New-York tribune., 1886-07-17
RAILS and PROTECTION.

mt mn at CHATTANOOGA. This will be an import
ant change for that region. No doubt it will
also prove benefit to the whole country In the
end, for the large investment OF capital VIII
ultimately insure an increased demand for
labor, and an increased production, even
though the demand for products may not at
first be sufficient to keep both the new and all
the old works in operation. For other large
establishments are going up in other parts of
the South the Thomas Iron Company, it has
been recently stated, is about to build large
furnace in Alabama; and powerful syndicate
of capitalists is about to put up very large steel
works at Birmingham, Alabama. The question
whether this expansion is desirable for the
country rs a whole never enters the mind of
capitalists who undertake the proposed works.
If they are assured that they can make money,
they do not consider whether some other estab
lishment in Pennsylvania, or Ohio, or Illinois,
will in consequence be pushed out OF work
and profit. To the industries of the South these
are steps of exceeding importance. They sup
ply home demand for the excellent ore of Ala
bama and Tennessee, and for the pig iron, of
which much has recently been sold at low
prices in Northern markets. Beyond doubt, the
Southern people are to be congratulated upon
the prospect Of healthy and permanent deyel-
opment of their industries.
1t is not to be forgotten, on the other hand,
that the products of these works may displace
the products of older establishments. Ii the
pig non made at the South is not to be sold in
Northern marx xets, but manufactured into rails,
the rails will be marketed, and 50 there will
result q smaller demand for Northern rails.
Necessarily there will result a smaller demand
for Northern pig iron. The reduction is likely
to be quite as great as if a largely increased
quantity of Southern pig iron were to be
marketed at the North. Unless the general
demand for iron and products of iron and steel
shall materially increase, there will result for a
time an apparent overproddction, and some
body will suffer. Then we shall hear that it is
the protective tariff which causes this disas-
trous overpIoductiOn, and the consequent ruin
in some quarters. But a clearer and more truth
full explanation is that the combination of stee
rail makers has for the time enhanced the price
of rails out of proportion to the prices of other
products of iron and steel. The advance in
rails within the past year has been about 80 per
cent, while the advance in pig iron has been
only about 10 per cent, and there has been
scarcely any advance in bar iron. The capital
lSIS WHO are dDOuJ 10 lHNcSJ luOucy III uc" ldil
works conclude that if this combination is to
be maintained, they will get part of the profit
by making iron into rails, and they care moth
ing about the consequences to the older estab-
lshments. They calculate that in any case,
being able to produce cheaply, they can sustain
themselves, and they reckon that it is for
others to consider whether they can sustain
themselves also.
Here we have an illustration of the working
of the tariff by which American industry is de-
Tended, and its growth is permitted without
check from foreign competition tendency
toward excessive prices is thought to have APP
peared in the steel rail market. 1t makes no
difference whether the price has really been
enhanced unreasOnably, or whether only fair
profit is charged by the combination which
sustains the price of rails. In either case, the
belief of capitalists who seek employment for
their money determines their action. Within
less than six months several large establish
ments promising great prOductlveness, nave
been projected, and the inevitable result is
that within n short time the home production
will reduce prices of rails to fair correspond
encc with the prices Of raw materials. But this
has been the chief reliance of those who ady0-
cate the protective policy. They have main
tanned that, under the system of National de-
fence, unreasonable prices can never long be
maintained, even by the most thorough combl-
nation of producers. because increased produce
ton at home is certain to follow under the
shelter of protective duties. 1t is to be re-
membered that all European consumers have
for years been forced to pay high prices by a
combination OF steel rail makers, in Great
Britain and on the Continent, which has re-
Gently broken up, and n reduction of 50 to $40
per ton has resulted. Combination of pro-
ducers is possible in any country, with or with
out protective duties. But here combination
of producers moro quickly and surely brings
about an increase in production, because the
home producers are sheltered from foreign
competition.
II treaty providing for the eXtradtion OF bank