1 In the coffee districts hands will take 7 pounds of corn for a day's labor.

PASO DEL NORTE (IN THE free zone).

APPENDIX NO. 2.

I now append the views of American statesmen on the subject of the rate of wages that I referred to in this paper (page 505), namely, that the main factor of the rate of wages is the amount of commodities they produce, and not the rate of import duties on foreign merchandise.

I could cite the views of many other public men of the United States bearing on the same subject, but as that would take a great deal more space than I have at my command, I will only append two which I consider fully sustain my views.

The Hon. John G. Carlisle expressed the views just referred to with his usual lucidity in the following extract from his Annual Report, as Secretary of the Treasury, of December 15, 1896, to the House of Representatives, on the state of the finances in the fiscal year ended June 30, 1896:

"The danger of a large foreign competition in our home market, and the alleged injurious effects of such competition upon the interests of domestic labor, have not only been greatly exaggerated in the past, but are less now than at any time heretofore, and must continue to grow less hereafter.

"In 1886, three statisticians and economists of high standing, at the request of one of my predecessors, Mr. Secretary Manning, made and submitted to him a careful estimate of the number of persons engaged in gainful occupations in the United States, who could be subjected to foreign competition, and, although they worked by different methods and conducted their investigations independently of one another, their several estimates agreed within a fraction of 1 per cent. In their opinions, about 5 per cent. of our population so engaged were subject to competition from other countries, and one of the gentlemen said: The general conclusion that if trade were entirely free, the fraction of our present industrial population injuriously subject to foreign competition would not exceed 6 or 7 per cent., seems to me unquestionable.' Those estimates were based upon the census of 1880 and the trade of 1886. Since that time, great changes have taken place in our international trade and in the cost of production and subsistence in this country, and it cannot be doubted that the principal industries in the United States are relatively and actually stronger now than they were then, and, therefore, better able now than they were then to compete with foreign products, not only in the home market, but in the markets abroad, where no special privileges or advantages are conferred upon their rivals by treaties or differential tariffs.

“The number of our people engaged in gainful occupations increased from 17,392,099 in 1880 to 22,735,661 in 1890, a gain of 5,343,562; and, while the increase in all such occupations during the ten years was 30.72 per cent., the increase in manufacturing and mechanical industries, which are supposed to be most subject to foreign competition, was 49.13 per cent. A further and most gratifying evidence of our grow

ing industrial power is to be found in the greatly increased exports of the products of domestic manufacture, which now constitute, for the first time in our history, more than one fourth the total value of all our sales in foreign markets. If these products were not, at least, equal in quality to similar products of other parts of the world, and if the prices at which they are sold were not as low as the prices demanded by our foreign competitors, they could not find a market outside the limits of our own country. The exportation of manufactured products would not go on continuously year after year at an increasing rate, unless there was a profit for our people in the operation, nor unless the markets in which they are sold are in some manner benefited by giving a preference to the American article over like articles produced elsewhere. The annual increases since 1892 in the quantities and values of exported manufactures, notwithstanding the extremely low prices which have prevailed in all the markets of the world, are without a parallel in our commercial history, and furnish such conclusive evidence of industrial power and a capacity to compete successfully with the outside world in production and trade as ought to convince our people that protective duties on imported goods cannot be hereafter justified or excused upon the plea that they are necessary for the encouragement of capital or the security of labor in this country. With a healthy internal growth and a constantly increasing export trade, the influence of foreign competition in our home market must continue to diminish, and there is no reason to fear that our domestic industries could be seriously interfered with, even under schedules of duties much lower than we now have.

"But an examination of the various gainful pursuits in which the people of the United States were engaged in 1890, which is the date of the latest official returns upon the subject, will show that, even if we are not more independent of foreign competition now than we were then, the number of those who can be adversely affected by the importation of products from abroad is so small, in comparison with our total population, that it would be both impolitic and unjust to persist in a system of taxation designed for the special protection of their interests at the expense of all others. Of the five great classes or groups into which the total population engaged in gainful occupations (22,735,661) is divided, three-professionals, 944,328, domestic and personal servants, 4,360,506, and persons engaged in trade and transportation, 3,325,962— may be excluded at the outset as exempt from foreign competition. No tariff duties can affect these classes, except by increasing the cost of many of the commodities which they are compelled to buy and use.

"Of the agricultural, mining, and fishing group, numbering 9,013,669, only a very small percentage can be subjected to direct competition with the foreigner, and this part is located on or near the seacoast or other borders of our country. In some parts of New England, in Northern New York, and in a few other localities on the border, Canadian competition in agricultural products must sometimes be met to a certain extent, but the people in all these places are able to export other kinds of products, similar to those of their Canadian neighbors, and sell them at a profit in the Dominion and in other parts of the world, in competition with all others. In fact, the traffic in agricultural products across the Canadian line includes large sales by our citizens to the people of the Dominion, as well as purchases from them, and the official statistics of our whole trade with that country in this character of products show that we annually export more than three times as much as we import, our exports last year being $17,400,000, and our imports only $5,500,000. It is safe to say that not more than 500,000 persons, or about five and a half per cent. of those engaged in agriculture, mining, and fishing in this country, can be in any degree adversely affected by competition from abroad, and all these are wholly or partially compensated for foreign interference in their home market by the increased sales which international trade secures for their own products in foreign markets.

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'In considering the manufacturing and mechanical industries, for the purpose of ascertaining to what extent they can be subject to foreign competition, the following general propositions may, I think, be accepted as the basis for just conclusions:

“(1) A large and continuous export of a particular class of articles proves an ability to manufacture as cheaply as any foreign competing nation.

"(2) Natural advantages, such as the proximity or cheapness of raw materials, inventiveness, special aptitudes, and facilities secured by an extensive use of superior machinery, are sufficient in most cases to exclude foreign competition.

"(3) Many occupations, such as those of bakers, blacksmiths, carpenters, masons, and others, are necessarily local; the work must be done at a particular place, and, consequently, foreign competition is impossible.

"(4) The expenses of importation-the cost of transportation, insurance, loss of interest, etc.—prevent competition from abroad in many kinds of manufacturing and mechanical products.

"Applying these propositions in the investigation of the industries known as 'manufacturing and mechanical,' the result may be most briefly and conveniently stated in the form of a table, in which the interests subject to more or less foreign competition are classified as nearly as possible according to the tariff schedules and in accordance with an extremely liberal view of the question.

"These constitute about 21 per cent. of the 4,712,622 persons engaged in all our manufacturing and mechanical industries, and, adding to them the 500,000 employed in agriculture, mining, and fishing, a total of 1,487,573 is obtained, which is about 64 per cent. of the total population engaged in all gainful occupations, according to the returns of 1890. A more thorough investigation would doubtless show that considerable deductions ought to be made from this total. Geographical position, proximity to materials or markets, or the existence of cheap and efficient transportation facilities, operate as a strong natural protection against foreign as well as domestic competition. There is a constant internal movement of our industries, seeking more favorable situations, in order to reduce the cost of production and secure better access to the markets, and every such change, when judiciously made, strengthens our industrial system and reduces the danger of possible interference by the introduction of foreign products. If the full effect of these movements could be ascertained, it would be found that they have during the last few years contributed largely to the independence and prosperity of our manufacturing industries, and that on this account great numbers of our people who were formerly subjected to more or less foreign competition are now entirely exempt from it. The failures of many of our industries in the past have been attributed to insufficient protection against competition from abroad, when the real causes were unfavorable locations and lack of skill and experience on the part of their managers, or oversupply of products by domestic establishments.