our laws great numbers of American manufactures have wn up with a rapidity unexampled in the history of any country. England was more than 100 years in building up her system of finanufactures. Ours have been built up since 1828. In 1828 NewEngland was a mere commercial community; now she is manufactur. ING. At the time when the great friend of America, the Earl of Chatham, said that the laws of England should be so framed that no shoe mail should be made in America we could scarcely make one. We imported everything. There was scarce a factory in America; and so it continued, with but slight progress, for 50 years. American manufactures took their birth in 1828 under the heavy restrictive duties of the tariff law of that year. Now they have grown to amazing proportions, until American productions by manufactures alone are ten times the whole importations of this country. o was somewhat surprised at the tables produced by my friendfrom NewJersey yester. day, and especially the table prepared by Mr. Delmar, showing that in 1860 the annual productions of this country—agricultural, mechan ical, &c.—amounted to $6, 700,000,000 in gold. I thought it was pretty large, and I should like to see the elements of Mr. Delmar's figures, but he foots up $6, 755, 587, 957. A large proportion of these productions were in manufactures which have been built up within the last 30 or 40 years. It is manifest, when this enormous industry is brought in competition with a different sys. tem of labor, that if you impose burdens upon it in the form of internal taxation and in the form of paper currency, you must give it countervailing benefits. Of the $310,000,000 of taxes levied upon productions in the form of internalrevenue, about $170,000,000 is paid directly or indirectly by manufactures. It is true it is finally collected again from the consumer; but, as it is added to the price of the commodity, the manufacturer must reduce his price to compete with the foreigner, or he must abandon the market. Under these circumstances it is apparent that the present rates of duty although very high, higher than they have ever been before, must either be increased or else there must be a reduction in the price of labor in this country, or there must bean increase in the price of gold. I think we have tried the last experiment very well. I do not believe an act of Congress can affect the price of gold. I do not think it can or will or ought to affect it. Then, unless you give to the American manufacturer some increased protection against your laws, the immediate effect will fall on the great mass of the people in the price of labor and the }. of food. They will have to pay these large internal taxes with less daily pay, and the result will be we shall have distress, complaint, not repudiation, I know, but dissatisfaction with your laws. While goods are flowing into this country in great quantities from all the countries of the world, the products of foreign industry, our own industry is being depressed, our manufactures broken down, our shops shut up; and thus you will have dissatisfaction and discontent. only way, in my judgment, to meet it is to give them, by your legislation, protection equivalent to the taxes you impose upon them and the effect of your currency. Whether the ComFinance have done this or not is for the Senate to say. I do not wish to go into the details. Hf observed the general scope of the tariff bill, as reported by the committee, there is an advance of duties of about ten%, on the cost of imported goods that come into competition with our own manufactures. || same principle of protection should be extended to him as to other industrial interests. I leave opt of view, because the computation o: It may vary more or less; but I believe that is | || is that 117 million. the general proportion—an increase of about ten%. Now I come to a part of this bill which is the only one which induced me to engage in this discussion, and that is the proposed duties on agricultural products. Here there is a conflict of interest between agricultural and manufacturing industry, or at least there was supposed to be, but I believe there is not and ought not to be. The manufacturer generally looks upon everything he has to buy as a raw material, and everything that he has to sell as a finished product. The revenue commissioner has fallen into the same error, and he calls wool a raw product. Wool is not a raw product to the farmer, though it may be to the manufacturer, because to the farmer it is the completed product of his industry. So of the cereals, wheat, flaxseed, rye, barley are not raw materials to the farmer, but they are raw materials to the manufacturer who consumes them. They are the result of labor; they are the complete product of the labor of the farmer. His raw material is his land and his labor, while his product is wool, wheat, barley, &c. Mr. President, if you ever attempt, in the present condition of affairs, to levy your dutiesonim ported goods so as to give to the farmer no protection against competing labor, you will do an act of gross injustice, and such a tariff as that cannot be enduring. We very well know that the great body, I believe 4 5ths, perhaps 5 6ths, of our people, are engaged in agriculture. They usually, onfaccount of the weight and bulk of their articles, do not require anything like the protection that other industries do, because the very bulk of their products iv.esifthem an advantage in the home market. they are compelled on ordinary articles of their production to compete on equal terms with the cheap labor of other countries they will naturally be dissatisfied. How do you maintain the doctrine of protection in a tariff? You say to the farmers, “Pro tect our industry, build up our manufactures, and we will start shops in your neighborhood and consume your products; we will give you the benefit of a home market.” That is all very well and very plausible, and it has induced the great body othe farming community in this country to be what are called protectionists. Ohio, which was always an agricultural State, was a protectionist State, and the farmers were probably as much so as any other class. Why? because they believed that by building up manufactures in this country they would have the benefit of the home market. But if a manufacturer in RhdIsland who consumes a million pounds of wool, after he has got the benefit of all the protection he wants on his woolen goods and has raised the price of them to the armer who has to buy them, turns around and says, “I can buy my wool cheaper in South America, and I am therefore opposed to any duties upon your wool, because it is a raw material, ” you will find that the farmer will be discontented. He will not be satisfied, and he will not be put off with any such reasoning. You must extend the doctrine of protection to everything that is made up by labor, and you cannot stop short of it. If wool is a raw article to the manufacturer, so is cloth a raw article to the tailor. If you will not give us protection to our products we will give you none to ours. The principle is correct as to wool or it is wrong as to cloth. In ordinary times protection is not necessary to the farmer, because with all the advantage he possesses in a rich soil and cheap land he can compete with similar products of any other country. Our agricultural industries do not often want protective duties and have rarely called on Congress for them; but now when the prices of all commodities are raised upon him by high extraordinary prices, he has a right to demand and does demand that the o. oo I wish in this connection to make some ref. erence to the report of Mr. Wells on the question of wool, and I do it with sincere respect for the author of this report, because I know from personal observation that he is not only industrious and able in the discharge of the duties imposed upon him by law, but I believe he is as well qualified from his experience and intellect to discharge that duty as any man in the U.S.; but at the same time in regard to some interests that affect my own constituents he has fallen into many errors. He is opposed to the proposed increase of the duty on wool, and has supported his opinion with all the reasons that can possibly be given, and he bases it mainly upon the assertion that every cent added to the duty on wool costs the consumer of the wool $6,000,000, and therefore that a duty of ten cents a pound would add to the cost of the wool and woolens consumed in this country some 60 million dollars. There is a great deal of fallacy in this mode of reasoning. Suppose you were to apply that principle to another protective duty. suppose we should turn round to the iron men and say, “Here, your duties on iron add to the cost of all the iron produced in this country the full amount of duty, and the consumer has to pay that additional value, and all this costs the people of the U.S. too much.” “If that is the mode of reasoning there is an end of all protection. You must show that all classes of the community get the benefit of this W or you must abandon it altogether. ou cannot maintain that it is a hardship for the wool interest to demand protection any more than the iron or other interests. Take the case of cotton manufactures, the duties on which are fixed in this bill at from 50 to 60%. Undoubtedly to a considerable extent these duties are added to the cost of the articles to the consumer; and I might make a formidable array of figures to show that in order to sustain the manufacturers who are the constituents of my friendfrom RhdIsland the people of Ohio are compelled to contribute out of their pockets a number of millions of dollars. That would not be a fair mode of argument, and yet it is precisely the mode of argument with which we are met in regard to the duty on wool. It is strange that the manufacturing interests, who have been maintained by protective duties, should resort to free trade arguments when the agricultural interest demands a far less rate of prohibition than has been given to them. But there is an element of error in the computation itself as well as in the principle of the computation. The commissioner without giving us the basis of his computation, declares that there are 117 million pounds of woolen goods manufactured and consumed in this country and that there are imported 33 million pounds of woolen goods. He thus puts the whole amount of woolens consumed in this country at 150 million pounds. Then he says, as it takes 4 pounds of raw wool imported into this country to make one pound of woolen cloth, therefore the amount of wool consumed in this country must be 600 million pounds. That is an absurdity. The largest amount of importations of foreign wool into this country in one year was never over 84 million pounds, and the average is about 60 millions; the largest clip of wool ever grown in this country, and that was last year, was 100 million pounds, while the average is 80 millions; showing but an aggregate of 184 million pounds or enough to make 46 million pounds of cloth instead of 117 million pounds. What is the use of taking a computation of this kind in the face of plain, palpable facts.” The wool imported in the form of woolen goods pounds of woolen goods aside from those in ported are consumed in this country. That would show a production of wool here amounting to about 468 million pounds.